The City of Columbia’s latest Famously Hot New Year’s Eve celebration drew more people than in previous years, but it ended up $56,868.08 in the hole.
City Council has voted to fill the gap, using an additional $50,000 in hospitality tax funds to help make up the deficit. That will bring the total city spending on this past year’s event to $140,000.
Add to that $50,000 from Richland County Council, and taxpayers will have put $190,000 toward the free downtown party, which for the 2013-14 year featured Kool & the Gang and ZZ Ward.
Now heading toward its fourth year, the New Year’s Eve party was launched as a sort of flagship event for the city, spearheaded by Mayor Steve Benjamin. Its first year, it featured George Clinton. The second year, The Wallflowers played.
Leona Plaugh, the only member of City Council to vote against last week’s $50,000 allocation, says the organizers didn’t provide her with budget information she’d asked for in order to make an informed decision, which is why she voted no.
“I think it’s a wonderful festival,” she says. “I think we still need to do our due diligence to make sure public dollars are being well spent.”
In its first year, the event cost about $212,600 total, ending with a deficit. In total, the city paid $55,000 toward the event; the rest came from private sponsors. It drew 20,000 people.
Last year’s event drew down $56,000 in city money and $15,000 from Richland County, bringing public spending for the 2012-13 party to $71,000. With roughly a $400,000 total budget, the event came in on budget, according to a 2013 article in The State. It drew 25,000 people.
This year’s event was approved to receive $40,000 in city accommodations tax and $50,000 in city hospitality tax. City Council voted 6-1 last week to spend an additional $50,000 in hospitality tax to address the deficit, bringing the city’s spending on this year’s event up to $140,000. Richland County Council voted unanimously in January to chip in $50,000.
This year, the event drew 26,000 people, according to co-chair Sam Johnson, who works in the mayor’s office. The event used $189,000 in private money in addition to the $190,000 in public funding.
Johnson points to the event’s economic impact — estimated at more than $1 million — as evidence that the party is a good thing for the Midlands.
Insufficient VIP ticket sales were the main reason for the 2013-14 deficit, accounting for a $35,000 shortfall, or 280 tickets fewer than organizers hoped to sell.
Tickets to the VIP section, dubbed the Crescent Lounge, went for $125 apiece. They sold 565 tickets and gave away 280, says Johnson.
So, why were VIP ticket sales lower? The event was just too successful, according to a letter its organizers sent Council.
“The primary reason for the shortfall is its own success,” the organizers wrote. “The productivity of prior year [Famously Hot New Year] celebrations encouraged multiple venues to host competing VIP-type events that took away from Crescent Lounge sales.”
In their letter, the organizers included a link to Free Times’ New Year’s Eve coverage “as just an example of the number of alternative events that came ONLY because of FHNY.”
But businesses have been hosting New Year’s Eve events for years, long before the city party came around. Asked which events he had in mind, Johnson cited surveys of attendees and social media: “We saw more people this year who came out for the concert and fireworks but went to dinner at bars and restaurants hosting New Year’s events and promotions in Five Points, the Vista, Main Street and elsewhere beforehand, and we think that’s great,” Johnson said. “We hope more events spring up around FHNY and that established events benefit from the crowds we’re bringing downtown.”
The rest of this year’s shortfall came from:
• An extra $5,000 charge for the Palmetto Penthouse
• An extra $2,000 in insurance costs
• $14,868.08 in taxes paid to the state Department of Revenue. “There has been some confusion about whether or not FHNY owed ticket taxes from last year’s celebration,” Johnson says. “Nonprofits are exempt from this tax. Having submitted all the paperwork to be eligible for exemption and operating with a nonprofit fiscal agent, we proceeded with that understanding. It wasn’t until we went to pick up our liquor license for this year’s event that we were notified that SCDOR believes that we do owe those taxes. So, erring on the side of caution, we went ahead and paid SCDOR while we protest the fact with our attorney in an effort to recover those funds. It is our understanding, however, that this process could take several months.”
Once things are worked out with the Department of Revenue, says Johnson, they’ll apply that money to next year’s party.
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