May 19, 2013

Hungry groups want their bite of Columbia’s meal-tax millions

The annual frenzy over who should get some of the millions in meal-tax revenue is even more intense this year as Columbia City Council retools how it spends the money and considers a new multimillion-dollar bond to pay for undisclosed “legacy” projects.

The annual frenzy over who should get some of the millions in meal-tax revenue is even more intense this year as Columbia City Council retools how it spends the money and considers a new multimillion-dollar bond to pay for undisclosed “legacy” projects.

City financial officials are projecting restaurant and bar patrons will pump about $9 million in such taxes into Columbia’s treasury during fiscal 2013-14 as more people go out to eat and drink in a recovering economy.

The jingle of all that cash has further stirred the appetites of community and civic groups that ask the city for a portion of that money each year.

As of late last week, requests have reached at least $10 million – and that’s before council discloses the full list of what it is calling “legacy projects” that are supposed to attract more tourists to the Capital City and further fatten its meal-tax revenue stream. Council even extended the deadline for applications through the end of the business last Friday.

Meanwhile, time is growing short for council to decide who gets how much. The first vote on next fiscal year’s budget is June 4. On Tuesday, council moves closer to big-ticket decisions as it tackles the budget again, including the list of requests for hospitality taxes, the legal name for meal taxes.

“I have urgency about it, but it’s about capturing the moment,” said Councilman Cameron Runyan, who keeps reminding council that interest rates are at record lows. “I think we can make that money work for us.”

This year, for the first time in a decade, council is debating whether to borrow against future meal-tax revenues, this time to pay for the legacy projects.

City staff has provided council figures for what it would cost to issue from $4.3 million to about $14.3 million in 20-year bonds. But council members might decide to borrow even more because interest rates are so low.

City Council has yet to decide on or even discuss in public the list of special projects it would undertake if it borrowed money against future revenue. But it has mentioned some contenders.

Aside from special projects, though, council traditionally has spread the regular stream of meal-tax money around.

Council doles out most of the annual pot itself, for expenditures ranging from park rangers and police officers who patrol entertainment districts to security cameras in those parts of town. Council might tap the fund next year to help pay for its plan to install 800 security cameras along thoroughfares and in about half the city’s parks.

Roughly one-third of the $9 million pot is allocated by a citizens advisory committee, though council ultimately must approve the “H-tax” committee’s decisions.

Council’s own pot

So far for next year, the total requested from the portion council allocates directly is about $3.8 million, or $2.1 million more than allotted this year from that pot.

The largest requests come from the EdVenture children’s museum ($1.6 million for new exhibits); the Columbia Museum of Art ($716,000 for a new entrance and interior construction) and the Historic Columbia Foundation ($771,000 for its tours and the 1963 Civil Rights project).

Other large requests include $300,000 from the State Museum and $180,000 from One Columbia, a city hall-affiliated group that seeks to coordinate marketing for arts organizations.

H-tax committee’s pot

About $2 million to $3 million of the overall revenue is delegated annually to the H-tax advisory panel.

Requests for next year from 82 organizations for that pot add up to $5.6 million. That’s $3.1 million more that what was allocated this year. Nineteen groups asked for money that did not seek any this year

The biggest requests to the committee come from the Nickelodeon theater ($600,000); the Columbia City Ballet ($476,000), the Five Points Association ($375,000), the Vista Guild ($280,000) and Columbia Classical Ballet ($250,000).

Council has tightened controls over the committee, which it appoints, as well as the money the panel distributes.

The $2.4 million the committee allocated this year is facing a cutback. Some on council have suggested stripping as much as $200,000 from that total and transferring that sum under council’s direct control.

In a series of moves directed largely at the committee’s work, council:

Required everyone who seeks money to file a formal application instead of bypassing the panel and going directly to council.

•  Forced groups to choose whether to use meal-tax money to pay for their marketing directors or to hire marketing firms – but not both.
•  Cut the number of restaurateurs on the panel and named new members who are in private business other than restaurants.

Began enforcing term limitations.

•  Required council to maintain a reserve fund equal to 10 percent of total meal-tax income, or $900,000 next year.

Legacy projects, borrowed money

The biggest change under consideration is whether to float a second, 20-year hospitality-tax bond. The city still owes about $13 million on money it borrowed through a 20-year bond in 2003.

Council members have talked in general terms about the size of the bond, but no votes have been taken.

Councilman Brian DeQuincey Newman has said he would support up to $20 million.

Last week, the city’s chief financial officer, Jeff Palen, gave a council committee an outline showing the cost of issuing bonds ranging in worth from $4.3 million to about $14.3 million.

Palen estimates the upfront costs of tax-exempt bonds would range from about $1 million for a $4.3 million bond to $1.7 million for a $14.3 million bond. Upfront costs include money that must be set aside for debt service and for the costs of issuing bonds.

During that discussion, Runyan pushed again for borrowing now.

“Everyone in this room will probably be dead when interest rates are this low again,” he said. “I believe this is something we need to do.”

Council has yet to decide or even discuss in public the list of projects it would undertake with borrowed money.

But it has mentioned some contenders and probable costs:

•  A whitewater park along the Columbia Canal. Depending on its size and features, the construction price ranges from $6.4 million to $10.3 million.

An unspecified “recreation catalyst project” in North Columbia. Council members will not discuss what the project is or its cost, saying plans are too preliminary.

•  A children’s splash pad at Finlay Park featuring the “Busted Plug” sculpture by Columbia artist Blue Sky. Estimates put the cost at about $750,000.
•  A baseball park in the proposed Bull Street neighborhood. Mayor Steve Benjamin once mentioned using meal-tax money for some of the unspecified construction costs, but nothing has been decided. Neither the city nor Greenville developer Bob Hughes, who is buying the land, have disclosed specifics about a ballpark.

Palen told a council committee last week that the law requires the city to settle on which projects it wants to finance before it can issue bonds that use public money.

The committee said it wants the city to appoint two advisory groups on legacy projects. One group would be experts who would vet the proposals, including evaluating the return on the city’s investments and how many tourists the projects would attract. The other would be public forums at which private citizens could express their views on projects designated for construction.

Council has until June 30 to finalize all budget decisions.

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