CVB payments issue in lawsuit

On Friday, we reported about the civil suit filed by Tupelo Chief Financial Officer Daphne Holcombe that claims Mayor Ed Neelly forced her to resign effective Dec. 31 because she “can’t keep (her) mouth shut.” A major part of the lawsuit concerns the Tupelo Convention and Visitors Bureau. Read the initial story.

In today’s Daily Journal (full story), we reported more information about the CVB’s role in the suit.

TUPELO – The repayment of debt on Tupelo’s multimillion-dollar coliseum is at the heart of a federal job discrimination lawsuit filed against the city last week by its chief financial officer.

Daphne Holcombe, who was given until Dec. 31 to resign, claims in her suit that the Tupelo Convention and Visitors Bureau has sole responsibility for reimbursing the coliseum’s now-$10 million bond note.

But CVB Director Linda Butler Johnson and city attorney Guy Mitchell disagree.

The coliseum – today called the BancorpSouth Arena – was built in the early 1990s for $14.3 million, and its debt has been refinanced since then. By the time it’s retired in 2022, the city will have paid nearly $32 million on it, according to the complaint.

In her lawsuit, Holcombe said that if the CVB had paid all the debt with its 2 percent restaurant sales tax – for which she claims it was intended – the building would be almost paid off by now.

Instead, Holcombe says the city has had to share the debt burden while the CVB “is wasting” its money on unnecessary expenses.

Holcombe says in her suit that she was forced to resign after raising objections to the CVB budget and its coliseum payments, as well as for questioning other decisions. Her suit asks that she keep her job and that a jury trial be held to determine damages she is owed.

Holcombe’s attorney, Jim Waide, who said the suit has two purposes: “One is to protect her job, and the second is to get something done with the spending of the city, especially with TCVB.”

At issue is a local and private bill that allows Tupelo to levy a 2 percent restaurant sales tax in addition to the 2 percent hotel tax already in effect to fund the CVB. Holcombe claims the restaurant tax is for the purpose of building and operating the coliseum and cites a section in the bill that says it authorizes the CVB to “construct facilities necessary for useful to promote tourism and conventions.”

Mitchell disagrees with Holcombe’s understanding of the bill. He cites a section of the bill stating its purpose is for “providing funds for the promotion of tourism and conventions and the economic development of the city of Tupelo.”

“It doesn’t say it’s for the purpose of building or caring for the coliseum,” Mitchell said, “but to carry out activities of the CVB.”

In the first full fiscal year after the new tax was levied, Tupelo earned $1.2 million from restaurant and hotel sales taxes combined, according to city records. Last fiscal year it earned $3.1 million. All those funds go to the CVB.

In a September interview with the Daily Journal, Holcombe said the city dipped into its general budget to offset the bond note the first few years, because the CVB didn’t earn enough in tourism taxes to pay both the bond note and its operating expenses. But now that it does, she said, it should.

The CVB currently pays $1 million annually to reimburse the note; the city pays $615,000.

Mitchell said the CVB wouldn’t have to pay any of the debt except that its board members decided years ago to help offset the costs, because they realized the coliseum would help tourism.

“Nowhere does (the bill) say it all has to go to the coliseum,” Johnson told the Daily Journal, explaining that the rest of the money goes toward funding the CVB’s program of work.

But Holcombe’s lawsuit claims the tourism group “is wasting the 2 percent restaurant sales tax on excessive travel, duplicitous salaries, retreats and wasteful advertising expenses.”

Johnson denies this, saying all expenses are to promote tourism in the city. She also said that as the CVB’s budget has increased, so have the payments toward the coliseum.

“The council has in the past requested we pay more, and our board has,” Johnson said. “The times they came for support from the CVB, the board had no problem supporting that.”

So far, the CVB’s payments have benefited the city’s Coliseum Commission, whose chairman Scott Reed said he has no reason to question how much the tourism group pays versus what the city does.

“As far as the original deal that was cut,” he said, “they’ve honored that willingly and happily, and I think we use that money pretty well. So far, that relationship has been good.”