Government

Fate of GO Cedar Rapids and its debts determined in private

Cedar Rapids council members defend process held out of public view

Board chairman John Myers and  and board treasurer Seth Wear talk with reporters after a press conference at the GO Cedar Rapids office in Cedar Rapids on Tuesday, Aug. 21, 2018. Myers will step in as chief executive until an interim CEO can be found, replacing former CEO Aaron McCreight, after the board found the organization had $2.3 million loss from the recent newbo evolve festival. (Liz Martin/The Gazette)
Board chairman John Myers and and board treasurer Seth Wear talk with reporters after a press conference at the GO Cedar Rapids office in Cedar Rapids on Tuesday, Aug. 21, 2018. Myers will step in as chief executive until an interim CEO can be found, replacing former CEO Aaron McCreight, after the board found the organization had $2.3 million loss from the recent newbo evolve festival. (Liz Martin/The Gazette)
/

CEDAR RAPIDS — The interim leader of GO Cedar Rapids met privately with City Council members and top city staff in a series of small group meetings from Sept. 19 to Oct. 9 to review the tourism bureau’s financial outlook before announcing three days after the last meeting the organization would fold after running up a $2.3 million debt from the summer’s “newbo evolve” festival.

No more than four of the nine elected council members attended any one of the six meetings — thus avoiding a quorum and a legal requirement to make the meetings open to public scrutiny.

Under criticism, council members have defended the process as a result of busy schedules and the need to convey complex information on a fast-moving timeline.

“Small meetings of council members on complex issues are useful, they are perfectly legal and are used by city councils and government bodies across Iowa,” Cedar Rapids Mayor Brad Hart said during a council meeting last Tuesday. “The only purpose of those meetings was for GO Cedar Rapids to present its proposal and to see if there was sufficient interest from council members to place it on an agenda.”

There wasn’t support among council members to use tax dollars to pay off the debt of GO Cedar Rapids, which is a separate entity from the city. On Tuesday, with the option of saving the organization now off the table, the council was presented with and unanimously approved a plan to direct public funds to create a Cedar Rapids Tourism Office housed at VenuWorks, an Ames-based company with local staff that already booked events for city-owned venues.

Details of the plan to expand the mission and funding of VenuWorks had not been discussed previously in public.

The process has drawn criticism from some who say it defies the spirit of Iowa’s open meetings law and say citizens — many of whom believe the city should cover $800,000 in debt owed to an untold number of vendors, some of them local — had a right to weigh in.

ARTICLE CONTINUES BELOW ADVERTISEMENT

“I do think they could have done something to defuse the situation and review feedback if they had a public meeting and enabled the vendors and other citizens to come forward and express their beliefs about how this should be handled,” said Robin Kash, a resident and public meeting regular. “We really don’t know whose preferences in this are being honored, except the council all being on board.”

Tuesday, as part of a presentation laying out the VenuWorks arrangement, city staff briefly told of three scenarios discussed at the private meetings.

Option 1: The city would continue providing $1 million per year in hotel-motel tax money and spread out GO Cedar Rapids’ repayment of a $500,000 city advance for “newbo evolve.” That debt as well as debts to Bankers Trust and vendors would be repaid over several years.

Option 2: Bankers Trust would waive $1.2 million of the $1.5 million it was owed by GO Cedar Rapids. This option similarly counted on delaying repayment of the city advance and continuing providing the $1 million hotel-motel tax allocation. GO Cedar Rapids would be able to repay debt more quickly to the city and vendors in this scenario.

Both scenarios also factor in revenue from destination marketing fees and from Prospect Meadows, a baseball and softball complex that doesn’t open until next year, but the city would remain the primary sponsor.

Option 3: This is the VenuWorks scenario, which the council ultimately supported. The city would not delay repayment of the advance and would redirect hotel-motel tax money to VenuWorks. The byproduct of that was the fall of GO Cedar Rapids, which had a $2 million annual budget but no remaining assets or reserves.

Eight of the City Council members participated in private meetings where the options were discussed. Council member Dale Todd declined to participate, he sad, because he already had decided he would not support a plan in which the city paid off the organization’s debt.

The private meetings were held on five dates and included:

• Sept. 19: GO Cedar Rapids interim Chief Executive Officer Jim Haddad, council member and GO Cedar Rapids board member Scott Overland, council member Tyler Olson, Hart, City Manager Jeff Pomeranz, Finance Director Casey Drew and Assistant City Manger and GO Cedar Rapids executive committee member Angie Charipar.

• Sept. 28: Haddad, Overland, Hart, Pomeranz, Drew and Charipar.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Thank you for signing up for our e-newsletter!

You should start receiving the e-newsletters within a couple days.

• Oct. 3: Council members Ann Poe, Susie Weinacht, Ashley Vanorny and Overland; Haddad, Pomeranz, Drew and Charipar.

• Oct. 5: Council members Scott Olson, Marty Hoeger and Overland; Haddad, Pomeranz, Drew and Charipar.

• Oct. 9: Haddad, GO Cedar Rapids board chairman John Myers, Olson, Overland, Hart, Pomeranz and Drew.

“In the work session I attended, Jim Haddad presented his then-current financial forecast of GO Cedar Rapids financials,” council member Vanorny said. “He spoke about his attempt to reduce his financial burden with the bank. No assessment of council support was made.”

Council member Scott Olson said the discussions would have advanced to the public realm, but there was not enough time. GO Cedar Rapids did not have enough money to continue. Plus, he said, discussing sensitive information in public would not be fair to people whose jobs were at risk or to vendors. A number of vendors owed money don’t want their names disclosed. A full list of who is owed money has never been released.

“Normally, it would have gone to the finance committee, but we had to give an answer in three or four days,” Olson said.

Olson said he was being urged by taxpayers not to pay off the debt.

Private small group meetings are common practice in the city government to discuss complicated or bigger issues before they appear on a public meeting agenda. The city occasionally uses work sessions, such as to present the annual budget, do strategic planning or to review results of a community survey.

Council member Tyler Olson said this is an important part of “doing my homework” before voting at meetings.

ARTICLE CONTINUES BELOW ADVERTISEMENT

“We deal with a number of different issues and while the level of detail and time varies depending on the complexity and size of the issue, the community elects members of City Council and me to do that research ahead of time and get input ahead of time. I have to spend some time on an issue before showing up and voting on it at a meeting, otherwise I’m shortchanging citizens.”

Alan Kemp, executive director of the Iowa League of Cities, said many larger cities hold public work sessions where city staff and elected council members meet to delve deeper into complicated issues and take feedback — but private small group meetings are not unusual.

“It is not uncommon with some issues where a city may decide to have a couple council members meet with city staff on a complex matter to get background information and knowledge that can be brought to the council so at least some of the council knows what is going on,” Kemp said.

l Comments: (319) 398-8310; brian.morelli@thegazette.com

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

CONTINUE READING

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.