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Council approves one-year extension of Chamber tourism contract; no long-term deal reached

T-R PHOTO BY ROBERT MAHARRY Marshalltown Area Chamber of Commerce President/CEO John Hall addresses the city council about a proposed five-year tourism contract during Monday night’s meeting. The council ultimately agreed to a one-year extension of the current contract while leaving the door open for further negotiations.

The city council discussed a proposed five-year agreement for tourism and promotional services with the Marshalltown Area Chamber of Commerce during Monday night’s meeting and, after some discussion, ultimately opted to continue the current contract for another year while diving deeper into the details with hopes of returning to the negotiating table at a later date.

As it stands now, the Chamber receives 56 percent of the annual hotel/motel tax revenues generated in Marshalltown, while the city receives the remaining 44 percent. Iowa law stipulates that at least 50 percent of those revenues must be put toward the promotion of tourism, whether through a nonprofit organization like a Chamber or Convention and Visitors Bureau or through a government agency.

With a motion and a second made, Councilor Greg Nichols said he had concerns about the agreement, specifically the revenue model as the proposed contract increases the Chamber’s share by one percent each year, ending at 60 percent in the final year. As Nichols saw it, there was no consideration for inflation.

“Through that five-year life, they’re actually declining in volume, declining in revenue. So with that, that doesn’t show a metric to me that shows we’re growing, and so I don’t see any reason to change the percentage for the Chamber in that,” he said.

Other factors that worried him were the clause that the contract could only be terminated for “gross mismanagement or fraud.” Because the council doesn’t have access to the Chamber’s financials, Nichols didn’t know how fraud could even be detected, and he didn’t feel there was a measure of effectiveness included in the contract.

“The measures should be more like ‘Is revenue growing? (Are) conference stays increasing?’ All these things should be growing and not just a matter of as a metric for being able to terminate. If they’re ineffective, we should not be going five years,” he said.

Fellow Councilor Mike Ladehoff said he was uncomfortable with the increase in percentages going to the Chamber but otherwise didn’t have a problem with the contract.

“I believe that we are indeed attracting more tourists and everything to Marshalltown. That does increase both the city’s share and the Chamber’s share under the current agreement, so that’s pretty much where I stand,” he said.

Councilor Jeff Schneider thought the contract was OK in principle and wondered if indexing it to inflation would assuage Nichols’s concerns, and he didn’t feel the city could do the job better than the Chamber can. Councilor Gary Thompson said he would like to see an agreement that benchmarks where things currently stand but includes “hard data” showing growth throughout the period to prove that the program is working.

“For myself, without that, I can’t support this five-year contract the way it’s written right now,” he said.

Nichols then clarified that he wasn’t opposed to a longer term contract, he just wanted more clearly defined metrics of success and effectiveness. Councilor Barry Kell, communicating remotely, advocated for a longer contract to allow for stability in planning from year to year but also echoed the concerns previously mentioned.

“The motivation within this contract should be to grow the pie, and as the pie grows, both the Chamber and the city grow. So I can see both sides of it,” Kell said. “I think we need to realize and understand that as a city, we are not prepared to do this effectively today. So with this agreement, it looks ultimately there’s some room for negotiation, but there’s a lot of good work being done by the Chamber.”

During the public comment period, Chamber President/CEO John Hall stepped forward to address the issues raised and noted that the contract they utilized was “effectively” the contract that had been in place for a number of years. He also said he’d be more than happy to dive into the metrics on what success looks like.

The main reason behind the annual increases in the proposed contract, he said, was the physical infrastructure needed to continue hosting high quality events. As an example, he cited the successful bid for the Iowa High School eSports Tournament but added that Coralville is currently building an arena of its own with the intent of eventually getting the state tournament moved there.

“We know that we’re gonna have to invest in some of those physical assets, and we know that even if we dedicate the entirety of hotel/motel tax, we wouldn’t be touching what it takes to do that,” Hall said. “But we’re trying to continue to have those tools and resources necessary to make those investments, whether they be small improvements to the Y and some of the folks that come up here for state swim… All of those require physical infrastructure needs that we would like to be able to be at the table on and helpful with.”

In light of the concerns raised, Hall proposed a one-year extension of the current contract with the 56-44 split (which is the same as it would have been under the escalating five-year deal) to allow for further negotiations with the council and staff.

Ladehoff endorsed the one-year extension idea and again complimented the Chamber for its work.

“It’s not a knock,” he said of the conversation. “It’s just how we proceed, how we do things and how we move forward together to make Marshalltown the best town we can have.”

Nichols agreed about the need to “actively and aggressively promote Marshalltown” and didn’t feel it was a job for city staff. He agreed with the idea of the one-year extension with conversations to come about the metrics for success and sharing the benefits between the Chamber and the city.

Kell then motioned to extend the current agreement by a year, which was clarified as a motion to amend the original motion. The motion to amend passed 4-2 with Thompson and Mark Mitchell opposed, and the amended motion then passed by a 5-1 tally with Thompson opposed.

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Contact Robert Maharry at 641-753-6611 ext. 255 or rmaharry@timesrepublican.com.

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