Council forces PHA's hand

TUESDAY, 05 NOVEMBER 2013 02:00 JOHN MOORHOUSE Penticton Herald
The City of Penticton has pulled the tourism marketing plug on the Penticton Hospitality Association. However, the PHA indicates it isn't about to roll over and is seeking its own legal advice in what has become a lingering dispute over external tourism marketing funds generated by the two per cent additional hotel room tax (HRT). The PHA, representing more than 40 local hotel and motel owners, has received a letter from the cityÍs lawyers, Boyle and Company, outlining ongoing city concerns over the lack of sufficient tourism marketing initiatives from the HST revenue. The tax generates about $400,000 a year. The city claims no money, other than funds earlier earmarked for Tourism Penticton, was spent in 2012 and more than $300,000 remains unspent in 2013. The city demands the PHA return all remaining room tax funds to the city before the end of November.“The city intends to transition the administration of the HRT funds to the Tourism Penticton Society and encourages the PHA to co-operate with an orderly transition to the new organization,” the city's legal firm stated in the letter.“Clearly it is in the interests of all Penticton tourism stakeholders to ensure that as much of these HRT funds are spent on external marketing of the city as possible so that the accommodators and other tourism related businesses within the City of Penticton can thrive.” City council claims the PHA breached the HRT agreement by failing to spend the full amount of the room tax funds collected in 2012 and 2013. Rob Appelman, president of the Penticton Hospitality Association, said Monday the PHA has hired a lawyer to rebut comments made in the city's letter. Legal advice is also being sought about whether to hand over the remaining HRT funds, as directed by City Hall."At this point, we don't feel we're in a breach of contract," Appelman said. The PHA has spent about $325,000 this year, including up to $60,000 for online advertising and $35,000 to the Challenge Penticton triathlon. Appelman said rather than spent the remaining funds from 2012 in one year, they want to spread it out over four years, in addition to new revenues generated by the tax. The PHA president said he was not surprised by the city's letter, claiming relations with City Hall has been strained ever since they received a mandate to handle the tax revenues. He said the organization hoped that relations would improve after “some good dialogue” in recent weeks. Council alleges the Penticton Hospitality Association didnÍt supply audited financial statements until October following a mediation session, despite repeated requests for the report from March through to August. This marks the second time in six months the city has butted heads with the PHA over the room tax revenue. Council members tore into PHA officials for the apparent lack of tourism marketing efforts during an appearance at the May 6 council meeting. The PHA acknowledged at the time that more than $330,000 collected last year was carried over to 2013. Mayor Garry Litke could not be reached for comment prior to Monday night’s council meeting.