Follow the BID money
First of all, let me say that I would support a fair, transparent and above board BID to market tourism on the South Shore. I would also be willing to pay my fair share into it because I know I benefit from tourists. All that I ask is a level playing field where all businesses play by the same rules.
Unfortunately, this BID has been purposely designed to favor a special interest group, giving them all the rights and privileges at the expense of the rest of the businesses. It has even been designed so the rest of us cannot turn it down. The BID has been written specifically to cheat 3,200 businesses out of their money, giving them absolutely no say in the matter, while the special interest group pays nothing and gets all of the rights and privileges. This inequity was deliberate and calculated.
How was this done? The state law that allows communities to form BIDs states that participants would get to vote according to their contributions, which is fair. After all, why should someone who pays $10 get the same vote as someone who pays $1,000? If the BID had been written in that way, I would have no objections with it, because that would have been fair, transparent and above board.
The city has decided to skirt the spirit of the law in favor of the Lodging Association. What they have done is design a payment schedule for all the other businesses in town for their share of the BID, while not requiring the association to pay anything. Instead, they decided to donate tax revenues as the lodging portion of the BID, and extend Measure Z to give the lodging people $1.2 million by Oct. 31, 2006. This is will be in excess of anything the Lodging Association people would be able to donate, if they were taxed like the rest of us with a $3,000 cap.
I have several problems with this.
First, this TOT is a pass-through tax, like sales tax. The lodging people collect the money from their customers and give it to the city. It was never their money and they have no legal claim to it. Yet the city intends to make them a gift of it as their “contribution” to the BID. Check this out: Resolution 2004-S4: “The City Council intends to levy an annual assessment on business in the district, except where funds are otherwise available to pay for improvements and activities of the district.”
This gift ensures the association will eventually have $1.2 million of voting power. The money the city intends to collect from all other businesses is $325,000 based upon our annual revenues, but they do not intend to collect anything from the Lodging Association based on its annual revenues. If the city had any intention of being fair and above boar, it would collect from all of us equally and restore the TOT money to the BID that was earmarked for marketing with no strings attached while allowing Measure Z to sunset as promised.
Secondly, the BID law states that to defeat this proposal, there must be a “nay” vote equal to 50 percent-plus of all the possible votes available. No “aye” votes are allowed. Since the city will give the Lodging Association $326,000 worth of votes for free, the rest of us have no chance of getting anywhere near the 50 percent of votes needed. If each of the 3,200 businesses were to get out the “nay” vote, we would miss defeating this by $1,000 worth of votes. By its action, the city has purposely skewed this proposal so it can’t be defeated. And that is if 100 percent of the (non-Lodging Association) businesses voted “nay.”
Finally, we were told businesses would have a $3,000 cap on how much they would be assessed to level the playing field. In other words, a business like Safeway or Kmart would not be assessed the full amount based on sales. I would have no problem with this if the premise were honest. What it is really designed to do is twofold: to limit the number of opposing votes to the Lodging Association, and discourage their opposition to the BID.
Because of the TOT gift, properties like Marriott and Embassy have no $3,000 limit. Their votes are based on the TOT they collect, which exceeds the leveling limit. Where is this level field? What if the arbitrary limit was $3,500? Would non-lodging numbers exceed $326,000.
The chamber’s Q&A paper says, “And, the cap is a good answer to the argument that the big businesses would control this. They could only vote their share up to the cap, so small businesses gain a little better weight in the process.” Let’s delve a little deeper into this $3,000 cap from the lodging side. To reach this cap let’s see how many room nights on average a motel must rent: $3,000 divided by $1.50 equals 2,000 rooms a year. Divide by 365 days, and 5.48 room nights on average is what it takes to exceed the cap. I am guessing there are some motels struggling that may not average 2,000 rooms a year and I am sympathetic as I am with other non-lodging businesses in the same boat. But I am guessing a majority of the motels do go over 2,000 rooms and will be allowed to exceed this “leveling limit” that, of course, keeps the playing level fair. “A little better weight in the process” for whom?
The Q&A also states: “This would provide one equal vote per business as to who would represent them.” This sound warm and fuzzy until you realize it doesn’t say that the representatives get one equal vote. BID law says voting power comes from contributions, and I doubt that can be taken away.
Neither in the chamber’s presentation nor in the city’s proposal does it clearly spell out any of the above, so let me make my case. In the BID information form sent to all of us, it clearly states, “It is not a new tax on lodging. The $1.50 per night TOT that currently goes in to the city general fund will transition to go into the BID. However lodging will contribute about $1.2 million from 146 lodging properties plus approximately 1,100 vacation rentals while all other businesses, about 3,200 will contribute about $325,000.”
Then add the note at the bottom of the assessment list:
“Lodging contribution to the BID will be a minimum of the $326,000 allocated in fiscal year 2004-05 and a minimum of $326,000 to be designated in the 2005-06 budget (subject to future council approval) from existing Measure Z funds. After Oct. 31, 2006, Lodging contribution to BID will be $1.50 per occupied room night.”
You will notice how this keeps saying: “Lodging will contribute.” How can lodging contribute moneys that were never theirs? It’s tax money collected from its customers and paid to the city. At what point did it become theirs?
If we accept for a moment that the “contributions” are fairly equal during the first almost two years, you will notice by Oct. 26, 2006, we are left in the dust, never again to have a say on this BID.
I am disappointed the framers of the BID chose to divide the business community into factions. We are all businesses up here struggling to earn a living in a very tough environment and should be working together as partners to succeed. Let’s make the BID fair for everyone involved.
– Dick Van Buskirk is owner of Bijou Furniture.