Lodging tax changes unwelcome

Talk about it

Don’t mess with the lodging tax.

That’s the plea the Alexandria City Council is hearing from those in the local tourism and hospitality business.

The state Legislature is considering a bill, House File Number 2077 (HF 2077), that would give cities, counties or townships the temporary authority to use lodging tax revenues for any permitted use.

At its meeting Monday night, the council voted unanimously to oppose the section of the bill involving the lodging tax.

Mayor Dan Ness fears that if the Legislature enacts the measure, it could claim that since the state was giving cities a new revenue source, it could raid more local government aid.

"I don't want the state to get their hands on this [lodging tax funds] in any way," Ness said. "We should fight this all the way."

Alexandria enacted a lodging tax in 1998. Guests staying in the 14 motels and resorts in the city are charged an additional 3 percent tax.

Last year, the tax generated $217,545 and the city received $10,877 of it for administrative fees, according to Brad Stevens, coordinator with Alexandria Hotel and Hospitality (AHH), the non-profit group that uses the proceeds to promote the area as a year-round destination.

"My position is that changing the lodging tax is a promise broken," he told the council Monday night. He added that revenues from the tax helped attract more than 93,000 visitors to Alexandria last year.

The impact of eliminating the dedication of the lodging tax would result in a “serious reduction or an end to tourism promotion at our local level,” Stevens said.

The money from the tax is used to produce ads and brochures; develop and maintain websites; allow local tourism representatives to attend sport and travel shows where they promote Alexandria; fund event promotions; provide staff; and present the local community’s image to potential visitors, Stevens said.

“At a time when local economies are struggling, this [HF 2077] will reduce the opportunity to bring in outside visitors seeking a gateway destination,” Stevens said.

Fewer out-of-town visitors, Stevens said, means less money spent at not only lodging establishments but also at restaurants, grocery stores, book stores, hardware stores, gas stations, car dealerships and hospitals.

“The dollars that tourism generates are critical to both local economies and the state at a time [when] we need more revenue,” Stevens said.

He cited information from the Minnesota Department of Revenue and Explore Minnesota Tourism that showed that every $1 invested in tourism brings an estimated $4.60 in state and local taxes, $20.40 in wages and $53 in gross sales.

If the lodging tax revenues were diverted in the 106 communities that have it, Minnesota, which ranks 42nd in the nation for tourism spending, would sink even further, Stevens said.

Stevens said the AHH will consider 20 requests for funding next week and he wanted assurances that the lodging tax proceeds wouldn't be raided.

"If the city flexes its arms and takes away the lodging tax money, it would effectively eliminate the AHH," Stevens said.

City Administrator Jim Taddei noted that even if the legislation passes, it does not mean the city will automatically take over the lodging tax revenues.

City Attorney John Lervick agreed. "You're not compelled to do anything…You are holding the trump card," he told the council.

The Alexandria Lakes Area Chamber of Commerce also opposes making changes to the lodging tax.

A policy position approved by the Chamber’s legislative committee stated: “To now remove this lodging tax revenue for other purposes is short-sighted and unfair. It will result in a decrease of our community’s ability to attract tourism and visitor dollars, and in turn it will damage the overall economic vitality of our community that is highly dependent upon tourism and visitors.”

Stevens said that the Chamber and lodging establishments have received support in their efforts to defeat HF 2077 from local lawmakers in the House and Senate.

Despite the opposition, the lodging tax provision is expected to be included in the omnibus tax bill the Legislature is scheduled to consider on April 20, Stevens said.

In other action at Monday's meeting, the council:

--Agreed to apply for economic stimulus funding to obtain a low-interest loan and grant for Alexandria Light and Power’s proposed new water treatment plant – a $5 million project.

The money would come from the Minnesota Public Facilities Authority and the Minnesota Department of Health.

If approved, the interest rate on the loan is expected to be in the 2.5 percent range, which would result in significant savings, according to ALP General Manger Al Crowser.

The funding comes with a couple of catches, however, which could drive up the cost of the project. Applicants must agree to pay prevailing wage to the workers who are building the project and abide by “Buy America” provisions, using only American-made goods and services.

Because of those requirements, ALP is bidding the project with and without the conditions.

Built in 1996, the water plant is running up against its capacity in the peak summer demand periods, according to ALP officials. The new plant is expected to meet the city’s water capacity needs through 2025.

ALP plans to complete construction of the expansion by next summer and complete the renovation work by the fall of 2011.

In other ALP-related action, the council approved a transmission agreement with Minnesota River Energy Services (MRES). It’s a risk-sharing agreement that will allow ALP and other utilities that obtain power through MRES to share in the cost of transmission deliveries.

The move is good for ALP, Crowser said, because its transmission costs have generally been higher than average over the years. He said it could save ALP as much as $300,000 a year.

The council also approved a facilities lease agreement that will provide credits to ALP for the local transmission investments it has made, including adding a 115,000-volt line that runs the length of the eastern side of the city. MRES will need ALP’s facilities to deliver wholesale electricity to Alexandria.

The lease agreement will cover about 14 percent of ALP's original investment to pay for the new line, Crowser said.

The city council was also reminded of its annual joint meeting/dinner with ALP. It’s set for Tuesday, April 21 at the Garden Center Ballroom, beginning with an ALP presentation at 5:30 p.m.

--Heard a report from Douglas County Sanitarian Todd Appel about radon – a naturally occurring but toxic gas that can build up in homes and cause lung cancer and other health problems.

Appel said that radon is the second leading cause of lung cancer.

Homes in Douglas County are considered in the highest level of risk, Appel said. Two out of every three homes tested had elevated levels of radon.

Appel said his goal is to educate people about the dangers of radon, urge them to get their homes tested and help them reduce the health dangers.

Residents can purchase radon-testing kits from the Douglas County Public Health for just $5. Testing takes only a few days and results are obtained in a couple of weeks.

Radon levels can be reduced with a simple ventilation system that costs only $200 to $300 when a new home is being built or about $2,000 on existing homes, Appel said.

As of 2009, all new homes must have a venting system for radon but it doesn't have to include a fan and the system doesn't have to be tested – serious flaws in Appel's opinion.

He said that even with a pipe venting system that reduces radon levels in half, 20 percent of homes would still have dangerously high levels. Appel prefers a higher "gold standard" of radon prevention preferred by the Minnesota Department of Health – a tested fan system that can be added to new homes for about $100.

"It should have been in the codes so long ago, it's ridiculous," Appel said.

The council thanked Appel for his report. A couple members said they planned to get a kit from public health soon.

--Approved the 2009 report from the city assessor’s office.

For the first time the estimated market value of all property in the city topped the $1 billion mark.

The report noted that the new construction in the city’s 2008 estimated market value included 43 single-family homes and 221 remodeling permits in 2007 that accounted for $8.44 million of value.

Commercial and industrial construction added another $17.32 million of value.

Tax-exempt property in the city accounted for more than $252 million of market value.

A total of 442 building permits were issued in the city in 2007, a decrease of about 8 percent from the previous year, the report noted.

The city comprises 19.8 percent of the total estimated market value of Douglas County.

New property that is coming into the city through annexation is expected to add $117 million of value in taxes payable in 2010.

--Accepted a petition to annex 2.08 acres of property located along Ridgewood Drive in LaGrand Township.

The land, known as the Crowser property, includes four parcels owned by eight people – Allen and Cynthia Crowser, Kevin and Nicole Taylor, Michael and Miriam Svobodny, and Mark and Tracy Larson.

All eight signed the petition.

The request will be forwarded to LaGrand Township, which is expected to waive any objections, and then sent back to the city council for final consideration.

--Gave preliminary approval to three annexation petitions for property in Lake Mary Township just south of Lake Andrew known as the Zavadil Development.

The petitions were submitted individually because state law limits each annexation request to 200 acres or less.

One petition involves 120.25 acres in four parcels of land adjacent to Cross County Lane and Lake Andrew.

Another petition includes 135.72 acres of land in four parcels adjacent to Cross County Lane.

The third petition is for 183.07 acres of land in seven parcels adjacent to County Road 21.

All the property is owned by Larry Zavadil. The council had previously approved two other annexation requests in the same area, bringing the total acres of annexed property to about 600, according to City Planner Mike Weber.

The petitions will be forwarded to Lake Mary Township, Douglas County and the Minnesota Municipal Boundary Adjustments Office. The petitions are then expected to go before the council for final consideration.

--Accepted a $1.18 million bid to extend city waterlines into a newly annexed area of the city – phase 3, part 1A, 1B and part 2.

The bid, the lowest of 15, was submitted by Nodland Construction of Alexandria – the only local firm in the running. It came in about 20 percent below the city's estimate.

The bidding was very tight – the second lowest bid was just $4,767 more.

The area is part of an orderly annexation agreement with Alexandria Township. It includes County Road 42, Ridgewood Drive, Wood Duck Lane, Autumn Drive, Wintergreen Lane, Fairview Lane and Green Lane, North Nokomis (County Road 42), County Road 11, Darling Drive, Wicken Lane, Ross Garden, Browns Point Road, Sessions Street, Short Street, South L’Homme Dieu Drive, Country Club Heights Road, Park Side Road and County Road 70.

--Agreed to apply for a $12,497 federal economic stimulus grant that has been awarded to the Alexandria Police Department.

Alexandria Police Chief Rick Wyffels requested the action. He said the grant, offered through the U.S. Department of Justice, will help the local Drug Abuse Resistance Education (DARE) program by providing a police officer in local schools and buying supplies.

The program teaches children about gangs, violence, drugs and the risks they involve. It also helps young people in getting to know a police officer in a positive way, Wyffels said.

The Byrne grant will help save the DARE program from cuts for up to the next four years, Wyffels said. The program has a budget of about $14,000 (excluding officer salary) over the next four years.

--Listened to an annual report from Chief Wyffels about the police department's accomplishments of the past year and the challenges ahead.

Watch for a follow-up story in Friday’s Echo Press.

--Was informed that the city has successfully completed right-of-way negotiations for all but one of the pieces of property needed to reconstruct Dakota Street near Target.

The project is under a tight timeline for receiving federal funding.

City Attorney John Lervick told the council that if a breakthrough doesn't happen soon, the city will use eminent domain to acquire the property.

--Was reminded that city council members will meet as the Board of Equalization on Wednesday, April 22. A quorum is required.

--Authorized Public Works Coordinator Bryan Bjorgaard to sell the city’s 10,000-gallon tack oil tank at the street garage.

The material in the tank can no longer be used.

--Scheduled a work session with the Alexandria Area Economic Development Commission for Monday, April 27 after the city council meeting.

--Proclaimed April 24, 2009 as Arbor Day in Alexandria.

The proclamation helps fulfill the city’s designation as a “Tree City USA” by the National Arbor Day Foundation.

The proclamation urges all citizens to celebrate Arbor Day and to support efforts to protect trees and woodlands.

--Agreed to a request from a volunteer committee for Habitat for Humanity's third annual motorcycle rally.

The police department will help manage traffic at three intersections in the city during the rally that will take place May 24 during the “Awake the Lakes” Memorial Day weekend celebration.

The group was also given permission to use Big Ole Central Park along 2nd Avenue for the event, pending approval from the park committee.

Last year's rally drew about 120 riders, according to Doug Garin, a member of the fundraising committee for the event.

--Approved the following licenses: peddler – Fabian Seafood Company (renewal); temporary liquor – Alexandria Area Arts Association for a May 1 event; charitable gambling – Douglas County Historical Society to sell raffle tickets for a June 13 event, and American Bikers for Awareness, Training and Education (ABATE) to sell raffle tickets for an April 18 event at the Holiday Inn; parade – Vikingland Band Festival on June 28.

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