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2 words, $128K: Chamber forfeits tax money
by Gary Kent
Jul 09, 2012 | 1463 views | 0 0 comments | 12 12 recommendations | email to a friend | print
BEEVILLE — A failure last weekend to reach an agreement between the city and Bee County Chamber of Commerce for the use of hotel and motel occupancy tax funds can be blamed on two words.

The chamber wanted a 90-day termination clause in its latest version of an agreement to include “for cause.”

The city did not want those words in the agreement.

Mayor Santiago “Jimbo” Martinez said Thursday that the agreement the city has had with the chamber for years never had a “for cause” stipulation.

The previous contract with the chamber for the use of so-called HOT funds for operational expenses always had given either party the right to terminate that contract with a 90-day written notice, without cause.

To add a “for cause” stipulation would mean that either party, in an effort to terminate the contract, most likely would have to go to court.

Interim City Manager Deborah Ballí said the city had become concerned about the way the chamber was spending the portion of the HOT funds for operating costs almost a year ago, in August 2011. It was then that the city first contacted the chamber with a 90-day notice.

That led to the two entities entering a “memorandum of understanding” during which the city would continue to give the chamber $128,000 a year to use for operating expenses.

Meanwhile, the City Council appointed a committee made up of former City Manager Tom Ginter, Assistant City Manager and Finance Director Ballí and Councilman David Carabajal to negotiate a new contract for those funds.

“And they worked hard,” Martinez said. Councilwoman Libby Spires and Carabajal brought an agreement to the council back in April but the chamber board wanted to add the words “for cause” to the termination portion of the contract.

The City Council balked. Those two words had never been part of any previous agreement.

Martinez said City Attorney Frank Warner recommended that the city refrain from adding those two words to a new contract.

At its April 25 meeting the council approved the current version of the agreement and sent it back to the chamber.

“We didn’t hear from the chamber throughout May,” Martinez said. Then, last month Martinez and Ballí met with chamber board members, who informed the council that they wanted to start over again and draw up a new agreement.

“But the city thought the agreement was good,” Martinez said. Again, he said it was the same basic contract the city had with the chamber before.

Martinez said he would bring the matter to the council again on June 26 session. But at that meeting, the council voted to leave the contract as it had been presented.

The chamber was given until June 30 to sign the agreement. Ballí said the chamber sent the city an express mail answer, notifying the city that it could not sign it.

Ballí said she sent the chamber notice on Sunday, July 1, that the agreement was being terminated.

Ballí said HOT funds are “very restrictive.” The state says specifically that money collected from hotel and motel occupancy must be used to “put heads in beds.”

Giving the chamber money for operating expenses was always a stretch.

“We have to administer the funds correctly,” Ballí said. If the city fails to do that, it could lose the use of those funds.

Martinez said there are several organizations which use that money to help finance events here that do bring in tourists and visitors. Those organizations are required to prove that they are using the money to fill motel rooms in the city.

“It’s a compromise,” Martinez said. “We have to give and take. I’m very surprised that they didn’t sign it (the proposal).”

The mayor said that without an agreement with the chamber, the city’s hands were tied and the council was unable to award HOT funds for other organizations.

Fiesta Bee County will need funds soon to organize its annual Diez y Seis celebration. Then the Western Week Celebration will seek funds for its events in October.

“While the Chamber board of directors is disappointed that terms were not reached, it looks forward to taking this as a new opportunity to refocus chamber efforts on its membership and our local business environment,” the organization’s board said in a prepared statement.

“Beeville and Bee County stand poised to benefit from long-term industrial and commercial growth and the chamber is committed to doing all it can to assist this community in capturing as many new opportunities as possible.”

“Additionally, the board remains optimistic that the city will continue to partner and collaborate with the chamber on future tourism and, especially, business development opportunities both now and in the future.”

Ballí explained that the lack of a contract will not completely stop the flow of HOT funds to the chamber. She said the organization can still apply for funding for events it schedules just as other organizations are required to do.

But the chamber must consider the need to fill hotel and motel rooms in Beeville to meet the requirements of the law. She said the city has invited a representative of the State Comptroller’s Office to come to Beeville on July 25 to conduct a seminar on how HOT funds may legally be administered.

Ballí said representatives of all organizations that apply for HOT funds will be invited and urged to attend the seminar.

The idea that bringing visitors to Beeville to shop in stores, eat in restaurants and purchase gasoline from businesses will not qualify. Purchases like that bring in sales taxes, not hotel and motel occupancy taxes.

The city manager believes the message the representative will bring to the city is that “HOT funds must be used to put heads in beds.”

Gary Kent is a reporter at the Bee-Picayune and can be reached at 358-2550, ext. 120, or at reporter@mySouTex.com.
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