Something in the Water could get up to $2M from Virginia Beach coffers after city increases incentive payment

What started out as a $500,000 incentive to support the Something in the Water festival unexpectedly grew to as much as $2 million at Tuesday’s City Council meeting.

Musician Pharrell Williams secured the money as a city subsidy, quadruple the amount that was originally proposed from Virginia Beach, for his festival.

It’s the city’s largest incentive for a festival. To receive it, the festival will have to generate that amount in tax revenue dollars.

Councilman John Moss was the only member who voted against it, stating he didn’t have enough information about the festival’s fiscal impact and the city’s cost.

The city announced its intent in November to provide $500,000 in advance to the festival producers. At this week’s meeting, some council members expressed confusion about how the city arrived at the $2 million figure and if the entire amount would come from the festival’s tax revenue.

City staffers offered little clarity on the change.

Senior Attorney Dana Harmeyer, however, added that if the taxes exceed $2 million, he and Deputy City Manager Taylor Adams would come back to the council to ask for more money.

The money will come from the admissions, meals and sales tax generated within the festival footprint, which has been generally described as stretching from 4th to 15th streets.

Virginia Beach also will provide “in-kind” services, which include use of the convention center, various resort stages, and parking lots for festival staff and rideshare, as well as and city public safety and public works employees already slated to work those days, which is typically College Beach Weekend.

Councilman Aaron Rouse said in years past, the city has spent more than $250,000 on first responders during that weekend.

No other event in the city receives as much funding, nor do any others have sponsorships tied to the amount of tax revenue generated by the event, according to the city.

Last summer, the city increased its sponsorship of the East Coast Surfing Championships to $750,000, the most to date at that time. The money came from a tourism investment fund.

Adams apologized to the council for the confusion about the amount of the sponsorship. But he didn’t explain how or when the number changed from $500,000 to $2 million.

“The actual payment to the vendor is performance based and will not be paid until after the festival when we reconcile what taxes were collected within the event boundary,” Adams wrote.

Something in the Water received a $250,000 sponsorship from the city in 2019, along with in-kind services, including police, fire and public works personnel, for a total of roughly $1 million.

Ticket holders infused about $21 million into the local economy in 2019. Most of the spending was on the festival ticket sales, lodging, and food and drinks, according to the city.

But the impact wasn’t only felt in spending; the festival put Virginia Beach in a positive spotlight.

“We’re getting back a huge value when it comes to advertising Virginia Beach as a tourist destination,” Rouse said.

Moss was concerned the city may not see financial gains from the festival, and that the value of the in-kind services, which come from the general fund, could instead be used to offset taxes for residents.

Rouse said the festival generates revenue for the city by “filling up hotels, filling up restaurants ... the indirect spending for such service stations, stores, small business, all the local businesses that will be activated when this festival comes to town.”

Mayor Bobby Dyer hopes the festival will jumpstart a positive summer in Virginia Beach.

“I enthusiastically endorse this,” he said.

Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com