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June 18, 2009 Door County Tourism Zone Commission Meeting - Minutes

DOOR COUNTY TOURISM ZONE COMMISSION
MINUTES OF JUNE 18, 2009
Sevastopol Town Hall

ACTION ITEMS:
Nelson moved and Larson seconded to approve the May 14 minutes with corrections. Motion passed unanimously.

Larson moved and Tice seconded to approve the May 28 Annual Meeting minutes. Motion passed unanimously.

Election of Officers:
Chair. Coulson moved and Nelson seconded to elect Kufrin for another year. Motion passed unanimously.
Co-Chair. Nelson nominated Tice and Coulson seconded. Motion passed unanimously.
Treasurer. Benzshawel nominated Nelson; Tice seconded. Motion passed unanimously.
Secretary. Tice nominated LeClair; Nelson seconded. Motion passed unanimously.

Nelson moved and Larson seconded to make the $75,000 held-money disbursement to the DCVB at the July 2009 meeting. Motion passed unanimously.

Nelson moved and Benzshawel seconded to form an Ad Hoc committee comprised of Kufrin, Nelson, Skare, Holtz, and Larson to discuss performance goals and measurements of the DCVB efforts and make every effort to meet with an official liaison from DCVB Executive Committee. Motion passed unanimously.

Larson moved and Goss seconded to approve the Kerber Rose Reports and Payables. Motion passed unanimously.
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Committee Members Present by Roll Call: Bob Kufrin, Tom Benzshawel, Mary Boston, Andy Coulson, Pauline Cyrus, Nancy Goss, Dave Holtz, Debra Jeanquart, Mike Johnson, Jeff Larson, Little Bit LeClair, Bryan Nelson, Sarah Sawyer, Chuck Tice

Excused: Diane Jacobson, Nedd Neddersen, Dick Skare, Carol Stayton, Nora Zacek

Absent: Sandy D�Amico, Richard Briggs, George Delveaux, Amy McClelland, Edson Stevens, Tom Tostrup, Bill Weddig

Also Present: Bill Vande Castle, Esq.; Jack Moneypenny, Mary Denis, and Jon Jarosh from Door County Visitor Bureau; Dianne Lensert, Kerber Rose & Assoc.; Kathy Kirkland, TZC Administrative Assistant

Audience: Leo Zipperer, Sevastopol Town Chair, who explained the functions of the new building and invited all to the July 18 Sesquicentennial.

Call to Order
Chair Bob Kufrin called the meeting to order at 9:10. Quorum was reached at 9:13.

Approval of Minutes of May 14, 2009
Coulson noted that he was listed at having arrived late when, in fact, he didn�t attend at all. Nelson moved to approve the May 14 minutes with corrections; Larson seconded. All ayes.

Approval of Minutes of the June 9 Finance Committee Minutes
Coulson noted a minor change on page one, should be �vested interest.� Finance Committee will approve its minutes at its next meeting.

Approval of Minutes of the May 28 Annual Meeting Minutes
Larson moved to approve the May 28 minutes; Tice seconded. All ayes.

ELECTION OF OFFICERS 2009-2010
Chairperson. Kufrin asked for volunteers or nominations. There were none. Kufrin said he would do it for another year, although it consumes a lot of time. The Commission is trying to have turnover, but while committees are being formed, we can keep people participating. Coulson moved to close nominations; Nelson seconded. All ayes. Motion to elect Kufrin for another year; all ayes. Kufrin asked if there should be a nominating committee to cull people to serve; maybe next January or February.

Vice-Chair. Nelson asked if Tice would be willing to serve another year. Tice said he would continue on Compliance Committee and hasn�t had much to do as Vice-Chair. Nelson nominated Tice; Coulson seconded. All ayes to nomination and for election.

Treasurer. Nominations or volunteers? Nelson volunteered to serve another year. Benzshawel nominated Nelson; Tice seconded. Acceptance of Nelson as Treasurer; all ayes.

Secretary. Tice noted that the secretary is mostly a legal position to sign certain documents. Nominations for secretary or volunteers? Tice moved to nominate LeClair for another year; Nelson seconded. Acceptance of LeClair as secretary, all ayes.

Administrative Assistant Report
Kirkland noted the total costs of the Annual Meeting were $1,374.85 and that attendance was minimal outside of the Commissioners, as detailed in the report. The two permit holders who are in circuit court are beginning to comply but are not fully compliant, whether it�s about late fees/penalties or registering monthly statistics. There are 20 new permit holders with 28 units since last meeting, and more ads are turning up on the Internet. She noted that she would miss the next TZC meeting as she�d be out of the country.

Kirkland noted the article in the paper about Sturgeon Bay possibly allowing non-zone rentals. Benzshawel stated that the measure failed in the second Sturgeon Bay meeting and the idea has gone back to Plan Commission to see if they can work on it.

Kufrin said that the list received the State Health Department and Steve Bell lists 647 properties, and our current list has 814, so there�s an approximate 170 lodgings or a 21% difference between theirs and ours. The Wisconsin Department of Revenue has still not asked for our list.

Report by Door County Visitor Bureau on Marketing Efforts
Denis said packages require 2 nights and a meal; guests were given a $25 gift certificate for Blossom Fest packages, and there were 245 packages sold, 500+ room nights. The DCVB sent out postcards for the first time this year. Moneypenny said the gift certificate checks were signed by him, and the businesses redeemed them; it became apparent where the $25 certificates were used, restaurants, innkeepers�just what we hoped to see in a spring promotion.

The upcoming DCVB audit was a 17-month audit. There�s an issue of separation of duties, which is being addressed from the old method. Accruals are now in cash; the audit will be ready for the TZC�s July meeting. The DCVB was disturbed at how long it took to do; it wasn�t ready until May 18, has now been through finance/executive and goes to the Board on the 25th. Coulson asked about the report on the website figures, �seeing a 26% increase over April 09.� Mary said it�s for May over April. May is still down 209 over May 2008. That was affected by the late start of eBrains this year. Nelson asked when eBrains kicked in; Mary said March instead of January.

The Pay-per-Click (PPC) is less than last year, and PI increase started in late March instead of January. Benzshawel asked for an explanation of PPC. Denis said leads go out to databases and as people click on our name, then we pay; you don�t pay until they actually go on the site. Jarosh said the term �Door County� is bid on, and when people search on it, it generates organic leads (search engine optimization) meaning how sites rank. The DCVB site shows up on the right-hand side of a web page and top of the page as sponsored results, essentially pay-per-click advertising, and we pay for that. A term such as �Door County� costs more than for a more specific/business. Holtz asked what the specific PPC budget for the year? Denis said it�s in the eBrains contract. Moneypenny said the first four months was $450,000; this year, we need to see more explicit means to give best results. It�s scaled back to $250,000 for eBrains; Geiger went from $250,000 in 2008 down to $150,000 in 2009, and in lowering that, you have to make choices. They�ll be putting money into different investments; July 15 is the first meeting on strategic planning.

Coulson asked about �Door County� searches. Can eBrains see where people go at that point? Do they click on sponsored or organic? Further, how do you tell which is effective? Are X% more likely from the organic list to spend more time on the site than the sponsored? Jarosh said there are different programs to track click activity; he can get that information. Coulson requested that be done, as it will be useful for members, who are microcosms in terms of budgeting. If a keyword is �lighthouses,� who�s coming up to the top? How many cents per click do you invest for that? Jarosh said the search terms are being refined and targeted by season to get the most for our money. Holtz asked if eBrains reports back to the DCVB and if the budget is monitored on a daily basis. Yes, it is. For example, there was a $10,000 difference in Moneypenny�s expectations, and eBrains had to explain what they did with the money.

Nelson asked to be reminded of what�s happening with the 500,000 inserts. (Zipperer left the meeting, 9:50) Moneypenny said 80% of the calls were from the insert, and the Visitor Guide is up 43% for individual requests from last year.

Kufrin asked on the tables that have the YTD goals and annual goals, if they could distribute the goals based on some factor other than 1/12th distribution; e.g., look at historical numbers and be realistic as to what you think is going to happen. If the percentages are substantially down, it�s a big concern. But because our activity is not evenly distributed, the YTD figure does not jibe with what�s expected. If an activity expects to create a spike, how will we know if it doesn�t happen? Moneypenny said they can pull historically what we�ve done over the past years. Larson said it�s a monthly report, so it should be a monthly goal.

On the second page of the DCVB report, Kufrin doesn�t understand some of the activity. Media Marketing YTD is 70% of the annual goal, but Media Monitoring down below suggests total impact of stories, which is off compared to AVE. In relation to the AVE, the media marketing doesn�t jibe. Moneypenny said they�re two different things; the first is Geiger, the second is anything out there. Kufrin asked if the bottom one includes Geiger. Moneypenny said �a little bit.� Kufrin felt media monitoring was all inclusive; Jarosh answer that it�s as inclusive as possible. When asked about specific articles, Jarosh said, �If you find something we�re not tracking, let us know.� Kufrin asked if Media Monitor picked up the value of the 500,000 inserts. Moneypenny said no, because that�s paid advertising, not editorial; anything we pay for is not counted in numbers. Kufrin asked how we determine return on investment for paid marketing versus editorial marketing. Jarosh said his department tracks things that are different than Denis�s marketing campaigns.

Report by Finance Committee and Representatives of Associated Bank on Current Investments and Products
Nelson introduced Associated�s Julian Lemue and Joe Hockers to address questions about the TZC�s involvement with products, security, etc. The Finance Committee had already met with them and quizzed them about Associated�s status. Right now we�re in funds offering little return, but Associated will be introducing new products. Our goal is security, not maximizing yield. Associated had some handouts, made part of these minutes.

Nelson said our current fund has three tiers of yield. Now, we�re in the middle tier at 30 basis points, and we anticipate the next tier starting in July through October when the season picks up and we can go to a higher level. Hockers said it�s the $100,000 mark now, and we�re slightly below that top tier. That�s calculated at an average daily collected balance.

Kufrin said last year we were holding the money and reimbursing the DCVB; this year, it�s disbursement, so our held money is a much smaller amount. We hold money less than 6 weeks now. Nelson said it was also a different banking world last fall; a sweeps account worked well for us, earning money in excess of our monthly fees at the bank. Starting in November 2008, the fees are exceeding yield in sweeps, so Dianne alerted Associates and the sweeps were turned off. Essentially, the sweeps option is gone now. Lamue said until the rate rises with the economy, you can�t offset bank fees by doing sweeps. They�ll monitor changes.

Nelson said we�d revisit all the products and accounts in October/November when we�re drawing up the 2010 budget. When asked about comments on ACH filter and Positive Pay, Hockers said the ACH filter blocks unauthorized withdrawals/purchases against fraud. Positive Pay accounts for each check; there are 16 fraudulent checks per second issued now in the banking sector. Non-profits and businesses are affected. We do not have check fraud occurring because Positive Pay matches the checks against what�s clearing. We have unlimited FDIC Insurance protection and with insurance that Associated buys now. That�s good through the end of the year; beyond that, we�ll find out.

Larson asked the cost of the extra protections. FDIC insurance is $9.67 for a month, ACH is $20, and Positive Pay is $55. Kufrin said it�s a small price to pay to ensure no one is compromising the checks, routing numbers, etc. and that information is being sent to the bank as checks are issued. Hockers said the earnings credits offset fees.

Nelson feels Lamue and Hockers have represented Associated well and been most helpful. He feels positive about the relationship. Kufrin said the Finance Committee talked about the strength of the bank in relation to other banks; Nelson has been evaluating banks through bankrate.com to ensure the bank is well rated. Kufrin said the Finance Committee with continue to report back to the Commission about any changes in the way we�ll be operating. Kufrin thanked the Associated gentlemen; Lamue distributed handouts on the top 150 banks in the country, Associated among them. Lamue and Hockers left the meeting.

Compliance Committee
Tice noted that the minutes distributed were not corrected minutes; those will be forthcoming. The policy handed out has run into snags about assessing fines and penalties and how they will be disbursed. Vande Castle wrote a letter of sanctions imposed on non-permitted, filing late, or other violation of the reporting process. How do we allocate those funds once collected? It started out as easy question but there are penalties layered on top of sanctions. State statutes are straightforward but can be interpreted differently in conjunction with the ordinances adopted. Ordinances are different in respect to how sanctions are imposed and collected. 70/30 is standard, but if we collect past due tax and interest, how is that allocated? The Commission/staff/legal/account fees are also involved. Does recovery of those additional costs get allocated back under 70/30 split or with the Commission?

Room tax is clearly under 70/30 split and any interest collected, 1% interest. But when get into accessory penalties, it�s very different; e.g., a percentage up to $5,000 of past due tax. In some, that would be distributed under 70/30 and others it wouldn�t. Do we need to modify ordinances? One split is that some communities had a sanction �fraud penalty� briefly talked about in the statute; that is, fraud by knowingly filing false reports. Some have 5% penalty or 50% penalty. Vande Castle said there are 13 different items that can be collected on; some are State statute or ordinance as to how they�re allocated; others have no guidance for allocation. Some local ordinances saying that tax money collected includes just the revenues recovered; others define it as penalties and interest. What defines �penalties�? Is that collection costs incurred by Commission? Lensert said currently any late fees and interest have been following normal split; now we�re coming into compliance issues, and these are new issues for us.

Kufrin asked if a table could summarize statute versus ordinance. Vande Castle will summarize it into a flow chart to be seen more clearly; the letter was his starting point. Kufrin said the goal for Compliance was to come up with that kind of guidance through the attorney, so we can give someone a penalty schedule � court costs, first offense, second offense. Tice said it would be better to get all ordinances changed or have our policy conform to each municipality. They�ve found three different versions; Washington Island amended it to the more recent members joined but not quite the same. Some had no allocation answers; there�s authority for the Commission to make that determination. The Commission has its own costs above and beyond normal practices; if TZC incurs $10,000 above normal, do we reimburse ourselves or allocate? Larson said it makes common sense that expenses we pay out would come back to us first, then distribution as normal. Isn�t it the municipalities� responsibilities to follow up as well?

Kufrin�s said the Intergovernmental Agreement was best at the time in May 2008. Now we�re finding things not working as well as they could. If communities want compliance enforcement, we may need to have standard compliance section for everyone to adopt. They are two different sections of legal: normal legal fees that the Commission incurs by doing business, and then compliance. The Finance Committee will change the budget to reflect legal services versus compliance legal services. Vande Castle said this was expected because of the large number of municipalities and what�s involved. He�s been involved with other groups� responsibilities, such as Lambeau�s group, and it was 80+-page agreement that have turned into lease agreements that have been amended 47 times. We�re breaking new ground; not a lot of tourism zones that fit our scope.

Tice said the Committee is looking at shortening the period up for compliance to a total of a 30-day period. First letter gives 15 days to make a correction; second letter is 10 days; third letter is 5 days, after that, litigation. Kerber Rose and Dianne are the TZC�s hired entity, so to keep Dianne from having to explain or justify something, their company should never have any meetings directly. If e-mail or regular letter, followed up with certified letter. All should be form letters or canned phone calls. Kirkland asked what level infraction is worthy of how much enforcement, since a certified letter is more than $5 to send; Vande Castle noted that even a certified letter can be charged back to them. Tice would like the commissioners to look over the draft, take notes, and let Tice know what they feel. Should the Compliance Committee take full action or involve the Commissioners? Consensus was that once a property gets into litigation, it�s public record and the Commission should be notified.

No matter what, every item should be documented and the Committee notified of all actions, right up to the point of requesting litigation from the Commission. Nelson is impressed with the path. We�re going to end up asking for uniform ordinance amending for compliance. Tice agreed, so the policy has to encompass everything and then amend the ordinance. Vande Castle said to include court costs, litigations�any money above and beyond just sending out notices�as part of the expense of that property to the Commission. Interest and tax collected should be split on 30/70, as originally written, but extra costs may come back to the TZC since we did obtain an Amendment assigning authority to us to collect that money. Nelson asked Vande Castle if there�s an ethical dilemma in incentivizing a Commission to pursue compliance. Vande Castle said that came up, and the structure is there to recover costs; it�s somewhat modeled after State sanctions in collecting sales tax. In some of the sanctions, we�re charging 24% interest plus up to $5,000 fee, plus all collection costs. It�s almost overkill. Is it worth going after someone for $1,000 when our net costs could be $7,000?

Tice said after cases go through court and it becomes public, those out of compliance see all the money and court costs, they�re not going to go that route. Maybe that would be enough at that point. We did have permits good for 1 year, and then went to a five-year permit. If we pull a permit, there may be legal problems doing that, too.

Discussion on Current Comparable Occupancy 2009
Coulson asked about performance evaluation; occupancy results are the best way of determining and evaluating our marketing efforts. If someone�s not filing on a timely basis, we�re getting older information that�s adjusted/unadjusted. In evaluating the DCVB marketing efforts, if several permit holders are not complying, the statistics don�t show the whole picture. Larson and Lensert said if larger properties are late, that would skew statistics. Moneypenny said the late collections aren�t in these numbers; we�re down just $800 last year compared to last year. ADR is down.

Moneypenny said $75,000 was held back as a cushion; he needs to know if $75,000 is always going to be kept out? Kufrin said no, that will be disbursement. Lensert said it�s still being held in reserve; the plan was to hold it 5 months and then release it, so that period is ending now. Nelson moved to disburse the $75,000 by July 1; Larson seconded. Lensert said to keep in mind that some Commission expenses came earlier than anticipated. She feels more comfortable doing it at the July meeting to match up with other payments. Nelson and Larson retracted. Nelson moved to make the $75,000 disbursement to the DCVB at the July meeting; Larson seconded. Vande Castle said it should be on the agenda to review and act on it. All ayes.

Nelson moved to accept the Kerber Rose reports; Goss seconded. All ayes.

Consideration of Ad Hoc Committee to Develop Performance Evaluation Process for DCVB
Kufrin talked about micromanagement versus a too-loose diligence. He�d like to have an Ad Hoc committee to look at specific measurement standards that compare Door County to comparable markets, so we can convert these measurements into performance goals. The Ad Hoc should agree on the factors and talk about standards to apply, then report back as to how the DCVB measures up to those standards. The standards should be separate versus the measurements and goals. The TZC should establish the standards and measures for our vendor; even though the DCVB has the Strategic Conversation, the TZC shouldn�t rely only on those measures (good as they may be) but formulate our own measures and quantify them. Kufrin felt the suggested members of the committee�Kufrin, Nelson, Skare, Holtz, and Larson�would give a diversity of opinion.

Kufrin tried to come up with timeline for finalization and hoped to return to the Commission from the Ad Hoc by August 20th. Benzshawel agrees that the vendor should not establish its own goals. Nelson said two months ago, there was a debate about going into closed session to discuss DCVB effectiveness; he believes that establishing standards should avoid this and dovetail nicely. Moneypenny said an Executive Committee member from DCVB could sit on the Ad Hoc. In his 20 years� experience with measurement, their current method is the way he has always worked, but if the TZC can find a new yardstick, he�s all for it. Coulson agrees and that we probably will not find new methods but there may be different goals. The DCVB does not have a statement on how much goes back to the communities. How are we doing versus other communities? If we set that, is the data possible to get? How doable would our goals be? Nelson felt it would be awkward to seat a member of the DCVB on the committee but rather have a liaison with whom the TZC could meet for input and coordination.

Kufrin stated that part of challenge is that the Strategic Conversation has many goals, and in order for the DCVB to be successful, all goals have to be met; however, many are just operational. Should a membership goal for DCVB be a concern for us? Should measurements be done once a year? He has no problem with a liaison from the DCVB to sit in on Ad Hoc but the final measurements and goals should be driven by the Commission and not by the vendor. Nelson moved that we form an Ad Hoc committee with the roster proposed and make every effort to meet with an official liaison from DCVB Executive Committee. Benzshawel seconded. All ayes. Larson is willing to serve. LeClair felt Stayton may be good.

Consideration of Approving Reports and Payables
Lensert said two bills came out after the written report, an ad for the Pulse and the Associated Bank credit card statement. Larson moved and Goss seconded to approve the Reports and Payables. All ayes.

Consider Motion to Convene into Closed Session pursuant to Wisconsin State Statutes, Section 19.85(1)(a)(f) or (g) to Consider Enforcement Action
There was no need for a closed session.

Adjournment
Nelson moved to adjourn, LeClair seconded. All ayes. The meeting adjourned at 12:15 p.m.

Kufrin reminded the commissioners that the next meeting is July 16, 9 a.m., at the Village of Egg Harbor.

Respectfully submitted,

Kathy Kirkland
Administrative Assistant

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