Cultural community jittery about possible loss of hotel/motel revenue to an Event Center

The cultural arts community here is jittery over Mayor Ron Corbett's idea to use some of the city's hotel/motel tax revenue to help pay for a proposed new downtown Event Center.

In meeting on Thursday with arts community representatives, Corbett worked to calm fears as he emphasized that the use of some of the hotel/motel tax revenue - which the arts community and others depend on - would not go toward an Event Center until, at the soonest, the fiscal year beginning July 1, 2011.

The mayor noted that the city also is asking the Iowa Legislature for permission to let Iowa cities increase the hotel/motel tax rate from the current 7 percent to 9 percent.

Such an increase - which the City Council here would have to put in place and take the heat about, Corbett noted - would bring in an additional $700,000 in hotel/motel tax revenue a year to add to the $2.5 million that now comes into the city.

Even so, under one plan, the city might need $1.1 million in the revenue each year for 20 years to pay off bonds to help with a required local match of dollars for a new Event Center.

Corbett said the Event Center and new hotel rooms being added in the city also likely would generate more hotel/motel tax revenue.

Corbett called his idea for using hotel/motel revenue to provide required local matching funds for the Event Center project a trial balloon for now.

He presented it this week as the City Council and the city await word on a $35-million federal grant for what is a $67-million project to build a new Event Center convention facility next to the U.S. Cellular Center arena and to upgrade the arena. The city already has secured $15 million in state I-JOBS funds for the project.

At the Thursday meeting, representatives from organizations that depend on the city's hotel/motel revenue - the Cedar Rapids Museum of Art, the National Czech & Slovak Museum & Library and the Carl and Mary Koehler History Center to name a few - emphasized to Corbett how losing the revenue could significantly impact the operations of their facilities and organizations.

Terry Pitts, executive director of the Museum of Art, noted that he would need 5,000 more visitors at $5 a person coming to the museum in a year if the museum lost its hotel/motel revenue, and Gail Naughton, president/CEO of the Czech museum said she would need 10,000 more visitors. Both said that such an uptick in attendance wasn't going to happen.

Pitts said the city's cultural organizations are always the first place people look to cut at times of funding challenges, and he said local businesses currently have had to do that. “Now city government is doing the same thing,” Pitts said.

Pitts told Corbett that he and others in the local cultural community asked local legislators to work to raise the hotel/motel tax rate shortly after the city's June 2008 flood. Nothing happened, he noted.

Corbett, a former speaker of the Iowa House of Representatives, asked, “Why not?”

Corbett encouraged Pitts and the others to work to build a coalition so legislators in other cities in Iowa hear from their art museums and cultural institutions about the need to give cities the authority to raise the current hotel/motel tax rate. He said the city had the 2010 and 2011 legislative sessions to get the job done.

Naughton pointed out that about 30 percent of the current hotel/motel tax revenue goes to pay off debt for the Museum of Art, Paramount Theatre, Ice Arena and History Center. Can that existing debt be rolled into newly sold bonds for an Event Center in a way that might leave more in the fund for others? she asked. Corbett said it was something to investigate and just one of many unknowns at this point.

Corbett noted that the city is considering a long list of other capitals projects - a riverfront amphitheater, a May's Island ice rink, a $60-million-to-$80-million Multigenerational community and recreation center are among them - all of which likely will require property-tax revenue. Thus, using hotel/motel revenue for an Event Center, which is designed to bring more conventions to the city and put more people in hotels and motels, only makes sense, he said.

The mayor said there seemed little disagreement that using local funds to help pay for an Event Center made sense if so much federal money and state money is involved. He compared it to a homeowner getting a gift to pay for a $20,000 kitchen remodeling, but only if the owner paid $3,000. Who wouldn't do that? he asked.