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April 1, 2020

1/11/2020 7:30:00 AM
Mayor says city not seeking to exclude Pelican from room tax zone

Jamie Taylor
River News Reporter

Discussions are continuing between the Rhinelander Tourism and Marketing Committee (RTMC) and City of Rhinelander officials regarding room tax collection.

The city and the Rhinelander Area Chamber of Commerce, the fiscal agent for RTMC, have been at odds since November when the city unveiled a plan to increase its share of room tax revenue from 30 percent to 45. (It was later clarified that the extra 15 percent will come from surplus room tax money that has not yet been spent).

At a subsequent meeting, the city council was presented with a revised version of the city ordinance governing the room tax process that would end Pelican's participation in it.

Discussion related to that ordinance was to be included on the agenda for the council's Jan. 13 meeting, however city alderman Steve Sauer, who was present at Tuesday's meeting of the Tourism and Marketing committee, indicated he would make a motion to table any action on the ordinance to allow more time for the two sides to work out their differences.

As it turns out, it appears no motion will be necessary as the agenda for Monday's meeting, sent out at approximately 2 p.m. Friday, indicates the city has chosen to postpone further action on this matter to allow time for all parties to iron out their differences.

Rhinelander mayor Chris Frederickson, who also attended the Tuesday RTMC meeting, also clarified that the city is not looking to scrap the current room tax "zone."

Chamber director Lauren Sackett began Tuesday's meeting by asking those members of the committee who represent lodging establishments to write letters to the City Council in support of keeping the zone with Pelican in place.

"If your respective lodging facilities could do that, I would appreciate it. I think it is necessary to show that the community wants this done, not just the Chamber," Sackett said.

"We need to facilitate conversations between Pelican and Rhinelander," Sackett added. "And how we go about doing that is what I'd like to talk about."

Pelican is scheduled to hold its annual meeting at the same time as the council meeting and the room tax matter will be on the agenda, noted RTMC member Dan Brekke.

"The Pelican promotions committee is going to have to collectively want to do this, from there it will go to the town board and town chairman," Brekke explained.

Brekke said that it is his understanding that when Pelican first started discussing levying a room tax in the 1990s, every lodging establishment was given a vote on the matter.

"Once that vote was passed, it then went to the town chairman and town board," Brekke said.

Sackett agreed that technically it is the town and city that have to enter into the agreement.

At that point Sauer, who was attending the meeting as an observer, asked what was needed for Pelican and Rhinelander to come to an agreement on the room tax issue.

"Does it require Rhinelander and Pelican to approve their own separate agreements or do they have to approve the same agreement?" he asked.

Sackett said it is her understanding that the township and city would have to pass the same agreement.

"The question is whether or not there ever was a zone created, because it was listed almost as if there is one, but they never sat down, from what I understood from our meeting," Frederickson interjected. "I might be wrong."

Sackett said it was her understanding that leaders of both municipalities agreed to create the zone, but an official agreement between the two was never formally adopted. Skinner concurred, noting "we never got the right signatures on it at the time."

Frederickson said there are currently two agreements, one for each municipality, but he hadn't seen Pelican's so he wasn't sure if they were the same.

"That was the issue, all we had to go on was the contract, not necessarily the creation of the zone or any charter," the mayor said, noting that following a meeting of the parties in December it was decided to move forward "with a commission that was legal" on the city's part.

"I offered to them and said to them we will not pass this even if it passes with a two-thirds vote until you discuss with your attorney what you would like to do," Frederickson said. "And that's why we held it off a month. Because if we had a two-thirds vote on the first one, it just passes on the second reading."

Sackett said their attorney has some "concerns just on verbiage in terms of room tax statute" with the ordinance as drafted and presented at the December council meeting. Frederickson said Sackett should pass those concerns along to city attorney Steve Sorenson and administrator Daniel Guild.

"I did mention at the last council meeting that our lawyer had concerns with what was drafted," Sackett said.

"Just so you know, according to our attorney, ours is legal," Skinner added.

Sackett said the RTMC has been consulting with Milwaukee-based attorney Barry Chase who has told them that the way the two municipalities are operating through the Chamber "is a legal way to do room tax."

"So we technically don't need the city to have a commission, in the meantime, to create the zone," Sackett said.

The problem is the two municipalities created the zone before the state statute covering room tax was updated to include the legal definition of such an agreement, it was pointed out. So while the agreement between the city and town and Chamber is legal, the definition of a zone they use is no longer correct.

Sackett said the way the RTMC views the city's ordinance is it is a way to take control of how the room tax money is spent. However, under state statute, only a "tourism entity" can allocate the tax proceeds.

"So that is the problem with the ordinance that has been presented to us," Skinner said. "And the fact that in this ordinance, in the one that was presented to us, it says that this group cannot enter into any contracts without City Council approval, which is also directly against state statute. Like, it's in there."

Sauer suggested the two sides get together, with their attorneys, and try to come up with a solution that works for all parties. Sackett said the Chamber Board will also have to have to be consulted because the RTMC is technically a Chamber committee.

Brekke pointed out that the town of Pelican would not be able to complete its part of the agreement for a couple of months.

Another sticking point in the current agreement is that while Rhinelander lodging establishments collect 5.5 percent in room tax, those in Pelican only charge 3.5 percent. To create a legal zone, the rate would have to be the same.

A discussion was also held about the city withholding room tax monies from the RTMC after the fourth quarter of 2019 is finalized. Sackett pointed again to the fact that the contracts the two governments signed are legal, and have about a year left until they are due for renewal.

"Technically, there is a legal agreement in place with our contract, and our attorney has said we could sue for those funds if we wanted to," she said. "Which I would like to avoid."

Sackett said the group's 2020 budget has already been approved, and some advertising buys are planned out well in advance. Cutting the funds off would jeopardize advertising that is designed to attract tourists to the area and "put heads in beds" of the area lodging providers.

Frederickson again suggested that the lawyers for all parties discuss how to reach a common position on the RTMC.

"More than anything just to hammer out how it is interpreted, what's interpreted and what they were looking at," he said.

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