Town of Hilton Head sued over chamber contract for bed-tax money

A recently filed lawsuit against the Town of Hilton Head Island claims it broke the law by repeatedly providing bed-tax funds to the area’s chamber of commerce through no-bid contracts — the most recent one worth more than $1.7 million.

The town contends it has done nothing wrong.

Peter Michael Buonaiuto Sr. claims in his lawsuit that his business, Hilton Head Visitors and Convention Bureau Inc., hasn’t been given an opportunity to compete for accommodations-tax funding provided to the town.

“My client is a person who has an interest in making sure that the town operates in the most transparent manner when choosing an organization that serves the taxpayers,” said Taylor Smith of the Columbia law firm of Harrison & Radeker, which is representing Buonaiuto, when contacted Tuesday.

The suit, filed in Beaufort County Circuit Court, says the town continues to provide bed-tax funding to the Hilton Head Island-Bluffton Chamber of Commerce for marketing and tourism purposes without seeking bids.

The accommodation tax draws from short-term housing rentals, such as hotels and motels. State law requires 30 percent of it be allocated annually to a special fund for advertising and tourism, according to the suit. It also states the Hilton Head chamber has received the funding for more than 30 years.

Brian Hulbert, town attorney, declined to comment Tuesday on specifics of the suit but said the town has followed state and local law.

Hilton Head attorney Greg Alford, of Alford and Thoreson, likely will take the case once the town is served, Hulbert said. Alford declined to comment Wednesday.

The chamber receives quarterly payments under the contract, Hulbert said. It has received $1.5 million so far this year and is estimated to get another $219,000 for the fourth quarter, he said.

In 2015, the chamber received $1.6 million total, Hulbert said.

The chamber can request additional bed-tax funding for specific advertising purposes, Hulbert said.

The Town Council awarded the chamber an additional $405,000 during its regular meeting Tuesday. Documents show a majority of the funding will be used for advertising specifically for golf tourism.

Taylor said Tuesday the town contends it does not have to go through a procurement process for the 30 percent of bed-tax funding.

He said in the past the town relied on a portion of town code that stated that the “(chamber’s) visitors and conventions bureau shall be the designated nonprofit organization to manage and direct expenditures of the 30 percent special fund.” A change in the code earlier this year designated the chamber as the town’s “selected designated marketing organization” to manage the fund, he said.

But the town has not put the contract out for bid in violation of its procurement code, Taylor said.

“Hopefully, we can help Hilton Head foster an environment where all individuals can be treated equally in being awarded contracts,” he said.

This story was originally published December 8, 2016 at 4:25 PM with the headline "Town of Hilton Head sued over chamber contract for bed-tax money."