By Kip Tabb | Outer Banks Voice on July 10, 2021
At its core, the legal dispute between the Corolla Civic Association (CCA) and Currituck County over the county’s use of more than $30 million in occupancy tax (OT) revenue hinges on language in a 17-year-old law.
In the latest round of that battle, the CCA late last month filed for a partial summary judgment of their 2019 suit. The suit challenges how the county’s OT revenue has been spent based on the provisions of a 2004 law authorizing the county to collect it.
The partial summary judgement for injunctive relief focuses on the second of 13 claims against the county – one that cites the “Unlawful use of occupancy tax proceeds for safety services and equipment in violation of the act.”
Casey Varnell, attorney for the plaintiffs, notes that counties that are authorized to collect OT can apply those funds for police and emergency service. However, that use is specifically listed in the law creating the tax. “The fact that you can fund police and emergency services, that is explicitly named in the local legislation,” Varnell said.
The Dare County law, for example, states that funds collected “may be used only for tourist-related purposes, including construction and maintenance of public facilities and buildings, garbage, refuse, and solid waste collection and disposal, police protection, and emergency services.”
The language in the Currituck County law is specific in what is considered appropriate — listing beach nourishment, capital expenditures and marketing as measures that “are designed to increase the use of lodging facilities, meeting facilities, recreational facilities, and convention facilities in a county by attracting tourists or business travelers to the county.” But there is no specific mention of public safety services as an appropriate use in that law.
The law that was in effect prior to the 2004 version did allow OT revenue to be used for police and emergency services in Currituck County. But the 2004 edition superseded the older measure, according to Varnell.
But for his part, Currituck County Attorney Ike McRee said there is language in the 2004 law that gives the Currituck County Board of Commissioners considerable leeway in how the money is spent. The full text of the provisions governing the how the funds can be used includes the phrase, “in the judgment of the Currituck County Board of Commissioners.”
That provision, McRee says, allows the commissioners to wholly determine how the funds are allocated. “It gave the commissioner greater discretionary authority when it provides that the commissioners in their judgment, determine what is a tourism-related expenditure,” he said.
Is beach nourishment on the horizon for Currituck County?
How those funds are allocated may become more critical over the next few years. In February 2020, Currituck County contracted with Coastal Protection Engineering (CPE) to conduct a three-year study of the county’s beaches.
The first year’s study was released in November 2020. Although the first-year study shows that some areas of the 22.7 miles of beach from the Dare County line north to Carova are relatively stable, there are stretches of beach the show significant retreat. It is, however, the first year of a three-year survey, and as the study’s authors note, the first year is designed to establish a baseline.
Nonetheless, some of the findings, using the state’s historic data compared to 2020 observations, seem to place more than 50 homes in danger. In particular the north end of Corolla to the south end of Carova appear to be experiencing significant loss of beach.
The average loss in the Carova area, which is seeing the greatest erosion of beach, is 7.4 feet per year. Along the northern end of Corolla, the average loss is 6.2 feet per year. However, those are averages, and some areas are experiencing larger beach retreat.
One of the contentions of the CCA in its 2019 complaint was that although the 2004 law specifically called for funds to be applied to beach maintenance and nourishment, almost no money had been allocated for that purpose.
The CPE study is being funded through the OT funds, but it is unclear whether funds are being set aside for an actual nourishment project if the study determines it is needed.
Beach nourishment is an extraordinarily expensive process, and it calls for ongoing maintenance. Nags Head is about to renourish its beaches to replace sand lost during Hurricane Dorian. The price tag for that project is $13.9 million. Much of the project is being funded through FEMA and the state, but the town is still obligated to pay almost $500,000.
Currituck Commissioner Bob White, who represents Corolla, believes the commissioners want to see a completed three-year CPE study before making a decision.
“We’ve had some preliminary discussions on it, but all of us, I think, by and large are just waiting to see where we are when they get done,” he said.
Yet, even if the study demonstrates a need for beach nourishment, the language in the 2004 law does not obligate the commissioners to fund the project, according to McRee.
“It can be used for that. But again that’s in the judgment or discretion of the county commissioners,” he said.
“This is really a political question not a legal question,” McRee added. “If the plaintiffs don’t like the way the elected county commissioners are expending funds, you would think that the solution to that would be to run candidates with a different point of view that could be elected to change the allocation of funds.”