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Sunday August 31st 2014

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Selling Paradise

INSIDE THE BED TAX BATTLE
by Jeremy Morrison

Sugar white sand. Sparkling emerald water. The Blue Angels, history and seafood. The greater Pensacola area has some pretty attractive draws.

Paradise has never been a tough sell. No one disagrees on that point.

The big debate in Escambia County is just who should be doing the selling. Or, more to the point, who should govern how the tourism development taxes, also known as “bed taxes,” are spent?

A Room Without a View

High above Pensacola Beach, the air tastes sweeter and the sky seems closer. Between the waves and infinity, the curvature of Earth almost reveals itself.
Julian MacQueen puts on his sunglasses and takes a deep breath. He walks to the balcony and takes it all in.

Down below, the beach is set up for the upcoming DeLuna Fest. It’s a big weekend. The festival has rented out all three of MacQueen’s hotels.

As CEO of Innisfree Hotels, MacQueen is a big player in the local lodging game. He estimates that his properties generate about a quarter of the annual bed tax in Escambia County. And he’d like more of a say in how those revenues are spent.

“This is not a new subject,” MacQueen says. “I’ve been talking about this for 15 years.”

MacQueen — along with his Inisfree partner Harlan Butler — operates the Hilton Gulf Front Hotel, Hampton Inn and Holiday Inn Resort on the beach, along with multiple other properties outside the area. With each room he rents, the hotelier collects an additional four cents in bed taxes for Escambia County.

Walking back inside, MacQueen passes through a large hall being prepped as one of the festival’s VIP areas. Not recognizing the CEO, a woman asks him to find someone to break down some cardboard boxes.

“I’ll take care of it,” MacQueen says, smiling.

The Holiday Inn at the beach is classy in a bikini-and-pina-colada kind of way. Flip-flop Zen at its finest. The kind of place Jimmy Buffett might like to hang out if he didn’t have his own hotel down the beach.

Tucked away off the lobby is the hotel’s restaurant, Riptides Sports Grill. Tucked away in the back of Riptides is a small meeting room. Tucked away in the meeting room are comfortable chairs around a table and glassy new Innerlight surfboards leaned against the wall.

Once the room’s door closes, the smell of salt and sand seem a hundred miles away. The laughter from the bar has given way to a rather serious silence.

MacQueen is one of the leading voices advocating for a restructuring in the way Escambia County’s tourism development tax is handled. He believes about half of it is misspent, and would like to see a private, industry-based, body manage the expenditures of the revenue generated from the tax.

“It would be simplified,” MacQueen explains. “Right now, we’ve got too many people in the kitchen.”

Currently, money generated by the tourism tax is handled by the county. It uses some of it to fund administrative costs, as well as supporting the Pensacola Civic Center, and passes the remainder along to the Tourism Development Council (TDC), which, in turn, gives the money to the Convention and Visitors Bureau (CVB), which uses the funds to market the area.

Taking up a pen, MacQueen draws several boxes and begins to label each, mapping out the current structure. There’s a box for the county commission connected by a bold line to another box for the TDC. There are also boxes for the Pensacola Bay Area Chamber of Commerce and the CVB. The lines become dotted and convoluted, with arrows pointing both ways.

“If you just hold these up at a distance,” MacQueen says, holding the sheet at arm’s length. “And just look at it and scratch your head and go, ‘really?’”

Exploring a Brave New World

Members of the hotel industry, primarily those doing business on Pensacola Beach, have raised concerns before. They have taken to referring to themselves as the “stakeholders” and actively push for the reform of business as usual.

“There’s some very direct and candid conversation that needs to be had,” said Dave Cleveland, a partner with Highpointe Hotel Corporation.

Over the past few years, there have been concerns raised over the use of bed tax dollars to fund the civic center, as well as the amount set aside for administrative purposes. In short, some members of the hotel community believe the tax money could be put to more productive use by a private, industry-based body.

“You throw this into the black hole of the government,” said MacQueen, “you get a very generalized idea of where the money goes.”

If the stakeholders get their Christmas wish list fulfilled, the entirety of the tourism tax dollars will be funneled through the TDC to an independent body made up of commercial interests.

“My definition,” MacQueen described his ideal scenario, “would be something that’s independent from the Chamber and the County.”

Escambia County Commissioner Grover Robinson said he considers the question regarding the Board of County Commissioners’ use of funds for administrative purposes a “black-and-white issue” that could be ironed out by a definitive reading of the Florida statute governing the tax. He said he is against handing over the entire four cents, but is open to a broader conversation.

“I want everything on the table,” Robinson said. “If we can do this better, shouldn’t we at least look at it?”

The Commissioner wonders if the Pensacola Chamber, which houses the CVB, is the best body to handle the county’s tourism needs. He wonders if they absorb too much of the tax revenue for operational costs.

“Our intent is not to support the overhead of the Chamber,” Robinson said.

The Pensacola Chamber, which houses the CVB, has pretty much deferred to the county. Donny McMahon, the Chamber’s chairman of the board, said it was “in their hands” but suggested conducting a study on the matter.

“You need a third set of eyes looking at it,” he said. “I like that idea, having a third set of eyes.”

TDC Chairman Denis McKinnon also see value in such an exercise.

“Hopefully, they will want to do a study on it,” he said.

MacQueen’s in no mood for more studies.

“I don’t understand the study at all,” he said. “I think there are three or four ways of doing this and we need to pick one.”

Money In, Money In

Guess what? Marketing works.

Ellis W. Bullock, III tapped excitedly on his computer keyboard. Above his desk hangs a star chart mapping the universe. As head of the marketing firm EW Bullock and Associates, he handles the tourism marketing needs of the county.

Scrolling through comparisons between this year’s tourist season and the last, Bullock grew excited. He called out percentage figures.

“I don’t know if we’ll ever see anything like it again,” Bullock said.

The tourism community is pretty jazzed coming off a record season.

“Everyone’s just talking, it’s been a super year during these bad economic times,” said Fred Simmons, owner of Paradise Inn.

In addition to the regular tourism tax dollars, this year’s marketing budget was swollen with BP penance money. Following the 2010 oil spill and subsequent fears that tourists might not want to vacation along an environmentally-fouled gulf, the British oil giant pumped ogles of cash into coastal coffers.

“There’s no question it’s the extra money,” Bullock said, explaining the record season.

Escambia’s tourism marketing budget was about triple what it normally is. It made a difference.

TDC Chairman McKinnon agreed.

“It was absolutely because of the BP dollars,” he said. “I don’t think you can look at it and say that the BP dollars didn’t have an impact on driving that.”

However everyone seemed to agree that those high-rolling days may be over. Bullock said he believed we had seen the end of the BP marketing grants, while McKinnon called the funding “dried up.”

Proponents of giving the entire four cents over to tourism marketing like to use the BP-funds-argument when discussing the possible shift in tax breakdown. They say the extra money–an additional 25 percent–would allow Escambia to better compete with surrounding counties that aren’t subsidizing civic centers and devote more dollars to straight-forward marketing.

“We’re being outspent two to one on both sides of us,” MacQueen said. “It’s like putting a billboard in the forest.”

Bullock said that if we didn’t step up our marketing game, we would find ourselves “sliding south.”

“We have somehow competed with two million, but there’s only so long we can do that,” he said.

United, Divided, Undecided

When a tourist thinks of the beach, they think of the beach. They don’t think of that other beach near the beach, or, certainly not, northern Escambia County.

“We should be advertising everyone together,” said Robinson. “I don’t care where you stay. I just want you to come to Escambia County.”

A little over 10 years ago, the county commission diverted a portion of the bed tax to the Perdido Key Chamber of Commerce for that area to create its own brand identity and recently more funds have been given to other groups to fund targeted events. It seems like everyone wants a piece of the bed tax pie. Some would like to see the funds pulled back in and the entire county advertised under one brand.

“Right now, you’re diluting it,” Commissioner Robinson told the IN. “The worst thing to do is to compete with yourself.”

He pointed to a photograph on his office wall. His family smiled down from the snow-covered ski hills of Summit County, Colorado. The four ski resorts in that county advertise as a group.

“Why don’t we advertise that way?” Robinson asked.

The Pensacola Beach hoteliers agree.

“You just can’t splinter the effort,” said Cleveland, whose company operates the Days Inn on the beach. “There’s definitely a value in a unified brand.”

Next door at the Holiday Inn, MacQueen’s on the same page.

“You cannot segment that money into separate pots,” he said. “If you did that your voice would be so muted.”

But there are obvious concerns with this route. If the area is marketed under a central umbrella, it stands to reason that the big-money draw would get top billing.

“We have different niche markets,” said Perdido Key Chamber of Commerce chair Allison Davenport. “You have to speak to your market. I don’t know how you can speak to your market when you have such a varied market.”

Bullock recognizes Perdido Key’s concerns. He agrees that each nook of the county does have its own hooks for tourists.

“It’s important to the people out in Perdido that they have their own brand out there,” he said.

While he grants a nod to individuality, Bullock said at the end of the day everyone needs to suck up their pride and rally behind a unified front.
“Pensacola’s the brand and that’s the brand we have to promote,” Bullock said.

TDC Chairman Denis McKinnon said he has yet to decide on the best way to advertise the area. He suggested conducting a study on the matter.

“I live up in Cantonment. I don’t have a dog in the fight,” McKinnon said. “It doesn’t matter to me.”

Out of the Woods and Up in the Trees

These issues have actually been explored for quite some time. A state investigation is currently ongoing into whether the discussion of such issues in a series of private meetings violated Sunshine laws.

Simmons, owner of Paradise Inn, calls the allegations of behind-closed-doors meetings “hogwash.”

“None of that was secret,” he said. “That was the biggest bunch of B.S. I’ve ever heard in my life.”

Over the course of the past several months, it has become apparent through a series of emails that members of the tourism-industry community have been actively discussing the specifics of a possible restructuring for some time. The discussions took place between members of the business community, county commissioners and tourism officials.

“I just don’t think the state attorney is going to find anything in regards to Sunshine violations,” Bullock said. “There’s never been any back-room deal.”

In an effort to protect the public, it is illegal for any elected official to discuss privately with a fellow official a matter which would come before them. While members of the TDC are not elected, they are appointed by the county commission, so the rule extends to them.

“I wouldn’t have done anything that knowingly would have created a Sunshine violation,” said McKinnon.

The TDC chairman and members of the hotelier group–the “stakeholders”–met individually with county commissioners. Robinson, who is on both the TDC and the county commission, said he stayed away from those meetings to avoid possible Sunshine violations.

“Denis McKinnon and his little group came by and talked to us about the structure of the TDC,” recalled Commissioner Marie Young.

Nash Patel, the TDC’s vice chairman and also a hotelier, avoided the meetings, too. He apparently sent his brother in his stead.

“Nash and Denis were extremely cautious and careful about the Sunshine Law,” said Bullock, adding that he didn’t feel the spirit or intent of the open-air law had been dodged. “There was nothing that this group was dealing with that was formal business before the TDC. I would never have looked at it as someone circumventing something.”

Bullock said he thought the back-and-forth barbs and Sunshine accusations, along with the ensuing state investigation, had thrown the entire momentum of the conversation “out of whack.”

“I hope we can get out of the woods and past who said what,” he said. “Let’s get above all this crap. Up in the trees again.”

A Tax is a Tax is Mine

MacQueen doesn’t seemed phased by the awkward swerve as of late. He calls it a “witch hunt.”

In his Riptide boardroom, the Pensacola Beach hotelier referred to the recent hiccups, including the state Sunshine investigation and muscled resignation of a high-level Chamber tourism official, as a “distraction.”

“It got interesting,” he noted as an aside.

But MacQueen remains focused on the task at hand – securing tourism dollars and ensuring they wind up in the appropriate hands.

In order to ensure that the best and brightest within the local tourism industry have a seat at the table, an independent body consisting of these leaders must be assembled. MacQueen is opposed to this new board being appointed by an elected body, such as the county commission — “no, absolutely not” — and doesn’t understand how it could be seen as any less accountable than the TDC.

“Just as a counterpoint,” MacQueen argued. “How accountable is the appointee made by [Escambia County Commission Chairman] Kevin White?”

The hotelier said the new board would be accountable to other people in his industry. Those are the people, he pointed out, that bring in the bed tax dollars.

“Maybe not to the residents,” he said, explaining who the group might answer to, “but anybody who has a commercial interest.”

MacQueen said he thought the board should be transparent but had no thoughts on the body adhering to Sunshine laws.

“Not having to deal with fully being in the Sunshine,” explained Bullock. “That’s a good thing sometimes, there’s some advantages to that.”

McKinnon said he thought that because tax dollars were on the table, any such body would be held accountable to Sunshine rules.

“In my opinion,” he guessed, “and I’m not an attorney.”

MacQueen’s reluctance to embrace the notion of operating in the full light of day could stem from his and his fellow stakeholders’ perception of the actual source of revenue in question.

“They kind of see it as their tax,” Bullock had explained.

The rough-sketch flow chart MacQueen had drawn earlier rested on the table in front of the hotel CEO.

“Generators of this money should be a large benefactor of this money so it can generate even more money,” MacQueen explained.

Opposite his chart mapping the existing structure, MacQueen had sketched out a chart representing his ideal setup. It features only two boxes– one for the county commission, the other for his independent body– with a broken line between them.

“It’d be a dotted line, but it wouldn’t be a hard line,” he said, pointing to the sketch. “Once they receive it, we’re suggesting they just pass it along.”

Commissioner Robinson believes the hotelier community offers an important voice, but acknowledged the county should stay involved. “It’s not their money,” he said.

MacQueen sees it differently. The bed tax is generated by the tourism industry, therefore it should stay within that circle.

“It’s not like a tax is a tax is a tax,” MacQueen said.

Conspiracy Theorist

Among the cries of Sunshine violations, was a charge of a backroom “tourism coup.” George Hawthorne, president of the Gulf Coast African American Chamber of Commerce, accused McKinnon and the hoteliers of leading a secret effort to restructure tourism marketing. He complained all parties were not being given a voice in the discussion.

“Let me bring it home,” Hawthorne laughed. “Let me tell you my theory. This isn’t even about the TDC. This is about the millions of dollars coming down the pipe from BP.”

Calling the now ‘dried-up’ funds “peanuts,” Hawthorne said that the current argument over who gets control of tourism dollars is focused on a much bigger prize.

“I know that’s it,” he said. “That’s what they’re fighting about, that’s what all this wrangling is about.”

Depending on how the federal government chooses to frame BP’s oil spill-fine obligation, the company could end up paying between $5 and $21 billion dollars. A bill is making its way through Congress that would keep 80 percent of the fines in the Gulf region. Of that money, the spoils would be divvied up between counties and some of it will certainly be used for tourism marketing.

“So, you’re looking at a sizable amount of money coming to Escambia,” Commissioner Robinson had noted.

The county commission plans to hold discussions in November on the issue of tourism marketing, and its possible revamping.