Promoters on the Run

by Luke Baumgarten & r & & r & & lt;span class= & quot;dropcap & quot; & T & lt;/span & he Empyrean coffee shop closed because of a poor location. Rock Coffee was forced out of downtown after a dispute with neighbors and landlords. Fat Tuesday's closed because the venue alone couldn't support owner Ken Dupree's family. A lack of startup capital doomed the B-Side, perhaps from the very beginning. Owners at the Shop, which remains a vibrant coffee hangout but no longer hosts concerts, said the stress got to them.





These are a few of the reasons why it's incredibly hard to keep a club open in Spokane. As of next Monday, Nov. 27, the City Council might be adding one more. Before the council is a city treasurer-backed measure proposing that venues pay the city's taxes on ticket sales when the promoters -- the ones normally liable -- skip town. The proposal has critics worried that clubs will start closing left and right -- especially all-ages venues, which, due to a lack of liquor sales, have razor-thin profit margins.





This is not a new tax. As the law stands now, the city taxes 5 percent of each ticket sold at all for-profit events, whether it be Danzig in concert or Disney on Ice. The tax is usually levied against promoters, the people who organize and put on a given performance. Under the new ordinance, rather than simply eating the cost when the promoters -- often companies based out of the Spokane area -- fail to pay, the city wants to be able to pull that tax revenue from other sources, shifting liability from the promoter to the owner of whatever venue hosted the show. Ellen Dolan, the city treasurer, says this is possible because the admission tax isn't a tax on ticket profits, but a tax "levied on every person paying an admission charge. It is a tax directly on the consumer and then passed on to the City."





The initial draft met with what City Councilman Bob Apple characterizes as nothing but criticism. "No one who spoke [at the council meeting on Nov. 13, when the measure went up for public discussion,] was happy with it," Apple says, adding he didn't know of any council members who were satisfied with the original draft either. So Dolan made a change and says she's is confident the latest draft, which states club owners can avoid tax liability so long as they report the names of the people who are actually collecting the "admissions revenue" (selling tickets, taking cash at the door, etc.), will pass.





Apple says he wants to take that change a step further. His proposed language would exempt collection of the tax altogether for clubs with a capacity of less than 300 as long as no advance tickets were sold. "It would still create a liability to the venue or the property owner but would be written in such a way as to exclude most of the concerns that were brought to us, if not all of them," the councilman says. Meaning, so long as clubs play ball and try to keep tabs on their business partners, they won't get stuck with the tax.





The issue initially was raised last month when the treasurer's office announced that the city was short some $32,000 in admission tax revenue each year because promoters were failing to pay. For a city with serious budget concerns, even $32,000 -- half a municipal wage, approximately -- is significant.





The question no one addressed, though, is whether taxing a venue on tickets it didn't sell -- and thus, on profits it never made -- is an ethically justifiable way to ensure tax revenue? In the treasurer's best case scenario, club owners would never pay the tax; they would become simply citizen enforcers of the tax code, making sure the treasurer's office had the names, addresses and phone numbers of whoever sold the tickets. In the worst case, though, venues like the Big Dipper, which charges $225 per show and receives no extra revenue from beer or liquor sales, could easily end up paying $70 to the city. That $70 -- 5 percent of the sales made by the promoter, assuming capacity crowd and a $10 cover -- would represent more than 30 percent of what the Dipper charged for its services.





This doesn't bother the city staff; Dolan notes precedent for these collection methods in cities like Kennewick and Seattle. The council, similarly, is addressing concerns with pragmatic compromises rather than with an eye toward the correctness of the measure, so as it stands, the ethics of the proposal aren't being questioned. That means that, while it certainly won't pass as originally intended, the amendment probably won't be defeated outright either.





What's left for the council to hammer out, then, is which compromise to enact. Mr. Apple wants to see his exemptions for smaller clubs enacted and has "passed them off to a couple of the council people," but the revisions as they stand would require every club in town to either pay the tax or point the city to someone who would. Apple says the two-week continuance the council gave the issue on Nov. 13 might allow for more public comment. "Continuing discussion is not required," he says, "but I believe we did continue it, so logically we would allow comments." Barring another continuance, the measure goes to vote next Monday at 6 pm.