Property owners challenge Currituck’s use of tourism tax money

By on June 11, 2019

The suit questions the appropriation of $8.5 million to the Curritck Family YMCA. (YMCA of South Hampton Roads)

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:

  • $11.6 million during fiscal years 2013 through 2017 for Emergency Medical Services and the Sheriff’s Office. The lawsuit says that legislation in 2004 disallowed spending occupancy tax proceeds on public safety.
  • Funding the YMCA in Barco on the mainland with $8.5 million in occupancy tax funds out of the total cost of $14.5 million.
  • $5.7 million for baseball fields in Barco.
  • $1.3 million out of total cost of $3.1 million or soccer fields in Barco.
  • $3 million on the Currituck County Rural Center

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.”


  • Local as it gets

    No oc tax spending for public safety are yall kidding me… just the way tourists drive requires more police and ambulances are needed
    The money shouldn’t be spent on just the beach. Police ambulances and fire dept come first. The airport is used by tourists. Anything in currituck that a local person has access to so does a tourist.
    The currituck mainland is part of tourism development present and future.

    Wednesday, Jun 12 @ 6:22 am
  • Mimi Lish

    “The airport is used by tourists.” I live 10 hours from my Corolla beach home and I do fly in, but guess what, I don’t own my own plane and I am not paying to charter a private plane into KONX. I fly into Norfolk and we drive as do most other people. While there is an “airport” this is not one where any carriers fly in so it is not a hopping tourist airport destination. Also, most of the charters available fly into Manteo and not KONX. People are not flocking to Currituck County for the Y, the Rural Center, Soccer fields, baseball fields or getting there in via the airport- heck I wish there were commercial carriers that landed there and I would be fine using tourism dollars to support it. They come for the beach, the beach cottages, and the horses. As far as public services, taxpayers in corolla are paying a special tax for additional services. Also allocating any of the dollars collected from this special tourist tax were prohibited by law from being allocated to public safety.

    Monday, Jun 17 @ 10:25 pm
  • Island Style

    As I said in the top of my previous statement, same old attitude. The beach properties should pay more for needed services. If you are making money on a property, it is a business. The influx of residents in a small area swells from hundreds to thousands. It requires more services, especially public safety.
    I do not understand how folks making money and enjoying the beach lifestyle, can be so short sighted as to not see how a rural county needs to upgrade and maintain to support your choice. A choice you can afford. As you look down from your flight, notice the farm fields, roads, bridges, schools, homes, businesses. If not for them there would be nothing for you to come to. If we as a community invest in our WHOLE county, we will make it a great place for everyone. No matter what your particular interest may be. Enjoy your stay.

    Tuesday, Jun 18 @ 9:27 am
  • Mimi Lish

    You missed the point of the article and my comments. The entire rationale of this lawsuit is that the county misused tax funds earmarked for something specific and spent it on other things. No one is saying that rural development is not wanted or needed but that is not what this tax was for. My property tax dollars (and the majority of the beach homeowners who do not live here full time) pay for schools that our children do not attend, so yes, I support local Currituck schools. My tax dollars also pay for public services and we pay an additional public services tax as part of my property tax to help pay for additional emergency services needed in Corolla- and I am totally fine with that. We hire local residents to maintain the property, manage the property, clean the pool, mow the lawn, etc so we add jobs to the local economy. And for the record, I do not “make money” on my home. Rental income covers expenses and taxes, however we break even or run at a deficit because we reinvest in upkeep and make capital improvements on our home every single year. You insinuate that people like me that provide a significant positive economic impact to the county are a burden, but without us and our capital investment the county would be significantly worse off.

    Tuesday, Jun 18 @ 12:06 pm
  • Spoonyrae

    So let me get this right, they are opposed to using tourist paid taxes to offset the additional costs of providing services? I guess this would mean they favor a tax increase on everyone else, weird logic.

    Wednesday, Jun 12 @ 7:14 am
  • Local

    Did you read the article?

    Thursday, Jun 13 @ 6:19 pm
  • Year Rounder

    On a per house basis the tourist areas have much less demand for Sheriff and EMS than the residential areas. Only in the peak month do the tourists approach the level of service demand of the residential areas. It’s much less expensive per house for beach public safety. A third of th houses in the County, 1% of the arrests.

    Tuesday, Jun 18 @ 5:15 pm
  • Arthur Pewty

    If you don’t vote here, I don’t care.

    Wednesday, Jun 12 @ 8:21 am
  • Brad Sink

    Arther got it right

    Saturday, Jun 15 @ 6:06 am

    There is a great need for proper sidewalks/walkways throughout the peninsula to provide a safe way for pedestrians to move about. There have been multiple deaths because of improper footpaths. Providing these safe passageways would help decrease traffic as well.

    Wednesday, Jun 12 @ 9:39 am
  • Lee

    This is sickening, to see our county spend this kind of money on non tourist projects. I guess this is why our county commissioners feel they need to create a special tax district to maintain the roads of carova. If you think that road maintenance in carova is not a safety issue you are crazy. Where is this county can you loose your vehicle in a 4 foot deep mud hole on a main road like ocean pearl. It happens many times every year, it is a shame to see a sixty thousand truck sitting in the middle of a main road in a mud puddle with water up to the steering wheel. How about road signs, there may be 10 road signs with dozens of roads in carova, tourist are always asking for directions because there are almost no street signs. I wish all of our commissioners could see the look on a family’s face when they drive into one of these deep mud holes with all there personal belongings under water and there car ruined. Is there no shame with our county leaders. I hope these people win this law suit and someone serves time for what they have done.

    Thursday, Jun 13 @ 6:49 am
  • Island Style

    This is the same old same old. The property owners of the Currituck Beach and their hypocrisy. They want to live on the beach and have top notch services and amenities. They want to make money on the so called cottages. They don’t give a crap about how the rest of the county supports them. Blinded by selfishness and greed only.
    Guess what folks. A visitor coming to Currituck County, may not stay in one of your cottages. They may come for the numerous other things you can do in Currituck County. I invite you to slow down and stop in some of the fine businesses. Also if we invest in the rest of the county more folks will want to come and do more activities. Fly in instead of drive in, you’ll need an airport. Without the use of OC tax for selected projects and mainland development, the people that provide services to the folks on the beach could not afford to live. These folks that work hard for you would have to charge you much more.
    As for the folks in Carova, you wanted secluded beach. Have at it. But to keep it secluded, you need to refrain from building it up. I do not feel the least bit sorry for folks that want to drive their 80K vehicle into a rut. Welcome to seclusion.
    I am glad, Currituck County government has used money to help develop parts of Currituck County, that are not on the beach. With sea level rise, things could look a lot different in our future. Stop attacking the county government. You are wasting the peoples money, that is the tax base of the county.

    Thursday, Jun 13 @ 4:31 pm
  • Local

    How does paying for the bulk of the new Y, that is in the middle of farm land, help tourism in Currituck County?

    Friday, Jun 14 @ 11:25 am
  • Joel M

    Do you know what percentage of the Y’s memberships are day passes from out of state tourists? Believe it or not, tourists that come to the beach tend to be in great shape, thus enjoy going to the gym – even on their vacation. OBX gyms have made a killing off of this with day passes being almost 20 dollars.

    Monday, Jun 17 @ 8:31 am
  • Island Style

    Anyone including a tourist, can go to the “Y'”. Pools, track, classes, cardio. Not every tourist has the $$$ to stay is the highest priced and outfitted cottage. Also we do have lodging off the beach. Guess what they pay tax too.

    Monday, Jun 17 @ 9:31 am
  • Mimi Lish

    Very few if any tourists are going to drive over an hour from Corolla or Carova to go to the Y. That is where the majority of Currituck County tourists come from- there is no doubt some tourists that visit the facilities and most are probably from Dare County tourists. No one is coming to the OBX because there is a Y here- let’s be real! Also, let’s see the demographical statistics from the guest check in- if Currituck was going to spend the $ on this and claim this as a valid tourist expenditure, let’s see where the actual guests are staying! There is lodging off the beach but it is dwarfed in comparison by the beach tax revenue. Most people in Corolla to Carova that work out are going to Pine Island, Corolla Light, or are swimming/biking/jogging/kayaking etc where they are and again not driving over an hour without traffic just to go to a Y

    Tuesday, Jun 18 @ 7:30 am
  • Island Style

    The “Y” is only an example of what the whole county has to offer. Like I said beach folks looking at the revenue taken in as theirs alone. It is not. It is meant for the entire county. If you are a resident, and vote here, talk to your commissioner. It is kind of you to look out for the tourist dollar, and very unkind to not even consider the local resident that lives here 365.

    Tuesday, Jun 18 @ 1:21 pm
  • Mimi Lish

    But the Y was one of the largest expenditures so it is not “just an example”. This specific tax is generated by tourists renting beach cottages and is meant to further tourism for Currituck County and none of the expenditures were made to support tourism for the beach or anywhere else in the entire county- the money was spent on pet projects for the mainland that had nothing whatsoever to do with tourism. I have no problem with non-allocated tax dollars being spent on any of the projects listed…I have a problem with the allocated tax dollars being misspent on projects out of the course and scope of the special tax. And those that vote and residents should take exception to their commissioners for voting to spend money they were not lawfully able to spend outside of a very specific scope. This tax is not a rainy day fund or a piggy bank. Hold the commissioners accountable for reducing wasteful spending so they can afford these projects without raiding an account they had no right to spend from. If residents needed 8.5 million for the Y it should have come from elsewhere in the budget or taxes raised to cover this…how many full time residents would have wanted that? Probably very few. Again I have no problems with these things being funded for the benefit of residents, but it should not come from a special assessment meant for something else entirely.

    Tuesday, Jun 18 @ 8:50 pm
  • Kitty Hawker

    I think a lot of people have a hard time remembering Currituck County is more than just Corolla and Carova. If they want to be so exclusive maybe they should start delegating themselves as a Republic.

    Sunday, Jun 16 @ 8:19 am
  • Daniel

    Corolla and Carova already pay 56% of Currituck county’s property tax base. This should be more than enough to cover the additional need for police and fire services needed for 3 or 4 months a year. As for the YMCA I wonder how many guest of Corolla and Carova have purchased a day or week pass. It would be over an hour each way to work out there I doubt they even sold one pass to someone staying in those areas.. The tax was an additional tax designed to promote tourism at the very least 50% should be spent in Corolla and Carova.

    Tuesday, Jun 18 @ 10:26 am