Visit Duluth tourism funding reinstated

Talk about it

After addressing several concerns flagged by a task force last summer, Visit Duluth has obtained a three-year funding commitment from the city.

A tourism tax task force, appointed to examine expenditures of tourism tax proceeds, had recommended Visit Duluth’s contract be renewed for one year and that a consultant be brought in to review its operations before the organization received further funding.

The Duluth City Council voted in late August to recommend that city administration follow the task force’s guidance.

But Karen Pionk, Visit Duluth’s new board chairwoman, said the organization needed greater financial certainty to operate effectively.

“In the convention business alone, we’re often operating three to four years out. We need to be able to say, we’re going to be here when you arrive,” she said.

Pionk pointed out that special events, such as the tall ship festivals that Visit Duluth has organized, require three to four years of lead time.

The organization will receive $1.6 million in tourism taxes for each of the next three years to promote Duluth as a tourist destination. That’s about $120,000 more than Visit Duluth received last year.

Duluth expects to collect about $7.5 million annually in tourism taxes, derived from dining, lodging and entertainment.

The task force cited several concerns about Visit Duluth, including the unwieldy size of its board of directors, the weakness of its financial controls, its governance and potential conflicts of interest.

Pionk said the organization responded aggressively, instating bylaw and governance changes and reducing the size of its board from 23 members to 18. Visit Duluth has also made changes in its financial authorization and check-signing policies.

“A lot of the changes we made were already in the works,” she said.

Terry Mattson, Visit Duluth’s executive director, praised the board for its commitment and diligence to accelerate many of the changes that had been contemplated in the past.

Sharla Gardner, a city councilor who also served on the tourism tax task force, commended Pionk and her organization, saying, “Visit Duluth really has responded to this input from our community very well.”

Linda Krug, another task force member who was recently elected to the Duluth City Council, agreed that Visit Duluth has been very responsive to the concerns raised.

Mattson said the issues, large and small, could not be ignored.

“A lot of it was dealing with perceptions, but perceptions become part of reality,” he said.

“Visit Duluth has always tried to take the high road,” Mattson said. “We put politics and personalities aside to get the job done.”

In addition to winning a three-year funding commitment from the city, Visit Duluth also earned a reprieve from the proposed task force requirement that it hire an outside consultant to evaluate its operations. This review was expected to cost $50,000 to $100,000.

“We didn’t see it was cost-effective to do an outside review, when that’s a fundamental role of the board of directors,” said David Montgomery, Duluth’s chief administrative officer.

Instead, Montgomery said Visit Duluth agreed to a comprehensive internal annual review of its operations in addition to a yearly financial audit.

Krug said she’s satisfied with the internal review being proposed, but she defended the task force’s initial call for a third-party examination.

“I think that is a good tool,” she said. “It was not meant to be punitive, and there is a benefit to having an outside view.”

Montgomery expressed optimism the compromise agreement will work.

“Visit Duluth took to heart what was being said, and that’s reflected in the changes that were made,” he said. “I think it shows this is an organization that wants to move ahead and fulfill its mandate.”

Tags: city of duluth, visit duluth, news, business, money, travel