Visitors picking Brown County as the place for overnight stays resulted in the local innkeepers tax bringing in more than $1 million this year, which is the first time that much has been collected in the history of local collections.
There are two entities in the county who are contracted to either receive innkeepers tax as part of their budget or have it pledged to cover mortgage payments when there is not enough operating revenues to do so: The Brown County Convention and Visitors Bureau, which is contracted to market Brown County using the tax funds, and the 2,000-seat Brown County Music Center.
The Brown County Convention and Visitors Commission manages innkeepers taxes ,a 5-percent tax on overnight room rentals in Brown County. and contracts with the CVB for marketing. The CVC and other government boards also signed off before the venue was built on pledging the innkeepers tax as a backup revenue source for the music center if there is not enough operating income to cover mortgage payments.
At the Dec. 20 Brown County Council meeting, members approved an additional appropriation request from the CVC to move $288,750 from the innkeepers tax fund to the CVB to help fulfill its contract for 2020 and 2021.
Since the pandemic forced the doors of the music center shut, the innkeepers tax had been used to pay for the venue’s interest-only mortgage payments for the past year and a half. Because of that the CVB had not been receiving its full contracted amount of innkeepers tax, which was set at $660,000 for 2021.
At the county council meeting, CVC President Kevin Ault reported that the innkeepers tax was $1.1 million for the year with December collections still to come. He reported there was $359,000 in the innkeepers tax fund as of Dec. 20.
“This is the first time in the history innkeepers collection we have hit this,” Ault said during a Dec. 16 CVC meeting.
“That gives you an extra $288,000 for marketing for 2022 and the future. Looking at everything I think we’re going to be well on the way to collect all of your budget in 2022,” Ault told CVB board members on Dec. 16.
Read on to learn the latest on what is happening with the both the CVB and the music center.
CVB check in
On Dec. 13, the CVB board voted to approve a purchase agreement to buy the Camelot Building on Van Buren Street that the Visitors Center currently rents space in. The board says that innkeepers tax will not be used to pay the mortgage.
The building was put up for sale last year.
The appraisal for the building came back at $1.25 million and the purchase price is $985,000. A down payment of $200,000 would be required, CVB Executive Director Jane Ellis explained during a Nov. 24 board meeting.
“We will have equity right out of the door with $465,000,” she said.
The purchase agreement for $985,000 was approved at the Dec. 13 CVB board meeting.
Currently the building receives $94,624 in rent from the Visitors Center and other shops in the building. The annual expenses are around $21,962, according to a presentation by Ellis in November.
Money that remains at the end of the year would then be put into a building fund. The estimated mortgage payment will be $3,800. Currently, the CVB pays $3,520 in rent. They have two separate leases for the back office space and the Visitors Center space.
Money for the down payment and the mortgage will not come from innkeepers tax and will be covered by other revenue generated by the CVB, like group tours, money from paid advertising on the CVB’s website and merchandise sold in the Visitors Center. The CVB has two bank accounts, one for innkeepers and the other for revenue outside of the tax.
The CVB was set to receive $660,000 in innkeepers tax in 2021 from the CVC. Previous years the budget had been set at $712,500.
Since 2018, the CVB had transferred money from the PNC Bank account that does not hold innkeepers tax to cover “cash flow challenges” and had not transferred the money back, Ellis said.
The plan is to also use that money owed to the PNC Bank account to cover the purchase costs of the building.
CVC member Barry Herring attended the Nov. 24 meeting and asked why the CVB had to purchase the building instead of continuing to rent the space.
“The building is for sale. We run a risk of losing our space and our investment in that space if it is purchased by someone else,” said CVB Board President Debbie Bartes.
The CVB’s lease is set to end in January 2023. Bartes said purchasing the building is a “great investment for the CVB.”
“The charge that the CVB has is you get cash, you’re supposed to spend it in terms of advertising and promoting Brown County, not in terms of enhancing your overhead,” Herring said.
“You’re to take cash that is generated by innkeepers tax, it is given to you by CVC to go out promote and Brown County. Being a landlord is not promoting Brown County.”
CVB Board member Carol Fitzgerald asked what happens if the CVC decided not to contract with the CVB to market Brown County in the future.
“We will look at that contingency when it happens, which is not likely. The building is self-sufficient,” Bartes said.
“This should be a celebration because, come on, how many times do you have the opportunity to walk into something with $465,000 of equity right off the get-go? That is a wonderful thing.”
She noted that revenue from the innkeepers tax will only be spent on advertising and promoting the county.
Ellis said it would be “very detrimental to Brown County” if the CVC did not renew their contract.
“I can’t think of another organization who can step in with the experience we have to do the job. But that doesn’t mean we don’t exist,” she said.
The CVB would have to find other revenue to continue to operate if their contract was not renewed, which would include money earned from renting space in the Camelot Building and encouraging more advertising on the CVB website.
“It might be a $500,000 organization. It might be a $200,000 organization, but our existence is not dependent on the innkeepers tax,” Ellis said.
At the Dec. 16 CVC meeting, Ellis presented the 2022 budget, which is set back to $712,500. Of that budget, $286,910 will fund marketing with the remaining budget being split among general and administrative costs.
During the presentation last month, Ellis said the No. 1 partnership the CVB wants to focus on heading into 2022 is with the CVC.
“Tourism is so important to Brown County. The relationship between the CVB and tourism commission, we want it to be a healthy working relationship. We want you guys to know the tourism commission is top priority for partnerships for this coming year,” she said.
At the December CVC meeting, member Derek Clifford said he supported the CVB purchasing the Camelot Building.
Bartes said the CVB board had discussed purchasing the building in meetings, but did not bring it to the CVC for approval due to the “community outcry about government-owned properties with the music center” and the plan to not use innkeepers tax to purchase the building.
“We’re going to avoid that rift with the community and we are trying hard to build relationships with the community and we don’t want to jeopardize that,” she said.
BCMC check in
Music returned to the Brown County Music Center in September and with that came some famous visitors to check out shows there.
In November, Kevin Costner and Modern West performed. Country artists Garth Brooks and Trisha Yearwood came out to see the show.
A photo of the couple with Costner at the music center received thousands of views on social media.
And as live music began to return so did revenue to the music center. BCMC also received $1.795 million from the Shuttered Venue Operators grant program this summer. SVOG was approved as part of a federal COVID-19 stimulus package.
Recently, BCMC received another round of funding from the SVOG program, bringing the total amount received to $2.737 million.
“All of that money is already budgeted and dogeared for truly the livelihood and success of the music center moving forward,” BCMC Executive Director Christian Webb said during the Dec. 16 CVC meeting.
“It is for the success and longevity of the music center should there be other issues in the future that are unforeseen.”
With that money in the bank, the venue’s management group presented a $54,000 check to the Brown County Commissioners in December for the music center’s annual property tax payment.
“You will be able see that tax payment coming from us every year going forward,” Herring said. Along with serving on the CVC, he also serves as co-president of the music center’s management group.
Brown County Commissioner Diana Biddle said the money could go into the county’s rainy day fund. The county council has not weighed in yet on which fund the property tax payment should land.
The management group also wrote a $354,221 check to the State Bank of Lizton, which holds the venue’s mortgage, to pay off the principle interest that was waived once COVID hit home.
“What that allows us to do is reset and stay on our current mortgage debt payment plan, so it will not be extended. The 30 year mortgage stays at the 30 year mortgage clip. A lot of that had to do with because we have reopened and are generating revenue,” Webb said during the Dec. 16 CVC meeting.
Money has also been set aside to pave the parking lot for the venue.
The CVC also approved an amendment to the administration agreement to change how the $1 million capital improvement fund could be spent. Originally that fund was to be set aside for major building repairs and had to be at $1 million before profit from the music center could be split between the county and the Brown County Community Foundation.
The administration agreement states that once the capital improvement fund was at $1 million, remaining profits would be split 25/75 between the county and BCCF with the foundation receiving 75 percent. No money has been given to the county or the foundation yet under that agreement, which is separate from the payments made to the county in lieu of property taxes.
The amendment now allows the music center to also spend the $1 million capital improvement fund on ticket refunds and operating losses.
“The last thing we as a board wanted to do was we have $1 million in the bank and we have all of these shows cancel, but we can’t touch it because we use it for capital improvements,” Herring said during the Dec. 8 commissioners meeting.
“We didn’t want to have to come back to the county and say ‘Oh my gosh we need some sort of funding for it (the music center),’ We can use this $1 million for that (ticket refunds and operating losses).”
Herring said he sees the music center making enough profit next year to give back to the county and the community foundation.
The amendment was also approved by the venue’s building corporation, management group, the State Bank of Lizton and the commissioners.
At the Dec. 8 meeting, the management group also presented the commissioners with an award for Excellence in Merit Shop Construction from the Associated Builders and Contractors Indiana-Kentucky Division for the construction of the 2,000 seat venue. Brandt Construction and Miller Architects also received the award for being the contractor and architect for the music center project.
Looking ahead, the music center has another sold out show on its books for next year with another one nearing the same status. Bobby Weir and the Wolf Brothers featuring the Wolfpack will take center stage on March 19. Weir is a founding member of the Grateful Dead and Dead &Company. Bobby Weir and Wolf Bros were formed in 2018 by Weir, Don Was and Jay Lane.
The band performs songs from the Grateful Dead’s catalog along with music from Weir’s solo albums, touring throughout the country. The show sold out almost immediately with over 1,400 tickets being sold in a fan pre-sale alone, Webb said.
The venue’s first sold out show was country legend Willie Nelson and was postponed due to COVID-19. It is now scheduled for April 25.
Wrapping up 2021 for the music center was a holiday performance from the Beach Boys and ringing in the New Year with Rev. Peyton’s Big Damn Band.
In February, Grammy winner Emmylou Harris and country singer Wyonna Judd will perform at the music center. Harris will take center stage on Feb. 2 and Judd will perform on Feb. 5.
Other acts coming to the music center next year include Weird Al Yankovic, Graham Nash and Gordon Lightfoot. Webb noted last month that Yankovic’s show was close to selling out as well.
Tickets are currently on sale for all the above mentioned shows, and more, at browncountymusiccenter.com and at the venue’s box office.