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Money used for American Airlines guarantee surprises tourism subcommittee

Friday, February 22, 2013 | 6:35 p.m. CST; updated 11:18 a.m. CST, Monday, February 25, 2013

*In a news release, the Columbia Hospitality Association criticized the use of tourism money for an American Airlines revenue guarantee. An earlier version of this article incorrectly attributed the information. Also, the spelling of Teri Weise's name has been corrected.

COLUMBIA — Subcommittee members of a city advisory board that doles out tourism development money were surprised to learn last week that $800,000 that was socked away in a reserve fund had been used as part of a $3 million revenue guarantee for American Airlines.

The subcommittee of the Convention and Visitors Bureau Advisory Board gathered last week to review the process it uses to give grants from the Tourism Development Fund, which gets its money from a tax on hotel stays in Columbia. Bureau Director Amy Schneider informed the members, though, that the $800,000 had been redirected.

"The sentiment was, 'You're kidding,'" said Teri Weise, a member of the subcommittee and the Columbia Hospitality Association and director of sales and marketing for the Holiday Inn Executive Center.

The subcommittee learned that last fall the Columbia City Council had authorized making the money part of the city's $1.2 million share of a revenue guarantee to American Airlines. The guarantee, which totals $3 million, is intended to ensure at least a minimum level of profit for Americans' flights to Chicago and Dallas from Columbia Regional Airport. Those flights began Feb. 14.

*In a news release issued Thursday, the Columbia Hospitality Association criticized the use of tourism money for the revenue guarantee. Both the subcommittee and the association, which have some overlapping membership, were kept in the dark, the news release said.

In the news release, the association questioned both the legality of the move and the ethics of it.

A bill introduced to the City Council on Oct. 12 outlined plans to appropriate the $800,000 from the Convention and Tourism Fund to the revenue guarantee fund, called the Central Missouri Air Service Fund. During a special meeting on the morning of Oct. 22, the five council members in attendance unanimously approved the bill. Helen Anthony of the Fifth Ward and Fred Schmidt of the First Ward were not present.

"The advisory board was not told about it in October," Weise said. "We weren't told about it in November when (City Manager) Mike Matthes spoke to us at a retreat. We weren't told about it when we met with city officials again in January."

Schneider and Julie Ausmus, development program manager for the Convention and Visitors Bureau, broke the news last week, Weise said.

"We're asking for more transparency," Weise said.

Schneider said the City Manager's office told her in early October that the money would be redirected. She said she didn't remember exactly who told her that.

"My mistake was not telling the Columbia Hospitality Association at the time," Schneider said, adding that she owns up to that miscommunication.

The hospitality association has consistently opposed the use of proceeds from the lodging tax to fund airport-related projects. It also has opposed the idea of increasing the lodging tax to finance reconstruction of the airport terminal building, arguing that would put the city at a disadvantage as it competes for convention and tourism business.

The lodging tax now is 4 percent. Three-fourths of the revenue it produces is used to fund the Convention and Visitors Bureau. The remaining 25 percent is funneled into a separate account to be used by the city for "planning, promoting and operating" tourist attractions and events, according to the lodging tax ordinance.

The Tourism Development Fund gets about $420,000 per year from the tax, Weise said. The $800,000 reauthorized for the American Airlines revenue guarantee represented money that had not been spent since the ordinance passed.

"Historically we have funded larger projects with those reserves. Now we're being told those reserves are gone," Weise said. "It changes the scope of what we're able to fund in the future."

Weise said she believes using the tourism money for the revenue guarantee violates the ordinance, which passed in 1999. 

"That $800,000 reserve was still part of the fund specified in the ordinance," she said. "That fund is meant to generate overnight stays by funding events and attractions."

Schneider, however, said that the American flights affect tourism and that, therefore, the money is "still being used for what it needs to be used for."

Weise, however, disagreed. "The (Columbia Hospitality Association) understands the value of a good airport, but the airport isn't an attraction by its own accord that will bring in tourists just because it's there."

Schneider also noted that the money is not truly gone. "It's just being held in a different account, and it will be returned if the airline ends up not needing it."

Neither Mayor Bob McDavid nor Matthes could be reached for comment on Friday.

Supervising editor is Scott Swafford.


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Comments

Ellis Smith February 23, 2013 | 12:16 p.m.

I am surprised - no, totally shocked - that some one hasn't commented on this.

Regional Airport boosters will know the airport has truly "arrived" when patrons can have direct flights to Chicago O'Hare, as do patrons of Eastern Iowa Regional Airport: Cedar Rapids (Rockwell Collins, Quaker Oats), Iowa City (University of Iowa) and Amana (Whirlpool).

(Report Comment)
Michael Williams February 23, 2013 | 3:32 p.m.

This from today's Columbia Daily Tribune article on the same topic:

"The CVB is funded from a 4 percent tax on hotel rooms in the city. Three-quarters of that money is used for general operating expenses, while the rest goes to a dedicated account that is used to promote events such as the True/False Film Festival and sports tournaments."
___________________

Now, I don't know about y'all, but this is starting to sound like a boondoggle that pays more in salaries than returns in results. Any charity that paid 3/4ths of it's income for operating expenses and only 1/4th for "doing stuff" isn't a charity....it's a job employment program. And this isn't a charity....it's a taxpayer-supported endeavor.

Why the hell are we doing this with such a poor dedication of resources. Just because out-of-towners do most of the paying, is this kind of resource allocation the right thing to do?

I don't like this at all.......

(Report Comment)
Ellis Smith February 23, 2013 | 6:53 p.m.

Michael:

Agreed, but it should be "Boonedoggle," not Boondoggle.

We used to have a poster on the Trib forum who posted as "Boonedoggle."

Guess I'll be paying that tax Sunday night. How lucky can I get?

(Report Comment)

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