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• • STAFF ORIGINATOR: CITY COUNCIL MEETING DATE: TOPIC: ACTION REQUIRED: AGENDA ITEM 6B Mary Alice Divine September 28, 2009 Consideration of First Reading Ordinance No. 07 -09 relating to a Tax Imposed Upon Lodging Simple Majority BACKGROUND In 2009, seven cities in the north metro area elected to leave Visit Minneapolis North, a convention and visitors bureau (CVB) that covered much of the northwest and northern metro area since 1998. These cities, which include Coon Rapids, Blaine, Anoka, Shoreview, Fridley, Ham Lake and Mounds View, agreed that Visit Minneapolis North marketing efforts were geared more to cities west of the Mississippi River, and that they were not getting the full benefit of the tax for marketing lodging and amenities within their cities. They have agreed to opt out of the established CVB effective December 31, 2009 and establish a new CVB called Minnesota Metro North Tourism. The funding for CVBs comes from a 3% lodging tax that is collected from lodging properties in the participating communities. Under Minnesota Statutes 469.190, 95% of the funds collected via this tax are passed on to the CVB for the purpose of marketing and promoting the city or town as a tourist or convention center, and the remaining 5% is retained by the city to cover administrative expenses. In January of 2009 the city council passed a resolution that supported the participation of the hotels in Lino Lakes in a newly created convention and visitors bureau, and directed staff to introduce an ordinance for consideration to impose a lodging tax as such time as was appropriate. Over the past several months, the opt -out cities have been meeting to discuss the most appropriate way to establish a new CVB that could effectively promote the newly organized region. They would like to establish the board of directors and be organized by the first of the year. They have asked Lino Lakes and New Brighton, two cities not previously involved in a convention and visitors bureau, if they would like to participate. The hotels in Lino Lakes have also requested that the city participate. To do so, the city must first initiate a lodging tax by ordinance. The ordinance outlines the requirements for the collection of the tax and the process for administration of the tax. If approved the lodging tax would become effective on January 1, 2010.