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City Council, December 6

Divisions over Accommodation tax allocations
Council wants more engagement
Marc Knapp

Accommodation tax issues dominated last night’s Council meetings. Although the 2017 budgets for both the Accommodation Tax and Hospitality Fee were passed with only one vote against, there was much dissatisfaction- with the nature of the State ordinance, and with the recipients.

First a recapitulation. The funds derived from the Tax and Fee are gathered by virtue of two State ordinances. As the names imply, they are gathered by a tax on guests at hotels, guest houses and bed and breakfasts etc., and a fee on prepared food, typically in restaurants and fast food retailers. The funds gathered are then distributed according to formulas. The formulas are complex with some of the funds remaining with the state, but most returning to the Counties and municipalities but again subject to distribution formulas. After the statutory distributions are made, there is usually a surplus for distribution on a discretionary basis. The recipients of the discretionary funds still have to meet state defined guidelines. The City of Charleston has a committee, currently chaired by Council member Seekings, that selects the recipients from the applicants but again guided by State statute. Broadly, the recipients have to utilize funds to put “heads in beds” and further the cause of the hospitality and tourist industries.

Notwithstanding the State directives, there is still scope for division as to the merit or worthiness of some recipients. This division caused the County to task the College of Charleston and the Convention and Visitors Bureau to devise a scoring system to assess the worthiness of applicants. This system is used to determine applicants and although it may still have deficiencies, it has taken much of the politics and subjectivity out of the determination process. In our view, the City could learn much by observing the County’s process.

There were three things that irked Council members last night – the State was keeping a disproportionate share of the Tax and Fee, Council members were not sufficiently engaged in the allocation process, and West Ashley was not getting its fair share. There is probably some merit to all of these views but we suspect there will be no resolution agreeable to all Council members.

There was no vote on the issue but it seemed that Council wanted some reduction in the amount of the tax and fee retained by the State. Members pointed out that the Tax and Fee collected by the City were well in excess of what was returned to the City. This was not right and the City should seek some change. Good luck on that one!

On the issue of engagement of Council members, we think Council members have a point. But if there is a higher level of engagement, there is going to be a higher level of division amongst Council members. The independent committee which is chaired by a Council member, to some extent, has taken politics out of the allocation process. But it will be there full blown if all the Council members get involved. Interestingly, we do not recall major divisions or discussion over allocations of the Tax and Fee in prior years. Was it the iron fist of Mayor Riley? Notwithstanding, the Mayor indicated that in future, Council members will be better informed about applicants and the process.

So if Council members are more engaged, will this lead to big changes, or in particular, to a redirection of funds from the Peninsula to West Ashley? The latter seemed to be of particular concern to Council members Waring and Moody, understandably as their districts are in West Ashley. Only Council member Mitchell took issue with their particular focus stating that Council should be concerned with the whole of the City, not just single districts. As the Mayor pointed out, West Ashley has about 12 % of all the hotel beds in the City. He didn’t say it but we will - most of the heads in these beds were probably there to see what was offered by other parts of the City and not what was in West Ashley.

Council member Wilson was the member who voted against the tax and fee allocations. She thought the City was not getting the return on its investment that it should. She was not specific in her criticism but she clearly was referring to some of the major allocations. Despite championing the cause of West Ashley, Council member Waring declared that it was a great shame that White Point Gardens on the Peninsula was lacking toilet facilities. He pointed to the large number of tourists that visited the Battery but had to suffer pain. or worse, embarrassment because of lack of facilities. He noted that facilitates once existed there but failed to recall why they were shut down – they were in the center of the park and their isolation, particularly at night, made them unsafe.

We were taken aback by Council member Gregorie’s request. He said that many tourists came to Charleston to see the Mother Emmanuel Church. For this reason, the church should be eligible to receive Accommodation Tax revenues. We fail to see how this would benefit the families of the victims of the murders. And we certainly think it …well gross, that the Church should be used as a tourist attraction vehicle.

Stoney Field was much discussed last night with Council members concerned about the slow development and looking to Accommodation Tax funds for finance. The stadium is built on a land fill and in my view, the City could probably sell the property for a large sum. The proceeds could be used to fund a new stadium on stable land . The cost of having to redo the field almost every year as is done with Joe Riley Park takes large sums of money from the Recreation Department. It makes no sense to renovate something that has become a money pit.

Press Download file for the 2017 budget for the Accommodation tax and Download file for the Hospitality Fee. Projected receipts for both ar 3% and 6% above those estimated for 2016. With the strong growth in hotels and restaurants in the City, revenue for both is likely to grow strongly in future.

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