(by Thomas St. Myer, PNJ)
Anyone spending money on a hotel room, dinner, souvenir or the sort on Santa Rosa Island will soon pay anywhere from a few cents to a few dollars less, assuming the sellers cooperate.
Last week, the Santa Rosa Island Authority sent a letter to commercial leaseholders about its lease fee reduction policy, which takes effect Oct. 1. Island Authority percentage fees will be reduced in half for full-service restaurants, fast food restaurants, beer and wine, professional services, retail sales, room rental, and other sales and services.
Holiday Inn Express General Manager Beverly McCay demonstrated how that reduction will save patrons renting a hotel room. The Island Authority collects 2.5 percent in fees for room rentals, which will decrease to 1.28 percent. That perhaps seems miniscule, but McCay used an example in which a patron renting a $100 room would save nearly $10.
If someone rents a hotel room today for $100 that total is multiplied by 2.55 percent for the Island Authority. That $102.55 is then multiplied by 11.5 percent (7.5 percent for state tax and 4 percent for tourism development tax) equaling $125.62. After Oct. 1, that same room will cost $116.47.
"Every little bit helps, but it's a little bit," said McCay, who falls in line with the overwhelming majority on the Island that argue since they pay property taxes they should have title to the property and should not have to pay lease fees.
The percentage fee reduction results from the Board of County Commissioners voting last month to cut the Island Authority budget in half and hand control of its Public Safety and Public Works departments to the county. In turn, commercial and residential leaseholders will pay half their previous lease fees.
Keisha Turner, an accounting specialist for the Island Authority, said commercial leaseholders are within their rights to decline the percentage fee reduction, but if they choose that option, they will be required to pay the Island Authority the same amount as the previous year.
"Whatever fee they charge the customers, we'll charge them," Turner said.
Tom Carmichael, co-owner of two Pensacola Beach establishments in Capt'n Fun Beach Club and Jubilee Oyster Bar & Grille, said he swallows the liquor sales percentage fees rather than charge patrons the extra 3 to 5 percent for the Island Authority. He then pays the Island Authority thousands of dollars out of pocket. Carmichael is unsure that will change with reduced percentage fees.
"It's difficult when you're a straight-up beer place," he said in reference to Capt'n Fun. "It's so competitive. A few cents is a big deal when you're talking about a single drink."Santa Rosa Island Authority board member Karen Sindel and her staff noted commercial leaseholders such as Carmichael stand to receive some relief from the lease fee reductions. The Island Authority collects a variety of fees from commercial leaseholders.
The News Journal obtained a copy of the 99-year lease between the Holiday Inn Express and Island Authority. Percentage fees the hotel chain agreed to pay the Island Authority in its initial 15 years included:
•2 percent of gross receipts from food sales, beer and wine, plus six cents per square foot per year on ground rental on ground space occupied by facilities for preparation and service of food
•5 percent of gross receipts from sales of all alcoholic beverages other than beer and wine
•5 percent of gross receipts from all other sources except room rentals
•5 percent of first $12,500 of gross receipts per acre of demised premises
•3 percent of the next $12,500 of gross receipts per acre of demised premises
•1 percent of any gross receipts in excess of $25,000 in each of the first five years
•2 percent of excess during the succeeding five years
•2 ½ percent of such excess for the remainder of the term of the 99-year lease after the first 10 years of business.
When asked why anyone would be willing to open a business on Santa Rosa Island and pay numerous lease fees as opposed to opening that same business in downtown Pensacola, McCay said, "Insanity. At this point until something is done to alleviate lease taxes, it's insanity."
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