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Council OKs hospitality tax committee

BEMIDJI--A community committee will now take the helm on a possible hospitality tax in Bemidji, with a longshot chance that a proposal may go before the state Legislature this session.

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BEMIDJI-A community committee will now take the helm on a possible hospitality tax in Bemidji, with a longshot chance that a proposal may go before the state Legislature this session.

On Monday, the City Council approved the forming of the committee, and tasked it with bringing forth a well-rounded proposal to the council. The intention is to let the public and civic and business leaders drive the decision-making process.

"We as the staff want to serve as the purveyors of information and data for the committee," City Manager Nate Mathews said. "I feel it would be better for an organic process, not led by staff, but by the community."

The main idea behind such a tax-levied on the hospitality industry such as hotels and restaurants-is to help pay for costs related to the city-owned Sanford Center, which opened in 2010. The city annually provides $450,000 to cover operating losses at the events center, as well as to reinvest in the building. Additionally, other costs related to the facility include bond requirements and capital improvement needs. These costs are covered by property taxes.

However, officials said Monday that there may be other uses proposed by the other committee members.

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"I think as a council, we agree that we need to figure out how to offload the subsidy and the capital improvement plan," Mayor Rita Albrecht said. "Beyond that, we'll see what the discussion is."

The proposed committee approved by the council Monday includes:

• Mayor Albrecht.

• Council member and Visit Bemidji board member Nancy Erickson.

• Council member and Coalition of Greater Minnesota Cities President Ron Johnson.

• Greater Bemidji Economic Development board member and Northern Township Supervisor Jess Frenzel.

• Kevin Johnson of Great River Design and My Bemidji.

• RP Broadcasting General Manager Mark Ricci.

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• Bemidji Area Chamber of Commerce board member Chris Vacek.

Additionally, the council directed staff to invite an innkeeper and a BSU representative to the committee. Mathews said the first meeting will take place this month and how often the group meets will be up to the members.

Mathews also said there is a possibility, if turned around fast enough, that a proposal could be sent to the Legislature this year. At the state level, special taxes are required to get legislative approval. This year's legislative session is scheduled to end May 20.

The idea of the tax last arose in 2017 in a proposal from Sanford Health and Great Bemidji in regard to a Wellness Center/amateur sports facility project, which has since been shelved. As envisioned by that group, a 2 percent hospitality tax would have generated about $1.25 million annually. Of that sum, $750,000 would go toward an amateur sports commission (which would bring in youth/amateur sports tournaments) and $500,000 would go toward the city to be used for the Sanford Center.

Carnegie Library update

The City Council also approved a change order for the ongoing Carnegie Library renovation project Monday.

The change order, coming to $112,775, would make additional improvements to the building's lower level to allow tenants to occupy the space.

According to City Engineer Craig Gray, when factoring in the previous additions, the total change order cost comes to just more than $169,000 for the project. Initially, the project budget had set aside $86,000 for change orders, leaving a shortfall of $83,118.

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As a whole, the renovation project, which is fixing the building's interior and exterior as well as its utilities. The project is being funded by donations raised by the Friends of the Carnegie Library, which began its efforts in 2012.

So far, Mathews said two potential tenants for the available spaces are the Bemidji Jaycees and Great North Counseling Services. The proposed rent for each tenant, Mathews said, could be between $5,500 and $5,800 per year.

When the overall project came before the council for approval, the fundraising group had collected $2 million, while the total cost of the project came to $2.2 million. As a result, the city funded the shortfall with the intention of the Friends of the Carnegie Library continuing to fundraise and payback the remaining amount.

With added amount from the change orders, the total shortfall for the project now comes to $294,922. In the future, Gray said there's also the potential for more change orders, such as chimney and brick repair work, which could cost roughly $20,000.

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