Jeff council makes statement on hotel/motel tax use

Council not opposed to reviewing funding levels, still willing to work with Chamber to promote tourism

This statement is being provided at the request of the Jefferson city council for the purpose of providing background information on its recently adopted policy regarding its proposed use of hotel and motel tax.

“As authorized by Iowa law, a 7 percent hotel and motel tax was approved by the voters at an election held on August 7, 2001. The ballot that was used to present the question as to whether the hotel and motel tax should be imposed contained additional language indicating that 80 percent of the tax collected should be paid to the Jefferson Area Chamber of Commerce to be used for the promotion and encouragement of tourism and convention business in the City and surrounding areas.

“The Iowa law that authorizes an election on hotel and motel tax does not authorize the addition of language specifying how the funds are to be used as that law itself directs how the funds are to be used. Based on that law the City has been advised by counsel that only the parts of the ballot that addressed whether the tax should be imposed and at what rate were valid and that the additional language directing that the funds be paid to the Chamber was not valid.

“The Iowa Code requires that at least 50 percent of hotel and motel tax be used for recreation, convention, cultural, or entertainment facilities or for the promotion and encouragement of tourism and convention business in the city.

“Consistent with that requirement the council adopted an ordinance shortly after the local ballot was approved providing that 80 percent of the revenue should be spent for the promotion and encouragement of tourism and convention business in the City, and that the remaining 20 percent should be used by the Parks and Recreation Department.

“The Iowa Department of Revenue collects the hotel and motel tax and pays it to the City on a quarterly basis to be credited to the City’s general fund. The city council is required by law to budget and oversee the use of all monies in its general fund, including money received from hotel and motel tax (it is not sufficient to merely pay over the funds and depend upon the recipient to comply with state law).

“Since the adoption of the ordinance substantially all of the hotel and motel tax money received by the City that was earmarked for tourism has been paid to the Chamber. All of these expenditures were always pre-approved by the city council to make sure they complied with the existing ordinance and also to make sure the City had proper documentation on hand for its annual audit required by State law.

“Due to the new hotel being constructed as part of the casino there are projections that the amount of available hotel and motel tax will substantially increase.

“Based on this anticipated increase and without first consulting with the City about funding the Chamber began incurring expenses to remodel the building at Thomas Jefferson Gardens for the purpose of operating it as a welcome center.

“(The City had previously been approached by Thomas Jefferson Gardens to determine if it had interest in acquiring the building as a welcome center, and after reviewing the condition of the building the City declined due to the high cost of renovation, maintenance and staffing.) The Chamber then requested reimbursement of expenses for the welcome center and based on its earlier decision the council declined.

“With the projection of increased hotel and motel tax money becoming available the city council wanted to develop a policy that would provide guidance as to who would be eligible for receiving money for tourism purposes, including the Chamber and other community organizations involved in promoting tourism.

“The City does not know how much hotel and motel tax  will be available until after it is actually received from the Department of Revenue so any policy had to take this into account. In developing its policy the City wanted to provide for three priorities: (1) It first wanted to assure the Chamber that it would continue to provide funding for tourism purposes at the $30,000 per year figure (which was approximately the average amount of money the City had received from hotel and motel tax money for tourism purposes for the last several years); (2) as a compromise and in order to accommodate the Chamber’s desire to move forward with the welcome center, the City stated it would make available up to $20,000 of the projected increase in hotel and motel tourism money for that purpose, but only after making sure that the first $30,000 would be used for other tourism purposes; and (3) any amounts in excess of the first two priorities would be available to any qualified organization (which would include the Chamber as well) on an application basis.

“Several discussions were held between the Chamber and City representatives while the policy was being developed. At one point the Chamber had requested funding levels of $30,000 for tourism and $15,000 for the welcome center. That amount was later increased to $30,000 and $20,000 as stated in the policy.

“Shortly before the Council adopted the policy the Chamber increased its request to $40,000 and $20,000, and the Council decided for the time being to leave funding at the $30,000 and $20,000 levels.

“The council is not opposed to reviewing the funding levels after it knows the actual amount of hotel and motel tax it can expect to receive annually.

“The City has now received information that the Chamber will not be proceeding with the welcome center for the reason that it cannot obtain a loan for the welcome center without increased funding from the City.

The City council has endeavored to take into account the interests of all its taxpayers as well as the Chamber in developing its policy. The City respects whatever decision the Chamber and its lender may make with respect to the welcome center at this time, and it looks forward to continuing to cooperate with the Chamber in promoting tourism in Jefferson.”

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