Myrtle Beach Downtown redevelopment group searching for ways to increase revenue

If something doesn’t change within the next year, Myrtle Beach’s Downtown Redevelopment Corp. will be broke, the group’s executive director said.

“We’re going to be broke next year,” DRC Executive Director David Sebok said Wednesday during a meeting with members of the Oceanfront Merchants Association. “We go $210,000 in the hole next year if something doesn’t happen. ... What you and the DRC board has been told for the last three years is all we have is parking meter revenues. And it’s not growing.”

The DRC approved a budget June 11 where it is expected to spend $2.4 million next fiscal year, which begins July 1, and has estimated its revenue at almost $1.5 million. Almost $1.2 million of that revenue is expected to come from parking meters and pay stations.

There are 1,861 parking meters and 18 pay stations in commercial areas on and near Ocean Boulevard from 29th Avenue South to 75th Avenue North.

In the 2013-2014 fiscal year, nearly $1.2 million is expected to be collected from parking. The DRC expected to collect $1.1 million from parking revenues in fiscal year 2011-2012. Nearly $974,000 had been collected by May 31, 2012, according to budget documents provided to The Sun News.

DRC Chairman Chuck Martino said he’s warned board members the past few years that they can’t keep spending money the way they have been.

“If we don’t bring in more revenue or reduce expenses, [it will cause problems],” he told DRC board members during their June 11 meeting. “For revenues, you have meters that have a flat rate that’s available to them. The only way to increase revenue [at meters] would be if City Council decides to raise meter rates.”

Parking rates increased 25 cents to $1.50 per hour at short-term meters with the 2012 season when meters went in service that March. Long-term parking rates also increased 25 cents to $1 per hour. The DRC collected about $896,000 in parking revenue in fiscal year 2010-2011, the last full fiscal year at the lower rate.

“Now essentially with flat revenues and because of increased private sector competition, we’re expecting a pretty flat revenue stream for the years coming ahead,” Sebok said.

Sebok said the DRC also used to have profitable partnerships with private parking lots that allowed the group to bring in additional revenues between 2007 and 2012. That additional revenue could be set aside in a fund balance, of which some has been used to pay for things the DRC needs or wants.

“We’ve been funding all of these things through the profit that we have built up years ago,” Sebok said.

Increasing revenue

The DRC has been trying to generate enough support to encourage City Council members to create a municipal improvement district in the downtown area.

Sebok said he understands, however, that council may be reluctant to impose an additional tax increase on those in the downtown area after increasing property taxes for all city residents by 3 mills to 69.1. The tax increase, which would raise about $900,000, will pay for the salaries, benefits, equipment and training of 10 new police officers that would patrol the waterfront area and the south end of the city.

If a MID were created, owners of land and commercial businesses, including rented residential properties, would pay more in taxes for a number of years. That money would, in turn, be earmarked for use only on an approved list of projects that benefit the DRC.

DRC members have suggested projects ranging from building new parking garages to reconfiguring roads at Five Points – where U.S. 501 becomes Main Street and converges with Kings Highway – to purchasing blighted or vacant property.

Sebok said money collected through the MID would free up money in the group’s budget and enable them to do more capital improvements and enhance services.

But some council members have expressed concerns with increasing taxes any more.

“If I was a DRC member, I would want a MID,” Councilman Philip Render said. “As a City Council member I’m not interested in levying more taxes on property owners in that district.”

Councilman Michael Chestnut also said several property owners have called him and other council members expressing their disapproval over raising property taxes downtown through a MID.

DRC members formed a committee to solicit feedback from property owners in the downtown area and have said they hope to present a proposal to City Council by the end of the summer.

Street improvements

When the DRC learned that a planned project improving the streetscape and burying utilities along Ocean Boulevard from Second Avenue North to Ninth Avenue North would be pushed back at least two years due to city budget constraints, board members voted to increase the group’s financial support.

Sebok said the group already planned to contribute a total of $291,000 toward the city’s nearly $10 million project. The board voted to increase that support to about $800,000 over the next three years to keep the project on schedule.

“The people in the south area were expecting these improvements,” Sebok said, adding that Ocean Boulevard improvements have been completed in all other areas of the DRC. The DRC area includes the area from Sixth Avenue South to 16th Avenue North, from the Atlantic Ocean to Oak Street and Broadway Street.

The two-year project will include refurbishing water and sewer lines and installing new sidewalks, curbs and gutters, assistant city manager Ron Andrews said, as well as putting overhead utilities underground.

City staff is putting the documents in order with plans to put it out for a bid in time for a contractor begin work in September, Andrews said. Work would be done between Labor Day and Easter, he said.

That was an additional expense DRC members hadn’t expected.

“That section of the boulevard is where there’s some interest in redevelopment occurring and we don’t want to do anything to hinder that,” Andrews said. “If the private property folks are wanting to redevelop in that area the public infrastructure around it should be ready for them.”

The DRC appropriated $315,000 in fiscal year 2014-2015 toward the project, with another $315,000 the following year and $170,000 the year after.

Making cuts

But spending that additional money was one of the factors that led the DRC to make some cuts, including decreasing it’s financial support of the Oceanfront Merchants Association by $90,000.

OMA, which was created by a number of Ocean Boulevard area businesses shortly after the closing of the Myrtle Beach Pavilion in 2006, hosts a number of events and festivals throughout the year.

Next fiscal year OMA will receive about $173,000 from the DRC toward its nearly $780,000 in expenses during the calendar year. DRC funded OMA at $280,000 in the 2013-2014 fiscal year. DRC gave OMA $296,000 in fiscal year 2012-2013 and $330,000 in fiscal 2011-2012 according to budget documents.

When considering its budget, Sebok recommended and board members agreed that the DRC contribute up to 25 percent of the costs to organizations seeking funds to hold special events in the downtown area.

DRC points to OMA as an example of businesses owners coming together to improve the experiences of those visiting the downtown area, and Sebok said DRC hopes to also improve things in blighted parts of town, such as the south mixed-used area from Second Avenue North to Seventh Avenue North between Kings Highway and the Atlantic Ocean.

“We could always say that taking care of the south end and revitalizing down there is no longer a priority and we are just going to worry about special events,” Martino said during the June 11 meeting.

The DRC also pulled money from its business interruption fund, which would be used to cover necessary costs in case of a hurricane or other “devastating event” that damaged the area.

“In order to balance the budget we decreased the amount of money in the fund from $330,000 to $125,000 to maintain the level of enchanced services and meet our [financial] obligations with the city for major capital improvements,” Sebok said.

Annual expenses

While parking is the DRC’s largest revenue generator, managing it also is the group’s largest annual expense.

In the 2014-2015 fiscal year, the DRC expects to spend about $371,000 on the day-to-day costs of operating the meters, including the labor, materials and equipment.

They expect to spend nearly $350,000 on meter management when this fiscal year ends in June, and spent $354,000 in the 2012-2013 fiscal year.

In addition to the funds projected for Ocean Boulevard streetscape improvements at $315,000, they will spend $247,000 in salary and personnel costs for its two full-time employees – Sebok and an executive assistant.

The budget plans for about $137,000 to be spent on restrooms – both to maintain a new permanent facility set to open this summer and renovate a restroom trailer – and $100,000 on boardwalk and Ocean Boulevard services.

Sebok said that money is spent to maintain the level of cleanliness and safety that visitors expect.

“Visitors to any place want and expect and notice a sense of cleanliness, safety and enjoyable activities,” he said. “These public amenities need maintenance and they’re not your typical sidewalk or boardwalk or streetscape. ... The intensity of use combined with the harsh physical – salt, sun and wind – mandates that we provide these enhanced services.”