Richland hospitality tax

Richland County rethinks hospitality tax – and what constitutes a tourist attraction

dhinshaw@thestate.com August 25, 2013 

cityskyline013

TIM DOMINICK — The State Newspaper

  • A decade of hospitality taxes Revenues from the 2 percent tax on restaurant meals in Richland County generally have increased each year. In 2010, Richland County Council cut the tax in half but raised it again in 2012.

    2004: $3.6 million

    2005: $4.4 million

    2006: $5.1 million

    2007: $5.2 million

    2008: $5.3 million

    2009: $5.2 million

    2010: $2.7 million

    2011: $2.8 million

    2012: $5.6 million

    2013: $5.7 million (estimate)

    SOURCE: Richland County

  • Feasibility studies approved Richland County Council agreed to pay consultants $420,000 to study these projects at the request of six council members who chose these amenities for their districts:

    Multipurpose amphitheater in Kelly Mill Road area, where Richland County Recreation Commission owns land — Julie-Ann Dixon ($100,000 for the study)

    Volleyball/basketball complex on Bluff Road — Kelvin Washington ($90,000 study)

    Water park on county-owned land at Farrow and Hard Scrabble roads — Torrey Rush ($90,000 study)

    Swim facility on recreation commission property on Garners Ferry Road (or on county-owned Caughman Pond property) — Norman Jackson ($80,000 study)

    Additional baseball fields at Friarsgate Park or multipurpose amphitheater — Bill Malinowski ($30,000 study)

    Multipurpose amphitheater — Joyce Dickerson ($30,000 study)

    SOURCE: Richland County

Ten years ago, when Richland County began collecting a tax on restaurant meals, the plan was to spend the bulk of the money on three proven tourist attractions in Columbia and to build two new destinations in the suburbs.

Now, after killing those two projects in the suburbs, some on County Council want to revisit the entire plan.

They have expressed interest in building at least four recreational centers in the suburbs – leaving their colleagues to speculate that multiple new attractions would mean cutting money historically devoted to the Columbia Museum of Art, Historic Columbia Foundation and the EdVenture Children’s Museum.

Already, the council has committed $420,000 for consultant studies of six new venues that council members say would attract tourists to their districts.

Increasingly, council members have shown a willingness to fund events in the county’s suburban and rural areas, saying they want to look out for county interests and promote its “uniquely rural” side.

The difference of opinion on how best to spend H-tax funds highlights a division between urban and suburban members on the 11-member council, as well as attitudes between longtime and newly elected members.

Members Norman Jackson and Kelvin Washington say building attractions in Lower Richland would make up for years of neglect.

Washington, the council chairman, said his colleagues’ decision to abandon a $21 million, 206-acre soccer tournament park in Northeast Richland last year demonstrates a new intent for spending tourist dollars. “We could not do one major complex,” he said, “so why not spread it around the county?”

But change, if it comes, may not come easy.

Veteran council member Greg Pearce said the county made a deal with city-based museums that enhance quality of life. “I’ll fight to the death, but I could very easily lose,” he said.

If recent trends in restaurant tax funding are any indication, Richland County Council will be wrestling with district politics and historical allegiances for months to come.

‘A free-for-all’

Council uses a hospitality tax advisory committee to allot a small portion of the H-tax money, but leaves the largest pots of money to spend on its own.

This spring, the citizen’s committee reviewed detailed proposals by 43 nonprofit groups requesting $2.1 million to support their events.

But the advisory committee had just $321,650 to work with – less than 5 percent of the $6.6 million the council appropriated for the year.

Instead, it was the 11-member council that decided who would get most of the available H-tax money, $2.9 million. The rest, about $3 million, was already committed.

The 2 percent hospitality tax is collected on restaurant meals in Richland County and used to promote tourism by developing destinations and events to attract visitors.

Based on The State newspaper’s analysis of figures provided by the county, the council approved nearly one-third of the money for groups that had not requested money from the H-tax committee.

That means the county did not have an application on file showing how the groups would spend the money until later, said Sara Jane Salley, grants and community impact manager.

The unvetted groups were voted on by the council, one by one, with individual members negotiating their requests.

“Being a new member, I’ve seen where council members may say that things work a certain way as it relates to hospitality, and then I see it go out the window when the will of the council goes another way,” said Councilman Torrey Rush. “I’m still trying to figure that process out.”

“It’s a free-for-all,” Councilman Jim Manning said.

But some observers, and even some council members, question whether all of the groups that received money qualify for H-tax money, which under state law must be used to bring in tourists.

This year, the council devoted 76.5 percent of the available $2.9 million to groups and events held in unincorporated areas of the county, the newspaper’s analysis showed. Last year, the proportion was flipped: 79 percent of the available money went to tourist events held in Columbia.

In 2012, the council allocated 53 percent for groups in the city and in 2011, 59.5 percent for city groups.

The percentages are noteworthy because in 2011, a council-imposed rule went into effect requiring its Hospitality Tax Advisory Committee to devote 75 percent of the money under its influence to unincorporated areas.

Now, Councilman Norman Jackson wants the council to extend that rule to all restaurant-tax expenditures. His main argument is that the city has its own H-tax program and doesn’t spend any of the money on events in the county.

A legal definition

Jackson’s idea could be aired in an ad-hoc committee formed to sort through competing ideas and agendas.

The committee already has dispatched with the decision on which of the council-generated park ideas should be studied by consultants – answer: all of them – to see if they would be successful.

Two other major decisions await the group when it gets back to work Sept. 16, said Manning, chosen by his colleagues as committee chairman. One is deciding whether to add more recipients to the list of three city museums that automatically receive H-tax funds, and the other is to evaluate whether the amounts they receive should stay the same.

Some suggest the county-owned Township Auditorium should be added to the city groups.

But entering the mix for funds are some new suburban projects.

Already, Jackson has garnered support for a recreational addition to his southeast Columbia district: Caughman Pond, also known as Pineview Lake.

The county purchased the property along Garners Ferry Road two years ago for a park where people will be able to fish, walk or picnics. So far, it has devoted $2.3 million in H-tax funds to the project — though council has not determined who will run the park or where operating expenses will come from. Jackson said the park could open this spring.

But a key question is whether Jackson’s park – the first of what could become several built around the county in coming years – qualifies as a tourist attraction. After all, that’s the purpose of the hospitality tax, which the General Assembly allowed cities and counties to collect in 1997. The revenues must be used to generate tourism, making the tax palatable to the restaurants that collect them.

Many define a tourist as someone who travels from at least 50 miles away to attend an event or attraction. But when it comes to building tourist attractions with H-tax money, state law says only that cities must attract people from outside the city and counties must attract people from beyond “the immediate area.”

The Columbia Hotel and Motel Association is monitoring city and county use of hospitality funds, said Steve Graves, a local hotelier and chairman of the board. It objected when the city of Columbia recently wanted to use H-tax funds to buy a historic building, for example, and when some on County Council first brought up setting aside H-tax money for what were then unspecified projects in suburban districts.

Graves said the group has a stake in seeing to it that attractions and events bring “new” money into the community from visitors who eat at restaurants and stay at hotels.

“A politician needs to make their constituents happy, and funding a project very near and dear to constituents’ hearts does that, but it doesn’t necessarily meet the letter and the spirit of the law,” Graves said.

Not every festival qualifies as a tourist event, he added.

Working it out

While much of the current debate has to do with funding large venues requiring potentially expensive operating and maintenance budgets, small festivals and signature community events receive much of Richland County Council’s attention and funding.

Councilman Bill Malinowski said he’s been disturbed to see allocations increase each year for gatherings such as the Sweet Potato Festival, which requested $135,000 and was granted $60,000 this year; or the Sparkleberry Country Fair, which requested $24,000 and received $30,000.

“They’re not really tourist events,” Malinowski said. “They don’t appear to me to be trying to draw tourists in.”

While the county needs to support events in the rural areas, he said, it also must acknowledge that more people go to the museums that the council has always funded. It would be foolhardy to cut the attractions most popular with tourists, he said.

Still, Manning said it makes sense to re-evaluate the funding formula that has the county automatically devoting more than $1 million, every year, to three destination spots in Columbia without weighing the level of support each receives.

Reach Hinshaw at (803) 771-8641.

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