A week after the leader of Niagara-on-the-Lake’s Chamber of Commerce and Niagara-on-the-Lake Tourism went to the town’s budget review committee with two separate 2024 budget requests, she returned Tuesday to town hall asking for a loan of $226,000.
This is on top of the $152,000 already requested as contributions to both agencies. And after councillors went into closed session for an hour and a half and debated the new request at length, a tied vote resulted in the loan being turned down.
During her presentation last week to the budget review committee, Minerva Ward, president and chief executive officer of the chamber and Niagara-
on-the-Lake Tourism, said the process to divide both organizations started in August, and that efforts to create separate boards of directors were underway.
Ward also said last week that “significant debt” had been accrued by Niagara-
on-the-Lake Tourism due to costs associated with destination marketing.
During that meeting, it was also noted that the tourism agency has not received any Municipal Accommodation Tax revenue collected by the town because a transfer agreement has yet to be finalized.
More discussion about the accommodation tax, the tourism agency and the chamber’s current finances were front row and centre this Tuesday during a tense debate.
The loan Ward was asking for is Niagara-on-Lake Tourism’s piece of the 2022 MAT funding, which has yet to be doled out.
She said it could be paid back within 15 days of the money owed to the organization finally coming through.
When council re-emerged from closed session, Coun. Wendy Cheropita made a motion that the loan be approved, but that was followed by questions and concerns from around the table about where the funds should come from, and why an agreement hasn’t been finalized yet, when discussions began in early 2022.
“Whatever the delays are, it didn’t happen,” said Cheropita, adding that she appreciates the tourism organization moving forward proactively and continuing to promote the town as a tourism destination, without being in receipt of funds they know would arrive eventually.
Chief administrative officer Marnie Cluckie said Ward and her team, along with the town, “have been working hard toward a resolution,” and that she doesn’t think there’s any blame to direct to either side.
A meeting is scheduled for Nov. 21, at which time Cluckie said the deal could be rubber-stamped.
“We feel we’re at the final strokes with the two parties’ legal counsel,” said Cluckie, also noting that “agreements do take time.”
Councillors also argued whether municipal accommodation tax revenue is considered taxpayer money. Both Cheropita and Coun. Gary Burroughs opined that it shouldn’t be considered tax dollars, and the loan should be drawn from those funds, if approved.
Town treasurer Kyle Freeborn said, in one way, it’s all the same.
“There is usually an argument that any funds the town has are as good as tax dollars that can be used in other places, or in lieu of tax dollars,” said Freeborn, adding it can also be considered “open to interpretation.”
Coun. Maria Mavridis said parking reserves would be “the best place to pull it from” because there would be no impact on the tax levy.
She also said it’s not fair to hoteliers for the town to be lending out $226,000 in MAT funds without an official guarantee it will be paid back.
“I have an obligation to the accommodation owners to make sure the money they’re collecting, let’s be honest, on our behalf, is being spent properly,” she said.
In 2017, the Ontario government issued the Transient Accommodation Regulation, which provides provisions for municipalities across Ontario to implement an accommodation tax if they choose to do so.
Last June, town council approved a MAT bylaw, resulting in this new tax of two per cent applying only to accommodation establishments with five or more rooms and for bookings made on or after July 1, 2022.
Starting in January, short-term rentals with less than five rooms will also have to pay the tax.
Accommodation providers will see the tax rise to three per cent in 2024, and four per cent in 2025.
In August of 2021, council passed a motion to implement the tax within the 2022 budget for tourism projects and to place any revenue generated into a special reserve for tourism promotion, town capital infrastructure and tourism initiatives.
In the early part of Tuesday morning’s meeting, Lord Mayor Gary Zalepa said he wanted more information from Ward, documents that “identify incurred expenses” related to the marketing work Ward and her team have been doing.
Ward said the funds were used for portions of staff salaries, marketing and “professional fees.”
Later in the meeting, after the closed session, Coun. Sandra O’Connor also said she was wary about the request.
“At this point, I don’t feel I have sufficient documentation to be able to approve a loan of $226,000,” she said.
Coun. Erwin Wiens also said he has grave concerns with using tax money to hand over as a loan “without having enough information to guarantee the security of that funding.”
Voting against the loan request were Couns. Mavridis, O’Connor and Adrianna Vizzari.
In favour were Couns. Tim Balasiuk, Cheropita, and Burroughs.
Zalepa was not in attendance when council came back from closed session, and Wiens expressed during the meeting that he would be leaving early, therefore, neither voted.
In a statement provided by Ward to The Local following Tuesday’s meeting, she said Tourism NOTL has been the town’s Destination Marketing Organization since 2013, and has been eligible to receive half the funds generated by MAT since 2022.
“While the MAT transfer agreement should have been given to us by the town at this time, understanding the bureaucracies of government, and acting in good faith, expecting the town to move quickly towards getting the MAT transfer agreement done, and wanting to ensure we supported Niagara-on-the-Lake’s tourism industry especially in a post-covid environment,” her team proceeded with their work, she said.
This involved incurring professional fees for legal, accounting and marketing.
The organization also began the implementation of some of the tactics of a five-year strategic and tactical marketing plan.
“We acted in good faith in anticipation of receiving our portion of MAT funds,” she said.
“Almost a year and a half later, the town has delayed in getting us a signed transfer agreement and our portion of MAT funds,” she added.
As a result, the chamber has had to underwrite the expenses of Tourism NOTL that should have been paid for by MAT.
The cash outlay and debt that the chamber has incurred on behalf of the eligible tourism entity Tourism NOTL is $162,120.50 for July 1, 2022 to December 31, 2022 and $215,577.11 for 2023, she said in her statement.
The town’s delays have put the chamber and Tourism NOTL in a “very difficult position, starving the DMO of much-needed funds while the MAT sits in an account,” she said.
“It is very disappointing the decision of council today that inevitably hurts our tourism industry and our business community, hampering economic development and post-Covid recovery,” she added.
In her budget presentations last week, Ward asked for $21,000 to cover costs associated with the annual Peach Festival, the Candlelight Stroll, and Christmas decorations in the heritage district.
The tourism agency’s budget request is $131,100 — with the biggest ask involving $65,000 in salaries and wages for its visitor information centre staff.
A sponsorship of $40,000 from the town for the annual Icewine Festival is also part of the budget request, along with costs associated with rent and the operation of the NOTL Ambassadors program.