CVB gets new pact from Kent County
A new agreement between Kent County and the Convention and Visitors Bureau has been tentatively created despite separate attempts to delay a vote and shorten the contract’s duration.
The county’s Finance Committee narrowly agreed to a three-year contract with the CVB last week that will begin Jan. 1 and run through 2012. The full commission will take up the agreement in a month. The current contract expires Dec. 31.
The new pact calls for the county to give the bureau either 12.5 percent of total revenue to the county’s lodging excise tax fund or a minimum payment of $625,000 next year. The CVB will receive 13.5 percent of the fund’s total tax receipts in 2011, and 14.5 percent in 2012. No minimum payments are required in those years.
But Commissioner Dick Bulkowski suggested that the committee table its contract vote until its next meeting. He felt members would have a clearer picture of the fund’s fiscal condition because its status is set to be discussed then, when the committee continues its ongoing review of upcoming budgets.
Bulkowski also reminded the committee that the county transferred $550,000 from its general fund recently to cover projected shortfalls in the lodging excise tax budget and is set to send another $1.8 million from the general fund to the account next year.
“That’s now and that’s huge,” he said of next year’s transfer. “This is about how they’re funded.”
Bulkowski said he wants the CVB to increase its excise tax from 3 percent to 4 percent, which can be done under state law and would raise an estimated $1 million in new revenue and lower the county’s financial backing of the bureau.
“It merits some consideration to how we want to subsidize the CVB with this fund, when they have the ability to raise more revenue,” he said.
Bulkowski added that a 1 percent hike on a guest’s bill likely wouldn’t stop anyone from taking a vacation here. “I don’t think 1 percent is going to be an issue, but it means a lot to this budget,” he said.
But Commissioner Art Tanis pointed out that another percent, which would raise the local excise tax from 8 percent to 9 percent when the county’s 5 percent levy is included, could prevent a convention with 5,000 delegates from deciding to meet here. “I think we need to support the bureau because it does a good job,” said Tanis.
Bureau President Doug Small said his organization needs a majority of the county’s hotels and motels to agree to the tax bump and has been in touch with the Kent County Lodging Association about the increase. “We have made overtures to them about this assessment,” he said. “This is a timing thing.”
However, Small noted that many of the county’s 93 operators are small and don’t want to raise their room rates when they don’t see any financial benefits from the convention trade, which largely stays at the downtown hotels near DeVos Place. “We want to be certain that we have a buy-in from everyone so we don’t have an issue,” said Small.
Commissioner Gary Rolls felt the contract’s term needed to be shortened, possibly to a year. “I’m just hesitant about entering into a three-year agreement,” he said. “We may have to come back and revisit this anyway.”
But County Administrator and Controller Daryl Delabbio said the county had entered into five-year contracts with the bureau until two years ago and also gave the CVB a bigger cut of the lodging excise receipts.
“We, at one time, provided 20 percent of our hotel-motel tax dollars to the CVB. Then we went to a dollar amount,” he said. “Given the times, I don’t think we can go longer than three years.”
As for the agreement’s revenue allocation, Delabbio said the first-year funding of at least $625,000 is $75,000 less than the county gave the bureau this year. He also said the minimum dollar amount was about 18 percent of the fund’s revenue estimate for next year, so the 13.5 percent and 14.5 percent for the agreement’s last two years are actually declines from the first-year allocation.
The biggest expenditures the county has from the lodging excise tax fund are two bond payments for the construction of the convention center that total about $4.87 million this year and rise by roughly 3 percent each year.
The forecast for the fund this year has total tax revenue at $4.6 million, or 7.5 percent less than the $4.98 million it received last year. Tax revenue to the fund was $3.2 million at the end of September, which was down by 5.6 percent from last year.