Currituck slapped with suit over $40 million in occupancy tax spending

Currituck Beach Lighthouse. [VisitNC.com]

A group of Currituck Outer Banks residents and property owners have filed a lawsuit against Currituck County over the use of more than $40 million in occupancy taxes collected by the county over the past 15 years.

The complaint filed in Currituck County Superior Court on May 7 claims that nearly all of the tax charged on hotel rooms and vacation rentals was collected on the Currituck Outer Banks, the money has been mostly spent on projects on the mainland or non-tourism related items.

Plaintiffs in the lawsuit include the Corolla Civic Association and 23 property owners.

They are “asking the court to clarify how the county may spend OT in the future and return past misspent funds to the Tourism Development Authority so that no more pedestrians will be killed, our beaches will be saved and the county’s overall tax revenues grown,” according to an online post from the association.

The Currituck County Board of Commissioners, Currituck Tourism Development Authority, County Manager and Budget Officer Dan Scanlon have been named defendants.

County Attorney Ike McRee told The Daily Advance on Monday he is still evaluating the claims and, after talking to commissioners, will file a written response.

Projects the plaintiffs and others have claimed were out of line for receiving occupancy tax funds include the construction and operation of a recreation center, YMCA and sports facilities in Maple, the Currituck Rural Center in Spot, renovations to Currituck Veterans Park in Coinjock, a loan to the water system supplying the lower Currituck Banks,

More from the Corolla Civic Association’s statement sent to members on Monday:

  • In 2004, following the devastation of our beaches by Hurricane Isabel, the county persuaded the state to authorize it to raise the Occupancy Tax rate by 50% and allow its use for beach nourishment.
  • The state agreed to allow the tax increase, but placed significant restrictions on its use by the County, prohibiting previously allowed general purpose use.
  • The tax increase has raised an additional $40 million for the county but less than $50,000 has been spent on beach nourishment.
  • The county has improperly diverted more than $40 million of occupancy tax to the county General Fund for general purpose use.
  • For several years the county has refused to listen to CCA pleas to legally spend occupancy tax (funds) to help save lives along N.C. 12, to restore the county’s beaches, to create attractions to increase tourism, to help grow the tourism business and to enhance the county property tax base
  • The county has also refused to discuss CCA’s request for an open, business-like approach to occupancy tax investments consistent with the legal requirements, or to discuss a detailed ten-year plan for legal occupancy tax spending developed by the beach tourism community.

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