It was an intense 90-minute executive session for a special called meeting of the London City Tourism Commission on Monday afternoon - one in which the commission voted to become separate from the city government and prompted the resignation of Attorney Larry Bryson as official counsel for the board on Tuesday.
The meeting was called to discuss the city tourism commission becoming an SPGE (Special Purpose Government Entity), of which the board has not been involved in its seven years of existence. At the end of the executive session, commissioner Starr Handy made the motion to become affiliated with the SPGE, with board member Holly Little seconding the motion. A vote was then taken, with Handy, Little and board members Lois McWhorter and chairman Steve Berry casting "yes" votes. Board commissioners Mike Holt and Phil Smith, who has served on the commission for only two months, voted "no". The vote however carried with a 4 to 2 majority for the London Tourist Commission to become an SPGE.
The city tourism board has operated under the oversight of the city since the 3% restaurant tax was established in 2014. But Douglas Phelps approached the board last year, informing them that under state law, the city tourism commission is supposed to operate as an SPGE, which would allow them to operate separately from the city. That would include all employees paid through the restaurant tax funds to be hired, evaluated and disciplined by the tourism board, as well as allowing them to hire their own accountant and attorney.
According to the past several budgets, the restaurant tax generates over $2.5 million per year for the City of London, with the funds allocated to the Tourism Commission. But a breakdown of the budgets for the past three fiscal years, starting July 1 and running until June 30 of the next year, the restaurant tax funds have been estimated at $2.7 million in 2018 and $2.8 million in 2019. The COVID pandemic of 2020 lowered those collections as restaurants were closed down, but the estimated revenues for fiscal year 2020-2021 were set at $3.7 million. Of that, approximately one-third of the revenue is used to fund salaries and benefits for employees falling under the departments listed under the city tourism umbrella.
Phelps has been insistent on the tourism board separating from the city oversight, citing several state laws requiring them to do so. But on several occasions, Bryson said the local commission was not required to join SPGE and even wrote a letter to the Department of Local Government arguing that the commission was exempt from that requirement.
"Pursuant to our request for declassification as an SPGE in 2016, a decision was made by DLG (Department of Local Government) to declassify the City of London Tourism Commission as an SPGE and to remove it as such," the document drafted by Bryson on July 8 reads.
That response was regarding a notification by the Department of Local Government (DLG) the previous day stating that the London Tourism Commission was not in compliance with state laws that it was a SPGE. The letter also stated that the local commission had 60 days to comply or would face penalties.
Special Purpose Government Entities include: ambulance, emergency and fire protection services, community development services, public health and mental health and hospitals, industrial and economic development, mass transit services, parks and recreation services and library services, to name a few. Bryson's argument was that KRS 65A, which outlines requirements for tourism commissions, states that such organizations may become SPGE's rather than that they are required to do so.
However, the email from the DLG states that in 2016 the London City Tourism Commission was declassified through Bryson's request. The email dated July 7, 2021 counters that action with the following information:
"After reviewing the City's letter, we have now determined that the Tourism Commission must comply with KRS 65A, which regulates SPGEs. The basis for this decision is that the Commission was formed under KRS 91A.350 which specifically requires such compliance in KRS 91A.360."
The letter further states that no penalties will be assessed against the London Tourism Commission but that they must become SPGE within 60 days.
The City of London Tourism Commission collects the 3% restaurant tax for operational purposes. Falling under their jurisdiction are the Parks and Recreation, London Community Center, Levi Jackson Wilderness Road Park, Treetop Adventures at Levi Jackson Park and the former Laurel County Fairgrounds property which was included in the acquisition of Levi Jackson Park from the state parks department as well as any city tourism events.
The commission is comprised of seven members, all of whom are chosen by the mayor, and represent the hotel/motel association, restaurants and Chamber of Commerce, which deals with local businesses. The members are appointed in staggering terms with the mayor re-appointing or appointing each member. Under current Kentucky law, those appointees do not have to have approval by the London City Council or other Tourist Commission members and are left solely to the discretion and selection of the mayor.
The city tourism commission is also being audited by the Kentucky State Auditor's office, having been notified in late March that some concerns regarding operations and expenditures of departments within the tourism commission had been voiced. In April, auditors began going over those issues. Hiring practices for personnel falling under the city tourism commission's departments have also been questioned.
As a SPGE, the tourism commission would have control over all employees falling under the umbrella of their oversight and includes the departments listed above. The tourism commission would also set salaries and procedures for those employees rather than being created and/or appointed by the mayor with salaries above the recommended pay scale.
During Monday's meeting, Bryson, Mayor Troy Rudder and city council member Kelly Greene were permitted to participate in the meeting. Rudder, however, exited before the meeting concluded. Bryson then submitted his resignation as attorney for the board on Tuesday morning.
The city tourism commission has been the target of numerous complaints regarding nepotism, hiring practices and operations at the Levi Jackson campground area over the past several years - especially the park property and campground operations since the city acquired that property two years ago.