Aspen City Council kicks can on forgiving marketing loan to chamber of commerce
$500K COVID-19 marketing plan launched in spring by the Aspen Chamber Resort Association spent on borrowed money by city
Aspen City Council could not come to consensus Monday to forgive a $200,000 loan to the chamber of commerce that was granted in May to spend toward a marketing plan in a COVID-19 world.
Two months into the pandemic, the Aspen Chamber Resort Association asked for the release of $300,000 in reserves held in city coffers within the Tourism Promotion Fund, plus an additional loan of $200,000 from the general fund.
The money went into what was called a “restorative destination marketing” plan for summer and fall tourism during the pandemic.
Council and ACRA officials agreed in May that the full amount was to be repaid over the course of five years, in $100,000 installments.
But because the city has been generous with other economic stimulus and recovery efforts, such as rent relief for residents and businesses, $25 gift cards, tax breaks and reduced fees and restrictions, ACRA officials asked for the city’s continued generosity for marketing.
“Now that we are seven months into a pandemic, and economic recovery still seems 12 to 18 months away, we would like to request some consideration that the loan from the general fund, in the amount of $200,00 be converted to a grant,” reads an October letter from ACRA President and CEO Debbie Braun, the board of directors and staff. “This will allow us to utilize our finances to continue to rebuild the tourism industry in Aspen and recoup lost local occupancy sooner for the betterment of the community.”
Some council members supported delaying the repayment of the loan and revisit the request later, and others, like Rachel Richards, proposed a 50% payback, and Ann Mullins wanted to forgive the entire $200,000.
City Manager Sara Ott said based on council conversation during its work session Monday, she and Braun will work on details and bring back a proposal at the beginning of the year.
ACRA officials told council the return of investment to the city and community as a whole greatly exceeds the initial amount funded, and will continue to pay dividends well into the future.
“Requesting repayment of these funds will impact the ability of ACRA over the next two years to fully execute its mission to serve the community with the limited funds available to it due to reduced economic activity in the city,” the letter states.
Because of the early projected impact of COVID on lodging tax collections for 2020, the city’s anticipated release of that money to ACRA for tourism promotion this year was significantly reduced, according to City Finance Director Pete Strecker.
While there has been some revision to the projected collections, concerns about reduced funding for marketing still hold true, he said. Instead of the original projected $2.9 million a year ago when the 2020 budget was first set, current expectations are for roughly $2.1 million in lodging tax revenue, according to Strecker.
He noted, however, that looking at lodging tax collections from 2011, which was the first year of the additional 1% lodging tax for marketing added to the 0.5% base lodging tax, through 2019, the average annual increase to collections was about 8%.
“This is notable as all collections are conveyed directly to ACRA, and ACRA then provides a spending plan to equally apply these dollars without any restriction on annual spending growth,” Strecker said. “This is counter to the spending limitations placed on the rest of the city’s annual budget and perhaps should be considered for future application of funds.”
In 2009, the city loaned ACRA nearly $500,000 during the Great Recession. It was paid back within five years at zero interest.
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Tourist accommodations in Aspen and Snowmass Village enjoyed a strong holiday period, which is always expected. But advance reservations also indicate the area could set a winter occupancy record.