Convention center budget session: A glimpse into possible timing for tourism recovery
A week ago Friday, the Monroe County council wrapped up a series of four budget work sessions in as many days.
On the docket for Friday were the funds related to the county’s convention center.
The recovery of the area’s tourism industry from the impact of the COVID-19 pandemic has already begun, but it will be gradual. It will follow a U-shaped trend, not a V-shaped pattern, according to Mike Campbell, who serves on the county’s 5-member convention and visitors commission.
Campbell sits on the board in his capacity as the associate director of the Indiana University Memorial Union.
Campbell gave projections for the county’s 5-percent innkeeper tax based on numbers that show a recovery starting to take shape. Revenues are expected to rebound from a low of about $49,000, reported in June this year. That was just 17 percent of the total for June in 2019, which was about $289,000.
Already on the books are increases in July and August to 40 percent and 60 percent of revenue for those same months last year. Based on September’s numbers so far, Campbell thinks the now-projected $155,000 figure for September will be hit. It won’t be until August of next year, however, when the revenues are forecasted to be back to previous levels.
Some of the projected recovery is due to latent travel demand that would not have been seen otherwise, because the usual large events are not taking place. For example, the cancelation of Indiana University football games means a loss of bookings, but that makes room for people looking to visit the area to view the fall foliage.
Getting a mention during the county council’s budget session on the convention center was the food and beverage tax. It was enacted in late 2017, to be used for the planned expansion of the convention center, and other related tourism projects. The food and beverage tax revenues are split between the city of Bloomington and Monroe County government about 90-10. That’s based on the location—inside or outside Bloomington—of the businesses that collect the 1-percent tax from their patrons.
The impact of the COVID-19 pandemic on food and beverage tax revenues has led to a significant delay to plans for the $44-million expansion project. At a recent budget session, Bloomington’s controller Jeff Underwood put the timeframe for the delay at five to seven years.
Bloomington has lent out around $1 million in accumulated food and beverage fund to local businesses to help them get through the immediate economic crisis. That’s money that would have been put towards architectural fees. The expansion project had also hit a rough patch last year due to disagreements between county and city leaders.
The food and beverage tax revenue trend over the last several months has been less sharply down than innkeeper’s tax revenue. While almost all of the innkeeper’s tax can be analyzed as coming from visitors, only some of the food and beverage tax revenues comes from visitors.
The lowest month for food and beverage tax revenue compared to last year’s numbers was May, which saw $174,000 in revenue. That was 51 percent of the number in May 2019. That compares to a 17-percent nadir for the innkeeper’s tax.
This August’s report for food and beverage revenues showed 88 percent of the August 2019 figure—about $203,000 compared to $230,000.
How did the food and beverage tax come up in conversation at the county council work session?
The county council’s discussion of three different convention center budgets for 2021 included the center’s debt fund. Every year $636,000 is paid against the existing debt, Campbell said. The debt was taken on for the land surrounding the convention center and the most recent renovation to the center.
Campbell alerted the county council to April 1, 2021 as an important date, because that is when the repayment penalty goes to zero. Paying off the $2.8 million in principal would save around $275,000 in interest, Campbell said, which he called “not insubstantial at all.”
In his remarks, Campbell said, “And if there was an opportunity to pay that down quicker or faster, potentially with another fund, that would be, I think, a logical opportunity to do that.”
Campbell was asked by county councilor Geoff McKim to clarify: “And so I assume, like when you talk about ‘another fund,’ you’re thinking food and beverage?”
Campbell replied, “Very bluntly, I say yes. And here’s why. I think that in the short term, I think it makes sense to do that.”
Campbell added, “This fund and this innkeeper’s balance has shown that it is willing to invest in development opportunities, either for a land purchase or for others. And when the county has come to us in the past and asked us to do that, with this fund, we’ve done it. And I think if you did that here, you potentially would save money, and then you would be able to repay or invest in another attraction or what other opportunity there might be for them.”
President of the county council Eric Spoonmore questioned whether the county’s portion of the food and beverage tax revenues would be adequate to consider paying off $2.8 million in debt.
Further diminishing the availability of the county’s share of food and beverage revenues to pay off the debt was the county’s award of $400,000 in COVID-19 relief grants to business and nonprofits outside the city of Bloomington. Those grant awards tapped food and beverage tax revenues.
Spoonmore said, “The county doesn’t have that kind of money and food and beverage revenue, right?” McKim’s response: “Not by a long shot.”
Spoonmore concluded that if food and beverage tax money were used to pay off the $2.8 million in debt, in order to save on interest payments, it would require Bloomington to approve the expenditure out of its share of food and beverage tax revenues. That would also require approval from the food and beverage tax advisory commission. Councilor Marty Hawk expressed skepticism that Bloomington would be willing to do that.
By the time April 2021 rolls around, when the debt could be paid off without penalty, the convention center will be celebrating its 30th anniversary.
At the county council’s budget session Talisha Coppock, who’s executive director of the Monroe County Convention Center, told county councilors the convention center has hosted over 60,000 16,000 events during its three decades. Those events have been attend by more than a million and a half people, she said.
Coppock described how the convention center has still been getting some use during the pandemic, from smaller groups, executive training sessions, blood drives, and church services. “Once this pandemic is over, events will come back. They’ll look a little bit different, but they’ll come back,” she said.
