After denying the Albert Lea/Freeborn County Convention and Visitors Bureau needed funds at Monday’s city council meeting, the city is ready to help the strapped organization, said Mayor Bob Haukoos.

Wednesday, April 11, 2001

After denying the Albert Lea/Freeborn County Convention and Visitors Bureau needed funds at Monday’s city council meeting, the city is ready to help the strapped organization, said Mayor Bob Haukoos.

The city will take steps to relieve the financial distress of the CVB, Haukoos said Tuesday. As soon as the CVB submits missing monthly financial reports, Haukoos said the city is willing to offer assistance.

&uot;We’re going to work with them. We want the CVB to be as successful as possible,&uot; Haukoos said. &uot;We just want to know what they’re spending their money on.&uot;

CVB representatives told the city council Monday that the organization had run out of money and was forced to get a short-term loan to meet payroll obligations. CVB President Don Malinsky asked the council to release more than $29,000 in excess lodging tax money to provide some needed cash reserves.

The lodging tax, a 3 percent tax on hotel and motel rooms, is the CVB’s primary source of funding, said Malinsky.

The council did not vote to release any of the tax revenue, however, because the CVB had lapsed in filing monthly financial reports.

City Manager Paul Sparks said no CVB reports have been filed with the city for several months, even though the monthly financial reports are required by the CVB’s contract with the city. Sparks met Tuesday with CVB Executive Director Jim Pilgrim to discuss the issue.

&uot;It’s not an unreasonable request, and based on my meeting with Jim Pilgrim, he plans to submit the reports,&uot; Sparks said.

Sparks said the city can release some portion of the excess lodging tax revenue this week, provided the receipt of the financial reports.

&uot;We’re probably going to take some short-term steps to relieve their distress, but the council would have to release the bulk of the excess lodging tax funds,&uot; Sparks said.

Pilgrim said the Tuesday meeting with Sparks was educational, especially regarding the current contract between the city and the CVB.

&uot;The city would like some more details, and we’re happy to comply,&uot; Pilgrim said. &uot;I think we’re on the same page now.&uot;

CVB board member and former president David Nelson said the financial problems of the CVB began last year when the city withheld two monthly lodging tax payments. At the time, the CVB was operating with a $35,000 reserve

Nelson said the reserve is crucial to getting the CVB through the winter months when lodging tax revenue is down. By withholding lodging tax payments for two months, the city forced the CVB to dip into reserves at a much faster rate

&uot;The whole thing is completely baffling. We were running a successful enterprise over there, staying within our budget,&uot; said Nelson. &uot;Then, with no explanation, we suddenly quit receiving our monthly operating money from the city. I had to call the city to find out what was going on.&uot;

Sparks said the council was concerned last year about a growing CVB surplus, so the city began discussing the possibility of lowering the lodging tax rate.

&uot;The surplus raised some questions because it was just sitting there and growing. If you’re going to be accumulating a surplus just to put it in the bank, then perhaps the tax is generating too much money,&uot; Sparks said.

But Malinsky said tax revenue is a direct reflection on the effectiveness of the CVB. Drawing more visitors to Albert Lea, the main objective of the CVB, means more lodging tax money.

&uot;How can the city discern a small surplus as a problem? It shows we’re bringing more people to the area which, in turn, means more tax revenue,&uot; Malinsky said.

City leaders created the CVB 15 years ago to take some of the promotional workload off of the city’s hands, Malinsky said.

&uot;I’m sure the city would rather let the CVB handle that excess lodging tax money. I completely understand the city’s point about communication and reporting, and we will uphold that responsibility,&uot; he said.

The CVB board does not want to see the lodging tax reduced, especially with several important projects in the planning stages, Malinsky said.

&uot;We’re going to do our best to operate in good faith with the city, but having a reserve is important to the CVB’s operations,&uot; he said.

According to Sparks, the council has not yet decided how large a reserve the CVB should have, or if it’s appropriate to have a surplus at all.

&uot;The council hasn’t answered that question because they haven’t had adequate information,&uot; Sparks said. &uot;Now I think we’re on the right track.&uot;