Saving Delaware’s golden goose

Nearly a million tourists visited eastern Sussex County over Memorial Day weekend to enjoy our world-class beaches, picturesque Inland Bays, and stunning state parks, wildlife areas and trails. Our unrivaled natural resources are Delaware’s golden goose. They are the foundation of our massive $6 billion tourism economy and support tens of thousands of jobs. Yet, as we’re seeing from the recent dune breach on the north side of Indian River Inlet, our golden goose is under threat due to extreme weather and sea-level rise. To protect our thriving tourism industry that generates tremendous revenue for state and local governments, we desperately need additional investment to ensure the resilience of our beaches and bays.

Fortunately, we have a once-in-a-generation opportunity to invest in Sussex’s natural resources, as the General Assembly debates whether to extend the accommodation taxes that currently cover hotels, motels and tourist homes (with at least five bedrooms) to include short-term rentals (houses, apartments and condos). The legislation proposes applying the existing distribution formula – 62.5% to the general fund and 12.5% each to beach nourishment, county tourism and state tourism, respectively – to revenues generated from a tax on short-term rental. For hotels and motels, this formula generally makes sense, as existing accommodation tax revenues are generated broadly in all three counties from business travelers to vacation tourists. 

Here’s the catch: Well over 90% of the revenue from short-term rentals will come from Sussex County, so it simply does not make sense to just use the existing distribution formula for hotel and motel taxes, which would only keep 25% of the dollars in Sussex. The vast majority of this new revenue should stay here to boost the restoration and resilience of the very assets that drive short-term rentals: our ocean and bay beaches, our Inland Bays, and our state parks and wildlife areas, especially Cape Henlopen, Seashore, Assawoman and Holts Landing. We must also increase funding for Southern Delaware Tourism and the Delaware Tourism Office. By preserving the natural treasures that drive our tourism economy, we will also enhance the resilience of our coastal communities and do it with a fiscally responsible user-pays approach, which ensures those who benefit most from Delaware's coastal amenities contribute to their preservation.

This approach would also finally resolve the question of how to pay for millions of dollars in local match requirements for coastal resilience and ecological restoration projects administered by the Army Corps of Engineers. Aside from 1% of the existing accommodation tax on hotels, the lack of predictable state funding has delayed everything from nourishment projects to flood abatement and resilience studies and projects. It’s also led to suggestions that coastal towns should provide the local match, which is neither feasible within town budgets nor reflects the regional nature of the tourism economy. Committing the majority of the short-term rental tax to restoration solves this problem.

This solution is even more essential because of Sen. Tom Carper’s leadership over the last two Water Resources Development Acts, which have authorized more than $100 million for beach restoration and locked in a 20% local cost-share rate for our Atlantic beaches and 10% for Delaware Bay beaches in perpetuity, rather than the traditional 35% to 50% match requirement. We can secure these federal resources at this advantageous matching rate for decades by dedicating most of the short-term rental revenues toward restoration projects.

Let’s keep our golden goose healthy by ensuring that the vast of the revenue from the accommodations tax for short-term rentals is allocated toward our beaches, bays, parks and wildlife areas. It’s the ultimate win-win-win: sustaining our tourism industry, bolstering our climate resilience and upholding our commitment to environmental stewardship for years to come.