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

Scott Davy, the new General Manager for the Ramsey Comfort Suites, has requested the City facilitate the City 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.

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 Ramsey's 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 leaner budget 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 majority 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 the City 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. 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 Happy Days, and overall marketing efforts for the City.

The draft Ordinance regarding the Lodging Tax and membership in the Twin Cities Gateway CVB was introduced by the City Council on March 13, 2012 and is now eligible for adoption.

Adopt Ordinance

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.  The State statute section which directs the disposition of proceeds provides as follows:

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. It is estimated that this would generate approximately $24,000 based upon last year's gross revenues. A simple majority of the Twin Cities Gateway Board of Directors must also approve the admission of the City of Ramsey into the CVB.

Motion to waive the City Charter requirement to read the Ordinance aloud.

Motion to adopt Ordinance # 12 ___ which is an Ordinance Imposing a Lodging Tax and permitted membership in the Convention and Visitors Bureau (CVB).

Roll call vote: