Politics & Government

Why won’t Hilton Head chamber show how it spends $2.5M in taxes? Mayor takes final shot

Here’s why Hilton Head chamber doesn’t want cost for “#1 island in US” ad made public

Bill Miles, president of Hilton Head-Bluffton Chamber of Commerce, explains why the organizations marketing costs should not be made public.
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Bill Miles, president of Hilton Head-Bluffton Chamber of Commerce, explains why the organizations marketing costs should not be made public.

Hilton Head Mayor David Bennett may be nearing the end of his first and only term, but he appears to be nowhere near giving up his four-year battle with the Hilton Head-Bluffton Chamber of Commerce.

Bennett has long been at odds with the chamber over its refusal to provide more detailed information on how it spends public tax money it receives from the town to market the island. He brought it up again at this month’s meeting.

The fact that an outgoing mayor would choose to reignite a settled fight that he lost in 2015, when the town and the chamber entered into a five-year contract, surprised some Town Council members, angered chamber President and CEO Bill Miles and begged the question of whether Bennett was simply trolling the chamber ahead of the election or if he had enough votes to force the receipts to be released on a quarterly basis.

The issue is important because the chamber receives a large amount of public money from tourists — more than $2.5 million in 2017 — and the lack of oversight and accountability for how it spends that money creates the potential for unchecked abuse, conflicts of interest and lavish spending habits.

Transparency by the chamber also came up at the first mayoral public forum on Tuesday, and is likely to be a dividing issue between the seven candidates.

The chamber has fought vigorously to protect its spending secrecy, and its argument is built around three core points: It needs to protect its strategic business practices, it adheres to an acceptable amount of auditing and transparency already, and it is not subject to state Freedom of Information laws.

So far, the chamber has won at every turn. In May, a South Carolina Supreme Court ruling gave the chamber a victory when it said that it was not subject to FOI statutes, which means that itemized breakdowns about how the chamber spends taxpayer money are not open to public scrutiny.

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That leaves the town to insist on transparency in return for giving them money, but a slim majority of Town Council has consistently sided with the chamber.

Things are good, they say. The chamber is doing its job, and the town is prospering. Time to move along.

And that doesn’t sit well with Bennett.

The chamber is the town’s Destination Marketing Organization (DMO), and it receives money from the accommodations tax (A-TAX)— the tax tourists pay when they book a hotel room on the island — for the purpose of helping boost future tourism. The tax money is just a portion of chamber’s annual budget, which was $7.26 million in 2018, according to the chamber’s marketing plan.

Bennett said that the DMO is one of many recipients of A-TAX revenue, but is the only one that does not release its spending to the public.

“Why do we have one organization that is treated differently?” Bennett said.

When asked by an Island Packet reporter if the DMO’s spending would raise the public’s eyebrows if it were to be revealed, Miles said it might to “untrained eyes.”

He added that he would be “happy to sit down and explain” the chamber’s spending to town staffers or members of the public.

Miles has long talked about protecting the chamber’s “secret sauce” for keeping the island ahead of its peers. At this month’s meeting, when Bennett and Town Council member Kim Likins made the surprise move to approve the DMO’s marketing plan under the condition that the chamber release detailed quarterly spending reports to the public, Miles was ready.

He held up the August issue of Travel + Leisure, the front of which featured bold, white lettering that boasted “World’s Best Awards 2018.” An ad for Hilton Head Island appeared inside.

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One of the advertisements bought by Hilton Head-Bluffton Chamber of Commerce in the August issue of Travel + Leisure magazine featured a beach scene using a textured card stock for the sandy beach parts of the photo.. Drew Martin dmartin@islandpacket.com

“Why do we want to share with Charleston, or Destin, or any other areas, how much we paid for this ad?” he said to the council during a heated exchange.

Hilton Head was named Travel + Leisure’s No. 1 island in the continental U.S. for the third year in a row in July, and Ariana Pernice, the vice president of the Visitor & Convention Bureau at the chamber, told Town Council that the award would not have been possible without marketing and thoughtful ad placement.

“Other towns will be able to see how we do what we do, and they will compete to be the best vacation destination,” Pernice said about the consequences of releasing spending details.

But at least one of the town’s competitors poked holes in that argument.

The Emerald Coast Convention and Visitors Bureau, the DMO for the area that serves Destin, Florida, is considered a public entity, according to its director, Jennifer Adams. Adams said she releases her full budgeting, marketing plan and spending to the Board of County Commissioners and to the public.

Asked if she thinks these transparency measures allow for other cities to copy Destin’s approach, Adams said no. She added that she “would not go look at another DMO’s marketing plan” for ideas.

Issue in the mayoral race

The issue will continue to roil over the coming months heading into the election and become a point of attack for candidates aiming at John McCann, a council member who announced his intent to run for mayor last year.

On his website, the first issue McCann lists on his platform is “promoting transparency and accountability,” but he has previously voted in line with the chamber’s position during his nearly six years on council.

When asked recently if the chamber should release its spending receipts, McCann declined to take a clear stance, instead criticizing Bennett for bringing up the release of spending reports when the council was only expecting to vote on the DMO’s budget.

At least two other mayoral candidates appear to side against McCann on the chamber’s lack of transparency.

Mayoral candidate Sandon Preston said at the candidate forum that the chamber’s contract needs to be “renegotiated so that it’s clear that they have to tell us how they’re spending the money,” Preston said. Although he thinks the chamber is doing a good job marketing Hilton Head, Preston said that “you can’t turn a blind eye” to “millions of dollars.”

Alan Perry, another candidate in the race, told the audience at the forum, “There needs to be transparency so that we do understand how the money is being spent,” but he added that he believes this information “is being provided to us fairly well” by the chamber. Perry said he’s not sure all of that information is making it back to the community.

Likins, who is also running for mayor, defended her previous stance at the forum saying that the chamber does “an excellent job in marketing our community,” but she asked “the Chamber of Commerce to provide receipts for all of the spending of our money” at the Town Council meeting earlier in the month. She said she believes transparent spending in the chamber to be “important and separate from our contract” regarding the DMO.

What the chamber already releases

Chamber officials argue that no further transparency is necessary. Pernice said that the motion by Bennett and Likins would require “additional time spent by town staff and the chamber to provide transparency that is already there.”

The chamber releases its past marketing plans and past audits, but not on its main website. Instead, these reports can be found by searching a secondary website owned by the chamber.

The available audits, however, do not include the most recent fiscal year. Bennett calls them “vague.”

For example, the most recent audit available online includes generic line items such as “leisure fulfillment” for $104,898 and “social media” for $52,059 without providing a more detailed spending breakdown on exactly where the money is going.

The annual marketing plan, which is not released online until the end of each fiscal year, detailed $118,000 for “social media” in fiscal year 2017-2018, which included $15,000 to fund blog content and visits to the island by influencers that are required to make at least two posts on their personal social media accounts.

The 2017-2018 plan also outlined expectations for videos to be produced for the DMO including “short, 15-30 second ‘atmosphere’ videos, i.e. the ocean waves, a panorama of the view from the top of the lighthouse, a glass of wine being poured at sunset, etc.” The videos are part of a $35,000 allocation for “destination photo and videography” used for social media.

Information that is typically available to citizens about public spending, such as how much individuals are being paid in salaries or bonuses, how much money is going to things like airline tickets, dinners, entertainment and hotel rooms for business partners and which businesses are benefiting from lucrative contracts, is not open when it comes to the DMO.

While the chamber’s annual marketing plans provide more details than the audits do, those details are only about how the DMO anticipates spending money on marketing, not what is actually spent. In the 2018- 2019 marketing plan, which The Island Packet received through a Freedom of Information request to the Town of Hilton Head Island, the chamber allotted $231,000 for “social media.”

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The chamber also budgeted $56,000 for its Travel + Leisure campaign, according to the plan. The campaign includes a “custom video series” for Hilton Head Island, “targeted” media and social presence and “influencer integration options,” with few details listed.

According to Travel + Leisure’s print ad rates that are posted online, a full-page color advertisement like Hilton Head’s ad in the August edition could have cost an estimated $169,900 — that rate does not include the half-page insert with the “special texture” that Miles used as an example during Town Council.

What’s next

When Bennett used the DMO’s budget vote to reignite a fight that’s been going on for years, council members McCann and Bill Harkins said they were surprised. Harkins told Bennett “you dropped this in at the last moment without any notice, shame on you” for bringing up the DMO’s receipts without preparing council members in executive session first.

McCann said that the town’s contract with the DMO expires in 2020, and that it would “reflect poorly on a partner” to change the terms of a contract originally “signed in good faith by both parties” halfway through. Harkins agreed and added that the town and DMO should sit down to renegotiate the contract rather than the council “dictating” changes from one side.

Council member Marc Grant proposed that the topic be sent to a committee. He told the Island Packet that he made the motion because “there wasn’t enough research and work done in the forefront for us to make a wise decision right there.”

Grant, who has previously sided with Bennett on chamber issues, said “taxpayers have a right to know how their money is spent” during the meeting.

McCann amended the motion to ensure that the committee included members of the DMO. The measure passed 6-1, and Bennett’s was the only dissent.

Asked if he didn’t vote for the motion because he didn’t want it to go to a committee including DMO members, Bennett said the original motion of Likins’ “seemed like a totally straightforward request” that could have been resolved in the council meeting.

The finance and administration committee will now review the chamber’s budget. The committee is made up of council members McCann, Lennox, and Likins. In addition to town staff, two representatives from the DMO and two representatives of the public will sit on the committee as nonvoting members.

Bennett said he hopes the committee can be effective and said he believes his motion has a chance to be approved.

On Monday, Beaufort County denied funding to the Hilton Head-Bluffton Chamber of Commerce and Beaufort Regional Chamber of Commerce due to a lack of transparency regarding how they plan to use the $105,000 that the county would allocate to each of the two organizations for tourism and marketing.

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