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Accomodations tax: Rules ease for groups seeking funds

By Charles Swenson
Coastal Observer

Groups that want a share of Georgetown County’s accommodations tax revenue will no longer need to come up with matching funds, and they won’t have to be nonprofits either under proposed changes to county policy.

“We want to change some of the restrictions that were hard to enforce,” said Will Dieter, who chairs the Accommodations Tax Advisory Committee. It reviews applications and makes recommendations to County Council. The committee approved the changes last week.

Scott Proctor, the county finance director, said the changes are also an effort to make sure the county stays in compliance with state law. Its accommodations tax grants are reviewed by the state Tourism Expenditure Review Committee, which can withhold funds from the county if it finds money has not been spent properly.

Other changes include:

  •  Making it clear that unused funds must be returned, but allowing groups with other sources of funds to maintain a reserve;
  •  Restricting funds for events to advertising and promotion;
  •  Allowing advance funding of projects rather than reimbursement;
  •  Discouraging grants for projects that aren’t ready to move forward.
The county is also considering whether to cut the time limit for spending funds from 15 months to 12 months and doing away with extensions to projects that don’t meet that deadline. The change in funding is intended to avoid running afoul of state law that requires the county’s funds to be spent within two years, Proctor said.

The county averages about $800,000 a year in collections from the state tax on short-term rentals, and is required to allocate 65 percent of that in grants for tourism-related projects.

Although Georgetown County hasn’t approved funds for festivals and events in recent years, the state oversight committee looks at those expenditures closely and rules out those that aren’t tied to promotion, Proctor said.

The county has always required unused accommodations tax funds be returned, but last year, it cut the allocation to the Litchfield Corridor Beautification Project because the group had a reserve fund. It hasn’t applied for money this year. The beautification committee argued that it was sound business practice to have a contingency, and that the surplus didn’t come from public funds.

That argument “was a good one,” said Council Member Jerry Oakley, who helped draft the changes.

Litchfield Beaches Property Owners Association, which gets an annual allocation to maintain beach accesses, also maintains a reserve fund. Oakley said the county couldn’t do the same work for the money it gives to the association, which matches the county funds with in-kind labor.

The county has required a dollar-for-dollar match of accommodations tax by grant recipients. But that was waived for public entities, such as the Sheriff’s Office and the Tourism Management Commission, the largest grant recipient.

“It’s a laudable goal, but in practice it is so difficult without a lot of waivers,” Oakley said.

Dieter said the committee will still consider whether an applicant has matching funds, but it will be able to focus more on the merits of the project “and its ability to bring tourists to the area.”

Allowing for-profit entities to receive accommodations tax grew out of a 2004 case in Myrtle Beach where the city awarded $10,000 to a business group to promote a fall biker event. The state oversight committee said it was ineligible because a state Attorney General’s opinion held that local governments can’t give public funds to private groups to spend. But an Administrative Law judge overturned the oversight committee, saying the city was directing how the money was spent: to advertise the bike rally. Even though the event benefitted the business group, all businesses in the city also benefitted, the judge ruled.

“There might be some event that would benefit tourism, like a golf tournament,” Proctor said, adding that the funds would be restricted to advertising.

“If it puts heads in beds,” Oakley said, “that should be enough.”

It the past, County Council turned down recommendations to promote the Waccamaw Golf Trail, a consortium of golf courses, because Litchfield Beach and Golf Resort was the only accommodation provider that belonged to the consortium.

The resort dropped out, but the county still didn’t fund it because most of the courses were owned or managed by Myrtle Beach National, which also owns the resort.

“What they were doing was good and worthwhile. The spectrum was not wide enough,” Oakley said.

The golf trail organizers argued that it draws people to the area who also spent money off the course. It has since developed a joint promotion with the Tourism Management Commission, with each contributing an equal share to a $60,000 campaign.

Oakley said the county wouldn’t fund a for-profit venture to further its own profitability, but he noted that the goal of increasing tourism and accommodations tax revenue directly benefits the accommodations providers that collect the tax.

“You get into some really interesting questions,” he said.

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