Aerial view of Currituck County, North Carolina

A Corolla group is suing Currituck County over how lodging taxes were spent.

A Corolla citizens group has filed suit claiming Currituck County illegally diverted millions of lodging taxes from the Outer Banks to mainland projects.

North Carolina requires the 6 percent tax charged on overnight stays be spent only on tourism-related activities. But projects including the YMCA and a park on the Intracoastal Waterway all are used mostly by locals far from tourists on the Outer Banks, according to the lawsuit filed earlier this month by the Corolla Civic Association and others.

County officials have maintained that the mainland projects such as a large ballfield complex in Maple and restoration of a jail built in the mid 1800s are intended to enhance tourism and attract more visitors.

"They have been successful at that," said Currituck County attorney Ike McRee. "Occupancy tax money has been spent in accordance with the law."

But the mainland attractions have a limited number of places to stay close by, the lawsuit says.

The lawsuit calls for the county to return more than $40 million to county’s Tourism Development Authority, made up largely of county commissioners. The group also wants the court to clearly define how occupancy taxes should be spent, among other demands.

Currituck County collects about $12 million annually in occupancy taxes. The Currituck Outer Banks produces 99 percent of the revenue from 4,000 rental homes and 200 rooms at hotels or inns, according to the lawsuit.

Corolla residents have a long history of challenging Currituck officials over a range of issues including development standards such as the size of signs and construction of more walkways along busy N.C. 12. After many years of wrangling with the county, an effort by residents to incorporate the village in 2007 failed to get approval at the state General Assembly. How occupancy taxes are spent has been at the center of many of the disputes.

Jeff Hampton, 252-491-5272, jeff.hampton@pilotonline.com

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