CEDAR RAPIDS — Outside of GO Cedar Rapids organizers, skepticism about the finances and logistics of the tourism agency’s “newbo evolve” festival prevailed from the earliest stages.
On its face, a $4 million budget for a first-ever signature music and culture festival and its $400 three-day passes were out of line with other large events in Iowa, The Gazette reported.
While the city and GO Cedar Rapids are separate organizations, the city government could have required more detailed financial information in the run-up to the August festival — such as when negotiating two advances and when GO Cedar Rapids applied for a new round of public hotel-motel tax money.
In addition, the City Council had been awarding $1 million a year to GO Cedar Rapids and has a council member on its board and top city staff member on its executive committee.
Now GO Cedar Rapids has gone dormant after losing $2.3 million on the event, leaving about $800,000 in debts to local and national vendors.
Cedar Rapids Mayor Brad Hart answers questions about the saga, many of them inspired by Gazette readers.
Q: Why does or doesn’t the city or City Council bear any responsibility?
A: Nothing in your question would indicate to me that the city’s taxpayers should pay the debt of a separate organization that separately planned and orchestrated an event that failed. The city did not have the authority or power to control the planning. A council member and a city employee have served as liaisons for the city on the (convention and visitors bureau, called GO Cedar Rapids) board for, I believe, many years. They, along with the rest of the 18-member board, voted to make the event happen, and have taken responsibility for that. That board had community-minded, experienced and talented people on it. I’m sure they made decisions they thought were reasonable based on information provided by the paid staff and any outside consultants/advisers. Council members sit on the boards of other community nonprofits, but that does not make those organizations the city’s responsibility. I was not on council when the advance was made, so I won’t second guess those who were merely trying to serve the community. There was, I believe, a plausible reason behind the ask for the advance and the city made sure the CVB understood that if the advance was not repaid when scheduled the city would withhold the planned funding until it was repaid in full. The city has provided significant funding for the CVB from hotel-motel taxes for decades because the CVB is the only entity whose primary mission is to generate hotel-motel taxes. Bringing people to Cedar Rapids benefits our businesses and citizens in many ways.
ARTICLE CONTINUES BELOW ADVERTISEMENT
Q: While $800,000 is a lot of money, could the long term cost of not cleaning this up now be much greater for the community?
A: While we have heard from some that they want the city to pay the vendors, several others have told me the city should not pay the debts of a separate organization, debts the city does not owe. I don’t believe the city can become a guarantor of the obligations of separate, non-city organizations. While paying those debts would help the vendors involved, it would do little to heal the black eye we’ve already been given by this event. Paying those debts may cause all vendors and performers in the future to expect or demand the city guarantee their fee or payment, which is not a position for the city to take.
Q: Why not call for an investigation or an audit?
A: I understand Jim Haddad, the interim CEO (of GO Cedar Rapids), reviewed the records and did not find any evidence of funds going where they shouldn’t go. The ticket sales were no where near what was needed to pay the expenses. It is that simple. The only major sources of revenue for the event were sponsorships and ticket sales. I understand neither of those were close to what was hoped for and needed to pay the expenses. What would an investigation reveal other than those two revenue sources fell far short of predictions? It is certainly possible others will investigate some of the actions of those who provided information to the bank and other creditors.
Q: What are the prospects for a “newbo evolve” and/or zip line (which initially was planned to coincide with the festival) next year?
A: I have not heard of anyone planning to do either of those events next year. Fortunately, there are always many events and activities that provide entertainment for our citizens and visitors to Cedar Rapids without a zip line or another “newbo evolve.”
Q: What impact will this episode have on the ability to put on events, book conferences and attract visitors to Cedar Rapids?
A: It is difficult to gauge that right now, but our track record before this event, and our track record after this event, should have a positive impact on all of those activities and goals. I think sophisticated travelers, event planners, etc. will recognize “newbo evolve” was a single event that failed and does not impact our community’s ability to host them in the future with all our other amenities and events.
Q: What needs to happen to clean this up and move past this episode?
A: It will take time. We, the community, need to be flawless in our efforts to welcome and host visitors in the future. We need to support our local businesses and arts organizations and events. We all need to invite our friends and family to visit Cedar Rapids. The black eye will eventually heal. Seems like we all were sucker punched by all this, but we are back on our feet and fighting to move forward to our bright future.
l Comments: (319) 398-8310; email@example.com