Cape tourism fund nears $1 million

The city of Cape Girardeau expects to have a surplus of over $1 million in motel and restaurant tax money stockpiled by the end of October, money that could be used for tourism projects such as development of a water park, Mayor Jay Knudtson said Wednesday.

The surplus continued to grow even as the city council wrestled with a tight budget in the last fiscal year for basic operations such as police and fire.

City officials said they weren't ignoring the surplus -- which faces new restrictions as of Nov. 1 that are tied to the River Campus arts school project -- but legally couldn't use the money for basic operations.

"If we could have, we probably would have," said city finance director John Richbourg.

Unable to dip into that pot of money, the city council successfully sought voter approval of a quarter-cent fire sales tax in June.

Knudtson said a water park could qualify as a tourism project, but he wants city residents to offer suggestions on how the money should be spent. The city council would make the final decision.

Voters in April 2003 defeated four tax and fee issues that would have funded a number of projects, including a $6.5 million water park.

The city council has asked the Cape Girardeau Convention and Visitors Bureau board to draw up a plan for spending the surplus tax dollars by the end of the year.

Knudtson said he has talked to John Mehner, Cape Girardeau Chamber of Commerce president, about inviting comment from the public.

"Our citizens oftentimes are our best assets," the mayor said.

The chamber operates the visitors bureau under a contract with the city, and any spending plan will need approval of the chamber board before it will be submitted to the city council.

Mehner said he's not opposed to seeking spending suggestions from the general public. But he said any realistic spending plan needs to show a "return on investment."

So far, no specific process has been chosen for seeking public input. Mehner said it might involve taking both written and online suggestions, but the visitors bureau board hasn't discussed it yet.

As of Nov. 1, legal restrictions tied to the River Campus project will prevent the city from adding more tax dollars to the unspent account, city officials said Wednesday.

As of that date, the city can collect and spend restaurant and motel tax money only for the operation of the visitors bureau and the retirement of bonds on the city's $8.9 million share of the cost of the Southeast Missouri State University River Campus arts school project.

The restriction, which city and civic leaders say was put in place with the 1998 election on the River Campus project, doesn't apply to the surplus in place as of November 2004 nor any continuing interest revenue generated by that sum. That opens the door for the spending of such money on tourism projects, city officials said.

The motel and restaurant tax money has been earmarked for tourism under a tax plan approved by voters in 1983. The plan at that time involved a 1 percent gross receipts tax on restaurants and a 3 percent gross receipts tax on motels.

The initial ordinance governing the taxes said the money would go to pay off Show Me Center bonds, promote tourism and conventions, as well as programs for "fostering and development of manufacturing, industrial, retail, scientific, educational and business enterprise, and economic development in the city."

But Knudtson said the motel and restaurant taxes were "sold to citizens" solely as a way to fund tourism programs and projects, including the convention and visitors bureau.

Using the money for anything but tourism would have opened the city up to lawsuits, he said.

Fund growth

The surplus has continued to grow over the past 21 years even as the city used some of the tax dollars to help retire bonds issued for construction of the Show Me Center as well as the Shawnee Park recreation fields complex and the Osage Community Centre.

In March of 2003, city and chamber officials estimated the surplus at about $650,000.

But that has increased significantly this year with the retirement of $5 million in bonds that financed construction of the Show Me Center, and $5.1 million in bonds that funded construction of the Shawnee Park soccer fields complex and the Osage Community Centre.

The retirement of the bonds means that since April money that previously would have gone to bond payments has been building up in the fund. "This accumulation is only in the last few months," Mehner said.

The city council approved the Shawnee Park and Osage Centre projects partly as a way to spend what was a growing surplus of motel and restaurant tax revenue more than a decade ago.

In 1990, council members solicited ideas from the community and picked two -- the Osage Community Centre and the Shawnee Park complex. The city issued $3.8 million in bonds in 1993 and $1.3 million in 1997.

The two projects were completed in 1997.

In November 1998, Cape Girardeau voters approved a measure to increase the motel gross receipts tax from 3 percent to 4 percent and extend both the motel and restaurant taxes to 2030. Without voter approval in that election, the motel and restaurant taxes would have ended in November 2004 under a sunset provision approved by voters in August 1987.

The 1998 plan provided that all of the motel and restaurant tax money would go only to fund visitors bureau operations and pay off River Campus bonds beginning in November 2004.

Mehner said a settlement reached between the city council and local businessman Jim Drury last December reemphasized those requirements. The settlement brought an end to Drury's legal battle with the city over spending motel and restaurant tax money on the university's project to turn a former Catholic seminary into an arts campus.

But the settlement added a restriction that limits the growth of the visitors bureau budget to a maximum of 3 percent annually unless tax revenue increases by at least 7 percent in a single year, a move that city officials said would mean any major tourism projects would have to come out of the surplus rather than the visitors bureau budget.

The agreement also mandates that the motel and restaurant taxes will expire once the bonds are retired, which, city officials have said, could be as early as 2012.

Knudtson said he expects the city council will ask voters to extend the motel and restaurant taxes as the termination date approaches.

mbliss@semissourian.com

335-6611, extension 123