2008 Letter to BOCC on Tourism

Here is the first of two letters that Ellis Bullock referenced in his statement to the Pensacola Bay Area Chamber of Commerce.

The first is the 2008 letter from the TAC Chair John Panyko. Other names cosigned on the letter were Daryl Lapointe (Highpointe), Julian MacQueen (Innisfree), Andrew Rothfeder (Portofino), Beverly McCay ( Holiday Inn Express Pensacola), Joe McCay (Crowne Plaza), Ed Schroeder (Chamber), Robert Rinke (Portofino), Fred Simmons (Paradise), Joe Gilchrist (Florabama) and Ray Palmer (PSA)

It focuses on how the Escambia Board of County Commissioners has used, and possibly misused, bed tax dollars:

June 3, 2008

The Honorable Mike Whitehead, Board of County Commissioners District 1

The Honorable Gene Valentino, Board of County Commissioners District 2

The Honorable Marie Young, Board of County Commissioners District 3

The Honorable Grover Robinson IV, Board of County Commissioners District 4

The Honorable Kevin White, Board of County Commissioners District 5

Dear Honorable Commissioner,

Tourism is a primary economic engine for Escambia County. Our tourism economy consist of over three million visitors who generate more than $550 million in direct spending, over $130 million in lodging spending and support over 20,000 local jobs.

In recent years the private sector has made significant investments in new and improved facilities to accommodate our visitors. Escambia County Tourism Development  Tax revenues have increased by nearly 25 percent over the past two years. In calendar year 2007 total Tourism Development Tax revenues were $5,313,644, an all time record.

Yet preliminary estimates indicate available funds for the promotion and development of our tourism product for FY 2008/2009 will decline to an alarming level.

Our neighboring counties budget from two to four times the amount of Escambia County for tourism promotion, development and management programs. The well-funded effort of our coastal competition places the Pensacola area in a challenging and weak competitive position.

The original and primary intent of Tourism Development Tax is to generate funds for the promotion, development and management of our tourism product. As representatives of the Escambia County Tourism community we have concerns regarding the allocation, distribution and utilization of available tourism development tax funds.

We respectfully petition the Escambia County Board of County Commissioners to consider the following matters:

•           FY 2008/2009 Request Considering the projected short fall in available funds (due to an increased subsidy request from the Pensacola Civic Center) from the first three cents of tourism development tax collections allocated by the Tourist Development Commission, we respectfully request that the Board of County Commissioners allocate available funds from the forth cent of Tourism Development Tax in order to fully fund the request made by the primary agencies receiving funds from the first three cents.

•           Pensacola Civic Center subsidy: The proposed budget for FY 08/09 requests a 12.7 percent increase ($170,000) in the subsidy for Civic Center operations. This follows a 10 percent increase for the current budget year and an additional $168,482 for a “co-promote fund” that equates to an additional 10 percent resulting in a total subsidy increase of approximately 20 percent for the current year.

•           The subsidy requested follows a 2007 Civic Center Internal Audit Report, prepared by the accounting firm Carr, Riggs & Ingram that identified 33 items of concern and resulted in the Clerk of the Court stating that the Civic Center management contract with SMG “does not offer any incentive for SMG to operate in a fiscally responsible manner.”

We respectively request that the Board of County Commissioners take immediate steps to ensure that the Civic Center is managed in the most efficient and fiscally responsible manner possible.  This includes determining if the findings of the 2007 Audit report have been addressed by SMG.

It also includes the consideration of professional consultants or the establishment of an advisory board* composed of qualified business professionals for the purpose of reviewing Civic Center agreements and operations in order to determine if greater operational efficiencies can be achieved. (* See attached “advisory board” recommendation)

In addition to concerns regarding the operational efficiencies of the Civic Center there are other Tourism Development Tax matters that we respectfully request the Board of County Commissioners and the proposed Civic Center Advisory Board address. They are as follows:

A. Florida Statute section125.0104 titled: “Tourist development tax; procedure for levying; authorized uses; referendum; enforcement.”; Section (3), item I-2 states:

a county may impose tax in order to “pay debt service on bonds issued to finance the construction of a convention center.” However section 3, I-3 states; a county can “Pay the operation and maintenance costs of a convention center for a period of up to 10 years.” Only projects “completed after July 1, 2000 may use the proceeds of the Tax to pay operation and maintenance cost of a convention center for the life of the bonds.”

As Escambia County has paid for operation and maintenance cost of the Civic Center with Tourism Development Tax revenues for a period in excess of 10 years we respectively request that the Board of County Commissioners clarify if Florida Statutes allow for the continued subsidy of Civic Center operations from funds generated by Tourism Development Tax revenues.

B. Florida Statute section 125.0104 titled: “Tourist development tax; procedure for levying; authorized uses; referendum; enforcement.” Under Section 10 – Local Administration of Tax, item B-5 states: “A portion of the tax collected may be retained by the county for costs of administration, but such portion shall not exceed 3 percent of collections.”

Currently, Escambia County retains a total of  10 percent of collected funds of which half or 5 percent of collected funds are retained for administration cost. We are not clear, nor do Florida Statutes indicate, what allows the holding back of an additional 5 percent of the retained funds.

We respectively request that the Board of County Commissioners determine if Florida Statutes allow for the continued retaining of 10 percent of collected funds for such administrative cost.

C. Florida Statute 125.0104, section 3, I-4 states: “if  tax revenues are expended for an activity, service, venue or event, the activity, service, venue or event shall have as one of its main purposes the attraction of tourist”…

Based upon a review of the prior allocations of  tourism development tax funds it is our observation that policies currently directing the allocation, distribution and utilization of available tourism development tax funds are in need of a detailed review.

The process surrounding the allocation system of the fourth cent of the tourist development tax consistently calls into question even the most well intended selections. In addition, the lack of bright-line tests of what constitutes an appropriate “tourist development” expenditure and a consistent application of such rules raises additional questions and suspicions about the allocations made.

D. Not all organizations receiving tourist development taxes are equally accountable.  Certain organizations are required to substantiate all expenses and make themselves subject to audit.  The spending of tourist development taxes by other organizations goes unreported and unchecked. There is no reason why all tourist development taxes recipients should not be held to a single proven level of accountability and we request the Board of County Commissioners quickly establish reporting requirements that apply to all organizations in receipt of tourism tax funds.

We recognize that we have presented a number of concerns and we are grateful for your willingness to consider each. Of utmost importance is the available funding for the primary agencies for the upcoming 2008/2009 budget year. We would appreciate expedient consideration be given to our request for available fourth cent funds to be utilized to offset shortfalls from the available funds from the first three cents.

On behalf of everyone that works in the Escambia County tourism economy we

thank you.

Sincerely,

John Panyko
Chairman
Tourism Administration and Convention Committee

Recommendation – Pensacola Civic Center Advisory Board

We respectfully request the Escambia County Board of County Commissioners establish a standing Civic Center Advisory Board to assist in reviewing our and the community’s issues and concerns regarding the operational inefficiencies and financial status of the Pensacola Civic Center.  

We believe assembling a group of business professionals who can constantly review the operations and financial status of the Civic Center will provide the Escambia County Board of County Commissioners additional independent insight and recommendations not currently or otherwise available.

One behalf of the tourism industry, we suggest and recommend that such Civic Center Advisory Board be comprised of the following individuals: a Certified Public  Accountant, a finance professional (bonds, etc), a facilities management representative,

a promotional professional and a  representative from the hospitality industry.

Once seated, we ask that such Board be given unrestricted access to all documents and information regarding the Pensacola Civic Center that is in the possession of any party.  We also believe that such Board should be allowed to perform its duties free from as many administrative and bureaucratic restrictions as permitted under the law.

We also ask that the Board of County Commissioners fully and carefully consider all recommendations made by the Civic Center Advisory Board, especially those dealing with the potential release of tourist development taxes from the operational subsidy to and debt allocated to the Pensacola Civic Center.

We have no preconceived notion of what the Civic Center Advisory Board may discover in its work.  But, with the impeding massive cuts in the tourism marketing and promotion funding at a time when such funding is most needed, we hope such Advisory Board, the Board of County Commissioners and our tourism industry can structure permanent solutions and lasting alternatives to the financial status of the Pensacola Civic Center.