Town attorney outlines draft MOU to raise Pine Mountain hotel-motel tax to 8%; council seeks bond and audit details

Town Attorney Austin Gibson presented a draft memorandum of understanding at a March 9 work session that would raise Pine Mountain's hotel-motel tax from the current 5% to 8% if the Georgia General Assembly authorizes the increase, and would specify how the additional revenue is distributed while certain revenue bonds remain outstanding.

Gibson told Mayor Mullins and council members that the draft MOU calls for three priority uses of net revenues tied to the 2005 and proposed tax increases: first, at Callaway's direction, payments to the Harris County Development Authority (via the trustee) to cover debt service on revenue bonds issued for infrastructure benefiting Callaway Gardens; second, remaining funds paid to Callaway to promote and develop conventions and tourism; and third, when the bonds are retired, future use or distribution would require mutual agreement or an amended MOU and comply with Georgia law. The memorandum cites O.C.G.A. —48-13-51(b) and related Hotel-Motel Tax Act provisions as the legal basis for an increase.

Gibson summarized other material terms: the Town will retain the greater of 6% of gross tax collections or $50,000 annually to cover administrative expenses; obligations tied to the 2005 increase and earlier three-percent base are addressed separately; the MOU would limit municipal services inside Callaway Gardens to police and fire protection while other services (garbage, road and light maintenance, security) would be provided by Callaway or its homeowners' association; Callaway and the Association must maintain books and records that the Town may inspect; and Callaway and the Association would indemnify and defend the Town against claims arising from their projects related to the MOU. Gibson noted the 2007 Development Authority revenue bonds and the existing trust indenture that channels tax revenue to Wells Fargo as trustee.

Council members raised several outstanding legal and financial questions. Committee member Stokeley Pound asked whether the Town and the Pine Mountain Tourism Association (PMTA) have the right to renegotiate the existing MOU if Callaway negotiated a new deal that increases its share; whether Callaway would be required to pay bond balances if it threatened not to refile with the Department of Natural Resources; and whether Herschend, a private for-profit company, could assume the MOU's benefits without the Town's and PMTA's consent.

Mayor Mullins pressed similar points, asking how the Town could obtain more favorable terms, whether an explicit end date should be added (the memorandum as presented ties the end date to payment of the debt or 50 years), and whether Herschend could legally take over the bond, contract or MOU or whether such a transfer would require renegotiation.

Mrs. Keating asked whether the Department of Natural Resources could revoke permission for the Town to tax the Ida Cason Foundation, how the council could request an audit of Callaway's historical use of hotel-motel tax revenues, and whether the Town can verify ownership of involved entities. Gibson said he would seek an account from the trustee to determine the outstanding bond balance and stated that DNR approval is no longer required for the current path the parties are pursuing.

No formal vote or motion was taken during the work session. Gibson told the council to submit any additional questions ahead of the next meeting; Mayor Mullins asked Gibson to obtain trustee account information to clarify the outstanding debt. The work session adjourned at 5:47 P.M. and an attendance list was provided as an attachment.