Introduce Ordinance for Imposing Lodging Tax and Allowing for Membership in Convention & Visitors Bureau (CVB)

City staff has been having discussions with Scott Davy, the new General Manager for the Ramsey Comfort Suites, regarding the City of Ramsey joining the local convention and visitors bureau or CVB. The Twin Cities Gateway is a CVB that markets nine communities and 22 hotel properties in the northern portion of the Minneapolis-St. Paul metropolitan area. Twin Cities Gateway CVB's website is www.tcgateway.com. Its legal name is Minnesota Metro North Tourism Board and its d/b/a is Twin Cities Gateway. In 2008 a number of the communities east of the Mississippi River broke away from the Visit Minneapolis North CVB to form their own organization. They wanted to focus more narrowly on tourism and do so with less administrative costs. The idea was to create a non-profit corporation, funded by the local option lodging tax, that would market the region's strengths: sports venues (e.g. the National Sports Center or NSC), convention space and proximity to outdoor amenities and the Twin Cities. The aim is to draw leisure and business travelers who will take lodging in the member cities' hotels and spend their travel dollars in restaurants and entertainment venues.

Today the Twin Cities Gateway CVB represents the communities of Anoka, Blaine, Coon Rapids, Fridley, Ham Lake, Lino Lakes, Mounds View, New Brighton, and Shoreview. Its $650,000 budget is funded by a 3 percent sales tax collected by the 22 lodging properties. Those funds are forwarded on to the member cities and then transmitted (less a 5% administrative fee for the city) on to Twin Cities Gateway. Another financial benefit for the member cities is a yearly amount (currently $2,000, plus a proportionate amount based on lodging tax revenue) provided for a local festival selected by the City Council. This would provide an ongoing revenue source for Happy Days.

Twin Cities Gateway CVB focuses more on tourism and sports destination and less on the meeting & convention segment. It operates on a much more lean manner than other local CVBs. Whereas other CVBs may spend 50 to 70% of their resources on administrative overhead, TCG allocates only 25% on overhead. The lionshare of Twin Cities Gateway's resources is used for marketing activities, such as Internet ads, online social media apps, regional destination marketing, etc. Fewer resources are allocated for hard-copy visitors' guides since 70+% of visitors get their information online.

Being a member of the CVB would allow for the City of Ramsey to expand its promotion of various events (e.g. Game Fair; Business Expo), venues (e.g. Fountains of Ramsey, The Links at North Fork Golf Course, Rum River Hills Golf Course), unique resources (e.g. Rum River Central Regional Park and Mississippi West Regional Park), and to do so in a cost effective way. Attached are samples of TCG promotion on its website. By being a member of Twin Cities Gateway, Comfort Suites would not have to pay rebates or commissions to the NSC (non-member hotel properties have to pay a 10% commission). Since the NSC is the world's largest amateur athletic complex and receives millions of visitors a year, Comfort Suites sees an opportunity to pick up sports-related overnight stays. In summary, Twin Cities Gateway membership appears to be a benefit for the hotel, the City's festival, and overall marketing efforts for the City of Ramsey.

At the February 28, 2012 Regular Session of the Ramsey City Council, the majority of the councilmembers were supportive of approving membership in the Twin Cities Gateway CVB and directed staff to develop a draft Ordinance that could be considered at the March 13, 2012 council meeting.  Attached please find a copy of the draft Ordinance regarding the Lodging Tax and membership in the Twin Cities Gateway CVB.

Staff is seeking input and approval from the Ramsey City Council regarding the proposed Ordinance Imposing a Lodging Tax and Allowing for Membership in the Twin Cities Gateway Convention & Visitors Bureau (CVB).

In 1983, the Minnesota Legislature passed the Local Option Tax. The law was passed such that 95% of all proceeds from a local option lodging tax must be used to fund a local convention or visitors bureau for the purpose of "marketing and promoting the area as a tourism or convention area." The remaining 5% could be retained by the taxing authority (the City) for its administrative costs.

Any community desiring to join Twin Cities Gateway, is required to adopt a lodging tax (up to 3.0%). This is a statewide requirement for any city wishing to join any CVB organization. This would be added to the current sales tax paid by customers. Both the Comfort Suites management and the owners are supportive of the City joining the CVB and implementing this revenue change (See attached letter). It is estimated that this would generate approximately $24,000 based upon last year's gross revenues. Following discussions with the City Attorney, implementing the lodging tax would not require a public hearing, but would require adoption of an ordinance by the City Council. A simple majority of the Twin Cities Gateway Board of Directors must also approve the admission of the City of Ramsey into the CVB (See attached by-laws).

Introduce Ordinance Imposing a Lodging Tax and Allowing for Membership in the Twin Cities Gateway Convention & Visitors Bureau (CVB).