Henderson County BOC meeting about FRP: All shook up

From the Hendersonville Lightning:

Here are excerpts from public debate, comments and interviews by the Hendersonville Lightning about the Flat Rock Playhouse and proposed occupancy tax.

County commissioners discussed the proposed 1-cent hotel tax increase on July 18 but took no action. [Ed. - it is a 1 percent, not a 1-cent, increase (and a 20% tax rate increase, from 5% to 6%)] Commissioners set a public meeting on Aug. 8 at 1 p.m. to take up the issue again.

Public comment (from the July 18 Henderson County BOC meeting)

Steve Carlisle (former Playhouse actor, theater professor at Western Carolina University): The primary responsibility of any board of trustees is a fiduciary responsibility of financial success. In 2005 the theater had a surplus, and then they had this board of trustees come in, and we know that they have lost $1.4 million in 2010, and we haven't seen the numbers for 2011. But the (IRS form) 990 for 2011 should be out in about a month and that should tell us whether they've been successful in their business practices or not. And what are those business practices? Here we go into a recession in 2008, or 2005, and they raise ticket praises, they raise salaries of employees, they hire more year-round employees, they open a satellite theater downtown, during a recession and are now in discussions about opening another theater in North Myrtle Beach, S.C. I see nothing wrong with making money in theater; for 57 years Mr. Farquhar did that. He did it by putting on the kind of entertainment that the people wanted to see at a ticket price that people wanted to pay. If you don't have a good product and you don't have it at a good price it's not right for the taxpayers of Henderson County to have to pay for that, or the tourists that come here.

Vincent Marini, Playhouse director: It's not fair, we agree, to pass a tax when we haven't had the opportunity to present an honest straightforward plan to you or to the other people that the tax affects. The inns and the hotels are some our greatest partners in this community. We support everything that they do. And we believe that with the right information, and by telling them how we're going to use these funds to help everyone in the community we think we can develop a sense of consensus around this. I think it's very important you give us the time to show you how these funds are going to be expended and also to show the inns and hotels what that tax would go for and how it would benefit them.

Commissioners debate

Chairman Tommy Thompson: There's been all kinds of statements that have been made, none of which have been totally and completely in my opinion verified either way. It would be for the sole purpose of a forum, not for the public but for the Playhouse and its management, its tax people, its attorney, the chairman of the board, and this board have a forum, and that's hash all this out and let's air all this information and make sure we understand what the status of these things are.

Larry Young: I have been doing a lot of homework on this. When I was with General Motors they taught me how to do a double entry financial statement. I can show you a lot of things in these that says it's bad business management, and one is raising salaries... When you go into this bad economy, you have to cut your expenses, they have increased their expenses drastically. One of the things is Mr. Marini's salary. It went from 2009 at $44,000 in 2010, to $103,000.

Vincent Marini (from the back of the room): That's not accurate. I wasn't here.

[The $44,000 figure Young cited was four months salary.]

Young: They're gonna take our occupancy tax money and take it to North Myrtle Beach for the Playhouse down there. How you going to separate that? I'm bringing information that needs to be out to the public. ...

Read it all. The August 8 meeting should be fun.

Flat Rock Playhouse beach proposal draws fire from critics

From the Hendersonville Lightning:

FLAT ROCK — Flat Rock Playhouse administrators have been negotiating with businessmen in North Myrtle Beach a plan to bring shows to the beach but have no plans to own a theater there, the Playhouse director and a chamber executive at the beach say.

News that the Playhouse is considering taking shows to the beach has further electrified an already emotional debate over the Playhouse's financial condition amid a pending decision on granting the theater proceeds from a 1-cent occupancy tax increase. [Ed. - 1-percent occupancy tax increase, not 1-cent (and that makes it a 20% tax rate increase, from 5% to 6%)]

During a turbulent Board of Commissioners meeting last week, Playhouse critic Steve Carlisle [former Playhouse actor, theater professor at Western Carolina University] said that Playhouse leaders "are now in discussions about opening another theater in North Myrtle Beach, S.C." County Commissioner Larry Young, who is leading the charge against giving the Playhouse $225,000 a year from the tourism tax, echoed Carlisle's concern. "They're going to take our occupancy tax money and take it to North Myrtle Beach for the Playhouse down there," he said.

Playhouse critics have got it wrong, the theater's producing artistic director, Vincent Marini, and the chamber official at the beach said.

The Playhouse would not own or invest in the theater, the chamber CEO, Marc Jordan, said in an interview with the Hendersonville Lightning. He said talks have been under way for about 18 months mainly with Marini on behalf of the Playhouse. "We're very interested in it," Jordan said. "We would like to open a venue that would provide a number of performances here for family entertainment. It would be like Flat Rock at the beach."

Jordan said a group of investors has been working to draw up a business plan for the theater, although it has not yet found a performance space it could remodel for Playhouse productions. Jordan disputed the claims made here that the Flat Rock theater is exporting local money for a high-risk venture.

"I can assure that that ain't the deal at all," he said. "That is not at all what they have in mind. It's a revenue generator for them at no risk."...

Read it all, and take a look here. In my opinion, just because the Flat Rock Playhouse won't own or invest in theater space at Myrtle Beach doesn't mean that occupancy tax money won't go to help put on performances there, such as using tax money for travel and/or lodging, etc. It also benefits businesses in Myrtle Beach (restaurants, hotels, shops, etc.) located around wherever they end up finding theater space.

It wouldn't matter if this were just a private business using their own funds, but in this case, tax money is being used, with the proposed tax increase only affecting the lodging industry in Henderson County, and possibly benefiting the lodging industry in Myrtle Beach.  

FRP update: Henderson County BOC examines Playhouse's finances

The power to tax is the power to destroy.

- Daniel Webster (1819), McCulloch v. Maryland

From the Times-News:

The chairman of the Henderson County Board of Commissioners said last week he continues to research the fiscal management of Flat Rock Playhouse, and that what he learns likely will decide his vote on whether to raise the county's hotel occupancy tax to help fund the theater.

The board decided during its July 18 meeting to postpone its vote on a proposed 1 percent room tax hike until a special-called meeting Aug. 8, when commissioners, the Playhouse, local municipalities and members of the accommodations industry can have their say on the matter.

A brief agenda has been posted on the county website for the 1 p.m. meeting, which will begin with comments from the public.

“In my opinion, to make a decision (July 18) would have been very foolish for the simple fact that I didn't have all the information, and quite frankly, I don't think the rest of the county commissioners had all the information either,” Board Chairman Tommy Thompson said last week. “They don't and I still don't. And until I can garner all the information that I think is necessary to make a decision, I'm not going to make one.”

Finally, realization that it's not a good idea to raise taxes when no one's sure why or what for (and when the economy is down).

Thompson, however, expressed concern about Playhouse tax records and said he would vote against the room tax hike if it was determined that the nonprofit has exercised poor business management. He said that after reading through the Playhouse's 990 tax forms, he noticed a “tremendous amount of expenses” and a “great shift in spending” in 2009 and 2010, though he acknowledged it could be due to the opening of the theater's downtown Hendersonville venue.

And will the Playhouse have filed their 990 for 2011 before a decision is made on increasing the occupancy tax? I don't see how the commissioners can commit tax money to any group without having available to the public the most recent audited tax data.

Thompson added that many in the public have come to premature conclusions about the matter before the Playhouse has had a chance to present its case.

It will at the Aug. 8 meeting.

But initially it seems as though the commissioners were going to vote on this without the Playhouse presenting its case. It is only because of the concern expressed at the July 18 BOC meeting that it was decided to let the Playhouse address those concerns.

Producing Artistic Director Vincent Marini said last week that financial records will reveal “we had some really good years; we had a really bad year in 2010; we improved a lot in 2011; we've come even further in 2012 — we had a surplus in 2012 — and it's like any other organization that was facing a very difficult economy.”

According to unaudited financial statements the Playhouse provided the Times-News last week, the Playhouse had a $1.4 million net operating shortfall in 2010, with $3.2 million in revenue and $4.6 million in expenditures. The Playhouse whittled its deficit to just more than $500,000 in 2011, while a financial summary to date this year shows a projected $60,000 surplus.

So if the Playhouse has a projected surplus for 2012, why do they need taxpayer money now? And how will it be used? (And why is the Flat Rock Playhouse the sole beneficiary of the tax increase?)

Marini said, however, that he thinks all the talk about the Playhouse's finances has become a distraction from the issue at hand, which is how the Playhouse would utilize the roughly $450,000 in additional funding it would receive over two years if the room tax increase passes.

“I'm really having a difficult time understanding what this other discussion is about,” Marini said. “I mean, we've been so public about everything that we have done and what we need, etc., over the past couple of years, I'm having a difficult time understanding what everybody thinks is going to come from this other stuff except for wasting our time and everybody else's time...."

So it's a waste of time for the accommodations industry to ask why taxes are going up that will affect their ability to attract paying guests? It's a waste of time for county taxpayers to ask if the private business recipient of tax money will be a good steward of that money? I'm sensing a whiff of entitlement here that's very unattractive. 

Hendersonville City Councilman Jeff Collis expressed support for the Playhouse, though he said the new Henderson Travel and Tourism Authority — on which the city will have three representatives — should decide where the extra room-tax revenue goes rather than automatically giving it to the Playhouse....

So is the county raising taxes just because it can? It seems as though no one really knows what this money is going towards but they're for raising taxes anyway.

“I really feel like they've been demonized over this whole thing,” Collis said. “You can't really single out any one particular agency for requesting funds. I hate a lot of the stuff that has come out of all this, because they really do a good job out there. It's a top-notch facility, and I don't want to see them demonized. To have people (accuse the Playhouse) of bad business practices — I don't agree with that for a minute. You can scrutinize a lot of different agencies with the economy the way that it's been.” 

I don't think the Playhouse has been singled out for requesting funds--I think that because they, a private business, have requested money from a tax increase, the commissioners should do their due diligence and make sure this is the right thing, economically and politically, to do.

Does Mr. Collis just hand out taxpayer money because a group asks for it? Doesn't he check to make sure any group he gives tax money to will use the money wisely?

During the July 18 meeting, however, Commissioner Larry Young — an outspoken opponent of the room tax increase — said he, too, has examined the Playhouse's 990 forms and found they revealed poor business management. He told the Times-News last week that he invited the Playhouse's Board of Trustees to discuss the matter, “and see if they recognize the problem,” but he didn't get an immediate response....

Young wanted to disclose his findings on the Playhouse's finances during the July 18 meeting, but Thompson said it needed to wait until the special-called meeting when all parties involved could be heard.

“There's a lot of questions that need to be answered at that meeting,” Young said, “and I plan on asking them.”

Read it all. August 8 should be fun.

Henderson County BOC August 8 agenda [UPDATED]

From the Henderson County website:

AGENDA

Henderson County Board of Commissioners

1 Historic Courthouse Square, Hendersonville, NC

Wednesday, August 8, 2012

1:00 p.m.

SPECIAL CALLED MEETING
A forum REGARDING the levy of a 1% Occupancy Tax

WELCOME

PLEDGE OF ALLEGIANCE

PUBLIC INPUT (Decision of time limit to be determined by the Chairman at the start of the meeting)

PRESENTATIONS

A. Flat Rock Playhouse
B. Accommodation Businesses
C. City of Hendersonville
D. Town of Fletcher
E. Village of Flat Rock
F. Chamber of Commerce

BOARD DISCUSSION

ADJOURN

I see nothing here about the commissioners taking a vote on the matter, but I don't know if during the discussion time, they would be able to do that. From the Times-News story this morning, it seems as though they won't, but it is unclear.
UPDATE: I take that back--from the news story, it seems as though the commissioners will take a vote. It's still a little unclear, so if anyone knows for sure, let me know. 

More concerns about the proposed occupancy tax increase

A letter sent to the Henderson County Board of Commissioners and the Flat Rock Playhouse by Jack and Linda Grup, owners of the Highland Lake Inn and Seasons Restaurant, about the proposed occupancy tax rate increase (received via email, most boldface is mine):

Gentlemen,

I am writing to you to ask a number of important questions and to respectfully request that the Commissioners not approve the new 1% addition to the current 5% occupancy tax rate, as currently proposed, that is intended to be delivered directly to the Flat Rock Playhouse.

My wife Linda and I, and our businesses, Highland Lake Inn and Season’s Restaurant are huge supporters and business partners of the Flat Rock Playhouse (FRPH). We have had a strong and effective partnership over the past 13 years. This partnership certainly assisted our dynamic growth at Highland Lake Inn every year through 2007. We also hope and believe that this partnership and marketing cooperation assisted FRPH’s success over those years to some small degree.

2008 was the beginning of the Great Recession. From 2008 through 2010 our business got 30% smaller in sales. Our reaction to this was to also reduce our operating costs. We got smaller in reaction to the dramatically reduced sales.

It seems to us that FRPH management took a different approach in the face of the challenge of the recession. They grew in size by implementing a second venue downtown and by building the YouTheatre. Both very admirable endeavors made in a very difficult business climate. The downtown venue created the need to fill more seats while guest’s disposable spending was declining in the face of the recession. These additional expenditures, along with reduced ticket sales appeared to have resulted in a $1.4MM loss in 2010. We assume these are the primary drivers for the need for additional funding at this time.

There is good news on the horizon though. With the help of the Flat Rock Playhouse draw, Highland Lake Inn has seen 5% sales growth in 2011 and projected 10% growth in 2012. We might assume that FRPH will see similar improvements. It seems the tourists are slowly returning. We all work very hard to help facilitate that return of our guests.

It is important for us to state, that we do not oppose better utilizing tax funds to better assist Flat Rock Playhouse’s success in a very difficult business climate. We all benefit from their success. Our only concern is deciding where to best get those funds from and who is best positioned to manage the utilization of those funds to best support tourism growth in our county, and at the Flat Rock Playhouse.

In order to better understand the situation, I  recently attended a FRPH briefing regarding how they would utilize the estimated $446,000 in occupancy tax funds delivered to them over two years under the proposed plan. I have read the “Playhouse Tourism Plan summary” delivered to us at this briefing by Mr. Marini. The stated goal is for FRPH to use the funds “To pursue a strategy of “cooperation and integration” among all tourism entities in order to “change the game in terms of tourism in Henderson County”. We wonder if these goals are not the exact same goals of the old Travel and Tourism Board, but delivered by a wider cross-section of the Tourism leadership in the county (including the FRPH) than that represented in the proposed FRPH model. 

There is currently $1,000,000 estimated occupancy tax collected for the Travel and Tourism budget to promote tourism in our county. Could we indeed make better utilization of the existing 5% occupancy tax we already collect to better assist the FRPH and the other tourism businesses in the county? At a recent board meeting I attended I heard that Travel and Tourism may even have the ability to give more to the FRPH from recent past occupancy tax increases they may no longer need. I also understand that the FRPH has already collected an additional $234,000 from new government sources in 2012. With an improving economy, will this be sufficient to get FRPH back on a more solid, routine management track to better fill their seats without an additional tax increase? Shouldn’t these avenues be pursued before we add an additional tax on our lodging guest’s decision process? This seems especially important given that none of this seems to have been clearly vetted with many of our tourism professionals and business owners in the county who will need to be part of the success we all desire for the FRPH and increasing tourism in our county.

When we first heard about this proposed tax increase, we were not aware that it would be directly delivered to the FRPH. Even though we are a major tourism business in the county, nobody asked us our opinion. We understand that the Travel and Tourism Board, and many of our lodging business owner associates were similarly not contacted for their opinions in regards to this important change in the way we determine how we spend tax dollars for county tourism expansion. We thought the tax being considered would be allocated to the FRPH through the Travel and Tourism Board with appropriate controls and success monitoring measures, just like most all other occupancy tax expenditures. This seems the most appropriate management of any additional tax dollars collected to expand tourism opportunities in our county.

If the FRPH needs emergency funding in order for them to survive then we support assisting them getting that funding. The arts ARE worth supporting.  Flat Rock Playhouse must succeed. We should certainly consider assisting them with tax collections if necessary in order for them to survive. But is this an emergency? And where should this funding best come from and how should it best be delivered? What we do agree upon is that the FRPH is too important in our community to allow it to fail. 

After reading Mr. Marini’s Playhouse Tourism plan summary, we assume that the funding is not emergency funding. If this is true, should we assist FRPH with monies collected via a 20% increase to current occupancy tax with a new, additional 1% occupancy tax delivered directly to the FRPH? We agree with many of Mr. Marini’s goals as stated, but differ on who should lead those efforts. In his Tourism Plan Summary presentation, it seemed to me Mr. Marini may believe we may not have best spent the current 5% tax via Travel and Tourism leadership and he seeks to spend the money more effectively under FRPH control and expertise with reservations systems and improved cooperation between tourism entities in the county.  I worry about further distractions of the FRPH leadership into these new ventures when, as in both of those cases, FRPH may not be the best entity to maximize our probability for success. I also wonder what prevented this improved cooperation in the past.

Along with Mr. Marini, I do wonder though if we can find a way to make a stronger destination appeal via better cooperation amongst our county tourism businesses and better marketing spending of the occupancy tax dollars we collect. Mr. Marini stated his concern that the new Tourism Development Authority may be in a state of confusion as it reorganizes and may not be the best place to direct new levels of cooperation and effectiveness of the spending of our tourism tax collected. He believes the FRPH is better suited to this task. I would rather put our focus on making a smooth transition from the past good efforts of the Travel and Tourism Board and improving the new Tourism Development Authority effectiveness so that they may better drive a strategy of improved cooperation and integration in the spending of the occupancy tax dollars collected. I am encouraged by what I heard from our new Travel and Tourism Executive Director, Beth Carden regarding a Spring Tourism forum to help to bring all of us together to improve our inter-business cooperation. This way we better utilize our current 5% occupancy tax funds, and prepare ourselves for more effective spending of an additional 1% tax collected if we ultimately deem this important to the growth of tourism and the success of the FRPH in our county.

Who is better prepared to “To pursue a strategy of “cooperation and integration” among all tourism entities in order to “change the game in terms of tourism in Henderson County”? I believe it is a newly energized  Travel and Tourism Authority  with a wide cross-section of Tourism leaders on its board (potentially including the FRPH of course). This will allow the FRPH to focus on its broader core competencies as it recovers from a very tough recession and the pains and opportunities represented by capital and operating budget expansions during that time. I believe we can work together better though the Tourism Development Authority to best understand how to help fill the recently expanded seat totals at the FRPH (via the downtown venue addition) while also increasing the average tourism dollars attracted to our county in the best interest of all of our county tourism businesses.

Finally, we may indeed need further tax collection to help us improve our destination tourism appeal in the face of increased competition in Buncombe County, but I believe we first should seek to better understand the impact on local lodging tourism businesses as we continue to increase the total tax paid by our tourism lodging guests. Our lodging guests are now paying 11.75% including sales tax which will rise to 12.75% if this tax were to be approved by the Commissioners. It should be noted that since 2006 the occupancy tax has already been increased by 67%.

Again, we are strong supporters of the Flat Rock Playhouse and their management team. We just think these questions deserve further consideration and discussion that include a broader cross-section of the tourism business leaders in our county. Travel and Tourism and the County may already have the money needed to better support the FRPH in our current occupancy tax funds. If, after this review, it is then determined that the FRPH needs even further funds in order to survive and to prosper, the Commissioners and the new Travel and Tourism Authority should work with FRPH on both the revenue enhancement (tax collection), marketing and cost control side to determine the most effective use of our current occupancy tax dollars collected (5% or an estimated $1 million) or any new tax being considered. Until that is completed, we respectfully ask that you delay or cancel this proposed occupancy tax increase that is intended to be delivered directly to the FRPH. We believe this approach will better serve our joint efforts to ultimately increase the tourism dollars spent in Henderson County in the best interests of the Flat Rock Playhouse and the other tourism businesses in our county.

Best Regards,

Jack and Linda Grup
Owners, Highland Lake Inn and Season’s Restaurant

Local business owners fearful of increased hotel tax

From the Hendersonville Lightning (links added):

With a decision on raising the Henderson County occupancy tax by a penny expected by Sept. 1, innkeepers told the Travel and Tourism agency that they oppose the increase.

Kaye Caldwell, owner of Clear Creek Cabins in Hendersonville, near Lake Lure, is very against increasing the occupancy tax.

"I think the increase in the hotel tax is a very, very bad idea," Caldwell says. "It will make our taxes 50% higher than Buncombe County, and we will see a definite decrease in reservations." She further rationalizes that fewer tourists will not only negatively impact the hotels and vacation rentals businesses in the area, but local shops and restaurants as well.

Jack Grup, owner of the Highland Lake Inn and Seasons Restaurant in Flat Rock, says he is just now forming an opinion on the new increased occupancy tax, as he is only now just learning the details of it.

"This all just came on very quickly," Grup says. "I just wish we could slow down all these changes so we could get a better understanding of them."

The occupancy tax increase was introduced on May 31 of this year, and went through twelve different versions between then and July 3rd, when it was adopted, giving those in the Henderson County accommodations industry very little time to voice their opinions or come to terms with the changes.

Henderson County Travel and Tourism Committee Representative, and owner of Kilwin's Chocolates in Hendersonville, Ken Butcher says he is neither for nor against the proposed tax increase going to the Flat Rock Playhouse.

"We all love the Flat Rock Playhouse," Butcher says. "But there should be a way to monetarily help them without increasing the occupancy tax."...

Read it all.

FRP tax: Impact on county business

All I can say is, someone did her homework. This letter, sent to the Henderson County Board of Commissioners, is long, but read it all--there's a lot of info here:

To: Henderson County Commissioners
From: Kaye Caldwell
Date: July 17, 2012
Re: Occupancy Tax Increase and TDA membership

I am writing to urge you to NOT increase the occupancy tax. With the new tax Henderson County’s tax rate would be 50% higher than Buncombe County and 100% higher than Polk County. It should be noted that the county has raised occupancy tax by 67% since 2006. One would expect a significant increase in room occupancy due to such a significant increase in tourism efforts. On the contrary, room occupancy had actually decreased 14% in that time(1). How much of a additional decline will be caused by the proposed additional tax?

(1) From the Travel and Tourism Committee’s Room Tax Revenues chart, showing fiscal year 06-07 rooms rented of 287,986 when the tax was 3%, and fiscal year 10-11 rooms rented of 246,898 at the tax rate of 5%.

The commissioners have available to them a group of people experienced in tourists’ visiting habits, interests, and price sensitivity. This group owns businesses for which 100% of their customers are visiting tourists. This group of experts has not been consulted by the commissioners, in spite of their unique expertise in the matter of tourism. Who are they? The county’s lodging business owners. Because we talk to visiting tourists and prospective visiting tourists every day, we know them better than any other segment of Henderson County merchants or entertainment providers. We do not need to do zip code analysis with possibly flawed assumptions to determine whether our customers have come from out of the area. We know they have because they are either staying overnight or planning to. It is essential that the commissioners confer with this group before imposing a harmful tax increase that may have little if any benefit to tourism in the county.

Here’s what the county commissioners could find out if they conferred with the county’s lodging business owners:

• That the effect is of non-completive occupancy tax rates (as compared to adjacent counties) is lost reservations, particularly lost multi-unit, multi-day reservations.
• That lodging businesses are seeing a decline of interest in Flat Rock Playhouse tickets.
• That there is a lack of co-operation between Flat Rock Playhouse and lodging businesses in some cases.
• That advertising in Flat Rock Playhouse playbills fails to attract guests to lodging businesses, indicating a scarcity of Playhouse attendees interested in overnight stays.
• What it actually costs in advertising and promotion for a lodging business to attract overnight guests. This could be compared to the proposed costs for the Flat Rock Playhouse to attract some speculative and unproven number of new tourists, who may or may not stay overnight.

The commissioners should also question:

• Whether this tax increase will negatively impact lodging businesses, particularly those outside the cities of Hendersonville and Flat Rock.
• Whether this tax increase will provide any positive effect on lodging businesses. Will it increase bookings during slow times, such as winter months or midweek? Or will the tax increase merely add to the decline in bookings?
• Whether the Flat Rock Playhouse’s downtown location is good for tourist businesses downtown, especially in light of two downtown restaurant closures since the downtown theater opened.
• What exactly the impact on overnight tourism is from the Flat Rock Playhouse – does their zip code analysis show how far theater attendees come to attend a show? Just saying they are from out of town is not relevant, what is relevant is whether they are from far enough to stay overnight. How may of the out of town attendees arrive by bus and leave without staying overnight?
• How has the Flat Rock Playhouse worked with local lodging business owners in the past and how will this be improved in order to provide the expected tourism increase.
• Exactly how much should the county expect tourism to increase as a result of this expenditure?
• How will the effect on tourism be measured?

I strongly urge the commissioners to hold a workshop with lodging business owners to discuss this tax increase before moving forward with the increase. I understand that the Flat Rock Playhouse has raised significant amounts of funding from Henderson County, Hendersonville, and Flat Rock, and has just undertaken a $240,000 fund raising effort. Surely the Flat Rock Playhouse can withstand a delay in imposing a controversial tax on tourists in order to determine the likely effects of such a tax.

Further study is particularly important in light of the statements made at the May 29th commissioners meeting discussion on this matter:

• One commissioner stated that our occupancy tax rates are the same as Buncombe County. However Buncombe County’s website says that their occupancy tax rate is 4% (and 0% for some), which is less than Henderson County’s current rate. With the new rate Henderson County would be 50% higher than Buncombe.
• Another commissioner stated that he did not mind paying 6% on a recent trip. However that commissioner’s profession (lawyer) is the 6th highest paid profession according to the U.S. Department of Labor. In contrast, our guests are from much less well-paid professions. They are typically teachers, firemen, nurses, law enforcement officers, pastors, retired persons, and other with similar income levels. Quite of few of our guests are active duty military on leave from war zones. The commissioner’s reaction to the tax is not representative of the reaction of our prospective guests.

If the commissioners feel that they must increase the tax now, I would request that they enact a six-month sunset date for the tax increase. At that time the effects should be evaluated to see whether the tax increase should be continued. Furthermore, the reporting imposed by state law is inadequate. In addition to reporting tax receipts and expenditures from those receipts, Flat Rock Playhouse should be required to report what results were received from those expenditures. Also they should report what they expect to expend funds on in the next quarter and what results they expect.

Please also consider whether some measures could be taken to alleviate the negative effects on lodging business owners, such as providing a property tax credit or business property tax credit to compensate lodging owners for lost reservations and increased advertising and promotion costs. I note that our lodging businesses pay these taxes – while the Flat Rock Playhouse is exempt. In addition, ask the Flat Rock Playhouse to provide free or significantly discounted theater tickets to lodging business owners that we could sell to our guests. In addition to offsetting the lost income and increased costs for lodging owners, this would be a good indication of actual interest in theater attendance from overnight tourists.

I am sure that if the commissioners held the above requested workshop other suggestions would be made that could alleviate the negative effects on lodging businesses from this tax increase.

Regarding the appointment of members to the Tourism Development Authority, I would urge that the following principles be adhered to:

1. In order to avoid the appearance of a conflict of interest, no member of the Authority should be affiliated with an entity that receives funds from the occupancy tax. One would hope this goes without saying.
2. Members collecting the tax (lodging business owners) should be as equally represented as members spending the tax (promoters of travel and tourism). This can be done within the constraints set by the law. Since all lodging business owners are, by the nature of their business, active in the promotion of travel and tourism in Henderson County, the Commissioners can appoint 5 members that are affiliated with businesses that collect the Occupancy tax (and therefore also promote travel and tourism). The remaining 4 members can be members that only promote travel and tourism, but do not necessarily collect the tax. Technically, if all 9 members were affiliated with businesses that collect the tax, the requirement for half of the members to be affiliated with businesses that promote travel and tourism would also be met.

In summary, I ask you to adhere to certain principles when appointing the members of Tourism Development Authority, and to reject this proposed tax increase, at least until further study is done. If you do impose the tax increase I urge you to enact measures that limit its negative effects on lodging businesses.

FRP tax: Impact on Blue Ridge Cozy Cabin

Public comment presented at the July 18 Henderson County Board of Commissioners meeting, from John and Dianne Gallenberger (read it all):

To: Henderson County Commissioners

From: John and Dianne Gallenberger, Proprietors, Blue Ridge Cozy Cabin

Re: Increase to Occupancy Tax

We are pleading with you to refrain from implementing the 20% increase in the occupancy tax, taking it from 5% to 6%.

We offer a single cabin as a vacation rental. Most of our guests find us through the Internet. Almost all of them compare several lodging choices before selecting one. Price is a critical element of their comparisons.

We are often in competition with similar lodging in Buncombe County. There, owners with fewer than five units pay no occupancy tax. A 6% occupancy tax would put us at a disadvantage of over $50 for a weekly rental. This definitely would cause us to lose more business to Buncombe County.

When we lose a week’s rental, we suffer a direct loss of about $850. Henderson County loses its current 5% occupancy tax and its 2% sales tax for a loss of $59.50. The point is we all lose, including the many retail businesses our guests use. Our lost guests are patronizing businesses in Buncombe County instead.

The Henderson County Visitors Bureau has been well managed financially for the past several years. There is good reason to believe they could do well at their prior 4% rate of tax and you should strongly consider reducing the current tax to that level. Increasing the rate to 6% is unwarranted.

Let Flat Rock Playhouse correct its own mistakes which have caused it to lose to much of its donor base, volunteer staff and audience. Don’t give in to their plea for taxpayer assistance.

Thank you.

Flat Rock Playhouse creates plan for spending room tax money

Someone help me here--where are the criteria that the Henderson County commissioners used to determine which organization would benefit from a tax rate increase on lodging? Where is the in-depth study on the impact of a tax increase on those most affected, the lodging industry? What am I missing?

From the Times-News:

Flat Rock Playhouse officials have drafted a firm proposal outlining how they would spend about $450,000 in revenue derived from a proposed 1-cent increase to Henderson County's hotel occupancy tax. [Ed. - it's NOT a 1-cent increase; it's an increase of 1% (from 5% to 6%), which is a 20% tax rate increase]

The theater's leaders will present the proposal to county commissioners during a special-called meeting Aug. 8, when the board will hear feedback from the Playhouse, the public, local municipalities and members of the hotel industry before it votes on a room-tax hike. 

A bill recently passed by the state legislature gives the county the authority to raise the occupancy tax rate from 5 to 6 cents, with the additional revenue — about $223,000 per year — earmarked for the Playhouse for two years. Commissioners must give final approval for the bill to become law.

The Playhouse plans to supplement the proposed extra funds with its own marketing dollars to pursue a strategy of "cooperation and integration" among all tourism entities in order "to change the game in terms of tourism in Henderson County," said Producing Artistic Director Vincent Marini.

Playhouse officials also will discuss the plan with members of the accommodations industry — many of whom have spoken out against the room tax increase — during three meetings over the next week. [Ed. - when are these happening and who will be there?]

The Playhouse's plan highlights six strategies for exploring "new and innovative ways" to allow other tourism entities controlled access to its patron base.

Examples include featuring a different local B&B or inn each week in a display in the lobby of the Playhouse Downtown; enabling the 15,000 monthly visitors to the Playhouse website to book vacations that incorporate county museums, lodging, dining, recreation and entertainment options; and the creation of a shared reservation system that allows the Playhouse to act as a central reservation center for county tourism, while allowing hotels, inns, restaurants and other attractions to sell Playhouse tickets....

Okay, so the lodging industry takes an economic hit in order to help fund the Flat Rock Playhouse, and their reward for that is to sell Playhouse tickets. What's wrong with this picture?

Also, being somewhat familiar with computer programming, I question the idea of creating "a shared reservation system"--that is a huge programming task and a potential black hole for money. When did the Flat Rock Playhouse change their mission to become a travel agency/software company?

Read it all.

FRP tax: Impact on the Cottage Inn, Mills River

Public comment presented at the July 18 Henderson County Board of Commissioners meeting, from Cory Fletcher (read it all):

Dear Commissioners,
I recently read the article in our local newspaper about raising our occupancy taxes in Henderson County from 5% to 6% and then giving that additional 1% to the Flat Rock Playhouse. I am outraged to say the least over this proposal.

This tax increase is unfair and extremely burdensome in so many ways! I am a very small business owner and trying very hard to build my business. To add one more tax burden on me is truly awful and will disable me greatly, if not shut me down. I cannot afford for possible future guests to choose to stay in another County in the area where their taxes would be less. That would run me out of business. Then the absurd proposal to give that additional tax to the Playhouse to help them out, is the most ridiculous thing I have ever heard of. Sending guests to another county where they pay lower taxes for accommodations and “hoping” they go to the Flat Rock Playhouse so they can generate an income, will be detrimental to Henderson County’s tax revenue because your lodging industry was taxes out of business. As a lodging industry we would not support the Flat Rock Playhouse with advertisements in our establishments. Taking money away from the lodging industry in Henderson County through increased taxes to benefit one business is a grave error in my opinion.

I urge you to do all you can to stop this lunacy. Please vote No on this proposal. I join with all the other Lodging Businesses in this county and oppose this tax increase. Henderson County needs to protect its small business owners, not disable them. I also want you to know I will remember your vote on Wednesday, July 18, 2012, either FOR the lodging businesses in Henderson County and how you supported us, or how you sold us down the river for whatever political objectives you have to help the Flat Rock Playhouse at our expense.

Sincerely,
Cory Fletcher
Owner of Cottage Inn Mills River

FRP tax: Impact on the Carolina Moon Cabins

Public comment presented at the July 18 Henderson County Board of Commissioners meeting, from Alana and Bob Indelicato (read it all):

 

To The Henderson County Commissioners:

As owners of Carolina Moon Luxury Log Cabins in Hendersonville, NC, we are struggling to maintain and increase our business. We have repeatedly lowered our rental rates and the terms of length of stay. It is our feeling that raising the Henderson County Occupancy Tax is counter-productive to all that we try to achieve. Our combined tax rate is already higher than the combined tax rate of Buncombe and Transylvania Counties. It does not take a mental giant to make a reservation change to lodging establishments in either of those counties. We see no value to be gained to individual business owners with this tax increase. We are opposed to it on all levels.

In addition, we are great supporters and patrons of The Flat Rock Playhouse. We have enjoyed and have recommended every performance we have seen for the past nine years. However, we see no logical thought process involved in the donation of a portion of our tax revenue to the Playhouse. Let The Flat Rock Playhouse increase its ticket prices by a dollar or two, beef up their fundraising efforts, and handle their money matters in a more business like and professional manner. Their money has been mismanaged for years, and shows no signs of improvement. And we are now being asked to charge our guests to help bail them out. Please explain how that notion helps tourism. County tax dollars being spent to help support a private enterprise? I don’t think so.

Alana G. Indelicato

Bob A. Indelicato

www.carolinamooncabins.com [Ed.: this is a non-operative link]

800-318-1151

FRP tax: Impact on the CedarWood Inn

Public comment presented at the July 18 Henderson County Board of Commissioners meeting, from Karen Orbaugh (read it all):

Karen Orbaugh

CedarWood Inn

Owner/Operator for Eight years this September

Thank you for allowing my statement to be read without my being here. I am sole owner and operator of an 18 room Inn. Each morning I provide a continental breakfast for my guests preventing me from attending this meeting. This opportunity is greatly appreciated.

Last year I experienced a customer turning down renting several rooms for a Los Angeles, CA independent film production crew. They saw all my rooms, and were very pleased. We discussed prices, and they were pleased. They asked taxes, and were amazed at our rate (combined Occupancy, State and County Sales & Use Tax of 11.75%). They were unhappy and asked why so high as LA’s accommodations tax was 8%. They left and did not return. This is not an isolated incident but since, in this case, I received first hand knowledge of tax rates in a city such as Los Angeles, it has made me concerned when I surprisingly find out about another tax hike being considered.

Even though I regularly receive written and verbal testimonies to the quality of my Inn and the services I provide, I have experienced a steady decline in occupancy. What I am forced to do is economize, tighten my belt, spend less, support my community by employing and buying locally, and make wise decisions.

Flat Rock Playhouse, Myrtle Beach satellite location

A January 31, 2012, posting at the North Carolina Theatre Conference:

Flat Rock Playhouse. The State Theatre of North Carolina is seeking a full time Producer to manage a new touring venture for the Playhouse in North Myrtle Beach, South Carolina.

The Producer will report directly to the Producing Artistic Director and will be responsible for the successful execution of the theater's first major touring initiative. Position will require at least part-year relocation to Myrtle Beach, South Carolina.

Job responsibilities include: managing production transfers from North Carolina to South Carolina, interfacing with series sponsor and local marketing/pr firm, representing FRP in the local and regional community, managing the touring budget, developing strategic partnerships with local businesses, managing local technical, box office, musician and house management staff, and collaborating with the Producing Artistic Director on programming choices.

The successful candidate will be a charismatic, outside-the-box theater professional with strong public speaking skills, and experience in managing theatrical related activities with budgets in excess of one million dollars. Salary is negotiable 43k-50k with enormous growth potential in subsequent years.. . .

Henderson County Commissioner Larry Young was the only one to bring this up at the commissioners' meeting on July 18. He is very right to be concerned that North Carolina businesses will be funding economic activity to benefit South Carolina.

Once again, where is the transparency (and where is the common sense)?

Second verse same as the first

You know, I actually thought that perhaps the Henderson County Board of Commissioners would have taken to heart their experience with the Highland Lake Golf Club and the soccer complex fiasco, but I would be wrong.

The commissioners have now created the Flat Rock Playhouse tax debacle. And why has this blown up for them? For many of the same reasons that the golf course/soccer complex became a problem.

• How was it decided that a special tax increase was appropriate?
• What criteria were used to determine that the special tax increase monies would go to the Flat Rock Playhouse? Were other non-profits considered? Why or why not?
• Where is the transparency in this decision?

And the facts:

• The tax increase is NOT a "one-penny" increase, as many state (including the Times-News editorial--and they should know better). It is an increase from 5% to 6%, which for every dollar spent may increase the tax burden by one cent, but the more dollars spent, the greater the burden. Also, the tax rate increase from 5% to 6% is a 20% tax increase from the current rate.
• This tax falls only on the hotel industry. Some say that because the tax affects only tourists, and not Henderson County residents, it should not be controversial. But a tax, any tax, has consequences. In this instance, the consequences fall on the hotel business owners in the area and no one else. Since both Polk and Transylvania counties have lower room tax rates, Henderson County hotel owners are concerned (rightly, I think) that they will lose business to their neighbors.
• Taxation is a necessary part of governance, but there is no denying it is a taking of property (monies) by the government by force. Any tax increase, no matter who or what it affects, should be taken only after the most careful consideration--it is not a power to use lightly or cavalierly. This decision to contribute on-going tax monies to the Flat Rock Playhouse seems a whim. 

I have no problem with the county deciding to give the Playhouse a one-time, or even yearly, contribution as they do other organizations. The Playhouse does add to the economic vitality of the community, but dedicating a tax increase to only one organization is not right.   

There will be a special meeting by the county commissioners on Wednesday, August 8, at 1:00 p.m. The room tax increase for the benefit of the Flat Rock Playhouse will be the only item on the agenda.