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HomeMy WebLinkAboutMinutes 05/21/2003 CALL TO ORDER: ROLL CALL: Approval of Minutes Lodging Tax Revenues and Expenses Presentation by Michael Luehrs LODGING TAX ADVISORY COMMITTEE Port Angeles, Washington May 21, 2003 Councilman Campbell called the meeting of the Lodging Tax Advisory Committee to order at 3 :00 p.m. Members Present: Councilman Campbell, Councilmember Rogers, Carol Griffith, Jim Haguewood, Patty Hannah, Bob Harbick, Michael Luehrs, Dave Neupert, Steve Oliver, and Bill Rinehart. Members Absent: Jack Harmon. Staff Present: Finance Director Ziomkowski, Economic Development Director Smith, Clerk Upton, and Recreation Services Manager Cole. Others Present: Tony Griffith, Russ Veenema, Bob & Margaret Mitchell, Paul Lamoureux, Sandi Hartmann, and Mark Bowman. Councilman Campbell opened the meeting by asking if there were any changes to the agenda. Economic Development Director Smith submitted a list of project ideas for discussion, a matter that he asked be inserted as Agenda Item IV. Approval of Minutes: Dave Neupert moved to approve the Lodging Tax Advisory Committee minutes of February 10, 2003. The motion was seconded by Bob Harbick and carried unanimously, Lodging Tax Revenues and Expenses: Finance Director Ziomkowski submitted a report showing Lodging Tax Revenues and Expenses for the years, 1999 - 2003, noting that the revenue figures reflect the actual time frame in which they were received by the hotels. The expense report is indicative of expenses for the same period, set forth in the various categories of funding. Director Ziomkowski indicated that, in 2001, the CIty commenced reserving $1 00,000 per year for a conference center. She directed attention to the graphs also depicting revenues and expenses and, in response to an inquiry from Mr. Smith, Director Ziomkowski projected lower lodging tax revenues for 2003 as compared to the past year. Brief discussion followed, with Director Ziomkowski providing further information and clarification on the report. Presentation by Michael Luehrs, Red Lion Hotel: Michael Luehrs provided comments as follow-up to a written proposal he had submitted on the possibility of diverting $100,000 from reserves to an additional marketing effort. Mr. Luehrs felt that, in view ofthe lawsuit and associated problems, as well as difficult economic times, the Chamber of Commerce has shown good accountability in terms of monies invested in marketing Port Angeles. He felt it would be reasonable to free up some of the money in reserves for purposes of further marketing and, once the developer breaks ground on a conference center, then the City could again insure that the original agreement for lodging tax funds is met. Mr. Luehrs acknowledged there has been some ineffective marketing in the past, but he suggested it is a myth that marketing does not equate to filling hotel rooms. Further, he expressed the desire to look to the future and what is best for the City as -)- LODGING TAX ADVISORY COMMITTEE May 21,2003 Presentation by Michael Luehrs (Cant' d) opposed to focusing on the negative issues currently being faced in the community. Councilman Campbell noted the difficulty of balancing marketing efforts with tourism related facilities in the City. Capital Projects Capital Projects: Recalling the conunittee's previous discussions concerning the decision to set aside $100,000 a year for a conference center project, Tim Smith distributed a list of tourism related capital project ideas in order to stimulate discussion on ways to diversify the investment of lodging tax funds. Noting that most of the unofficial ideas could be considered to be tourism related, Mr. Smith felt it interesting to note the potential for a great deal of capital investment on projects touted by many as having tourist enhancement capabilities. Just as there are individuals interested in using reserves for marketing, there are members of the community who are interested in furthering capital investment. At this time, Clerk Upton distributed copies of a chronology of discussions held by the Lodging Tax Advisory Committee since the latter part of 1999 on the matter of funding capital investment and a conference center. She thought it might prove helpful in the discussion relative to the proposal before the group today. Discussion ensued concerning the items on the list provided by Mr. Smith and the specifics as to which items might or might not be considered tourism enhancements. Councilman Campbell opened discussion by questioning how to best balance marketing efforts and capital facilities for the tourism industry. Discussion Discussion: Steve Oliver spoke of the committee's past labors on this issue, and he expressed support for the capital allocation and a continuation of that allocation on a long-term basis, as it is important to the overall package. He felt the allocation is not necessarily tied to a conference center, as there are clearly other projects to which it could be dedicated. He was reluctant to devote a larger allocation to marketing, being uncertain as to the benefits that would be gained particularly because the economy is down. He was, however, open to receiving other input from the committee members. Bill Rinehart, agreeing with Steve Oliver's comments, recalled the committee's deliberate effort to seek capital improvements by separating the funds between promotion and the creation of assets to get people to visit and make return visits. Bill noted that, in recent travels, he observed how much tourism is down, and it is all the more important to have capital funds invested in order to have something to attract people to the area. He did not support a reallocation of funds but, rather, spoke in support of reducing debt in order to free funds for capital investment. Bob Harbick disagreed with the notion that advertising should not be increased because tourism and the economy are down. He cited the example of significant funds being spent by British Columbia, noting that advertising should be increased when times are bad. Bob felt that leaving the funds in reserve would serve no purpose, and he recalled that the committee's decision to set the money aside was based on the assumption that it would be accessed immediately for a conference center. Bill Rinehart countered with his understanding that, when the decision was made to set funds aside, there would be two different funds - one for marketing and one for capital. Jim Haguewood referenced Lodging Tax minutes of January 7, 2000, indicating that most business is not looking for an expanded market, but a retooled market. He spoke in support of specific product development so that there is something to sell. Jim referenced what he termed to be two of the freshest marketing documents in the community, one produced with the EDC and the Clallam Networks and the other produced through the OTED Study where a survey was conducted giving the community a sense of who we are, what we offer, what the perception is, as well as how we relate to other communities. Jim was not in favor of jumping forward to add to an existing program, as he felt it would be prudent to look at specific products or programs to support a balanced approach. - 2- LODGING TAX ADVISORY COMMITTEE May 21, 2003 Discussion (Cant' d) Michael Luehrs clarified his intentions were not to support general marketing but, rather, to focus on an improved means of letting tourists know what products can be experienced by visiting Port Angeles. Further, he felt that a conference center would not necessarily equate to more room nights, but there are many products in the area that can be promoted in order to increase visitation. Michael felt that the items on Tim Smith's project list would not increase visitation to Port Angeles; however, it was pointed out that many members of the community have strong feelings that certain projects, such as the underground, would definitely draw more visitors to the area. Paul Lamoureux, an interested citizen in attendance, felt the Gateway project is tourism related, and perhaps some Lodging Tax funds could be dedicated toward that project. In addition, he felt that Russ Veenema and the Chamber of Commerce were doing a good job in terms of marketing; he suggested that consideration be given to increasing the percentage oflodging taxes, feeling that it would not hurt business in any way. Steve Oliver questioned the trend ofrevenues projected for 2003, wondering if it will be likely that $100,000 can put in reserves this year. Finance Director Ziomkowski indicated it may be questionable, but Michael Luehrs felt the trend would improve during the summer and fall. Jim Haguewood urged the committee to stay in focus, suggesting the members look at the capital element of the budget to determine if that component is still valid. Bob Harbick discussed the conunittee's past decision and his recollection of the $100,000 per year reserve as it specifically relates to investment in a conference center on Oak Street. Lengthy discussion ensued as to the timing of payments to a conference center developer; Tim Smith clarified that the developer won't receive any City funds until there is a product or a service. It was indicated that $200,000 could be moved into an escrow account based on all of the conditions being met. If the conditions aren't met, then the funds would return to the City. The developer could collect the $200,000, with payments of$IOO,OOO per year for 18 years. Carol Griffith, as a collector of lodging tax funds, moved to take $100,000 out of reserves and apply the funds to marketing Port Angeles. The motion was seconded by Michael Luehrs, who offered a friendly amendment that the Chamber of Commerce be asked to prepare a docnment that would reflect how the $100,000 would be spent for tourism enhancement, with the proposal being subject to the approval of the Lodging Tax Advisory Committee. Lengthy discussion and debate followed, with Bob Harbick offering information relative to marketing conducted by Estes Park, Colorado. He asked that the motion be further amended to take $200,000 out of reserves, but the committee chose not to move forward with that option. Dave Neupert, representing the Chamber of Commerce, indicated it has been less than one year since the commitment was made to Randal Ehm for the conference center. He felt a lot of time and money has been invested in the conference center project, and he hasn't seen enough of a significant change in circumstances to deviate from the plan at this time. A vote was taken on the motion, as amended, with Carol Griffith, Michael Luehrs, Bob Harbick, and Patty Hannah voting in favor of the motion, and Dave Neupert, Steve Oliver, Bill Rinehart, Karen Rogers, Orville Campbell, and Jim Haguewood voting in opposition. The motion, therefore, failed. Tim Smith reminded the group that this is an advisory vote only. Debate then followed on whether the Council members had voting privileges. Although that specific sentiment was not resolved, pending legal input, Councilman Campbell advised the group that the committee's composition had been determined to be legal and in compliance with the RCWs according to the City Attorney. - 3 - LODGING TAX ADVISORY COMMITTEE May 21,2003 Discussion (Cont'd) Steve Oliver urged the committee to maintain, as closely as possible, the 50/50 split between capital and marketing, including the administration costs for special events. However, he indicated an emergency or a special circumstance with a specific plan could be presented to the committee for review. Otherwise, he felt the committee should adhere to its long-term plan. Michael Luehrs reiterated the intent of his proposal, and Bob Harbick expressed the opinion that the current state of affairs, in terms of the war and the economy, does constitute an emergency. He felt that insufficient funds are being directed toward marketing. Tim Smith noted this committee's recognition of the value of investing in marketing; however, he noted there hasil't been an increase in "heads in beds". Lengthy discussion involved whether the committee would be willing to look at a specific plan for enhancing marketing efforts, to which Councilman Campbell responded it would. Carol Griffith asked if the Chamber of Commerce could be asked to provide this plan for consideration at a meeting in a month. Patty Hannah referenced a previous suggestion she had offered to the connnittee in terms of conducting a survey of all visitors to obtain specific feedback; she reiterated the value of gathering this type of data from the visitors. Russ Veenema was asked if there were uses for additional marketing funds, to which he responded in the affirmative, emphasizing there is a distinct difference between marketing and advertising. He felt that, in this instance, the committee was referring to advertising investment. The Chamber does image advertising, but it is extremely difficult to track the direct impacts of this advertising. Most advertising efforts thus far have been focused on the long-term goal of changing occupancy patterns. Mr. Veenema referenced the 2 - 3% increase between 2002 and 2003, noting this increase represents a significant expenditure of money in the Port Angeles area. Discussion was also held on the merits of associating lodging tax revenues with sales tax revenues, and Councilmember Rogers felt it somewhat difficult to see any trends by virtue of the fact there has been no increase in sales tax noted. She felt it to be premature to take funds out of reserves, and she was troubled by the message that might be sent to the developer should such an action take place. Discussion was generated on the marketing match program offered by the Chamber of Commerce, and Tim Smith noted that only one facility had used it thus far. However, it was noted at this time that the Bed & Breakfast Association had sought funds through that mechanism. Michael Luehrs was uncertain as to where the group would go from here, particularly because he did not want to undermine the efforts of Randall Ehm. Councilman Campbell agreed this is a core issue, as there are others who want access to this money in the form of capital facilities; the question of using this money for capital versus advertising is one that must be answered. Carol Griffith asked that the group meet again to consider a specific presentation from the Chamber. John Platt indicated the Best Western has significantly reduced its investment in advertising, as it has concentrated on improved performance and customer service instead. Discussion followed, with Mr. Platt expanding on the facility's success in view of the commitment to customer service. Councilman Campbell advised the group there is a need for a specific proposal on marketing, as well as the identification of other options for building a larger base of tourism. Adjournment There b 'l1jl no further business, the meeting adjourned at 4:55 p.rn. J ~O~~ ,1tto^ Becky J. U , Clerk - 4-