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TO: Mayor Thomas J. Weisner
FROM: Carie Anne Ergo, Chief Management Officer
DATE: January 13, 2014
SUBJECT:
A Resolution Authorizing the Execution of an Agreement in Support of the Aurora Area Convention and Visitors Bureau through the Hotel Operators' Occupation Tax.
PURPOSE:
To obtain the City Council's approval of a resolution that would extend the City of Aurora's participation in the Aurora Area Convention and Visitors Bureau from December 16, 2013 through December 15, 2015. Aurora agrees to contribute 90% of its revenues collected through the Hotel Operators' Tax during this period up to $175,000 annually.
BACKGROUND:
In 1987, the city entered into an intergovernmental agreement (IGA) with the Villages of North Aurora, Sugar Grove and Montgomery concerning the imposition of a hotel/motel tax and the use of the proceeds of that tax to promote tourism in the greater Aurora area (Resolution No. R87-3668). Originally, the communities agreed to impose a 3% hotel/motel tax and give 80% of the proceeds to the Aurora Area Convention and Tourism Council (now named the Aurora Area Convention and Visitors Bureau [AACVB]).
Since the execution of the original agreement, it has been amended and its term has been extended several times. Over the course of the extensions, the number of participating municipalities increased and the amount of hotel/motel tax proceeds conveyed to the AACVB increased from 80% to 90% of total collections.
DISCUSSION:
The extension of the fifth amendment to the Intergovernmental Agreement expired on December 15, 2013 (Resolution No. R12-362). In evaluating the terms of the extension, it became clear that the City of Aurora was the largest single financial contributor to the AACVB. According to the AACVB budget documents for fiscal year 2013, the organization's total budget minus carryovers was estimated to be $896,067. The City of Aurora directly contributed $489,912, which was 54.7% of the AACVB's total estimated revenues. Tax revenues accounted for $429,912 of this amount, while a grant to the AACVB from the gaming fund accounted for the remaining $60,000. Additionally, the AACVB received formula grant funding of approximately $200,000 from the State of Illinois as a result of Aurora's participation in the organization.
Over the years, the AACVB has grown to serve ten communities, including Aurora. Three of the communities - Batavia, Hinckley and Montgomery - do not have a hotel, and therefore do not contribute financially to the organization. The remaining six communities, including Big Rock,
North Aurora, Plano, Sandwich, Sugar Grove and Yorkville, had a combined estimated contribution of $105,945 in 2013.
According to the current bylaws, each municipal member has one direct appointee to the board. Additionally, the organization has members representing community organizations, businesses, hotels, chamber of commerce, etc. - up to 25 total board members. These members are recommended by the Chairman of the AACVB and approved by its board. As the AACVB grew, Aurora's direct municipal voting interest on the board diminished to 4%. At the same time, Aurora's total direct and indirect financial interest had risen to 77%.
Aurora and the AACVB Board have agreed to significant changes in the terms of the Agreement. The changes limit Aurora's financial contribution and increase its direct representation on the Board while preserving current levels of formula grant funding provided by the State of Illinois to the AACVB.
Below is a summary of the five substantive changes:
1) The term of the agreement will be limited to two years. Historically, the agreements have spanned five years.
2) The City of Aurora's contribution of Hotel Operators' Occupation Tax will be capped at $175,000 annually. Aurora will continue to contribute 90% of its hotel/motel taxes annually up to the $175,000 cap.
3) Each municipality will continue to be entitled to one municipal officer. During the term of the agreement, however, a total of 50% of all AACVB Board members will be direct appointees of the Mayor of Aurora.
4) Three of the eight total Executive Committee members must be chosen from Aurora's appointees, including no less than one Officer position.
5) The AACVB will be seeking a new Executive Director and agrees that the City of Aurora should be actively involved in the search process. Specifically, the Mayor or his designee will have the opportunity to participate fully in the hiring of a new Executive Director, including final acceptance of the candidate prior to hiring. Should AACVB choose to hire an Executive Director that the Mayor or his designee opposes, then in that event the Agreement between the AACVB and the City of Aurora may be terminated prior to the end of the specified term.
IMPACT STATEMENT:
Not Applicable
RECOMMENDATIONS:
Legal Counsel for the City of Aurora and the Aurora Area Convention and Visitors Bureau are still in the process drafting a new agreement, therefore, it is recommended that the City Council authorize the Mayor to execute an agreement in support of the Aurora Area Convention and Visitors Bureau through the Hotel Operators' Occupation Tax that meets the terms set forth in the attached resolution and Exhibit A.
cc: Alderman O'Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Peters, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing the Execution of an Agreement in Support of the Aurora Area Convention and Visitors Bureau through the Hotel Operators' Occupation Tax.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City has previously approved agreements with the Aurora Area Convention and Visitor's Bureau ("AACVB"), providing for the payment of certain collected Illinois hotel operator's occupation tax dollars from the City to the AACVB in exchange for the promotion and development of tourism within the Aurora area; and
WHEREAS, the first of such agreements was approved December 15, 1987 via Resolution R87-3668 and the most recent extension of the 5th Amendment was approved via Resolution R12-362 and expired on December 15, 2013; and
WHEREAS, it is the desire of the City of Aurora and the AACVB to authorize an amended agreement in accordance with the attached terms.)
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: the City of Aurora shall enter into an amended Agreement with the Aurora Area Convention and Visitor's Bureau substantially in conformance with the proposed terms attached hereto and incorporated herein as Exhibit "A", and the Mayor is hereby authorized to execute said Agreement on behalf of the City of Aurora.
PASSED AND APPROVED on ______________.
AYES ____ NAYS ____ NOT VOTING ____ ABSENT ____
____________________________ __________________________
Alderman Bohman, Ward 1 Alderman Garza, Ward 2
____________________________ __________________________
Alderman Mesiacos, Ward 3 Alderman Donnell, Ward 4
____________________________ __________________________
Alderman Peters, Ward 5 Alderman Saville, Ward 6
____________________________ __________________________
Alderman Hart-Burns, Ward 7 Alderman Mervine, Ward 8
____________________________ __________________________
Alderman Bugg, Ward 9 Alderman Johnson, Ward 10
____________________________ __________________________
Alderman Irvin, At Large Alderman O'Connor, At Large
ATTEST:
____________________________ __________________________
City Clerk Mayor
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