Council votes 4-1 to adopt new policy for SAT, LAT, and H-Tax allocations

BLYTHEWOOD – On Jan, 6, 2023, town council voted 4-1 to adopt a new policy for administering the $1 million or so revenue the Town receives from state accommodations tax (SAT), local accommodations tax (LAT) and hospitality tax (HTAX) – taxes that are largely paid by visitors to the town who eat in the town’s restaurants and sleep in the town’s hotels.

“While I think we all have enjoyed very much the various festivals and entertainment venues that have been funded by our SAT, LAT and HTAX funds, how this funding has been administered in recent years has begun to spiral out of control, to the extent that we are using this public tax revenue to fund private business, which is against the law,” Councilman Donald Brock said.

“Plus we were not using this money to plan for the town’s future as we should have been doing. This new policy will allow us to free up about $600,000 annually for capital improvements and investment. And we can still enjoy many of the qualifying events in town that we enjoy now. This new policy will guide us in spending our SAT, LAT and HTAX funds differently but in compliance with the law.”

Besides approving the new policy, council also approved a shorter, simpler application for the funding and an Excel formula-driven worksheet used to determine allocations.

The wheels of change began in the fall of 2020 when Brock and Councilman Sloan Griffin broached the idea of revamping how the town administered the tax revenues. But it was not until July 25, 2022, that council established a Local Accommodations and Hospitality Tax Advisory Subcommittee – Brock and Councilman Rich McKenrick  – and charged them with making recommendations to council for a new policy regarding the allocation of state and local accommodation taxes (SAT and LAT), as well as hospitality tax (HTAX).

On Jan. 6, 2023, Town Council voted to adopt this new policy. It passed 4-1 with Councilman Ed die Baughman voting against. Baughman told The Voice he voted against because any change in the policy, application and Excell formula-driven worksheet will require a super-majority vote (4 of 5 votes) from Town Council and may be reviewed once annually prior to the SAT, LAT and H Tax application process.

While Bughman said he agreed that council needs to protect the town’s capital assets, he also asked,” But at what cost? The loss of some of our best events?”

“Until now,” McKenrick said, “we’ve taken the road of least resistance. “We gave away the funds.”

McKenrick compared Richland County which receives $10.8 millon a year in HTAX revenue and gives away only $500,000 a year against $6.2 milloin in requests.

“They gave away only 27 percent of their ATAX funds,” he said. “Richland County understands their responsibility for taking care of their capital assets through this funding.”

Town’s new rules for appropriation of funds

In conjunction with the criteria established in Title Six of the South Carolina Code of Laws, the Town has established the following rules for the appropriation of SAT, LAT, and H Tax:

  • Expenditures must strictly adhere to the permitted uses outlined by Title 6 – Local Government
  • All expenditures must be approved by the Town Administrator prior to disbursement of funds
  • First year events are funded at a maximum of $7,500 of eligible expenses in the first fiscal year of implementation
  • Subsequent year events are funded at a maximum of $5,000 of eligible expenses per fiscal year
  • Organizations are capped at $15,000 in the first fiscal year of implementation and $10,000 in all subsequent years
  • Ticketed and private events do not qualify for SAT, LAT or H Tax funding
  • Richland School District Two area high schools (Blythewood, Westwood) will receive $5,000 fiscal year sponsorships; individual sports (or sporting events) will not receive funding
  • For profit entities are not eligible to receive SAT, LAT or H Tax funding
  • Elected officials, employees, and part-time employees, as well as their immediate families, are not eligible to receive SAT, LAT or H Tax funding

Eligibility Requirements

Applicant organizations must have been in existence for at least one (1) year prior to requesting funds and must provide proof of their non-profit status or fall into one of the following categories:

Organizations exempt from federal income tax under Section 501(C) (3) of the Internal Revenue Code and whose primary goal is to attract additional visitors through tourism promotion. The letter of exemption from the Internal Revenue Service must accompany the applicant’s proposal.

Destination Marketing Organizations, which are recognized non-profit organizations charged with the responsibility of marketing tourism for their specific municipalities, counties or regions, such as Chambers of Commerce, Convention and Visitors Bureaus and Regional Tourism Commissions.

The Town of Blythewood will not award H Tax/LAT funds to individuals, fraternal organizations or organizations that support and/or endorse political campaigns.

Grantee organizations may not re-grant Town funds to other organizations. All funds must be spent on direct program expenditures by the organization that is granted the allocation.

Rules for Disbursement of Funds

Funding for all projects is dependent on the receipt of expected LAT and HTax revenues from the State of South Carolina. Any decision or lower than expected revenues could affect project/event funding.

If LAT and HTax revenue received is less than budgeted, project funding may be reduced on a pro-rata basis or as otherwise determined. Project Directors should remember this in developing project budgets.

  • Reimbursement for project expenses requires the submission of paid receipts verifying expenditures. Expenditures must be consistent with the application budget. Only goods and services that comply with the Hospitality Tax/Local Accommodations Tax Policy and State Law are reimbursable. Reimbursement checks will be written only to the applicant. Invoices for reimbursements should be submitted to the Town of Blythewood Administrator with written letter of request for funding. Requests for reimbursement must be on letterhead from the organization funded, including a valid contact number and address.
  • 80% of the total amount budgeted for projects/events will be paid to organizations no more than 90 days prior to the event. Once the Final Report is received and reviewed by the Town Administrator, it will be determined if the additional 20% will be granted.
  • 20% of grant funds will be withheld until the Final Report is completed and reviewed by the Town Administrator. Upon approval by the Town Administrator, grant funds will be released to the organizations. Failure to submit a Final Report within 60 days upon the conclusion of the event/project may result in a forfeiture of any remaining grant funds. In the event the 20% grant funds are denied, the organization may appeal the Administrator’s decision directly to Town Council.

Unused funds must be returned to the Town of Blythewood within 60 days of completion of the event/project. Any deviation from this policy reverts back to Town Council for additional approval. If the event/project is cancelled, funds must be returned to the Town of Blythewood as quickly as possible. In the event a recipient is forced to cancel due to an Act of God, Town Council reserves the right to override the rules within this policy.

Use of Revenues

The Town of Blythewood will use the Excel formula-driven worksheet to determine the uses and allocations within SAT, LAT and H Tax. While the allocations can change, to ensure long-term financial stability, it is recommended that no changes occur while the Town is contractually obligated to appropriate revenues for the financing of capital assets, capital projects or capital improvements.

Outside Agency Request Funds (NOTE: These are allocated from the general fund)

The following are restrictions to the Outside Agency Request Funds:

  • Recipients must be a non-profit organization in good standing
  • Recipients must have been in existence for over one year
  • Recipients must use the awarded funds to benefit the Town of Blythewood
  • Appropriations to a single applicant cannot exceed 10% of the total funds available
  • Applicant cannot receive grants from the general fund if they receive SAT, LAT or H Tax funds.

SC rules for administering SAT, LAT and HTAX revenue

SAT Revenue

Pursuant to S.C. Code Ann. § 6-4-10, state accommodation tax revenue must be allocated as follows:

  • First $25,000 must be allocated to the general fund
  • Five percent of the balance must be allocated to the general fund
  • Thirty percent of the balance must be allocated to a special fund and used only for advertising and promotion of tourism
  • The remaining balance (plus interest) must be allocated to a special fund and used for tourism-related expenditures.

Allocations to the special fund must be spent by the municipality or county within two years of receipt. However, the time limit may be extended by recommendation of the local governing body and approval by the oversight committee established pursuant to S.C. Code Ann. § 6-4-35 (Tourism Expenditure Review Committee, or TERC).

Tourism-related expenditures include:

  • advertising and promotion that will develop and increase tourist attendance through the generation of publicity,
  • promotion of the arts and cultural events,
  • construction, maintenance, and operation of facilities for civic and cultural activities including construction and maintenance of access and other nearby roads and utilities for the facilities,
  • the criminal justice system, law enforcement, fire protection, solid waste collection, and health facilities when required to serve tourist and tourists facilities,
  • public facilities such as restrooms, dressing rooms, parks and parking lots,
  • tourist shuttle transportation,
  • control and repair of waterfront erosion, including beach renourishment,
  • operating visitor information centers.

(S.C. Code Ann. § 6-4-15 provides guidance on the use of these revenues to finance bonds.)

LAT Revenue

Pursuant to S.C. Code Ann. § 6-1-500 through § 6-1-570:v all revenues generated from a LAT must be used exclusively for the following purposes (§ 6-1-530):

  • tourism-related buildings including, but not limited to, civic centers, coliseums, and aquariums,
  • tourism-related cultural, recreational, or historic facilities,
  • beach access, re-nourishment, or other tourism-related lands and water access,
  • highways, roads, streets, and bridges providing access to tourist destinations,
  • advertisements and promotions related to tourism development, or
  • water and sewer infrastructure to serve tourism-related demand.
  • HTax Revenue
  • Pursuant to S.C. Code Ann. § 6-1-700 through § 6-1-770, the rvenues generated by the H Tax must be used exclusively for the following purposes (§ 6-1-730):
  • tourism-related buildings including, but not limited to, civic centers, coliseums, and aquariums,
  • tourism-related cultural, recreational, or historic facilities,
  • beach access, renourishment, or other tourism-related lands and water access,
  • highways, roads, streets, and bridges providing access to tourist destinations,
  • advertisements and promotions related to tourism development, or
  • water and sewer infrastructure to serve tourism-related demand,
  • control and repair of flooding and drainage within or on tourism-related lands or areas, or
  • site preparation for items in this section including, but not limited to, demolition, repair or construction.

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