CEDAR RAPIDS — The startup Cedar Rapids Tourism Office — which was quickly created in the wake of the “newbo evolve” debacle last year — would receive three-quarters of a million dollars per year through hotel-motel tax disbursements, under a plan approved by Cedar Rapids City Council on Tuesday.
The office was designed as a short-term solution to keep Cedar Rapids competitive in booking events, conferences, fostering sports tourism, fill hotel rooms and otherwise market the city after GO Cedar Rapids folded due to the failed three-day festival, which was held a year ago this month on Aug. 3-5.
However, the city’s contract with VenuWorks to manage the tourism office is set to expire on Oct. 14, 2019.
Cedar Rapids Finance Director Casey Drew and Mike Silva, director of VenuWorks, which also books events for city-owned performance spaces, both said they anticipate an extension to be signed in the coming weeks.
“The CR Tourism Office has significant momentum and we need to continue that momentum,” Drew said in an email. “The community has been so supportive of the CR Tourism Office, there is not an urgent need to make changes right now that could impact future bookings.”
Cedar Rapids City Council approved the hotel-motel funding plan as part of an allocation of $3.8 million of hotel-motel tax revenue. Organizations apply to receive money on a three-year cycle, but the City Council approves disbursements one year at a time and is not bound to release the amount in future years, Drew said.
The hotel-motel revenue is split such that 22 organizations receive $1.47 million as part of a competitive application process. The second portion — the primary allocation of $2.37 million — is directed to paying off debt at the Double Tree Hotel and Cedar Rapids Convention Center, operations and losses at the Cedar Rapids Ice Arena, and the Cedar Rapids Metro Economic Alliance.
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Other nonprofits to receive disbursements include $150,000 to Hawkeye Downs, $80,000 to Cedar Rapids Freedom Festival, $50,000 to Brucemore, and $46,000 to NewBo City Market. The Economic Alliance is slated to receive $95,000 as part of the primary allocation.
The Tourism Office is the top individual recipient.
GO Cedar Rapids had been the largest recipient but folded on Oct. 15, 2019 after losing $2.3 million putting on “newbo evolve,” which featured Maroon 5, Kelly Clarkson, and a host of speakers. The organization owed $800,000 to an untold number of vendors, artists and other contributors who have never been paid.
Since the new office formed, the staff of five, who all came over from GO Cedar Rapids, landed the potentially lucrative USA Roller Sports Indoor Speed, Figure Skating and Rink Hockey National Championships, which officials said could generate $10 million for the city next summer, a curling championship, and is handling housing for Prospect Meadows events. The office does not produce events, which was a core function of GO Cedar Rapids.
Cedar Rapids Mayor Brad Hart said the arrangement has worked much better than he had hoped.
“After what happened it could have been a disaster,” Hart said
City officials had previously indicated a tourism organization should be a separate entity from the city and an in-depth review of national best practices was to occur earlier this year with an eye toward a long-term solution in place by the end of the year. Hart said the current model may wind up being the long term solution, but a review still is needed.
“It still makes sense to really look at what best practices are and structure something around that,” Hart said. “But, the fact that it is running so smoothly and so successfully has allowed us to maybe postpone that effort. But I think we will ultimately do that. We just don’t know when.”
The Cedar Rapids Tourism Office is operating at a lower cost than GO Cedar Rapids, which had been receiving $1 million a year in hotel-motel tax revenue from the city, about half of the bureau’s $2 million annual budget. Under the new model, the city’s contribution makes up a greater percentage of the budget, but the budget is significantly smaller at $1.3 million in revenue and $1.21 million in expenses in fiscal 2020, which is July 1, 2019 to June 30, 2020.
VenuWorks had agreed to a $6,000 per month fee to manage the office.
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