Hilton Head council opposes bills regulating TIFs, online travel sites

tbarton@islandpacket.comFebruary 7, 2012 

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Hilton Head Island Town Council wants state legislators to oppose two bills it says would limit its ability to collect and spend tax revenue.

The council voted Tuesday to send letters to the chairmen of the Senate Finance and House Ways and Means committees asking them to oppose the bills, as well.

One bill, sponsored by Sen. Larry Martin, R-Pickens, would require local governments to specify and budget amounts for projects paid with proceeds from tax-increment financing.

The tax revenue would be restricted to paying debt issued for projects specifically defined and budgeted through municipal ordinance.

Currently, state law allows the tax money to be used for generally defined redevelopment purposes.

TIF districts allow municipalities to encourage private redevelopment of "blighted" areas by making public improvements such as roads, parks, sewers and pathways. Those projects spur new development, which increase in property values, and the rise in tax revenue that results is used to pay for the public works.

Under the bill, money collected above what is budgeted for a project would be considered surplus and could only be used to pay down debt. Otherwise, it must go back to other taxing entities within the district, such as a county government or school district.

The bill would not allow the surplus to pay for other projects, according to town staff.

Town officials say it's impractical and unreasonable to place such restrictions on local government. "You get locked in, while over 10 to 15 years your costs and needs change," Councilman George Williams Jr. said.

The other bill, sponsored by Rep. Tracy Edge, R-Myrtle Beach, would exempt travel agents and online travel companies from paying taxes on hotel occupancy.

The town settled its suit against national online hotel booking sites in April. The online resellers of hotel rooms agreed to pay $562,500.

Hilton Head and other state municipalities, including Myrtle Beach, claimed companies were not paying the correct amount of accommodations taxes.

The S.C. Supreme Court has ruled the companies furnish accommodations in the state and thus are responsible for paying taxes on the total, marked-up rate they receive from customers; not the lower prices negotiated with hotels.

Edge argues the "facilitation services" provided by the sites are distinct from providing a room for lodging and should not be taxed, according to the bill.

Council asks legislators "recognize the fairness" of the court ruling supporting the town's position.

Follow reporter Tom Barton at twitter.com/EyeOnHiltonHead.

Related Content

  1. Hilton Head officials: Bill would undermine settlement with travel sites: Jan. 18, 2012
  2. House bill 4337
  3. Travelscape LLC v. S.C. Department of Revenue
  4. Senate bill 1002

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