Myrtle Beach leaders: for-profit agencies usually haven’t, but can ask for accommodations tax money

Three for-profit agencies are among 32 groups seeking nearly $1.8 million in accommodations tax revenues to promote tourism-related events this year -- a change in the field of those asking for funds generally granted only to nonprofits.

Myrtle Beach City Council has not decided how much each agency will receive.

The council has typically approved accommodations tax (A-Tax) appropriations only for nonprofit agencies, according to city leaders, but giving to for-profit entities is not illegal under state law.

“It doesn’t have to be nonprofit. In the past, I don’t think we made any exceptions about giving to nonprofit organizations, but that’s just kind of council’s policy or practice,” said John Pedersen, Myrtle Beach city manager. “There is nothing that would legally prohibit a for-profit company from receiving A-Tax.”

The Carolina Country Music Fest, the Myrtle Beach Pelicans and NMB (North Myrtle Beach) Drag Strip, Inc., asked the city for a total of $442,000. The requests spurred some in the community to call a foul, saying the appropriations are supposed to go to nonprofits.

The state’s accommodations tax is collected when visitors pay to stay in area hotels and at other lodging. Under a state law on its allocations, 30 percent of a city’s allotment must be used “only for advertising and promotion of tourism to develop and increase tourist attendance through the generation of publicity. ... To be eligible for selection the organization must be organized as a nonprofit organization and shall demonstrate to the municipality or county that it has an existing, ongoing tourism promotion program or that it can develop an effective tourism promotion program.”

The remaining balance plus earned interest “must be allocated to a special fund and used for tourism-related expenditures,” according to another provision in the law that does not require nonprofit status. Funds can also be used for additional city resources like law enforcement, highway and street maintenance and beach renourishment, according to the law.

The city is asking for $7,491,746 in accommodations tax money; an almost 60 percent increase from last year’s approved $4,485,805. A majority of the increase is due to funding requests for extra law enforcement, traffic control, fire protection and highway and street maintenance.

“Everybody’s entitled to come and ask and then you take a look at each individual application and really look at the big picture that they’re going to bring to the table,” said Councilman Mike Chestnut.

If a for-profit company asks for money, Chestnut says he tries to find out what economic impact that company’s event will have on the city.

“I am open to look at any application,” he said, with a caution, “you can always ask for the moon, but that doesn’t mean you’re going to get it.”

The Carolina Country Music Fest has asked for $100,000 to promote its event; the first one last June drew an estimated 20,000 visitors a day to the three-day concert. Available three-day passes for the June 10-12 event this year are selling from $169 to $1,099 apiece.

According to the Myrtle Beach Accommodations Tax Advisory Committee, the $100,000 request makes up about 2.38 percent of the organization’s $4.2 million operating budget that it submitted to the committee.

Councilman Randal Wallace says he doesn’t necessarily have a problem with giving to a for-profit agency if the event it holds benefits the community.

But “I don’t know that I want to do it every year… The music fest was a big success,” he said, adding that it drew “huge crowds” that patronized local businesses and filled a lull the city typically sees in tourists after Memorial Day.

“I’ll be interested when we go back and listen (to this) more in-depth to what everyone thinks,” he said.

Myrtle Beach Pelicans told the board it had an operating budget of $33,290 in the for-profit organization’s application for $10,000 in tax appropriations.

According to the agency’s application for funds, the Pelicans want to use the $10,000 to advertise a new event at the ballpark.

“The focus of this particular marketing campaign is to provide additional programming for the Triple Crown Girls Softball Tournament and a Ripken Experience Girls Softball Tournament by hosting a game at Pelicans Ballpark between two professional softball teams from National Pro Fastpitch,” according to the application.

The event is set to be held July 28-29 and “will include two games over two days as well as a clinic operated by the NPF athletes.”

In its application, the Pelicans said the event will “provide a unique opportunity not only for youth teams traveling to Myrtle Beach, but for young local female athletes as well.”

“The NPF teams will also be in need of approximately 35 rooms per night over the course of their stay in Myrtle Beach,” according to the application.

“As I understand it, the A-Tax is supposed to be used to bring people (to the city), to put heads in beds,” said Councilwoman Mary Jeffcoat. “But we have to look at can for-profits make it on their own and make a profit? What’s the appropriate thing for the A-Tax money to do?”

Jeffcoat says she is interested in discussing the appropriation requests with the rest of the council to see how others feel.

Myrtle Beach City Council members heard the requests at a workshop last week, but no decisions in spending were made. At the workshop Jeffcoat urged the council to continue its traditional funding of arts and cultural events “because that was a part of the (tax) legislation when it was originally passed,” she said on Tuesday.

NMB (North Myrtle Beach) Drag Strip, Inc. asked the city for $332,000 in accommodations tax funds to help change the image of the Atlantic Beach Bike Fest through a marketing campaign and a unity concert. The campaign would play out in advertisements and billboards welcoming the crowds that come for Bike Fest, with warnings that those who act up will be locked up. The unity concert is envisioned to be held at the Drag Strip off of S.C. 90 in Longs.

The $332,000 request accounted for more than 87 percent of the Drag Strip’s reported operating budget of $380,000.

The Myrtle Beach Accommodations Tax Advisory Committee recommended city council give $100,000 to the Country Music Fest, $5,000 to the Pelicans and no money to the Drag Strip.

Wallace said the council will likely decide on final accommodations tax appropriations during its budget retreat in April.

This story was originally published January 26, 2016 at 6:14 PM with the headline "Myrtle Beach leaders: for-profit agencies usually haven’t, but can ask for accommodations tax money."