The mission of the Buncombe County Tourism Development Authority is to be a leader in the economic development of Buncombe County by attracting and serving visitors, generating income, jobs and tax revenues that make the community a better place to live and visit.
The Tourism Product Development Fund (TPDF) is a community grant program funded through Buncombe County occupancy tax (also called a lodging tax). The occupancy tax rate in Buncombe County was increased from 3 cents to 4 cents in August 2001, with the original 3-cent tax dedicated to marketing the Asheville area. In 2015, the occupancy tax was increased from 4% to 6%. The state legislation that guides usage of the occupancy tax mandated that 75% of occupancy tax revenue be invested in marketing and promotion, and 25% invested in the Tourism Product Development Fund.
For several years, local hotel leaders as well as Buncombe County Commissioners and local delegation advocated for a change in the allocation of the occupancy tax, increasing funding for investment in community capital projects and decreasing funding for promoting Asheville and Buncombe County to visitors.
A proposed bill filed in June 2022, by Senators Chuck Edwards, Warren Daniel, and Julie Mayfield passed as HB1057 and became law in July 2022, changing the occupancy tax split from 75% to be invested in travel promotion and 24% for community capital projects, to a split of two-thirds/one-third, increasing funding for community capital projects. The legislation allocates the one-third into two equal funds: the Tourism Product Development Fund (TPDF) and the Legacy Investment from Tourism (LIFT).
The purpose of the TPDF is to provide financial assistance for major tourism projects to substantially increase patronage of lodging facilities in Buncombe County. To date, more than $50 million* has been awarded to 39 community projects. (Download a fact sheet here.)
TPDF funds can be awarded to nonprofit entities as a grant, pledge of debt service or loan guaranty. The legislation establishing the TPDF states that the funds are to be used for tourism-related capital projects, such as construction costs for a new tourism project. The legislation also states that to be a qualified project, it must demonstrate that it will generate new and incremental room nights in Buncombe County.
The TPDF Committee, a 9-person review committee, reviews all funding applications. Each project must pass a 2-stage approval process prior to receiving TPDF funding. After the intensive process, the TPDF Committee make funding recommendations to the Buncombe County Tourism Development Authority (BCTDA). The Buncombe County TDA gives final approval for grant awards.
Frequently Asked Questions
What is the TPDF?
The creation of the Tourism Product Development Fund (TPDF) is the outgrowth of a business decision by the local tourism industry to find a way to attract more overnight visitors to the area. It is a fund that is under the auspices of the Buncombe County Tourism Development Authority, which designates review and vetting of applications to the Tourism Product Development Fund Committee as called for in the legislation.
Why was the TPDF developed?
When the tourism sector determined that the Asheville area was at risk of losing visitors to competitive destinations, local business leaders devised a mechanism that could serve as an incentive for community projects that could increase overnight visitation. Just as they had in the early 1980s, the lodging industry in Buncombe County turned inward to find a solution. The TPDF is the result of lodging properties choosing to earmark a portion of the existing self-imposed tax on their lodging facilities for funding tourism product that will serve to generate significant additional room nights, thereby impacting the local economy. The fund is not intended to be a project’s primary source of funding.
Who pays the tax?
The occupancy tax is paid by visitors to the area who are staying overnight in lodging properties, including hotels, B&Bs, short-term rentals, etc. In addition to the 6% occupancy tax, visitors also pay a sales tax of 7%, resulting in visitors paying a total of 13% on their accommodations.
Is it true that both nonprofit and for-profit businesses can apply for funds?
When first created, the tourism industry purposefully crafted the legislation without consideration of tax status of the applicant. The aim was to create an incentive pool to help projects that would serve as a destination driver or provide a reason for an extended stay or repeat visit. Projects are judged based on their ability to create substantial new and incremental overnight stays in Buncombe County, thus creating a significant overall economic impact on the community. In June 2015, the General Assembly passed HB347 which included modifications to the Buncombe County Tourism Product Development Fund. Under those changes, for-profit entities were no longer eligible for TPDF funding.
Who decides what project(s) receives TPDF dollars?
The enabling legislation mandates that a TPDF committee review all funding applications. Each project must pass a 2-stage approval process prior to receiving funding. The TPDF Committee first thoroughly reviews all applications and conducts interviews as needed. The committee then makes funding recommendations to the Buncombe County Tourism Development Authority (BCTDA). Before a project is recommended to the BCTDA board, 8 of the 9-member TPDF Committee must affirm the decision to fund, or all voting committee members minus 1 in case of absentees or abstentions. Three-fourths of of BCTDA voting board members (7) must affirm the funding recommendations made by the committee.
How are projects chosen for funding?
Each project is reviewed on its own merit and much scrutiny is given to the methodology and assessments of room nights. Projects are judged on their ability to generate new room nights as well as to impact the overall economy, similar to the way that businesses are assessed for potential economic development incentives. The TPDF Committee also requests information on financials from each project to ensure the financial viability of a project as best it can.
How many projects have received funding thus far?
Since the fund’s inception in 2001, more than $50 million has been awarded to 39 projects that are not only generating room nights, but are also great assets to the community. More than 40% of the funds disbursed have gone to City of Asheville owned or affiliated projects, including the John B. Lewis Soccer Fields, Pack Square Park, a portion of the Wayfinding program, the U.S. Cellular Center (now known as Harrah’s Cherokee Center – Asheville) and riverfront redevelopment (the River Arts District). Review the list of funded projects here.
How are funds disbursed once a project is awarded funding?
Disbursement of the monies takes place after various steps in the construction process have occurred. Contractual language in the specific grant agreements outlines a series of provisions and covenants tied to disbursement of the funds as well as remedies in the event of a breach. When it becomes clear a project won’t move forward, under certain contracts, the award can be rescinded.
Where do the funds sit before disbursement?
Funds stay in escrow in a BCTDA account until disbursement.
* This does not include the $5 million appropriated from unallocated monies in the Tourism Product Development Fund to establish a one-time emergency relief grant program, the Tourism Jobs Recovery Fund, in May 2020, to help local businesses begin to recover from the pandemic and save jobs. With legislation signed into law by Gov. Roy Cooper that allowed the Buncombe County TDA to create this fund, a total of 394 local small businesses and nonprofits that provide a direct visitor experience were awarded grants of up to $50,000 to help safely restart businesses and support nearly 4,800 jobs.