After more than a year of financial uncertainty, the Brown County Convention and Visitors Bureau is set to receive $65,000 per month for the rest of the year.

The Brown County Convention and Visitors Commission, which manages the innkeepers tax money, approved a request from the CVB earlier this month to receive $65,000 a month in innkeepers tax to help fund marketing and staff the Brown County Visitors Center. The CVB contracts with the CVC to market Brown County and run the Visitors Center.

The CVC approved the request with a caveat: that issues could arise that would require the CVC to pull that funding promise back.

Since the pandemic forced the doors of the Brown County Music Center shut, the innkeepers tax has been used to pay for the venue’s interest-only mortgage payments for the past year and a half.

Shows are set to return to the BCMC in September, which means new money is flowing in to help pay the mortgage.

Funding to run the Visitors Center, employ staff and promote Brown County comes from the innkeepers tax, a 5-percent tax on overnight room rentals in Brown County. The CVB is supposed to receive $712,500 of innkeepers tax annually.

In April, the CVB first approached the CVC about getting the $65,000 monthly payments for the next six months to help meet their budget. As of April 8, the CVB had not received any money for its 2021 budget due to the arrangement with the BCMC and its bank.

Last year, the CVB did not receive $186,250 from innkeepers tax that it was owed through the contract.

The $65,000 a month will allow for the CVB to hire the staff necessary to open the Visitors Center from June to December, along with $106,700 for marketing efforts. It would fulfill commitments already made to print more marketing materials.

Even with those payments, the CVB would still be short of its contracted $712,500.

The Visitors Center closed at the end of March 2020 when other businesses also shut down, reopened in June with a reduced staff, then closed again in December.

In May, the CVC approved a onetime payment of $65,000 to the CVB. The Visitors Center reopened Memorial Day weekend.

At the June 16 meeting, CVB board President Debbie Bartes presented an innkeepers tax projection for 2021 that included paying back a $150,000 loan from the county at the beginning of the year, paying the music center interest payments for the year, and giving the CVB a $65,000 monthly payment from April to December.

With the $234,116 that was rolled over from last year and a projected $1,015,858 collected by the year, the CVC would still have a little over $81,000 to roll over into 2022.

“We believe it will actually be double or if not more than that at the end of the year because our numbers are very, very conservative,” Bartes said.

Per innkeepers tax collected in May, the county has already brought in almost $400,000. The busier summer and fall months are still to come.

Previous contracts between the tourism commission and the CVB to market Brown County stated that the CVB will receive 95 percent of innkeepers tax revenue with the CVC getting the remaining 5 percent. The last contract like that expired Dec. 31, 2018.

A new contract was signed for 2019 and expires at the end of 2024. In the current contract, the CVB will be compensated a minimum of $712,500 of innkeepers tax, but that the CVB “acknowledges the commission commitment to offset certain financial shortfalls experienced” by the BCMC. It also states that the CVC understands the “adverse impact financial uncertainties and the redirection of innkeepers tax revenues has on the ability to plan and operate the bureau.”

“We did this leap of faith. We believe in the music center and so we need you guys to take a leap of faith with us,” Bartes said of the new contract and payments.

CVC President Kevin Ault said he did not see any reason why the board could not make a commitment to the $65,000 monthly payments through the end of the year.

“One thing you have to know is county can override our commitment. If the music center bellies up, the county can go back and use that to pay the mortgage,” he said.

CVC member Barry Herring said the commitment is a “precarious position” for the CVC. “I understand why you want it. You can’t run your business without it,” he said.

“Even if we vote on it today (June 16), (let’s say) three months from now COVID strain three comes back, an artist dies and we have to reverse the flow.”

Ault and Herring serve as co-presidents of the BCMC management group.

“We would like to have that commitment so we can meet our obligations and make plans. It’s important for us to do that. We’re planning to move on forward. We have to do our promotions and keep things rolling for Brown County. It’s important,” Bartes said.

Bartes also asked the CVC about legislation to increase the innkeepers tax rate here and help bring in more money for all. A discussion about increasing the tax rate began last June. At the July 2020 meeting, board members voted to engage in conversations with Rep. Chris May (R-Bedford) about sponsoring legislation in the General Assembly to increase innkeepers tax to as much as 10 percent in Brown County, which is the limit set by state statute.

Ault said that the legislation was delayed and will have to be introduced during next year’s General Assembly.

The music center has also applied for a portion of new $10 billion Shuttered Venue Operators grant program. The program approved as part of a COVID-19 stimulus package.

Based on the grant’s formula, the BCMC is eligible for up to $1.9 million, but the exact amount to be received will not be known until the official announcement is made hopefully by early July.

Herring said that the State Bank of Lizton, which holds the BCMC mortgage, could grab all of the innkeepers tax even if the mortgage was paid, but the venue could not pay the electricity bill.

The financial forecast for the music center has $60,000 in the bank at the end of September once shows resume, but the venue would have to write a check for $140,000 worth of refunds if something happened to Willie Nelson and he could not play his sold out show next year.

“First recourse is to go to innkeepers tax,” Herring said.

“It’s more than just the mortgage payment. I’m trying to warn you.”

Better tracking

During the June 16 CVC meeting, it was also discussed that the CVC could work with the county treasurer to change the innkeepers tax reporting forms to reflect if a person has a rental property that’s marketed through Airbnb or VRBO to better record payments for rentals made through those websites.

“The better information you guys get then that helps everyone. We would have better reporting,” Bartes said.

CVB Executive Director Jane Ellis said the county continues to see more and more Airbnb or VRBO rentals pop up since the pandemic.

“I think Airbnb has been incredible to Brown County and that is probably what got us through COVID with the numbers on Brown County. We had maybe 15 in the beginning, now it’s pages and pages of properties on Airbnb,” she said.

Bartes also has a rental listed through Airbnb and VRBO. She said she does not accept cash directly from guests, but that doesn’t mean other owners are not contacted by guests about paying cash to avoid fees or taxes.

Currently owners of rentals who use Aribnb or VRBO have to notify the treasurer’s office they are using those websites to book rentals, but they are not required to submit monthly innkeepers tax forms since that is handled by the sites.

“Our concern is we know people book outside Airbnb,” Ellis said.

“I think there is even more money being left on the table.”

The state reports the innkeepers tax for rentals through Airbnb and VRBO. If the CVC was able to keep track of the number of Airbnbs or VRBOs in the county, it would help them make sure the innkeepers tax from the state is accurate.

“If we get a check from the state and it doesn’t balance, then something is wrong,” Herring said.

Herring said he would set up a meeting with the treasurer to discuss changing the reporting form for 2022.

There was also a discussion about a need for an employee in the county, like in the Planning Commission office, to focus on finding illegal tourist homes and bring in innkeepers tax that is not being currently captured. The Planning Commission sends out letters to illegal tourist homes when they are discovered, but the office cannot dedicate its entire time to tracking those homes down.

“I think somebody doing that job would more than compensate their salary in collections out there that are not being collected,” said Bartes, who also serves on the county’s board of zoning appeals.

CVB Board member Greg Fox said that both the CVB and music center need to help each other because it all comes down to growing tourism here and ultimately innkeepers tax.

“If we all can align on that and have the same understanding, I think we will be more productive and more efficient,” he said.