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Bed tax to form disaster-reserve fund

Island will borrow money for beach renourishment

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The tax tourists pay to spend a night on Hilton Head Island amounted to almost all the money needed for the upcoming beach renourishment, but instead the revenue will be put into a reserve account for disaster recovery.

That doesn't mean the beach renourishment is dead. For the first time, the town will borrow money to pay for all of the sand-replenishment project.

The money -- $12 million -- that had been raised toward the $16 million renourishment now will become seed money for the new disaster-reserve account.

The reserve account is a key piece of new disaster planning. The town wants to build up a large rainy day fund over the years to use for planning before a disaster and to help rebuild after one hits.

The town informally has held money in emergency reserves for years, but not to the extent currently being discussed. A few years ago, the town had $200,000 set aside, finance director Shirley Freeman said.

The town will issue $19 million in bonds and have eight years to repay them. Officials hope to get a 3 percent interest rate, Freeman said, and the bonds will be repaid with more bed-tax money as it comes in.

In other years, the town has paid for part of the renourishment project with short-term bonds, which it uses if it doesn't have enough tax money on hand. Usually those short-term notes are for a few million dollars.

The beach renourishment, scheduled to begin in September and last through May, will replenish the oceanfront from The Westin Resort to Alder Lane in South Forest Beach and about 2,200 feet north of Fish Haul Creek. The Town Council in May chose Illinois-based Great Lakes Dredge and Dock Co. to do the work.

But that's not to say part of the $12 million won't ever go to help the beach. Part of the disaster-reserve fund's purpose is to provide money to clear debris from the beaches after a hurricane. The money also could be used to remove debris from private roads in gated communities or unpaved areas that might not get federal reimbursement for cleanup.

The town created two other disaster-reserve accounts this year: an advertising fund to help get out information after a disaster, and a fund to pay off debt during a disaster or financial crisis.

Both of those accounts are capped at $1 million. The advertising account already has reached $1 million, Freeman said.

Contact Tim Donnelly at 706-8145 or . To comment on this story, please go to islandpacket.com.