Shocker: Canad Inn’s Guests Don’t Pay the City Hotel Tax
We all know that the Alerus Gang was desperate to get the Canad Inn folks to build next to the Alerus. I’ve heard that their incentive plan was worth up to 7 million dollars.
One thing they apparently got was an exemption from the city hotel tax. From the city council meeting minutes on September 8th.
There was some discussion relative to the Convention and Visitors Bureau and it was noted that they are receiving the motel and room tax and getting the full 3%. Council Member Christensen stated that the City is collecting 3% on rooms in the city, that 2% goes to CVB and 1% was collected for a period of 15 years to amortize the bonds which the City sold to pay for the facility that the CVB operates on Highway 2; those bonds were paid off in February of this year, and in the 2009 budget it appears that they increased their expenditures based upon the additional revenue that they would be collecting from the 1% tax ($230,000) and used for tourism, promotion or buildings; and would like the extra 1% to be reviewed. .
He stated that they also have $391,000 in a reserve account that hasn’t been designated, that the CVB has presented a 15-year plan for the repairs and maintenance of their facility and in 2010 looking for $103,000 – that there is more than enough money to cover the maintenance of the facility out of the $391,000 and to help them with that for the next 2 to 3 years – in 2004 City advanced $225,000 to CVB to help with additional needs. At that time suggested that it is appropriate time for the council to review issues of cooperation and communication and look at how they spend the additional sales tax dollars they are collecting and to address the future amount that they will be receiving when the Canad Inns is no longer exempt from paying the sales tax,
What’s shocking about that is that while the CanadInn doesn’t pay any hotel tax they and the Alerus are the main beneficiaries of the tax that other hotel’s collect from their customers.
Another part of the incentive package for the CanadInn folks was to spend a certain amount of money to market the Alerus and CanadInn. You’ve maybe seen the Alerus/CanadInn Grand Partners billboards around town. Those are paid out of the hotel tax that the EVERYONE in the industry Pays except for the hotel that benefits. You’d think that since they were the beneficiaries the CanadInn could collect this tax from their customers.
They don’t pay any property taxes either while they’re subsidized by businesses that do.
Crazy? Yes. Normal run of business to force some business to subsidize their competitors? Yep!