Two firms get bulk of Myrtle Beach chamber's spending from ad tax
Apr 15, 2012 (The Sun News - McClatchy-Tribune Information Services via COMTEX) --
TWO COMPANIES -- one an established media buyer located on the fifth floor of a Manhattan high-rise, the other a start-up Internet firm operating at a Myrtle Beach area storage and business center -- have received more than 40 percent of all tourism tax dollars spent by the Myrtle Beach Area Chamber of Commerce, according to reports released last week by the chamber.
Those reports outline for the first time specifically how the chamber has spent $38.1 million from the 1 percent sales tax for tourism promotion the city of Myrtle Beach approved in 2009.
Myrtle Beach City Council approved the sales tax initiative as a way to boost tourism during the recession. The city gives 80 percent of tax revenues to the chamber for out-of-market tourism marketing and uses the other 20 percent to reduce taxes for city property owners.
Brad Dean, the chamber's president and chief executive officer, did not respond to requests for comments about the reports and the chamber's expenditures.
Prior to the release of last week's reports, it was impossible for taxpayers to see how their money was being spent because the chamber had been lumping all of its expenditures -- both public and private -- together without citing the source of revenue for each expenditure.
The Sun News filed a Freedom of Information Act request in 2011 for the information, and was able to review some invoices and other documents. But it wasn't until after the City Council approved a resolution in October requiring the chamber to separate the tax expenditures from other spending that Dean agreed to provide the information showing the two sources of income and payments from each account.
Last week, Dean said the separation of tourism tax spending is important information for taxpayers and others.
"We intend to continue providing that information because we think it's not only important for you and your constituents but for the businesses that are benefitting from the marketing and the businesses that are not a part of the chamber," Dean told the City Council last week. Dean said non-chamber members can use the marketing studies and spending information on the chamber's web site to help boost their sales.
New York-based Corinthian Media, which purchases television advertising for the chamber, has received more than $11.1 million from the sales tax -- more than any other vendor used by the chamber, according to the reports. Corinthian, which was founded in 1974, has a wide range of national clients including Papa John's, the National Football League and the Gap clothing store. The company uses the money it receives from the chamber to buy broadcast ads and keeps a 15 percent commission, according to a copy of the company's ad services agreement obtained by The Sun News.
Larry Schneiderman, Corinthian's executive vice president, could not be reached for comment.
Visibility & Conversions LLC, an Internet firm started in 2010 by former chamber employee Bill Rosenthal, has received the second-largest portion of tax revenue at $4.7 million. Visibility & Conversions -- which has an office at the Myrtle Beach Storage & Business Centre near Briarcliffe Acres -- provides services such as search engine optimization, pay-per-click marketing and e-mail marketing for the chamber, according to a copy of the company's contract obtained by The Sun News.
Rosenthal did not respond to a message left at this office seeking comment.
Those two companies accounted for 41.5 percent of all chamber spending from the sales tax revenue since 2009, according to the reports.
Miller Direct Media, a Fort Mill-based direct-mail firm, was the third-highest paid vendor from sales tax revenue, earning more than $1.1 million -- all of it in 2011.
Myrtle Beach-based The Brandon Agency and Fuel Interactive -- a pair of companies with a common owner -- followed with $778,933 in sales tax revenue for print and Internet advertising creative and placement services.
The Sun News first requested a specific breakdown of tourism tax expenditures in early 2011. Dean told the newspaper at that time that he would not provide the information, adding: "It appears no matter what we do, The Sun News will not find it acceptable."
Finally, in October, the City Council unanimously voted to require the chamber to separate sales tax expenditures on its reports. City Councilwoman Susan Grissom Means said at the time that she does not believe that there is anything wrong with the chamber's accounting, but she wants the financial information reported as simply as possible for the public.
The council took that action after The Sun News reported on discrepancies in statements Dean has made about some of the chamber's marketing expenditures.
Nearly six months after the City Council told the chamber to separate the tax expenditures, Dean last week presented council members with the results. Council members lauded the chamber for its marketing programs and openness and Mayor John Rhodes quipped, "And we didn't even have to listen to Alvin" to get the information.
Rhodes was referring to an incident last year in which the chamber responded to The Sun News' request for sales tax information by dumping thousands of documents unrelated to the tax into boxes and then offering to let a reporter sift through the information in an un-air conditioned warehouse while a forklift was operated adjacent to the boxes and songs including "Achy Breaky Heart" and Christmas tunes by Alvin and the Chipmunks were repeatedly played at loud volumes through the warehouse speaker system.
Dean, at the time, complained about the cost of photocopying documents for The Sun News -- calling it an unjustified "cost of time, supplies and effort that we have wasted" -- even though the newspaper did not ask for the paper copies.
Last week, Dean presented all seven council members with 4-inch-wide three-ring binders, each of them containing more than 550 pages of sales tax expenditure and other information that had been printed from the chamber's web site. Kruea said he is not aware of any request by a council member or city official for printed copies of the information that Dean provided.
Contact DAVID WREN at 626-0281
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