Deal has already given plenty of support to boosting tourism and conventions on Jekyll Island, where Georgia taxpayers have invested $50 million in a new convention center and beachfront park, spokesman Brian Robinson said. But developers of a planned 200-room Westin hotel on the island state park should never have assumed they would get a tax subsidy from the state, he said.
“A hotel will be very successful there on Jekyll Island,” Robinson said. “But that investment needs to be made on a level playing field with other competing hospitality businesses on the island and in the area. The governor has said we’re not going to use this sales tax rebate in instances where the new entity competes with existing Georgia job providers.”
The Jekyll Island Authority said last week that delays in building the Westin have caused at least seven groups to back out of plans to hold conventions on the island in 2014. Developers were supposed to break ground last month, but couldn’t get financing. The developer planned to secure its loan with a tax refund for tourism projects signed by the governor in May 2011. But the tax break remains unavailable to businesses 16 months later.
Jekyll Island officials are working to help the developer, Jekyll Landmark Associates, find another source of financing. Meanwhile, other projects looking to apply for the tax break will have to wait until at least next year. Robinson said the state agencies in charge of writing rules and regulations needed to implement the program plan to send the tax break back to the Legislature for changes in 2013.
The 2011 law, called the Georgia Tourism Development Act, seeks to encourage development of museums, cultural centers, theme parks, convention hotels and other tourist attractions by allowing qualified businesses to keep a portion of the sales taxes they collect for up to a decade.
But the rulemaking agencies say eligibility requirements built into the law are too complex and subjective compared to other tax breaks. Applicants would have to show at least 25 percent of visitors would come from outside Georgia and they would not be allowed to compete with existing businesses. And unlike any other tax break in Georgia, the governor would get the final say in approving or denying applications.
While the state hasn’t begun taking applications for the tax break, it’s still generated controversy. A group of Savannah hoteliers and tea party activists protested last year when developers said they planned to seek the tax refund for a proposed convention hotel near the city’s downtown historic district, which is already packed with hotels and inns.
A Deal policy adviser cited the no-compete provision in an email to Savannah Rep. Ron Stephens, the law’s author, saying the governor would likely deny the tax break for that project.
Stephens, the Republican chairman of the House tourism and economic development committee, said he believes the Jekyll Island hotel deserves the tax break. But if Deal’s office has already tentatively turned down a similar project in Savannah, “that does create a real dilemma to say the least,” he said.
“They’re both convention hotels, but that’s where the similarity ends,” Stephens said. “We don’t have an investment in Savannah that is massive and was made to revitalize tourism. But there’s a lot of taxpayer exposure by not getting this convention hotel on Jekyll Island in the works.”
David Curtis, a spokesman for the Jekyll Island hotel developer, said his firm and Jekyll Island officials are still working with the lender, PNC Bank, to reach an agreement on the $25 million loan.
“I have every confidence that we will find a resolution that enables the project to move forward,” Curtis said in an email.