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Type:
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Resolution
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Status:
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Passed
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File created:
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12/4/2020
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In control:
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Finance
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On agenda:
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12/14/2020
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Final action:
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12/14/2020
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Enactment date:
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Enactment #:
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Title:
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RESOLUTION DISTRIBUTING THE ESTIMATED 2021 HOTEL-MOTEL AND FOOD AND BEVERAGE TOURISM TAXES.
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Title
RESOLUTION DISTRIBUTING THE ESTIMATED 2021 HOTEL-MOTEL AND FOOD AND BEVERAGE TOURISM TAXES.
Body
CITY PROPOSAL:
WHEREAS, Tourism Taxes are collected on specific purchases and are used to fund legislatively allowable expenses mandated by Minnesota Laws and City Ordinance.
WHEREAS, it is expected that the tourism tax collections will be $9 million for 2021. A significant amount of these collections- more than 60%- are set aside through specific authorizing legislation that tied bonding projects to tourism or through previously stated and mandated commitments. These are:
• DECC Improvement Refunding Bonds (AMSOIL Arena) - $33,440,000
• Tourism Tax Revenue Bonds (St Louis River Corridor) - $18,000,000
• Spirit Mountain Tax Abatement Bonds (Grand Avenue Chalet & Improvements) - $7,055,000
• Minnesota Slip Bridge Interfund Loan - $2,200,000
• Promotion and Publicity 3% Hotel/Motel Tax Mandate
WHEREAS, the allocations for City funding to the General Fund and Parks are focused on the costs of providing services for events and tourist-focused activities which include but are not limited to: Lakewalk, Enger Tower, Rose Garden, Public Safety staffing and road closures for special events.
WHEREAS, the remainder can be spent in ways that align with legislative intent in support of our tourism economy. These funds cannot be unilaterally applied to other non-tourism organizational needs of the City.
RESOLVED, that the 2021 hotel-motel and food and beverage tourism taxes, as estimated, be distributed in the following manner:
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Promotional |
Capital |
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& Operational |
Support & |
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Total |
Support |
Debt Service |
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3% Hotel/Motel Tax: |
$2,181,100 |
$834,300 |
$1,346,800 |
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1% Hotel/Motel Tax: |
$722,800 |
$722,800 |
$0 |
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1% Food & Beverage: |
$1,959,100 |
$1,959,100 |
$0 |
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Additional 2% Hotel/Motel: |
$1,351,700 |
$675,800 |
$675,900 |
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Additional .75% Food & Beverage: |
$1,469,300 |
$0 |
$1,469,300 |
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Additional .5% Food&Bev & .5% Hotel/Motel |
$1,316,000 |
$0 |
$1,316,000 |
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Tourism Tax Fund Balance |
$719,400 |
$25,600 |
$693,800 |
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Total: |
$9,719,400 |
$4,217,600 |
$5,501,800 |
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DECC- Amsoil Arena Debt Service |
$2,963,600 |
$0 |
$2,963,600 |
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Spirit Mountain Bond - Chalet |
$475,000 |
$0 |
$475,000 |
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Spirit Mountain Adventure Park Lease |
$145,700 |
$0 |
$145,700 |
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St Louis River Corridor Debt Service |
$1,342,500 |
$0 |
$1,342,500 |
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Minnesota Slip Bridge |
$550,000 |
$0 |
$550,000 |
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DECC - Bayfront Park Management |
$71,300 |
$71,300 |
$0 |
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DECC - Blue Bridge Operations |
$43,000 |
$43,000 |
$0 |
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Tourism Events Support General Fund |
$821,300 |
$821,300 |
$0 |
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Business Improve District |
$220,000 |
$220,000 |
$0 |
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Lake Superior Zoo |
$510,000 |
$510,000 |
$0 |
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Rail Alliance |
$15,000 |
$15,000 |
$0 |
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Advertising and Publicity |
$1,500,000 |
$1,500,000 |
$0 |
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Fourth Fest Fireworks |
$57,000 |
$57,000 |
$0 |
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UMD Athletics |
$20,000 |
$20,000 |
$0 |
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Great Lakes Aquarium |
$270,000 |
$270,000 |
$0 |
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Depot Foundation |
$165,000 |
$165,000 |
$0 |
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Spirit Mountain Operations |
$500,000 |
$500,000 |
$0 |
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Duluth Area Family Y |
$25,000 |
$25,000 |
$0 |
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Duluth Children’s Museum |
$5,000 |
$5,000 |
$0 |
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Glensheen |
$20,000 |
$20,000 |
$0 |
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Total |
$9,719,400 |
$4,217,600 |
$5,501,800 |
Statement of Purpose
STATEMENT OF PURPOSE: This resolution distributes the 2021 estimated tourism taxes as required by Minnesota State Statutes, City ordinance, or City policy. A 25% decrease in 2021 tax collections was factored in determining the allocations above. A comparison of 2020 approved allocations to 2021 proposed allocations is attached as Exhibit A.
In previous years, the City instituted an application process for tourism tax allocations. All applicants were asked to apply for funds, submit budgets, and answer a series of questions and report on previous tourism tax funding levels and uses. Due to the pandemic and projected decreases in tourism revenue, the City did not have an application process but rather allocated the reduced tourism funds and fund balance in the tourism tax fund to fulfill existing debt obligations, legislative intentions, contractual agreements, commitments, and protect large tourism asset investments.
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