City, PHA can’t even agree to disagree

Mayor says hospitality association broke off talks on hotel tax, but won't say much more than that

Two months after Mayor Garry Litke announced the city had accountability concerns about how the Penticton Hospitality Association was spending tourism funds, the full extent of the those concerns is still a mystery.

Litke said city council is considering options after talks broke down with the PHA, and their objective continues to be accountability for the marketing funds raised through the two per cent hotel room tax, though he wouldn’t expand on what he meant by accountability.

“I don’t think I can answer that question. There is more to it, but I am not going to comment any further because I don’t want to jeopardize any actions going down the road,” said Litke.

The city and the PHA are in agreement on a few things: the PHA provided an independently audited financial statement to the city in mid-October; and there are unspent funds accumulated in 2011 and 2012, when the PHA was either not in control of the HRT, or was getting their operation going. PHA president Rob Appelman said the city is aware the association planned to spend the accumulated funds on tourism campaigns incrementally over the course of four years, rather than spend it all in a single year.

Tim Hodgkinson, the society’s director of operations, estimates the PHA spent around $314,000 on marketing between January and October 2013, including: $60,000 for online advertising, $47,000 for print media and $40,000 in a collaborative campaign with Tourism Penticton.

According to Hodgkinson, the city is aware of how the money was spent, but Litke said the city’s accountability requirements aren’t satisfied.

“I wish they would come into the room and show us the evidence of that. We did get an audited financial statement in October, after the mediation process in September, but there is more to this than that,” said Litke, who was also unwilling to confirm whether the PHA had completed their annual report, a requirement under the Societies Act, to the city’s satisfaction.

It’s no news that the City of Penticton and the Penticton Hospitality Association are at odds, but now the two groups don’t even seem to agree on the outcome of discussions held last month.

The city issued a press release Tuesday, expressing their regret PHA representatives chose not to resume discussions on Jan. 6.

“We reached an agreement in principle with the Penticton Hospitality Association on Dec. 16 to resolve outstanding issues with the HRT funds, and were scheduled to meet again on Jan. 6 to continue discussions on creating a united tourism entity for Penticton,” said Litke in the release.

Appelman said an agreement had been reached, though on Dec. 6, then the city reversed its position on Dec. 16.

“The mayor agreed to look at ways to return the funds to the PHA and allow us continue with our work. We agreed to assist him to do so,” said Appelman. “That was the agreement we felt we were carrying forward. He reneged on it, he said he didn’t agree to that.”

Hodgkinson, the society’s director of operations, used stronger language, saying the mayor denied even making those commitments. The PHA, according to Hodgkinson, told the mayor that discussions couldn’t continue unless the city agreed to focus on resolving the issues around the two per cent hotel room tax, which the PHA controlled until Oct. 31, when the city announced the association was in breach of their five-year contract with the city and the province.

“The only topic for discussion and the reason for these meetings is to resolve the legal issues that have come out of the city’s breaking of their contractual obligations,” said Appelman. Hodgkinson concurs, saying the PHA made it clear that unless they could get assurances from the city that discussions would stay on the agreed agenda, the talks couldn’t move forward.

“I am disappointed to hear they thought it was not working because I thought it was,” said Litke. “The Dec. 16 meeting was productive and at the end, we were coming to an agreement on three points. We left that meeting thinking we were close to an agreement.

“We were meeting, we were having discussions, if there is some disagreement about what happened in those meetings, then there is even greater reason to have another meeting.”

The dispute traces back to late 2011, when council awarded the contract to provide tourism, economic development and visitor information services to the new Penticton Business Development Group. Previously, the Penticton Chamber of Commerce handled the contract for these services.  Shortly after the announcement, however, the Penticton Hospitality Association expressed concern that hotel and motel owners were not consulted about the change. As a result, operators voted against allowing the PBDG to handle the approximate $425,000 generated from the additional hotel room tax.

The PBDG collapsed in early 2012 and tourism funding was split between Tourism Penticton and the PHA.

At the beginning of November, Litke announced council had voted in camera to strip control of the two per cent hotel room tax from the PHA and give it to Tourism Penticton, breaking the five-year contract signed with the association in July 2012.


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