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Mayor: Tax receipts, law changes highlight need for ordinance updates

By Staff | Jan 3, 2020

Sue Sitter/PCT The Cobblestone Inn is one of Rugby's lodging choices. The hotel pays a two percent city lodging tax to promote tourism to the Rugby area, and a one percent city restaurant/lodging tax for tourism infrastructure.

A dip in lodging tax revenues for 2019 has sparked interest in budget matters and efforts to promote tourism in line with changes in the state tax code.

The changes also raised questions about existing city ordinances governing the disbursement of lodging tax revenues and who would receive them.

Rugby Mayor Sue Steinke told the Tribune a two percent lodging tax for hotels and motels was approved by the city in 1983, and an additional one percent tax for restaurant and lodging was approved in 1997.

Although both ordinances designated the funds collected for promotion efforts, no provisions were made for how the funds would be used to promote Rugby. Additionally, the ordinances did not designate a specific entity to carry out promotion efforts.

The Greater Rugby Area Convention and Visitors Bureau, Inc. currently handles tourism promotion.

“The Greater Rugby Area Convention and Visitors Bureau was incorporated January 13, 1984. It’s a separate corporation. It’s not an arm of the city. The City has an ordinance to collect tax money the two percent but no one can find any resolution that authorizes the city to actually give that money to the CVB.”

“No recipient is designated in the ordinance,” Steinke noted. “It says the city would collect (the money), and that’s it.”

“If you go to Century Code, the city is supposed to create its tourism committee and the funds are disbursed that way,” Steinke added. “The city has no authorization on the books to give it to a private corporation.”

“We have no authorization on the books to give that money to a private entity,” Steinke said. “So, that all needs to be cleaned up.”

Steinke acknowledged past efforts to comply with North Dakota Century Code chapters pertaining to city lodging taxes.

Steinke said former Rugby Mayor Arland Geiszler had appointed a visitor’s committee to promote tourism in an effort to comply with the law, but the committee had never met.

Steinke said after she took office, “I reappointed the committee June 28 of 2018.”

The visitors’ committee consisted of Bruce Rheault, Crystal Wangler, Cory Geiszler, Michelle Lake and Ashley Berg.

Lake told the Tribune she had not sat on the committee for more than a year.

Steinke said the city was in the process of writing new ordinances covering the city lodging tax.

The ordinances would reflect changes that took effect August 1, 2019 in North Dakota Century Code Chapter 40-57.3, which covers the visitors’ committee and funds for “promotion capital construction,” including such things as maintenance on Rugby’s Northern Lights Tower and Geographical Center Monument.

“Those new ordinances are necessary because we need to follow state law and we need to get a resolution on the city’s books so that we are transferring funds legally,” Steinke noted.

“Now whether those funds would go to a committee of the city, or whether there would be authorization to take it to another private group, that is yet to be sorted out,” she added, indicating a tourism promotion entity “could function as an arm of the city just like the JDA has functioned with its own board, and distribute the funds according to century code.”

Frank Nolasco, manager of Rugby’s Cobblestone Inn, told the Tribune he had worked to promote tourism together with the CVB.

Nolasco said the Cobblestone had scheduled a meeting with the Rugby CVB. “I’m on the Chamber, and we work hand-in-hand with the Chamber (of Commerce),” Nolasco said.

While Nolasco said the Cobblestone “didn’t do much advertising,” they worked with communities to promote tourism.

“I work together with the CVB,” Nolasco said.

“We haven’t done much, and that’s what we’re working on more with the Chamber is to get tourism promoted. I have done job fairs with them,” Nolasco added.

The Rugby Chamber of Commerce has shared an office and director in the past, leading to public perception that the agencies are the same. Rugby Job Development Authority Executive Director Liz Heisey, who is helping to draft the new lodging tax ordinance, said she hoped the law would help clear up some of the confusion.

Both Nolasco and Erin Schafer, manager of Rugby’s Northern Lights Inn called 2019 a “slow” year for lodging, but both said things were beginning to improve in recent months.

“It seems like it’s been picking up for the last quarter,” Nolasco said.

Schafer of the Northern Lights Inn agreed. “It’s been slow this year, but things are picking up,” she said. “Things are steady.”

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