Cape Girardeau City Council OKs new agreement with Midamerica Hotels on hotel/restaurant tax

Cape Girardeau city leaders and executives of Midamerica Hotels have forged a new agreement on the city's restaurant and hotel taxes, bringing several possibilities for new tourism-related projects in the coming year.

Since December 2003, a legal agreement between the city and the corporation has sent the revenue from a 4 percent tax charged on hotel stays and a 1 percent tax on restaurant meals to fund the operation of the city's convention and visitors bureau and to pay off bonds used to help build the River Campus at Southeast Missouri State University. Now that the debt is nearly paid down, the parties are working on an amended agreement that could mean the revenue will go toward one or several projects between now and the sunset of the taxes in 2030. The 2003 agreement ordered that the tax was to sunset after the bond debt was paid in full.

Among the projects that will be considered for the revenue, per the amended agreement given first-round approval by the city council Monday night, are an indoor sports complex, a convention center, a combination of the two, improvements to existing or new aquatic facilities and an agricultural exposition center. Economic viability, including rate of return on investment, will dictate the direction of the revenue. A committee made up of representatives of Midamerica and the city will be formed to review and make recommendations on projects from a feasibility study that will be done, per the agreement, before the end of November. Revenue from the taxes will pay for the feasibility study, and also per the agreement, 12 months worth of revenue is planned to be used for enhancements to Cape Splash, the city's water park, or will go toward other expenses for the parks department. Officials say the purpose of the year's worth of revenue going to the parks will be so that the public can gain amenities and the tourism industry can continue to flourish while one or more of the other projects are being planned and built.

The outcome of a use-tax vote that will be held in April's municipal election is also part of the agreement -- the agreement states that if a use tax is not passed by voters, up to $5 million in proceeds from the restaurant tax can be spent on parks. A use tax passing later than 2014 would stop any further proceeds from going to parks.

Still another large part of the agreement -- the possibility of Cape Girardeau gaining a minor league baseball stadium -- has relation to the possibility for the tax revenue. If a team formally expresses interest, the agreement requires that another committee be established to assess a ballpark's economic viability.

Completion of city council-approved projects and placement of revenue into the parks fund will down the road mean more meetings to see if any additional projects are needed -- and if at that time no projects are determined to be needed, the restaurant tax would terminate. In the 2013 fiscal year, the restaurant tax and hotel tax combined produced $2,025,089.

Talks about the future of the lodging and dining-related tax revenue began in earnest in 2013 as the debt payoff for the performing arts center neared. Some city council members and civic leaders floated ideas for changing the direction of the revenue -- there were conversations about whether to plan spending on public safety and other needs -- but it was ultimately determined by city leaders and representatives of the tourism industry that a tax in large part comes from visitors should keep driving the city's ability to attract even more visitors.

A committee also in 2013 looked at options for a new project on which to spend the restaurant tax revenue, but did not pitch a project to the city council. Two other proposals -- one from Midamerica vice president Joel Neikirk to seek voter approval to extend the restaurant tax to pay for an indoor sports complex and another water slide at Cape Splash and one from the city's historic preservation commission to put the money toward a visitor center and other history-related tourism projects -- gained little traction in the city council.

Diane Drury Edwards, also a vice president of Midamerica Hotels and daughter of the late Jim Drury, the corporation's former head and orchestrator of the 2003 agreement, addressed the city council on the new agreement Monday.

"We are proud to present an opportunity for the city and Midamerica to work together to maintain the accountability for which the original settlement agreement imposed, along with giving the voters their original wish to continue to collect this tax until 2030," she said.

Voters in 1998 passed a measure that authorized the taxes to be collected at their current amounts through 2030. Jim Drury's concern with the taxes that led to lawsuits being filed against the city and the 2003 agreement being reached, according to Southeast Missourian archives, were that the city could be illegally incurring debt through sending tax revenue toward the River Campus project.

Neikirk said the proposed new agreement represents a turn in the relationship between the city and the corporation, which is because the corporation felt the city has acted responsibly within the expiring agreement.

"Definitely ... the commitment that the city made toward following the details in the other agreement facilitated us having this discussion," he said. "And [the new agreement] provides the same level of accountability, just on a different set of projects."

Neikirk and Mayor Harry Rediger both said they feel the agreement will help both the city and the local tourism industry continue to grow. Rediger also said he hopes the committee that vets projects will provide opportunities for public input during the process.

The city council unanimously approved allowing city manager Scott Meyer to sign the amended agreement Monday, with the exception of Councilman Trent Summers, who was absent. The council must give second-round, final approval to the agreement at a future meeting.

eragan@semissourian.com

388-3627

Pertinent address:

401 Independence St., Cape Girardeau, MO