Bring on the hike

In response too a letter to the News Herald editor on Sunday January 11th:

For years, the Bay County Tourist Development Council has discussed increasing the bed tax from 3 cents to 5 cents, and finally the motion was made and passed to do so.  The timing couldn’t be more perfect.  Now more than ever we need to be using every resource possible to increase awareness of our destination.  With increased inventory and overall traffic down, now more than ever we need to be sure that vacationers and tourists alike know that our little slice of paradise is here waiting for their arrival.  Thus, when the Bay County Commission meets January 20 to give final consideration to the issue, I urge a “YES” vote to increase the bed tax collection from 3 cents to 5 cents.

The idea of raising taxes during a recession is gut-wrenching for some, but for this specifically, there is no reason to puke – we’re only talking about 2 percent!  And, we’re not talking about 2% on hundreds of thousands of dollars, the average rate increase a visitor to our area would experience is around $20.  $20!  Opponents make this increase into a huge number that would serve catastrophic results to our area during an economically failing time.  This just isn’t true.

Look, I don’t like taxes being raised as much as the next guy, but we have a growing area and are on the cusp of being nationally and even internationally recognized as a world-class desination and we need to be sure that we are financially prepared to take full advantage of this.  Furthermore, our competition has higher overall revenue/visitor AND a higher bed tax, not to mention lifeguards (a whole ‘nother can of worms) putting them at a competitive advantage.  I’m not even mentioning the other destinations in other parts of the country that have a higher bed tax affording them great marketing and beautification capability.

The author in the letter states that we should promote that we are the lowest bed tax collector.  I can see the ad now: “Extra, Extra, read all about it!  Panama City Beach is offering $20 discount for every $1,000 spent – Vacation in Sunny Panama City Beach Florida and save an Andrew Jackson that won’t even take you to the Grande Movie Theatre anymore.”  Yea, real clever, that’ll work. (please note the sarcasm)

As a destination we have to look at this as a business decision.  This is not emotional.  We simply have to analyze the balance of risk versus reward.  If the reward is greater than the risk, we need to increase the bed tax – and in this case, the reward far outweighs the risk.  We stand to gain many more visitors to our area by increasing the bed tax, ergo increasing our ability to enhance our visibility to the vacation traveler than we stand to lose from an average increase of $20 per 1 week stay.  You always have to spend money to make money – anyone that is a business owner knows that.  I mean, this is a no-brainer.

Recently it was estimated that the new airport will bring approximately 500,000 new visitors to our area.  There are varying factors in making that estimation a reality.  One of those factors is ensuring that travelers in the cities that will have direct flights to PCB know about us.  Direct flights are great, but you have to MARKET to those visitors or they won’t even know the flights are available.  Marketing is expensive – very expensive, and we need to have a dominant presence in our new feeder markets.  People don’t realize how much an infusion of 500,000 NEW visitors to our area would change the dynamics of our local economy.  Everything here would pick up – restaurants would stay at capacity during peak seasons, there would be long lines at the movie theatre, you would have to search for a parking spot at your resort, etc.  And, yes, these are good things as it will mean our area is booming!  That’s right, I said it – booming.  And that’s just with the airport.

2008 was a pretty good year for events.  Panama City Beach has grown tremendously and is truly on the path to becoming a real destination resort town.  With Pier Park alone, we have been placed on a map that we’ve never before been on.  In addition, with the great events that we had last year and the promise of more to come this year, we will become a stronger destination each year in the future.  We need to upgrade our facilities.  We can’t keep doing the same thing year after year and expect the same results.  There was a quote in Rowland’s first issue of 850, which debuted last fall: “If you are doing the same thing this year you were doing 5 years ago, you’ll be out of business in 2 years.”

The quote said “out of business,” “not your business will be slow,” or “you won’t be doing that good,” but out of business.  We cannot go out of business in Panama City Beach.  Our whole local economy depends on it.  Sure it would be great to have some other industry here that supported us in addition to tourism, but there isn’t, and we need tourists to come to our area.  We need them!

I totally agree that a complete and total overhaul needs to be done on the current collection methods.  One person managing the collecitons and tracking down those who aren’t paying just isn’t enough.  I mean, just look at the IRS?  They employ like 700 billion people.  We need to have a team working on our local bed tax collection – funding cannot be an issue, it needs to be worked into the current operational budget – this is one area we can’t skimp on.  This is just another risk versus reward scenario.  The funds that we will be able to collect will more than pay for the increase in operational budget and we will have a more efficient system that is ready to handle future growth.

Furthermore, we need to enforce the tax collection with swift and strict consequences if you do not pay.  The criminal justice system uses deterents to persuade criminals to not commit crime – if you steal a car, you go to jail for X years.  So, if you don’t pay your bed tax, you are fined $1,000 for the first infraction, $2,500 for the second infraction, and $10,000 for the third infraction.  If you don’t pay your fine, a temporary injunction will be placed on your business license and you will not be allowed to operate.  If you are not a business, a lien is placed on your property.  Sounds severe?  You bet, but some people need the threat of consequence in order to obey the rules.  Sad isn’t it?

Another part of our area that is lacking and in need of improvement is our beach sporting facilities.  We have been counseled by Richard Sanders, our Director of Sports Marketing that as other destinations are spending millions in improving their sporting facilities they are becoming a more attractive tournament location for their events.  These events pump millions into our economy every season and if they go away, we will hurt.  If you don’t beleive me, just wait and see – this isn’t something we can overlook.  Not to mention that we were counseled by an independent third party that an increase in facilities and sports infrastructure was required to remain competitive and that if something wasn’t done immediately, we could be at risk of losing events now.

The author of the letter to the editor mentions that if the need was so great for increased sporting facilities then it would be a money-making opportunity for a private developer, therefore seemingly disqualifying this as a valid need. Now, this is just ignorant and plain untrue.  What the author fails to recognize is that the increase sporting facilities will not benefit one entity directly (a developer, etc.), but our destination as a whole, therefore it would NOT be a good money-making opportunity for a developer.  In fact, a developer wouldn’t touch this with a 20 foot pole – why would he?  Public sporting facilties should not be privatized if they effect a destination as a whole.

Commissioners, I urge you to consider the future of Bay County in your decision tomorrow morning. From one business owner to another, we need to make a good business decision and provide a vehicle to generate more money to grow our area.  We have an opportunity to give our area a shot in the arm that almost no other destination has at this time.  We can continue to grow, thrive and bring our children into an area that we are all proud of, an area that we grew through our good business decisions, an area that is alive because we chose for it to be, or we can watch it slowly wither away and die.  This is a long term decision and we need to think about our future.

At tomorrow’s meeting I urge you to vote yes for the increase in bed tax from 3 cents to 5 cents.

18 thoughts on “Bring on the hike

  1. Jason, I wish I had more confidence that the increase would be spent wisely. And, I wish it were only from 3 cents to 5 cents as your article states …. but it is from 3% to 5% which is about $20-$60/week more per unit. In this economy, many potential guests/travelers are staying home already and won’t pay any more than previous years to come down. As a matter of fact, most now want to pay LESS to due economic hardships. So, condo owners will have to “eat” the increase from their already tight rental income. If I had more confidence in the elected officials in PCB, I wouldn’t be as reticent that this is just PCB’s version of a “mini-bailout” where the money will either be unaccounted for or continue to be spent in the wrong way…promoting Spring Breakers and MTV instead of FAMILY SPRING BREAK and Family Summer Fun. I hope I am proven wrong.


  2. Are you NUTS? Do you not read about the foreclosures, auctions, and people barely making their mortgage payments on over-valued properties? Requests for rentals are down, and requests for amenities (internet service, game rooms, TV rooms, water parks) up.

    We are all for improving The Beach we truly love and wish to retire to. Right now, we’re just trying to hang on to what we have and make it to better times.

    Those who wish to make this increase now should sacrifice a bit, too, and wait like the rest of us. You’ll find more willing support.


  3. I know it sounds ok to say we are going from 3% to 5% but the reality is that the total tax a visitor pays is going from 10% to 12%. 12 cents of every dollar goes from the owners pockets to the political pockets.
    And don’t use the visitors pays it excuse. That’s just not true. The rental prices are going down not up. So the owners are seeing a drop in rentals and now another $100 to $200 per month in peak season will go to more taxes.

    I agree we need to promote this area and growth. I do it every day with over 110+ web sites for Panama City property and rentals. But that is not coming out of the owners pockets. As a Realtor in the Top 3% of sales in Bay County last year I see first hand what the owners are paying and losing every day. There are only 2 months a year that most units will pay for them selves and the owners eat the 10 months difference.
    Bottom line is, get the money from a bond issue, loan or what ever options you can but not on the backs of the owners who have seen taxes increase, insurances increase, utilities increase, condo fees increase, while the property values have fallen as much as 50% in the last 2 years.
    Consider this
    Today we have 274 short sales and foreclosures in mls.
    The new airport will not be ready for 16 months to bring in all these new visitors. Most owners will probably not be able to hold on that long with more taxes out of their pockets. Is this the image we want to show the new visitors? Empty buildings full of foreclosures.


  4. Friends tell me that PCB is now running ads on Chicago Radio stations. Specifically on WBBM.

    That should bring in more tourists and monies on the beach.


  5. I agree with Butch. Now is not the right time to increase the “pain” that condo owners are already feeling. And, they are the only ones who will suffer initially … until more empty foreclosed units up and down the beach start becoming painfully obvious to even the visiting guests. Maybe tighter oversight of currently collected taxes would be a better option. Marketing costs are down, advertising space and time is falling in costs…take advantage of those “bad economy” opportunities and make the dollars you currently collect stretch further….


  6. Maybe it is time to look at the CVB being funded BOTH through tourist taxes AND private business contributions. The accomodations could voluntarily contribute 1% of their gross revenue rather than being a tax added to our tourist’s bill. Since 2% is supposidly not important to the consumer, it seems reasonable to assume that the hotels who choose to participate would not miss 1% of their gross revenue. I assume that all of the hotels that have advocated for the 2% increase would agree to voluntarily participate. And these voluntary contributions could come from other tourist-related businesses also. Restaurants, clubs, and tourist-oriented stores could sign up to contribute a small percentage of their revenue also.


  7. I don’t see all the doom and gloom that an increase from 10% to 12% would bring. However, I have absolutely no faith whatsoever that we will see the money spent on the beach and Front Beach Rd. With the exception of Pier Park, Front Beach Rd is an eyesore! If the money would go to improving the area from where the taxes are derived, I would be totally in favor of the increase. With new construction halted, old delapidated and vacant properties line the Rd. Why doesn’t the city make the owners get rid of these dangerous and unsightly buildings. There are numerous good uses for the increased revenue, but I feel the only thing we will see are some small improvements in Frank Brown Park. We love the park, but the beach and Front Beach need a lot of help. They generate the revenue, so use the increased revenue to improve the areas that provide that revenue to the entire area.


  8. I was just talking with someone in the TDC office about when the effective date for the increase might be. She felt is would be around March 1st. Isn’t that great? I have collected payments for rentals through March already and have deposits and firm committments through August already. Guess who gets to eat this increase?

    This short-sightedness will cost me, not the tourist. The pro-ponents of this ridiculous increase should also bear some of these costs.

    Mr. Durtas’ article touched on some good points. Yes, let the businesses that supported this increase bear the expense. How about all of the others that benefit from tourists, like the citizens of the area that have work, due to our advertising and bringing people to the area.


  9. I dont trust the TDC to do anything but promote Spring Break. If the money went to improve Frank Brown park and maybe a convention/ multi purpose arena then Im all for it. Raising taxes for marketing sounds like a scam to me. Can anybody see what big name concerts/conventions would do for this area?


  10. Jamnolfin, yes, concerts and over a hundred golf courses is what makes Myrtle Beach a draw. He have the other in spades; restaurants and a much better beach.


  11. Also run an Ad to tell the Locals to get rid of the “Yankees suck” bumper stickers. I would think the area would like us Northern folks coming to PCB rather than Brownsville, Texas or Arizona.


  12. Why increase the bed tax when it’s not being collected effectively to begin with? I worked in the condo rental business for 3 years. During that time I got to experience first hand how the tax collector couldn’t explain how to even compute the tax. I remember setting up a new rental software and fielding what I thought would be a simple question only to get mixed answers. I hope they’ve cleaned up their act since then. An audit of the rental records for our properties was never a concern. And that was with a rental company. Imagine the multitudes of VRBO properties that are out there, many of which rent through a company and privately. And let’s face it, for some, the draw of the area has been devalued from over development. What more is the customer getting for their 2%?


  13. I worked in condo rental management for 3 years. From what I saw during that time (I “retired” from that business in ’06) the bed tax is not collected effectively or accurately. I remember making calls to the tax collector who couldn’t answer what I thought would be easy questions for them. Like, “how do you compute the bed tax?” They were often befuddled by such an inquiry. I certainly don’t mean to criticize them, but it was almost like they were happy to collect whatever money was sent in to them. They was never a fear of being audited and we were a rental company. Imagine all of the VRBO properties out there. And many of these properties are listed on rental sites and through VRBO or similar site. Or you have the regulars that “rent” through their buddies. You think we see any tax revenue for that? Is the beach 2% better than it was 10 years ago? Well, it’s certainly more developed. Cool, a canyon right on the beach! Grab the kids hun.


  14. Larry,

    What was the name of that rental company you worked for? The rental management company I utilize is extremely diligent and ethical in their collection and payment of taxes. Everything is computed via rental software and paid monthly and I get an accounting for income tax purposes by early Feb of each year so I can do my income taxes. And even on my other unit where I rent via VRBO on my own, I make sure to pay the taxes quarterly. I think most people follow the law and pay their taxes and don’t want to mess around with the consequences of cheating the local, state, or federal government. Of course, family and friends who don’t pay rent, don’t pay taxes, but that’s to be expected.


  15. Larry,

    What was the name of that rental company you worked for? The rental management company I utilize is extremely diligent and ethical in their collection and payment of taxes. Everything is computed via rental software and paid monthly and I get an accounting for income tax purposes by early Feb of each year so I can do my income taxes.

    And even on my other unit where I rent via VRBO on my own, I make sure to pay the taxes quarterly. I think most people follow the law and pay their taxes and don’t want to mess around with the consequences of cheating the local, state, or federal government. Of course, family and friends who don’t pay rent, don’t pay taxes, but that’s to be expected. Do I like the new local tax hike? No. I think it was horrible timing in this economy. I hope it is spent in a responsible manner. That is yet to be seen.


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