City of Grand

G Forks
Staff Re
eport
Committeee of the Whole
W –M
May 11, 20
020
City Coun
ncil – May 18, 2020

Agenda Item: $150

0,000 Loan
n Request from
f Conveention & V
Visitors Bureeau (CVB) from
Economic Development Fund 2163

Submitted by: Maureen Storsttad, Finance

e Director

Staff Reccommended Action: Review & co

onsider loaan request ffrom the CV
VB

Committee Recomm
mended Acction:

Council Action:

BACKGROUND:
The Convvention and d Visitor’s Bu
ureau was established
e tto market, p
promote, ad dvertise, spoonsor,
& fund evvents that provide
p for the promotio on of meetin ngs, convenntions, tradee shows, spoorting
events, artistic
a prod
ductions, tou urism & leissure travel inn the Greatter Grand Fo orks area an
nd to
coordinaate the effoorts of public, private & volunteeer agencies involved w with such ittems.
Funding for such pu urpose primaarily comes from
f a lodg ing tax on o
overnight ho otel stays.

Due to thhe COVID-19 9 Pandemicc, the hotel industry hass been greattly impacted d as many evvents
have bee en cancelledd, reducing hotel stays. In responsse, the CVB w uced lodging tax
will see redu
collections used to run their op perations. Julie Rygg, EExecutive Diirector of thhe Greater GGrand
Forks Vissitors Bureaau, has state
ed that bud dget cuts haave been m made to help p offset, bu
ut are
estimatinng a need off $150,000 to
t help cash flow in 20220. The Bureeau has applied for SBA A EIDL
loans andd they are working
w with
h local lende
ers regardin g this progrram. The CV VB has also been
in contaact with congressional delegation n regarding the needss of the ho otel industrry for
possible future fundding relief.

The fundding source for this loaan would co

ome from th he City’s Ecoonomic Devvelopment Fund
(2163), to
t be paid back over a period off 5 years orr less. Tourrism is an aallowable use of
economiic developm ment fund dollars. Juulie has statted if otheer program dollars beccome
available
e, the City would be reim
mbursed soo
oner.
ANALYSIS AND FINDINGS OF FACT:

 A 3% lodging tax is placed on hotel overnight stays, which is used by the CVB for
tourism/promotional activity for the Greater Grand Forks area
 COVID-19 Pandemic has impacted the Lodging industry significantly
 CVB has made $166,000 in budget cuts to date
o Will not hire part time visitor center staff and not filling open full-time position
 March hotel activity dropped to 34.9% (54% in 2019)
o No data yet for April
o 4th quarter projections estimate 50% of projected revenue
 CVB does not qualify for the Paycheck Protection Program (PPP) as they are a 501c6
 The CVB did receive $6,000 for the SBA’s EIDL Advance with the understanding that it
will be forgiven
 The CVB has applied for the COVID-19 PACE Recovery Program, which is being offered
through the Bank of ND
o Working through a local bank and currently waiting for update
 The CVB did have $35,700 in Event Funding dollars cancel, but still have $115,000 in
funds already paid or projected to use for events in 2020
 This $150,000 loan would come from Economic Development Fund 2163 to be paid
back over a 5 year period or sooner if other funding becomes available.

SUPPORT MATERIALS: