In May 2011, Gov. Nathan Deal signed the Georgia Tourism Development Act, which urges the development of museums, water parks, convention hotels and other tourist magnets by allowing those businesses to keep a portion of the sales taxes they collect for up to 10 years. State officials said the law is so complex and writing the necessary regulations has been so tricky that lawmakers may need to amend the tax break next year before it can be implemented.
Developers of a new 200-room Westin hotel on Jekyll Island were counting on that tax break to secure a loan that would have allowed them to break ground this month. Jekyll Island officials, who just opened a new convention center in March, have dozens of groups lined up to check into the finished hotel starting in mid-2014.
But now construction is in limbo. The state still isn’t offering the tourism tax incentive that Jekyll Island officials say the developer needs to get its $25 million bank loan. Meanwhile, uncertainty over when the convention hotel will get built has caused a handful of groups to back out of plans to meet at Jekyll Island. Officials say the lost business is worth about $3.8 million.
“Because of what’s happening with the hotel, we definitely will not be there in 2014,” said Beth Brown, the spokeswoman for the Association County Commissioners of Georgia, which holds a conference for 1,200 people every spring.
The state departments of Revenue and Community Affairs were tasked with the bureaucratic rule-making needed to implement the tourism tax break. Community Affairs spokeswoman Saralyn Stafford said it’s been tough because the law has a number of unusual eligibility requirements.
Applicants are to show their projects will draw at least 25 percent of visitors from outside of Georgia and that they won’t compete for tourism dollars with existing businesses. An outside expert is supposed to evaluate applications. The final call on if projects get approved is made by the governor – something no other Georgia tax incentive requires.
Stafford said it’s possible the tax break won’t be available until next year. Deal and the rulemaking agencies are considering asking the Legislature to change some provisions before issuing final regulations, she said.
“The General Assembly and the governor feel like this is a good idea for Georgia,” Stafford said. “However, in trying to develop these rules and regulations, it’s becoming pretty clear it’s going to be hard to implement the current legislation. They are currently looking at a second possibility, which is a legislative fix. That’s why it’s sitting in limbo”
Deal’s office referred all questions about the tax break to the rule--making agencies.
State Rep. Ron Stephens authored the tax break and said it got bogged down with complex and subjective requirements to appease fellow lawmakers. The Savannah Republican is chairman of the House committee on tourism and economic development. He said most tax incentives he’s worked on took about a year to clear the rulemaking process.
Garvey said Jekyll Island officials are working to help the hotel developer find new financing. If construction starts by the end of this year, he said, the hotel could still meet its mid-2014 deadline.
Meanwhile, the delay means a loss of convention dollars not only for Jekyll Island, but for all of Georgia.
The Georgia Forestry Association was interested in booking Jekyll Island for its 2014 conference of about 350 people. But with no guarantee the convention hotel will be open, the group decided instead to go to Hilton Head Island, S.C.
“We will not go to Jekyll Island without a new convention hotel,” said Steve McWilliams, the association’s president. “It just won’t happen.”