$21,000 and counting

FRIDAY, 08 NOVEMBER 2013 02:00 JOHN MOORHOUSE Penticton Herald
The City of Penticton faces a $21,000 legal bill stemming from its hotel room tax battles with the Penticton Hospitality Association. That bill could go higher if further court action is needed. PHA officials revealed Thursday they have now retained a lawyer to review city council's recent decision to transfer the two per cent hotel room tax (HRT) to Tourism Penticton. The city is also demanding the PHA return $300,000 in unspent tourism marketing revenues generated from the tax. The city's legal bill to date amounts to $21,783 Ð of which more than 43 per cent relates to a one-day mediation session in early September. Mayor Garry Litke said Thursday he hopes the legal costs won't climb any further. "I would hope that would be the end of it," he said. "It's always annoying when we have to spend money on legal costs to implement agreements, but that's what we were forced to do." The HRT monies are forwarded to the city by the provincial government. The city then has the option to hand them over to another organization for administration. A five-year HRT contract with the PHA went into effect on July 1, 2012. However, Litke said the city was forced to take legal action when the process involved in utilizing those funds and timelines were allegedly not adhered to by the PHA. Much of the city’s legal bill stems from a session with provincial mediator Howard Nemtin in Penticton. Coun. Wes Hopkin, who was acting mayor at the time, said many of Nemtin's recommendations dealt with the delayed delivery of audited financial statements from the PHA. Meanwhile, the PHA issued a statement Thursday defending its role in the HRT fight with City Hall. While acknowledging it was late in providing the financial statements for 2012, the PHA noted it didn't gain control of the tourism tax revenues until July 2012. "Given that this was the yearly halfway mark, the PHA elected to allow existing marketing operations (now in full swing) initiated by Penticton and Wine Country Tourism (a city-funded entity) to run their full course until the end of the year." The PHA said it couldn't produce an annual report until it received the reporting information for the first half of the year from the city. The Hospitality Association said it has been "prudent and commercially astute” in its use of the tourism marketing funds. It has spent $325,000 on external tourism marketing in 2013. The room tax generates about $400,000 a year.