Todd Paris, Associate Editor and Salisbury Attorney
♦ Tourism Development Authorities (TDAs) exist in many places in NC. In order to get one, a local bill must be passed by the legislature and we have ours. It’s called “The Rowan County Convention and Visitor Bureau.” It’s in the “Gateway Building” at 204 East Innes Street which also hosts “Rowanworks” our Economic Development Commission and The Salisbury-Rowan Chamber of Commerce. By 2013, the legislature granted over 200 such “concessions.”
TDA’s generally are allowed to levy a room occupancy tax of between three percent (3%) and six (6%) of the gross receipts derived from the rental of any room, lodging, or accommodation furnished by a hotel, motel, inn, tourist camp, or similar place within the area that is subject to sales tax imposed by the State. The use of funds is limited by the enabling statute to “Only to promote travel, tourism, and conventions in Rowan County and to sponsor tourist-oriented events and activities in Rowan County.” A PDF is attached.
In 2013, operatives of the City of Salisbury were able to have the occupancy tax raised to total of six percent (6%) and suddenly our TDA became “cash rich” and with the recent hotel building boom, literally had more money then they knew what to do with. Good news, right? (See Appendix B)
http://c.ymcdn.com/sites/www.ncrla.org/resource/resmgr/Advocacy/UPDATED_NC_Occupancy_Tax_Pro.pdf
What’s a Municipal Service District?
RFP published an excellent article on this subject way back in 2014 found here:
Suffice it to say that downtown property owners pay the highest property tax in the state to prop up Downtown Salisbury, Inc., which promotes downtown and regularly “puts on” events like “Friday Night on the Town” and “Slide the City” in order to encourage people to visit and spend money downtown.
The Empire Hotel Strikes Back
The MSD taxes used to be more than enough to support DSI and its programs until City Council member, Brian Miller decided that DSI should buy the old Empire Hotel. He just didn’t tell anyone it had an old dry cleaner site in it and it had failed a “Phase I Environmental.” Because of that, it just won’t sell. RFP has already run an article on that debacle and you can find it here:
Suddenly, DSI was saddled with 100K a per year debt service for an unsalable building and had a severe problem covering operating expenses. The solution? Our TDA was approached and agreed to cover about 80K per year in “marketing expenses” for DSI formerly paid out of MSD dollars and this allowed DSI to survive the Empire Hotel debacle. Why not, after all, City operatives just managed to double the TDA’s annual income in Raleigh, right?
The Empire Hotel Strikes Back
The TDA has been giving money each year to DSI without any questions, but suddenly they are requiring DSI to submit “grant applications” and specify how many “heads and beds” each event is likely to produce. At least one local merchant has filed a “butt-hurt” report over this in the local print media and predicted DSI’s pending financial demise. It is a valid issue in that most of DSI’s events draw folks within driving distance and probably do not result in hotel and motel stays and those are the folks that pay the special occupancy tax in the first place. Considering the statutory purposes (promoting tourism) established for the occupancy tax, their director is probably right in asking for this info.
In the end analysis, if Brian Miller, (a banker who should know better) hadn’t sold DSI and the City on a “dirty building” that can’t be sold, DSI would have $100K per year to spend on programs and infrastructure instead of being reliant on the TDA’s bail-out. Then again, folks just keep re-electing him.
