Destin Council seeks to delay bed tax expansion vote

Tony Judnich
Northwest Florida Daily News

DESTIN — Feeling left out of the loop on issues pertaining to the potential Okaloosa County bed-tax district expansion, the City Council on Monday adopted a joint resolution that seeks a delay in this fall's expansion-referendum election.

The council voted 6-1, with Councilman Rodney Braden casting the lone “no” vote, to adopt the resolution.

According to Destin’s city and land use attorneys, the council is the first local governing body to consider the joint resolution. Fort Walton Beach City Manager Michael Beedie distributed the resolution on July 12 to each of the managers of the county’s other eight municipalities.

Destin historically has generated the bulk of Okaloosa County’s bed-tax revenue.

Better known as the “bed tax” district, the county’s tourist development tax district was approved in 1989 and encompasses Destin, Cinco Bayou and most of Fort Walton Beach and Mary Esther, as well as unincorporated areas immediately next to Destin and Fort Walton Beach, such as Okaloosa Island.

Expenses of the county Tourist Development Council are funded by the 5% bed tax paid by people staying overnight at lodging facilities in the district.

With voters’ simple-majority approval of a countywide district, Niceville, Valparaiso, Crestview, Shalimar, Laurel Hill, the rest of Fort Walton Beach and Mary Esther and more unincorporated areas all would join the district.

Destin historically has generated the bulk of the county’s bed-tax revenue, according to local officials. While the Florida Department of Revenue currently collects the revenue for the county, the DOR does not track from where the tax revenue was generated.

The resolution adopted by the council on Monday asks the County Commission to implement a local bed-tax collection method in order to determine how much of the tax is being collected in various parts of the county.

The resolution also requests the commission to postpone the mail-in only referendum election, currently scheduled for Oct. 5, for at least 60 days to allow county staff and attorneys to work with the municipalities’ staffs and attorneys on the tax-collection issues.

Mail-in ballots:Many Okaloosa County voters will decide whether to expand county bed-tax district

Revenue from the tax can be used only in the district. In recent years, the existing district has generated from $18 million to more than $23 million per year, and those funds mostly have been used to promote the area to tourists and to fund beach safety and beach improvements.

If the district becomes countywide, the newly added areas, which combined have almost 3,000 lodging units, could generate an annual total of $4 million to $5 million in additional revenue.

Whether to collect millions of dollars from an expanded bed-tax district is arguably “the most important issue to come before the county in the last 30 years,” Destin City Councilman Dewey Destin said at Monday’s meeting.

Dewey Destin

Bed-tax dollars at work:A major expansion of the Shore at Crystal Beach Park in Destin is expected

Destin City Attorney Kyle Bauman noted at the meeting that Crestview and Shalimar officials are not interested in supporting the joint resolution, and that the Fort Walton Beach City Council likely won’t consider it until August because it doesn’t have regular sessions in July.

In separate but related action on Monday, Destin council members unanimously adopted a resolution to institute an “alternative dispute resolution process” that aims to resolve the city’s two-part conflict with the county.

According to Bauman, there is a conflict over whether Destin voters have the legal ability to vote in the Oct. 5 election, which will ask residents located outside the bed-tax district whether they want to expand it countywide.

County officials have cited Florida law while asserting that the area outside the existing district is the area that gets to vote on the expansion.

Besides that conflict, Destin officials oppose “the form, manner, and method by which Okaloosa County proposes to expand the taxing district because it puts the current taxing district at risk of being ‘reset’ to a lower tax rate,” according to Bauman.

Visitors enjoy a sunny day on the beach in front of some of the condominiums in Destin recently. The City of Destin adopted a resolution this week to delay an upcoming election referendum on expanding Okaloosa County's bed-tax district.

The alternative dispute resolution process is provided for by state statutes and is not the equivalent of a lawsuit, according to Bauman.

Former Destin City Attorney Jeff Burns is now serving as the city’s special counsel in its overall dispute with the county. At Monday’s meeting, Burns said County Administrator John Hofstad would be served in the next day or two with a letter and a certified copy of the council-adopted resolution to implement the dispute resolution process.

Burns said the first public “conflict assessment meeting” between Destin and county officials would occur within 30 days of Hofstad receiving the official notice.

While each council member would be allowed to attend that meeting, the council agreed to have Councilwoman Prebble Ramswell and Councilman Kevin Schmidt serve as its representatives in the alternative dispute resolution process.

The whole process “could be stopped in a week or two” if the city reaches an agreement with the county, Burns said.