CONWAY — The Horry County Administration Committee wants the full County Council to consider forgoing a portion of its accommodations tax – funds typically used to support rural festivals like the Aynor Hoedown and the Loris Bog off – for the next five years in order to make up for the weak performance of the revenue guarantee the county entered in with Canadian airliner WestJet.
Though officials said dipping into those funds to make up a projected $570,000 shortfall in the guarantee will not impact commitments to those festivals and more, Councilman Marion Foxworth does not support the idea because he wants the county to find funds immediately instead of placing the debt on future council members and citizens.
The administration committee heard from Brad Dean, executive director of the Myrtle Beach Area Chamber of Commerce, at its meeting Friday. Dean outlined a plan to pay WestJet the money it is expected to be owed. First, the chamber will dip into a set aside fund from the accommodations tax to the tune of $250,000. It will then front the county the remaining $320,000, which is still a projection, and pay the airline the money the county promised the airline would make to get the airliner to serve Canada throughout the year – an unprecedented move considering all other airlines serving Canada fly to and from Myrtle Beach in the winter months.
The gamble, which assured the airline would make at least a 15 percent profit in its operating margin, proved costly for the county.
“From the standpoint of the taxpayers, this is not an ideal agreement,” Dean said after Friday’s meeting. “It’s probably not the type of agreement that we or the county would ever agree to in the future, but by using the accommodation taxes to reimburse for promotion, this protects the taxpayers, doesn’t require the county to raise taxes or touch any other funds and it won’t impact the promotion of unincorporated communities and the campgrounds. This money won’t impact those. In the current contract we have with the county, we specifically committed to a portion of those funds being spent on unincorporated areas of the county and also campgrounds, which is very important to the county’s accommodations tax.”
Canada is the top international market for Grand Strand tourism, and the area has long celebrated that relationship with the annual Canadian-American Days festival in March. The flights began in May and ran twice a week between Myrtle Beach International Airport and Toronto Pearson International Airport.
Based on passenger numbers, as reported to the airport by WestJet, the airline has flown over 3,200 passengers to the Grand Strand from May through August. During August 2013, the airline flew more people to the market than any previous month; almost 1,060 passengers, according to a previously published report. A survey taken by the Myrtle Beach International Airport found that the nearly 2,000 first-time visitors to the Grand Strand had an estimated $6.6 million impact on the economy.
Dean said he wanted to stress the risk the chamber is putting itself in by relying on a steady flow of accommodations taxes over the next five years, considering severe inclimate weather in the past has impacted the accommodations tax. Funds from that tax are used for out-of-market promotions.
“Our goal is to help you out of this situation, but to do so in a way that doesn’t require us to reduce the destination marketing plans for next year,” Dean told the committee. “We’re trying to figure out a way to meet all the needs – our responsibility to the businesses and also our partnership with you and WestJet.”
Councilman Foxworth said he doesn’t have a problem using the accommodations tax to reconcile this WestJet agreement, but he doesn’t like the idea of “pledging it for the next three to five years.”
“This is something we did last year and we ought to figure out a way to pay for it and move on,” Foxworth said. “I think we dug the hole for ourselves by not having the proper information from the agreement up front and not having proper oversight from staff when the agreement was consummated, and we dug this hole for ourselves and I think we ought to dig ourselves out of the hole and not obligate future councils and future citizens.”
Council Chairman Mark Lazarus said this is what the accommodations tax, often referred to as A-tax, is there for – out-of-market promotion.
“It’s there, it’s A-tax money and it’s for proper purpose and proper use,” Lazarus said.
The full council will vote on the issue at a future meeting, however, on Friday, it was not on the council’s posted agenda for its next meeting Tuesday.
Dean said there were several benefits of the inaugural year – including many first-time visitors and those who would not have normally flown to Myrtle Beach in the summer – and talks of WestJet’s future service to Myrtle Beach have already begun.
“We’ve already began discussions with WestJet about promoting the 2014 route,” he said. “That’s a good indication that they’re at least interested in coming back. Whether or not they fly here next year remains to be seen, but knowing the county has to fulfill this agreement one way or another, this is the lesser of several evils.”
Contact JASON M. RODRIGUEZ at 626-0301 or follow him at Twitter.com/TSN_jrodriguez.