TR PHOTO BY ROBERT MAHARRY John Hall, president and CEO of the Marshalltown Area Chamber of Commerce, addressed the City Council at its meeting Monday night about the proposed five-year tourism contract. The City Council ultimately agreed to a one-year extension of the current contract, leaving room for further negotiations.
City Council discussed a proposed five-year contract with the Marshalltown Area Chamber of Commerce for tourism and promotional services during its meeting Monday night, and after some discussion, ultimately decided to continue the current contract for another year while further working out the details with the hopes of returning to the negotiating table at a later date.
Currently, the Chamber of Commerce receives 56 percent of the annual hotel/motel tax revenue generated in Marshalltown, and the city receives the remaining 44 percent. Iowa law requires that at least 50 percent of those revenues must be dedicated to promoting tourism, whether through nonprofit organizations such as the Chamber of Commerce or the Convention and Visitors Bureau, or through government agencies.
The motion and second was tabled, and Councillor Greg Nichols said he had concerns about the agreement, particularly the revenue model, as the proposed contract would see the chamber’s share increase by one percent each year, to 60 percent in the final year – which in Nichols’ view does not take inflation into account.
“Over their five-year existence, they have actually declined in volume and revenue, so I don’t see any reason to change the chamber’s percentage because this is not an indicator that we are growing,” he said.
Other elements that concerned him were the clause that the contract could only be terminated in the case of “material mismanagement or fraud.” Because Congress has no access to the chamber’s financials, Nichols said he didn’t know how fraud would even be discovered and didn’t feel the contract contained any measure of validity.
“The metrics should be, ‘Are revenues growing? Are conference stays increasing?’ All of these things should be growing, not just as a churn metric. If it’s not working, you shouldn’t be doing it for five years,” he said.
Fellow council member Mike Ladehoff said he was uncomfortable with the increased percentage paid to the chamber, but otherwise had no issues with the contract.
“I do believe Marshalltown is attracting more tourists and everything, and with the current agreement, both the city’s share and the chamber’s share are increasing, so I pretty much see it that way,” he said.
Councilman Jeff Schneider said he thinks the contract is fine in principle and wonders whether indexing it to inflation would ease Nichols’ concerns. He also doesn’t think the city can do a better job than the chamber. Councilman Gary Thompson said he would like to see an agreement that is based on the current situation but includes “hard data” showing growth over the period to prove the program is working.
“For me personally, without that I cannot support a five-year deal as it stands,” he said.
Nichols later clarified that she wasn’t opposed to long-term contracts, just that she wanted clearer metrics for success and effectiveness. Reached remotely, Councilman Barry Kell argued for long-term contracts to ensure stability in year-to-year planning, but echoed the same concerns.
“The purpose of this agreement is to grow profits, and as profits grow, so does the chamber and the city, so I see both sides,” Kell said. “I think we need to recognize and understand that as a city, we’re not prepared to do this effectively at this point. So with this agreement, it seems like there’s room for negotiation at the end of the day, but the chamber is doing a lot of good work.”
During the public comment period, Chamber President and CEO John Hall came forward to address the issues raised, noting that the contract they utilized has “effectively” been in effect for years, and also said he would be happy to take a closer look at the criteria for success.
The primary reason for the proposed contract’s annual increase is the physical infrastructure needed to consistently host quality events, he said. He cited the successful bid for the Iowa State High School Esports Tournament as an example, but added that Coralville is currently building its own arena with the intent of eventually relocating the state tournament there.
“We know we need to invest in some of those physical assets, and we know that even the full hotel/motel tax would not cover the costs of doing that,” Hall said, “but we are committed to continuing to make sure we have the tools and resources we need to make those investments. Whether it’s small improvements to the YMCA or people competing at the state championship swim meet, it all requires physical infrastructure needs, and we want to talk about those needs and work together.”
Taking into account the concerns raised, Mr Hall proposed extending the current contract for one year on a 56-44 basis (the same as for a five-year contract extension) to allow for further negotiations with the council and staff.
Radehoff supported the one-year extension and once again praised the chamber’s efforts.
“This isn’t a criticism,” he said of the conversation. “This is about how we proceed, how we do things, and how we move forward together to make Marshalltown the best town it can be.”
Nichols agreed with the need to “promote Marshalltown aggressively and aggressively” and feels that’s not the job of city staff. He agreed with the proposed one-year extension, which includes future discussions about metrics of success and sharing of benefits between the chamber and the city.
Mr Kell then made a motion to extend the current agreement for one year, which was clarified to be a motion to amend the original motion. The motion to amend passed 4-2 with Mr Thompson and Mr Mark Mitchell in favour, and the motion to amend passed 5-1 despite Mr Thompson opposing.
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Please contact Robert Mahary at 641-753-6611 ext. 255.
Contact him at rmaharry@timesrepublican.com.
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