Change of Occupancy?

That’s the question being put before the members of the Hyde County Board of Commissioners. All they have to do is enact a 2% Occupancy Tax increase, a power that has been invested in them since 2006 when NC Session Law 2006-128 was passed by the General Assembly.

Some background information might come in handy (skip to Part 2 of the story, if you already know how all this works):

Occupancy Tax (OT) is what you pay when you rent a hotel room or cottage just about anywhere. Ever notice the sticker shock when your $100 room turned out to be over $110 when you paid the bill? Blame OT (and sales tax, and, in some places – not here –, city tax as well.) On the other hand… have you ever decided where to vacation based on OT rates?

Ocracoke’s current OT rate is 3%, the lowest in the coastal region (What a bargain! Most coastal counties are 5-6%). We are in a small minority of NC counties that are allowed to use our OT monies for “any public purpose.” (NC SL 1991-230) Ocracoke collects more than $400K a year in OT and ten percent (or about $40,000) of that goes directly to Hyde County for “administrative costs” (more on that later.)

The rest of the big ol’ pot of dough pays for (in part) just about every nice community service or amenity that Ocracoke village has. The Health Center, Ocrafolk Festival, Blackbeard’s Pirate Jamboree, emergency services, 4th of July celebration, the new Fire Hall and more for the OVFD, our community radio station, the daycare center, Ocracoke Preservation Society, the community center, the library, the new ball field and community park, the British Cemetery ceremony – all these and more benefit every year from OT funding. 

OT funds have also been used to pay a lobbyist to fight the ferry tolls, to pay for a part-time travel and tourism director for Ocracoke Civic and Business Association (full disclosure: that’s my other job), to contribute toward the cost of lifeguards (last summer only), and to buy advertising that promotes the island (more on that later.) 

A five member OT advisory board of Ocracoke residents (current roster: Frank Brown – chair, Clayton Gaskill, Trudy Austin, David Styron, and Marlene Mathews) is appointed by the county commissioners to listen to the organizations that present a compelling case for why they need the cash, and then make recommendations to the board of commissioners about how to distribute it. 

Every year, the many good causes on Ocracoke ask for more than they receive. Also every year the commissioners go along with the OT board’s advice and dole out the money accordingly. Additionally, the OT board saves a little for a rainy (or rather blustery, hurricane-y) day, so that in the event of the “big one,” Ocracoke has some money in reserve for whatever needs may arise. In 2014, the board voted to spend about half of their savings on one-time “special projects” such as getting the ball field finished. Even after that display of generosity plays out, the OT board will still have at least $350K stuffed under the proverbial mattress.

But even with that cushion, the fact remains that Hyde is a poor county, and Ocracoke has many needs. Where can we raise more funds to do more good for the island’s residents and visitors. The time has come to revisit the lively debate on the efficacy and wisdom of raising the Occupancy Tax. 

Kris Noble, director of the Hyde County Office of Planning and Economic Development recently gave a presentation about just that topic. After several months of research, she and Hyde County public information officer, Sarah Johnson, came up with an informative Power Point explaining the whys and wherefores of enacting that extra 2% of OT, and creating an Ocracoke Tourism Development Authority (TDA).

Kris tirelessly presented her “Ocracoke Marketing Tourism Research” at the February 2nd commissioners meeting, the February 11th OCBA meeting, and at a special meeting of the Ocracoke OT board on February 12th. You can read it yourself here.  

As Kris helpfully explained, the Hyde County commissioners can raise the OT as much as 2% by a simple vote. Although our existing 3% OT may be used “for any public purpose,” the extra comes with strings attached. The legislation that enables Ocracoke to charge the extra 2% OT also requires that the county create a TDA. The TDA would consist of a 5-person commissioner-appointed board, all of whom must be Ocracoke residents. At least two of the TDA board members must be in the lodging industry. It would be a separate board from the OT board and would have direct control over the money. (The OT board for the 3% is an advisory board and all expenditures need commissioner approval; the TDA could act alone with its money.)

Right now our 3% OT is divided about 80/20. 80% goes to support community needs, while 20% is used directly to promote tourism (advertising the island, paying for a travel and tourism director) and for tourism-related expenditures (4th of July, Pirate Jamboree, etc.) With a TDA in place to pay for the marketing and tourism-related stuff, that 20% could be added to the coffers for “any public purpose.”

Kris envisions that this TDA, once appointed, would hire an executive director. She thinks it’s been “a longtime coming for Ocracoke to have a fulltime Hyde County employee on the island.” This director would do marketing work as well as act as a liaison between Ocracoke residents and county agencies.

Here’s a little bit of fun reading from the lawbooks (italics mine): “The Authority[TDA] shall use at least two-thirds of the proceeds distributed to it to promote travel and tourism in the district and shall use the remainder for tourism-related expenditures in the district. In accordance with the North Carolina Constitution and the United States Constitution, the tax proceeds may be used only for the direct benefit of Ocracoke Township. None of the proceeds may be used to promote travel or tourism in areas within Hyde County that are outside of the district or for tourism-related expenditures in the county that are outside of the district.”

All that money – just for Ocracoke! It would be at least $200K, even in a slow year.

All it takes is for the commissioners to vote it in. But will they?

Find out more in Part 2: Support and Opposition to the OT Increase (coming soon!)