By Rob Morris on June 11, 2019
A lawsuit filed by property owners on the Currituck Outer Banks contends that the county has misspent $60 million in occupancy tax proceeds since 2004 on projects and services that did little or nothing to promote or expand tourism.
The property owners and the Corolla Civic Association argue in their suit that Currituck County officials improperly appropriated occupancy tax money to pay for fire and police protection and for parks and other amenities on the mainland that only residents would use.
Some of the projects include money set aside by the Tourism Development Authority for renovations to the Old Jail at the county administrative complex. The lawsuit questions County Manager Dan Scanlon’s argument that any historical structure qualifies for occupancy tax funding.
State law and amendments requested by Currituck County limit the use of the money collected from visiting renters to promoting tourism and for tourism-related projects that would increase the use of lodging and facilities that attract vacation and business travelers, the suit says.
The lawsuit challenges the appropriation of $3 million for the Maple Commerce Park and other spending for the airport. It cites other case that it contends was use of occupancy tax revenue with no provable impact on tourism, including:
Scanlon argued in 2012 that mainland recreational facilities could drive a need for more restaurants and lodging, the suit noted, but that they have produced no tangible results nine years later.
The lawsuit also contends that the county improperly provided loans out of occupancy tax funds, including $5.7 million for a water treatment facility on the Currituck Outer Banks and has deposited the funds in the general fund in violation of a 2004 amendment to the state law.
Currituck has collected $144 million in occupancy taxes since 2005, according to the suit. The civic association contends that the beach area generates 60% of the occupancy revenue but only receives 20% of the benefits.
It asks the court to determine the parameters of occupancy tax spending and to bar further use of the money beyond those purposes. It also seeks reimbursement from the county of money that was spent in violation of state law. The plaintiffs contend that the expenditures deprived them of funding intended to benefit the Currituck Outer Banks.
A lawsuit provides only one side an argument. On June 4, the county was granted an extension to file its response.
“The county continues to evaluate the lawsuit,” County Attorney Ike McRee said Tuesday. “The county feels the suit is baseless and they plan to vigorously defend their use of the occupancy tax.”