Jenkins: Council ratifies lodging tax repeal
The Jenkins City Council in November rescinded an ordinance allowing a lodging tax at Jenkins businesses. That action was not official until the council ratified the decision at its Monday, April 8, meeting.
The lodging tax has been applied since 1999 or 2000 as a 1 percent fee paid exclusively by lodging customers in 22 lodging facilities in Jenkins, Crosslake, Jenkins Township and Ideal Township as part of the Whitefish Area Lodging Association. Of that fee, 95% must be used to fund a tourism bureau to promote the area.
Last November, the council rescinded the lodging tax for various reasons, among them a belief that the city of Jenkins wasn't being represented fairly and disagreement with how the funds raised through the fee were managed.
Council members were forced to backtrack after their November decision when it was brought to their attention that the lodging ordinance requires a party to issue notice to the tax administrator, in this case Ideal Township, before leaving the joint powers agreement. At first the council disagreed with this finding, but eventually acquiesced to letters appealing the decision by Whitefish Area Lodging Association members.
The city's attorney informed them that they had passed the resolution, but for it to be official, it would need to be ratified again after the city followed the proper procedures.
Ahead of the April 8 meeting, the council received correspondences and a petition from supporters of the lodging tax ordinance. At the meeting, WALA President, Dave Moe of Clamshell Beach Resort in Ideal Township, and WALA member Rebecca Mesenbrink, of AmericInn Lodge and Suites in Jenkins, along with another member attended the council meeting to present the petition and ask the city to reconsider its position.
Mesenbrink said the city should not rescind the ordinance, because the fee only comes from lodging customers and not citizens. Mesenbrink was the author of the petition and she read comments written on it by local business owners before urging the council to change its stance on the ordinance.
The petition included 53 signatures from individuals, including local business owners with home addresses in Pequot Lakes, Breezy Point, Backus and Crosslake.
Deborah Willicut, of Pequot Lakes' Asian Accents business, wrote that the tax is "very useful to local businesses."
"The concept is simple. More heads in the lodging beds. That helps turn the economic drive in a community," Mesenbrink said. "This doesn't cost residents of Jenkins a single penny. By taking away our lodging tax, you are in effect taking away a combined $65,000 in campaign from AmericInn."
Mesenbrink told the council that the Whitefish.org web page was changed in response to comments from the council. Specifically, Jenkins was not listed with other cities on the website previously but has since been added. Moe also addressed past complaints that communication was poor, saying there are now efforts to improve communication.
Moe gave a brief account of his own spending for his business within Jenkins city limits.
"Personally it feels a little like a stick in the eye when I try really hard to support local businesses," Moe said.
Council members took turns voicing their opinions on the lodging tax ordinance with each council member presenting a wide range of concerns. Council member Andrew Rudlang commended Mesenbrink for her petition and getting local business owners involved. He also said he takes petitions with a grain of salt, saying that the petition writer usually only presents one side of the argument.
Rudlang said he doesn't doubt that the lodging tax funds aren't used for great promotion, but that didn't change the fact that he opposes using a tax of any sort to fund something that local chambers of commerce do using voluntary membership fees. He said the city's lodging tax would be applied to any lodging business that comes to Jenkins going forward, even if they don't want the added 1 percent fee.
"They use membership-based dues systems," Rudlang said. "I'm not telling WALA how to run its affairs, but I am voicing my opinion that membership-based systems are more favorable to me because it's a free market, and if a business wants to be part of a chamber of commerce or builder's association, they get to decide if it benefits the membership or whether or not to participate. What we are being asked here is to legally impose a tax on any lodging business in the jurisdiction current and future and make it totally involuntary. The money is given to a third party where the communication can be difficult at times for getting any kind of report back on what's happening with it and the whole thing settles under a cloak of government with our name on it. That's the part I can't reconcile or find justification for regardless of how good the cause may be. I can't get over it being implemented as a tax."
Council member Donna Stricker said she was concerned with the clarity of the agreement between the city and WALA. The legal documents, she said, are difficult to get and even harder to read. Communication had also been an issue in the past. Discussions between the city and representatives of WALA are sometimes congenial and sometimes tense.
"Their document was a much more fleshed out, well-written document than ours was," Stricker said. "Whatever our documentation was, it was incomplete and it just felt it wasn't as concise and clear as it should be."
Council member Gary Hart said he hasn't seen many tangible examples of marketing that benefit the city.
The tone of the meeting shifted and became somewhat more tense as council member Charles Hoffman became visibly agitated talking about his issues regarding the lodging tax agreement. Hoffman's concerns were largely pertaining to communication. First, he said the city hasn't been presented with accounting according to the agreement.
"One thing that's a sticking point for me is in the agreement it says the tax administration shall account to Jenkins," Hoffman said. "We shouldn't have to be requesting it. The tax administrator shall account to Jenkins in April of every year. Said account should reflect total tax collection, total payments to the bureau, total fees to the services, total expenditures by the bureau for the purpose of marketing and promoting the area as a tourism and convention center. Why are we having to ask for it?"
He also complained that representatives from WALA have never presented examples of promotions they have done that benefit Jenkins and have never shown occupancy numbers since the installment of the lodging tax, both of which he suggested would be evidence of success of the tax.
Later, Mesenbrink and Moe said Ideal Township would be responsible for presenting accounting records. They also said they could possibly provide the documents Hoffman mentioned and told him communication was a two-way street.
Mayor Jon Lubke showed a promotional video Sourcewell made on behalf of the city and gave that as an example of the types of things he would like to see WALA produce, and the types of things he would like WALA to provide funding for. Moe complimented the video and agreed that type of marketing would qualify for funding.
Lubke asked how much had been raised by the lodging tax. Mesenbrink said it amounts to approximately $8,000 a year from AmericInn. Lubke then said he didn't feel like the city had enough representation when it comes to the use of the funding under the current agreement because cities are not allowed to be members, only lodging businesses are. He suggested there could be changes to give the city more representation and autonomy in accessing the funding. Lubke suggested the old agreement should be discarded and a new agreement should be rewritten. Mesenbrink asked what Lubke was thinking the new agreement should include. There was a brief mention of past discussion of raising the lodging tax before discussion broke down and people spoke over one another.
Moe became audibly excited. Moe, Lubke and at least one council member raised their voices.
"You don't know what it takes to pass a lodging tax, obviously," Moe said.
Mesenbrink attempted to respond to earlier discussion topics. She told Rudlang that the lodging tax helps businesses compete with larger industries in a way that would be difficult with a membership fee-based group.
Rudlang reiterated that he didn't think the fees should be collected through a tax when other organizations use membership fees.
The council voted 4-1 to ratify the repeal of the lodging tax agreement. Lubke was the sole vote against the repeal. Moe thanked the council for allowing an opportunity for public comment before leaving.
"I'm disappointed," Moe said.
"Very disappointed," Mesenbrink said. "You're telling me what to do with my business, and that's bothersome."
In other business Monday, the council:
• Agreed to contract with the city engineers for Wetland Conservation Act administration.
• Submitted a proposed cost-share agreement with Crow Wing County for work on County Road 145, which included a $75,000 cap on the city's share in case of cost overruns. The proposal also included a request for input into the Cemetery Road intersection.
The county previously said it would do road repairs on Cemetery Road sooner if the city agreed to a cost-share agreement, and the council said since the county was using the road as a bargaining chip, the city would like some input.
• Adopted an ordinance modeled after Coon Rapids ordinances setting aesthetic standards for the appearance of wireless transmitters installed in the city on utility poles.
• Approved a Pequot Lakes fire protection contract with a $369 increase over last year's contract.
• Approved submission of a letter of support for construction of a children's museum in Pequot Lakes as well as a letter supporting Pillager's application for a grant to buy dewatering equipment for Region 5 communities.