Tourism agency seeks temporary loan to cover promotional costs

Fat stacks of room tax cash collected from the patrons of Niagara-on-the-Lake’s hotels will continue to gather interest in the town’s coffers for a bit longer at least.

That was the decision of council after almost three hours of discussion at town hall Tuesday morning, much of which was closed to the public.

Minerva Ward, chief executive of Tourism NOTL, came to council seeking a $226,000 loan to support the operations of her organization, which markets the town’s festivals to visitors.

“We’re basically asking to borrow against what is owed to us,” Ward said in a phone call after the meeting.

According to Ward, the $226,000 would be half of the $452,000 in room tax revenue collected in 2022.

Hotel stays are now subject to a 2 per cent room tax, but the levy is scheduled to rise to 3 per cent in January and be extended to bed and breakfasts and cottage rentals.

As the town’s destination marketing organization, under provincial law, Tourism NOTL is entitled to half the revenue from the room tax each year.

Despite this, council declined Ward’s request after some councillors raised concerns about financial transparency and the security of the town’s tax revenue.

Ward said she was “terribly disappointed” by the decision.

“It would be unreasonable for a municipality to give money out without having an agreement for financial accountability in there.” said Coun. Sandra O’Connor, who chaired the meeting.

Coun. Maria Mavridis said she could back the loan, but only if it was funded out of the town’s parking reserve.

Town treasurer Kyle Freeborn said the town’s parking reserve was legally and financially the most secure revenue source from which to draw the loan.

While the town was advocating for a financially secure deal, Ward said if anyone needed security it was Tourism NOTL, which still had not recieved any money from the room tax.

Ward first brought up her concerns about the delayed rollout of the room tax funds at a budget meeting Nov. 7.

“We are incurring significant debt in delivering this marketing without (municipal accommodation tax) funds,” she said at the time.

“We’ve reached a point where we can no longer do marketing,” she added.

In an email, she said “critical initiatives like the Icewine Festival are in jeopardy” because of the delayed funding. 

The town is working with Tourism NOTL on a transfer agreement that will set the terms for how the room tax is remitted.

Town chief administrator Marnie Cluckie said the transfer agreement would protect both parties from financial vulnerability.

Ward said that document should ideally have been signed shortly after council passed the room tax bylaw in 2022.

“I don’t think there’s any blame. I think it’s just noteworthy that agreements just do take time,” Cluckie said at the meeting Tuesday.

Ward said the town was shifting the blame for the delayed rollout.

In her assessment of the situation, Coun. Wendy Cheropita said Tourism NOTL worked proactively after the room tax was passed and drafted a transfer agreement for the town to review because the town didn’t take the first step.

“I’m in no way pointing fingers at our staff. They’re busy, they have a lot on the go. Whatever the delays were, it didn’t happen,” Cheropita added.

Though funding for the marketing organization has been at a standstill, it has continued to promote the town and its seasonal festivals to would-be visitors.

“We’ve operated in good faith, never expecting these delays of a year and a half,” Ward told The Lake Report.

Meanwhile, the NOTL Chamber of Commerce, of which Tourism NOTL is a subsidiary, has been shouldering expenses the tourism marketing partner could have been paying for with revenue from the room tax.

The chamber is on the hook for almost $217,000 in fees associated with the marketing group for 2023 alone, Ward said.

And the chamber has near $162,000 on the line from 2022 as well, she said.

“This is not just about organizational strain,” Ward said in an email.

“The tourism industry has suffered enough and the town’s delay is now contributing to the problem, not the solution.” 

The whole debacle came up when, at a town budget meeting, Coun. Gary Burroughs said he was “frustrated” council was being asked for money to support the tourism industry but was “not talking about the funding source.” 

He said funding for Ward’s organizations, the chamber and Tourism NOTL, ought to come from the room tax.

The decision to refuse the loan was defeated in a 3-3 split vote, with Cheropita, Burroughs and Tim Balasiuk in favour of it.

Mavridis, O’Connor and Adriana Vizzari all voted against. Coun. Nick Ruller was not at the meeting.

Coun. Erwin Wiens and Lord Mayor Gary Zalepa attended the meeting but missed the vote, citing other meetings that they had to attend.

However, during discussions, Wiens said he could not support “lending money out without agreements.”

Because he missed the vote, Zalepa said he wanted to review the meeting before commenting on how he would have voted.

However, he said he would have preferred to followed the process and have both parties negotiate a transfer agreement, rather than trying to “work it out in a public meeting.

“I just think that’s an unproductive way to do business,” he said.

There is “no question” that the transfer agreement should be completed first, he added.