City Manager Pomeranz brightens outlook for non-profits who count on Cedar Rapids’ hotel-motel revenue

CEDAR RAPIDS - The city's cultural, educational and entertainment non-profits that rely on revenue from the city's 7-percent hotel-motel tax likely will not see drastic cuts in their annual awards as previously had been expected.

City Manager Jeff Pomeranz on Friday said he was proposing that those recipients as a group - which include entities like the Cedar Rapids Museum of Art, Theatre Cedar Rapids, the Freedom Festival and the Indian Creek Nature Center - look for just a 7 percent cut in what they currently receive from the hotel-motel funding pot, which in total has been bringing in about $2.5 million a year.

Earlier this year, the recipients had been told to expect as much as a 72-percent reduction for the fiscal year that begins July 1 as the city contemplated the need to shift some additional funds to pay debt on the city's Ice Arena and to cover some costs associated with the closing of the U.S. Cellular Center arena for renovation.

On Friday, though, Pomeranz provided the City Council's Finance and Administrative Services Committee with the new plan that will keep nearly “whole” those that have been depending on hotel-money revenue to help balance their annual operating budgets.

“We're trying to keep the entities we're funding as close to their current allocations as possible,” Pomeranz said after the committee meeting. He called the numbers proposed earlier this year “far grimmer” than the new proposal.

Even so, Pomeranz and the council committee noted that some uncertainty remains about whether the city actually will bring in a projected $2.5 million in hotel-motel revenue in the fiscal year beginning July 1 because the downtown Five Seasons Hotel, now owned by the city, will be closed for renovation.

Pomeranz said the expectation is that other hotels and motels in the city will see more traffic as a result of the downtown hotel's closing. Committee members noted, too, that the Five Seasons Hotel had been operating well below capacity for some years.

Council member Kris Gulick, the committee's chairman, estimated that hotel-motel revenue from the Five Seasons Hotel may have contributed less than $200,000 a year to the city's annual $2.5-million hotel-motel revenue.

Nonetheless, Pomeranz's proposal suggests that the council consider keeping payouts of revenue in line with the rate of the tax's collection in the course of the year to make sure that the city is going to meet its annual target of $2.5 million in hotel-motel revenue.

Of the Pomeranz proposal, Terry Pitts, executive director of the Cedar Rapids Museum of Art, said Friday, “There certainly is some good news in this.”

“We were prepared for the worst case,” he said.

Over the last three months, Pitts said he has met several times with Pomeranz and Mayor Ron Corbett and he said they had hoped they could lessen funding cuts to the city's cultural institutions even as they talked “candidly” about the city's financial challenges related to flood recovery and flood protection.

“So a 7 percent reduction seems like really good news in this context,” Pitts said. He added that the city already dispenses funds quarterly through the year, so he said he wasn't concerned about the possible unevenness of the payouts.

In the current fiscal year, the city says it is using $1.074 million of the hotel-motel revenue for a “primary” category of recipients, $673,400 of which goes to the Cedar Rapids Convention and Visitors Bureau and $331,000 to the operating budgets of the U.S. Cellular Center and the Paramount Theatre.

Another $693,600 of the total goes to pay off long-term debt on a variety of past capital projects, including those at the city's Ice Arena and Paramount Theatre and at the Cedar Rapids Museum of Art, Science Station and History Center.

Recipients in Category 2, cultural and education organizations, are now dividing up $436,500 in the current fiscal year; those in Category 3, recreation and events, $356,000; and those in Category 4, new and emerging organizations and events, $42,500.

The Cedar Rapids Museum of Art, for instance, is now receiving $54,000 for its annual operating budget.

Rich Patterson, director of the Indian Creek Nature Center, on Friday also called Pomeranz's new proposal “good news.” The center is receiving $48,000 in hotel-motel revenue this fiscal year.

“I fully recognize that the city is facing severe funding challenges in many areas and that they ‘could' divert more hotel-motel money from cultural non-profits to any one of many other needed areas,” Patterson said. “I feel they are sincerely doing whatever they can to keep hotel-motel grants to non-profits as high as they can.”

On Friday, the council's Finance and Administrative Services Committee said it wanted the city's citizen Hotel-Motel Allocation Committee to redo its recommendations in line with the new funding proposal. The citizen committee will forward those recommendations on to the council committee for its review before they go to the full council on May 24, the council committee said.

The new hotel-motel proposal will not use some of the hotel-motel revenue to pay a larger part than normal of the city's annual debt payment on the city's Ice Arena. Instead, the city will use money in a reserve account to make the payment. Revenue from the city's consolidated urban taxing district had been expected to cover the payment, but the value of the taxing district's property has declined and so is not generating enough property-tax revenue to make the debt payment, Casey Drew, the city's finance director, explained to the council committee.