Cedar Rapids reboots hotel-motel funds to nonprofits for first time since pandemic began

Editor’s note: The city of Cedar Rapids’ allocations of hotel-motel tax revenue to local nonprofits for fiscal 2023 were roughly on par with amounts distributed in recent years. The article previously incorrectly understated hotel-motel tax allocations for fiscal 2023 and did not account for the funds already given to the Tourism Office for this budget year.

CEDAR RAPIDS — For the first time since the pandemic upended daily life across the globe and halted travel, the city of Cedar Rapids is once again doling out grants to local arts and cultural nonprofits funded through the tax it takes in from overnight hotel guests.

The Cedar Rapids City Council last week awarded $525,000 in hotel-motel tax revenue for fiscal 2023 — the budget year spanning July 1 through June 30, 2023 — to 17 nonprofit organizations that fuel the city’s economy by offering arts, entertainment and recreational attractions that draw thousands of residents and visitors to town.

Organizations that received funds are:

The council took a separate vote on awarding those funds to The District. Council member Ann Poe, who works for the organization, recused herself from voting on that item.

Cedar Rapids fulfilled its obligations for fiscal 2020, the budget year that ended June 30, 2020 — a few months after the onset of the pandemic. But the city had paused payments since then, aside from $700,000 the council set aside in federal American Rescue Plan Act funds to replenish some of the lost funds.

Council member Scott Overland, who is chair of the council’s Finance and Administrative Services Committee, said his elected colleagues were pleased to be able to reboot hotel-motel tax payments again to local arts and cultural groups.

“They have all demonstrated strength and resiliency in getting through this pandemic period and continuing to thrive afterward,” Overland said.

Recipients are ‘core’ nonprofits

In recent years, the council distributed $1.2 million to 23 nonprofits in fiscal 2019, the budget year that ended June 30, 2019; and another $1.465 million to 22 Cedar Rapids organizations in a competitive three-year grant application process in fiscal 2020.

These figures are roughly on par with the allocation awarded last week for fiscal 2023 when factoring in money the city doled out to the Cedar Rapids Tourism Office.

The city budgeted about $3.2 million in hotel-motel tax revenue for the 2023 budget year. The hotel-motel allocations do not occur until revenue exceeds city commitments that also are supported by the same funding stream.

Those commitments include 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.

This allocation is for the first year of a two-year grant cycle, shortened from what used to be three years.

Cedar Rapids pursued changes that would allow for more flexibility in case of surprise events after the hotel-motel tax stream took a hit in 2020 as COVID-19 disrupted travel and prompted temporary hotel closures, casting fiscal uncertainty over how much money the city would take in from the tax.

Additionally, organizations must show the grant would not exceed 10 percent of their annual operating revenue, and the council will not give more than $50,000 apiece.

Overland said he thought the new guidelines helped ensure the council chose organizations that checked all those boxes and truly helped put heads in hotel beds.

“They are our core nonprofit organizations that help bring people to Cedar Rapids and provide things for them to do,” Overland said of the recipients.

Grants come at the right time

As they weathered financial and operational blows of the pandemic, nonprofits generally were buoyed by an influx of grant money and federal funds such as Paycheck Protection Program loans or dollars funneled through the Coronavirus Aid, Relief and Economic Security Act. Now, these funding streams have dried up, so local nonprofit leaders said the resumption of city hotel-motel tax payments comes at the right time.

John Myers, executive director of the Indian Creek Nature Center, said the pandemic had an effect on its operations that most other local nonprofits didn’t enjoy — it pushed visitors to the center.

“I would have to say that April of 2020 was perhaps the Nature Center’s busiest month ever when it came to use of our trail system and the outdoors,” Myers said. “People during the pandemic really realized the importance of nature and the opportunity to get outside for their mental health.”

Still, funding streams such as earned program revenue dropped off or other grant sources shifted their priorities, so the pandemic raised financial concerns, he said.

Myers said the need for services has continued to grow as the number of visitors spiked. He said visitor levels remain about 30 to 40 percent above pre-pandemic levels.

The derecho that battered Cedar Rapids with hurricane-force wind gusts on Aug. 10, 2020 — just months after the onset of the pandemic — did throw a major wrench in the organization’s operations, though. It shuttered Indian Creek for months, damaging several acres of woodlands and forcing the nonprofit to essentially suspend operations and fundraising.

While other funding sources were great stopgap measures, Myers said, it’s important to Indian Creek that hotel-motel allocations have returned. The funds help support the organization’s mission to provide environmental education and outdoor rec.

“This is an important piece of our revenue stream which we’re really excited to have back,” Myers said.

Like Indian Creek Nature Center, the Brucemore historic estate also grappled with the double whammy of the pandemic and derecho. In the unprecedented storm, Brucemore lost about 450 trees — over 70 percent of the 26-acre landscape — in under an hour.

While insurance and other proceeds helped cover the cost of the losses, Dave Janssen, executive director of Brucemore, said the organization having multiple hits like that constrains a nimble staff.

Funds such as hotel-motel tax revenue that Brucemore accumulates go toward preserving the historic site, restoration and recovery, developing programs, or hosting tours and concerts, Janssen said.

“As the more traditional funding sources come back like hotel-motel, it's really gratifying … feeling that recovery that we're all trying to make,” Janssen said. “ … Everything we do is aimed at adding to the economy and preserving this resource in perpetuity. And every bit of help that we can get from revenue makes it easier to do that, but it's a tremendous challenge.”

LaNisha Cassell, executive director of the African American Museum of Iowa, said in an email the museum faced the challenges many other organizations did during the pandemic and derecho of maintaining safety protocols and adapting to remote work and program delivery.

The museum had the added task of educating people across the state as there were local and national protests after the murder of George Floyd by Minneapolis police. Floyd’s murder prompted heightened awareness and spurred action among Iowans in response to police brutality against Black and brown people, Cassell said, and drove a marked uptick in visitors, contributions, membership and engagement at the museum.

Hotel-motel funds will be used to support the museum's operations, including exhibit development, programs, presentations, special events, outreach and maintaining its collection, Cassell said.

The award comes as the museum has closed until September 2023 to complete a $5 million renovation project while the city has closed 12th Avenue SE to install a floodgate. Cassell said this allocation is a welcome addition to the organization.

“We are very pleased to have been able to apply for the new round of hotel motel funding from the City this year and receive an award,” Cassell said. “It is a relief and a confidence boost to because we see the AAMI and the other four museums in Cedar Rapids as a collective destination draw for tourists and revenue generator for the city. Most importantly, arts and culture brings a valuable resource to our local and statewide citizens.”

Investing in ‘cultural economy’

Overland said that over time, city officials anticipate existing arts and cultural entities will continue to prosper and provide entertainment, and new organizations may come up as well.

As these groups continue to attract people to town, he said that helps generate additional hotel-motel tax revenue to potentially provide additional funds.

These groups attract residents from around the Cedar Rapids metro area, he said, but also those from out of town who come to the city and experience multiple attractions as part of their visit.

“It's great to get that back to a position where distributions can be made again to those organizations that are part of the big pie — making people want to come here,” Overland said.

Myers said strong communities invest in themselves, which Cedar Rapids accomplishes with its hotel-motel tax investments.

The city's investment in arts and cultural nonprofits has an economic impact beyond attracting visitors and encouraging residents to spend money, Myers said. They’re small businesses with their own payroll and they often spend their dollars locally.

And with large employers saying they need more workers to fill open jobs, Myers noted people will move to an area for a job and will decide to make a community their home based on all the different amenities it offers.

“Those quality-of-life, arts and cultural things are so important for the strength of a community,” Myers said. “That’s the fabric that weaves us all together.”

Janssen said these organizations are anchors of Cedar Rapids’ cultural community. An investment in these organizations spurs an investment across the board, as they bring people into town to restaurants, hotels or other businesses.

“It is an important part of the economy — the tourism economy, the arts economy, the cultural economy,” Janssen said. “It's not really about a charity to keep us open or subsidize our budget. It's really about investing in the health of these organizations that are at the center of that economy.”

Comments: (319) 398-8494; marissa.payne@thegazette.com