THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, May 26, 1996 TAG: 9605260045
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: 107 lines
Beach homeowners should hug the next tourist they see. Or at least say thank you.
It turns out that the annual invasion of tacky T-shirt-loving, parking-space hogging, highway-clogging tourists actually helps city homeowners where it counts - in the pocketbook.
According to a recent study by Old Dominion University's Bureau of Research, tourist spending cuts city tax bills by at least $77 for the owner of a $100,000 house.
The city's profits from the tourism industry allow it to keep tax rates among the lowest in the region and services nearly the highest.
``If we weren't developing the tourist portion of our economy, we'd have less money to spend on everybody else,'' City Manager James K. Spore said.
The profits generated by tourism last year - at least $13.9 million - would pay for a new elementary school or fund the entire Sheriff's Department.
It's enough to cover the annual cost of all the city's libraries and the Planning Department combined, or to widen Independence Boulevard from the Pembroke Mall area to just north of Haygood Road.
The city invests a fortune in its tourism industry every year, on such things as installing neon dolphins, adding sand, advertising its beaches and paying for police officers to make sure no one has anything but sanctioned fun.
But it gets back a lot more than it spends, according to the study.
Last year, the city spent $21.8 million, and netted at least $35.7 million in tax revenue, said Gilbert R. Yochum, who heads the Department of Economics and Urban Studies at ODU and co-authored the study with economics professor Vinod B. Agarwal.
By comparison, Yochum said, the same money invested in a long-term government bond would have grown to only $23.3 million.
``Does the tourism industry cost a lot of money? The answer is `Yes,' '' Yochum said. ``But we estimate that it generates in excess of what it costs. We look at it as an investment. It generates money and jobs, which is not a small thing.''
Tourist dollars create jobs and add value, Yochum said, because visitors bring cash to the local and regional economy that wouldn't be here otherwise.
When a grocery store opens, it draws business from other grocery stores in the area. But if 1,000 additional tourists come to Virginia Beach, they're spending money that wouldn't be here without them.
Yochum estimates that Virginia Beach's tourism industry creates more than 16,000 jobs and nearly $1 billion for the Hampton Roads' region.
He said he thinks the tourism industry wouldn't be as strong if Virginia Beach hadn't invested so much in it.
``What if the city did nothing? First of all, the city couldn't do nothing, they'd have to provide police,'' said Yochum, who has also studied the impact of Virginia Beach's advertising efforts.
``There's a tremendous rate of return on advertising dollars,'' he said. ``Does the city have to advertise? No. Would the (same) number of tourists be down there if the city didn't advertise? No.''
Virginia Beach's success with tourism seems to stack up well against other resort communities', but it's hard to tell.
Yochum said he doesn't know of any other researcher who does the kind of analysis he does.
Calls across the country showed that Virginia Beach's rivals for tourist dollars don't have the kind of information he spends months to collect.
In Broward County, Fla., which includes Fort Lauderdale, estimates show that the tourism industry annually adds $3 billion to the area's economy and $11.7 million to the tax rolls, and employs almost 67,000 people. But officials there don't calculate how much they spend to lure those 5.4 million tourists to town, or how much is spent to amuse them once they arrive, Communications Manager Stacie Faulds said.
In Worcester County, Md., which includes Ocean City, room taxes are expected to generate $4.4 million next year and a new food tax is projected to yield $1 million a year to help pay for an expansion to the city's convention center. Ocean City spends more to advertise to tourists - in excess of $1 million - than the state of Maryland does, Worcester County Administrator Gerald T. Mason said.
Though no one calculates exactly how much public money is spent on tourists, or how much tax revenue they create, Mason said he's sure the 39,000 residents of his county benefit from their presence.
Worcester County has the second-lowest tax rate in the state, and the wealthiest property owners. Because most of the landowners don't live in the county, they help subsidize those who do live there full-time, he said.
``We do enjoy the benefit of out-of-county property owners helping to educate our children,'' Mason said. The downside of that, Mason added, is that the state - which normally helps pay for new schools - made Worcester County pick up the entire $8.7 million tab for a new middle school, figuring the county could afford it.
Until this year, Myrtle Beach, S.C., hadn't spent much on its tourism industry, city Budget Director Michael W. Shelton said.
``We have not had a systematic program of putting capital improvement money into tourist-related projects,'' he said. ``Most of what we have spent has been operating support or additional advertising.''
This year, the city started a ``hospitality fee'' that's expected to generate $4.7 million a year.
It is similar to Virginia Beach's Tourist Growth Investment Fund, which is supported by a 2 percent room tax and half-a-cent restaurant and amusement tax. All the money raised by the fund is turned back into the tourism industry to pay for such things as the bond debt on the Atlantic Avenue beautification and the Holiday Lights show at the Oceanfront, so it is not counted as part of the profits tourism brings to residents.
Myrtle Beach will also plow all the money raised by its hospitality fee back into the tourist industry, Shelton said. The state sales tax paid by tourists boosts the city's bottom line somewhat, Shelton said, though at least a third of the money ends up back in the tourism business.
Basically, Shelton said, city taxes are not affected by the tourists. But the industry generates enough money for a city of 30,000 people to build an infrastructure to support 300,000, he said. ILLUSTRATION: Color photo by CNB