Municipal Mugging – Local Government Raid on $750,000 Tourism Fund

By. Neil Williamson, President

First the good news, regional tourism is up and the Charlottesville Albemarle Convention and Visitors Bureau (CACVB) is achieving these objectives while under spending its budget.

The Bad News – the two local local governments want the money.image

Please let me explain.

Where the money comes from: Albemarle County and the City of Charlottesville jointly fund the CACVB with monies earned from the lodging tax (also known as the Transient Occupancy Tax).  Virginia State Code § 58.1-3819 – Transient occupancy tax specifically delineates what these funds may be used for

The revenues collected from that portion of the tax over two percent shall be designated and spent for promoting tourism, travel or business that generates tourism or travel in the locality.

The concept behind this tax is the better job the tourism board does its job, the more revenue it generates for the community as a whole and to support their promotional activities.

After many years of annual budget wrangling, the discussion of a dedicated income stream developed,  According to C-villepedia:

In 2004, a new operating agreement was approved by the Charlottesville City Council and the Albemarle Board of Supervisors. A regional tourism council was eliminated, and the funding formula was changed to reflect that the CACVB would be funded from 30% of Charlottesville and Albemarle County’s annual transient occupancy taxes.

Where the money is spent:

According to their website the mission of the CACVB is:

“to enhance the economic prosperity of City and County by promoting, selling and marketing the City of Charlottesville and County of Albemarle, as a destination, in pursuit of the meetings and tourism markets.”

The CACVB accomplishes this mission through advertising, promotion, attending trade shows, staffing welcome centers as well as funding special projects.  This work is overseen by a Board of Directors that includes representation from both Albemarle County and The City of Charlottesville, The Regional Chamber of Commerce and representatives from the tourism industry.

Earlier this month, the two members from local government communicated with their colleagues in the CACVB Board  explaining their action (not the Board action) to ask staff to create a plan to draw down the accumulated the CACVB savings by shifting it to them.  The letter said in part:

The County Executive and City Manager have directed staff to develop a method for drawing down the fund balance to a more appropriate level, with the funds to be distributed back to the County and City.

While there was a promise in the letter to use these restricted funds for “tourism related purposes”, the Free Enterprise Forum believes both local governments are raiding the tourism cookie jar and punishing the CACVB.

The Charlottesville Regional Chamber of Commerce has sent communication to the City and the County advising against this “take back” –

Such a measure is ill-advised and opposed by our Chamber of Commerce.

These accumulated funds have been generated by local lodging taxes and are dedicated for direct tourism promotion funding – as compared to local general fund revenues available for any appropriate local funding options.  As such these funds should and must be expended only for direct tourism promotion purposes.  Unlike general tax revenues, dedicated tourism promotion funding is not to be available for general fiscal relief to County of Albemarle and the City of Charlottesville.

Earlier today, Board of Directors of the Charlottesville Albemarle Convention and Visitors Bureau passed a resolution (with the City and County government representatives abstaining) that said in part:

dedicated local direct tourism promotion funding – as compared to local general tax revenues – should and must be expended only for direct tourism promotion and is not to be available for fiscal relief to County of Albemarle and the City of Charlottesville;

Further, the Free Enterprise Forum has taken issue with the methodology Albemarle County has used in the past using tourism dollars to help fund the Acquisition of Conservation Easements (ACE) program for properties that have tangential relationship (in our opinion) to tourism promotion.  We have little faith that reprogramming these dollars will increase tourism support; in fact we believe it will be used to replace  the small amount of direct local government support for tourism.

The CACVB Board of Directors has now started to take ownership of the fund balance that currently exceeds three quarters of a million dollars ($767,272).  It is important to note that the funds were accumulated over years of reduced spending.

  • Has the current CACVB Board provided staff proper direction to spend the funds allocated?
  • If so, how did the the fund balance get so high?
  • How will local government respond now that the usually amenable CACVB Board of Directors has stood tall and challenged what we see as a municipal mugging?
  • Considering all of the above should the entire construct (and budget) of the CACVB be reconsidered?

Once again, the Free Enterprise Forum has more questions than answers.

Respectfully Submitted,

Neil Williamson, President

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20070731williamson Neil Williamson is the President of The Free Enterprise Forum, a public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa  and Nelson County.  For more information visit the website www.freeenterpriseforum.org

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One response

  1. Neil,

    Tourism board meetings used to be public – not now (show me where it’s posted publically and wherer they meet?). The budget for the CACVB is not public – why not?

    We used to have the hospitality community be involved as a precursor to the board meetings – no more. There has been a great deal of turnover in the marketing department of the CACVB – why? I believe that the current funding systems is very good – the problem I have is how it is being spent in total secrecy.

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