Cedar Rapids begins awarding American Rescue Plan grants to nonprofits that lost hotel-motel funds

CEDAR RAPIDS — The timeline is uncertain for when the city of Cedar Rapids will once again start up its contributions of hotel-motel tax revenue to local nonprofits in the coming 2023 budget year, but in the meantime the City Council is beginning to allocate federal COVID-19 relief money to restore some of the lost funds.

The council on Tuesday voted to allocate $50,000 to Hawkeye Downs, beginning the distribution of up to $750,000 in funds from a grant program city staff created last year using federal American Rescue Plan Act funds to restore some revenue to eligible nonprofits.

These organizations would have received a share of the city’s hotel-motel tax revenue in fiscal 2021 — the budget year that ended June 30 — but did not as the pandemic disrupted travel worldwide, reducing the cash Cedar Rapids reaped from the tax on overnight guests.

Before the COVID-19 pandemic, organizations that have received a slice of the tax funds included the Cedar Rapids Museum of Art, Brucemore, Indian Creek Nature Center and the African American Museum of Iowa, to name a few of the cultural attractions, recreation programs and institutions that the tourism tax has supported.

For fiscal 2023 — the budget year beginning July 1 and ending June 30, 2023 — the city is budgeting $3.15 million in hotel-motel tax revenue and expenses, which is up $150,000 from fiscal 2022.

In fiscal 2021, the hotel-motel tax revenue stream generated $1 million less than budgeted, totaling $2.8 million.

Cedar Rapids uses hotel-motel tax revenue to fund city commitments including debt payments, the Cedar Rapids Tourism Office (the main driver of overnight guests), the ImOn Ice Arena and a contribution to the Prospect Meadows baseball complex near Marion under a 10-year agreement.

As for when Cedar Rapids will begin to kickstart these payments to nonprofits again, city Finance Director Casey Drew said “we're taking a wait-and-see approach.”

City Manager Jeff Pomeranz added, “We're hoping and we're anticipating that there'll be an improvement in that environment so we'll be able to get back to that.”

Criteria for the grant program include, among others:

Because the city had satisfied obligations for the first two budget years in its three-year grant cycle, eligible nonprofits are only those that already had been selected to receive funds from fiscal 2019 through 2021.

Drew told the council that Hawkeye Downs’ application document stated a net loss of $230,814.05 from July 1, 2020 to Sept. 30, 2021. Drew said the organization demonstrated $227,512.90 in operating loss.

Organizations also are asked to submit a signed letter outlining the losses from their executive director, board president and board treasurer, as well as a complete list of their board of directors. The board must pass a resolution acknowledging that the application submitted is accurate and truthful.

“Probably on a regular basis now … as nonprofits submit their applications, we’ll bring their proposals forward,” Drew said.

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