Door County Tourism Zone Commission : Meeting Minutes

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May 14, 2009 Door County Tourism Zone Commission Meeting - Minutes

DOOR COUNTY TOURISM ZONE COMMISSION
MINUTES OF MAY 14, 2009
City of Sturgeon Bay/Community Room

ACTION ITEMS:
Tice moved and Nelson seconded to approve the Agenda as submitted. Motion passed unanimously.

Nelson moved and Tice seconded to approve the April 16 minutes as submitted. Motion passed unanimously.

Tice moved and Nelson seconded to place the Finance Committee�s April 27 minutes on file as amended. Motion passed unanimously.

Tice moved and Neddersen seconded to accept the Administrative Assistant�s report as submitted. Motion passed unanimously.

Larson moved and Johnson seconded to accept Schenck�s 2008 Audit/Management Letter as submitted. Motion passed unanimously.

Tice introduced a Resolution for the Compliance Committee authority but removed his motion when it was agreed that the Committee would present such Resolution concurrent with its compliance policies.

Consensus that the DCVB should edit its map to include all Southern Door Zone municipalities by name.

Consensus that a Legal Notice, written by Tice, should be placed as ads in the Advocate, Peninsula Pulse, Door Reminder, and Washington Observer regarding compliance of lodging owners regarding the room tax ordinance.

Consensus that the DCVB Board members be invited to the TZC meeting to evaluate the Visitor Bureau performance and reports.

Nelson moved and LeClair seconded to accept the Kerber Rose reports and approve payables. Motion passed unanimously.
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Committee Members Present by Roll Call: Bob Kufrin, Mary Boston, Bryan Nelson, Mike Johnson, Sandy D�Amico, Jeff Larson (9:10), Nedd Neddersen, Diane Jacobson, Pauline Cyrus, Bill Weddig, Little Bit LeClair, Chuck Tice, Tom Benzshawel, Dave Holtz, Richard Briggs

Excused: Dick Skare, Nancy Goss, Carol Stayton

Absent: Andy Coulson, George Delveaux, Sarah Sawyer, Tom Tostrup, Edson Stevens, Amy McClelland, Nora Zacek, Debra Jeanquart

Also Present: Mike Konecny, Schenck SC; Bruce Hill, Mary Denis, Jon Jarosh from Door County Visitor Bureau; Dianne Lensert, Kerber Rose; Kathy Kirkland, TZC Administrative Assistant

Call to Order
Chair Bob Kufrin called the meeting to order at 9:08 a.m. and noted that a quorum was present. He stated he�s trying to find out from our attorney how to post an Executive Committee agenda simultaneously with a regular Commission meeting so we can take action on urgent business if a quorum is not present; Vande Castle will send language for that.

Welcome New Committee Members
Kufrin welcomed Pauline Cyrus from Gardner who is taking over Mark Stevenson�s role as Commissioner. He also thanked Benzshawel for providing snacks.

Approval of Agenda
Tice moved and Nelson seconded to approve the Agenda as submitted; all ayes.

Approval of Minutes of April 16, 2009
Nelson moved to approve the April 16 minutes as submitted. Tice seconded. All ayes.

Approval of Finance Committee Minutes of April 27, 2009
Tice moved to place the Finance Committee�s April 27 minutes on file; Nelson seconded. Nelson noted that on pg 1, line 13, the next meeting of the Financial Committee states that it�s June 9 at 10 a.m.; it has been moved to 8:30 a.m. All ayes.

Administrative Assistant Report
Kirkland asked about getting an online subscription service that would track down cell phone and unlisted numbers, since many ads for rental include these numbers. Kufrin said it�s something the Compliance Committee should discuss along with its ongoing policy. Kirkland reported that all but one of the campgrounds in a previously gathered list were permitted; one holdout has been notified but not yet heard from. She reported 12 new permits since the April meeting representing 31 units. An update on the annual meeting at Crossroads is that Top Shelf will be catering and that she has done a �test� e-mailing to check for bad addresses. Permit holders without confirmed e-mails will get their Annual Reports/Audit by regular mail. Tice moved to accept the Administrative Assistant�s report as submitted; Neddersen seconded; all ayes.

Presentation of 2008 Annual Audit by Michael Konecny, Schenck Business Solutions
Kufrin said in late 2007/early 2008, the Tourism Zone Commission solicited proposals from accountants who had a history of working for municipalities; Schenck SC was selected as auditor. Mike Konecny of Schenck and the Finance Committee and went page by page on April 27 to answer questions ( 2008 Audit and Management Letter are made part of these minutes).

Konecny reiterated the main points of the audit: Page 1 is standard auditor�s opinion; third paragraph says that the financial statements were presented fairly and nothing was incomplete. Statement of Net Assets (balance sheet): 2008 had cash in Accts Receivable and Payable because the money was in transit; the TZC has only a small reserve fund. The significant difference between 2007 and 2008 reflects the accounting method to the DCVB; in 2007, it was done on a �reimbursed� basis; in 2008, the Zone used �disbursement� or pay-as-you-go.

Page 4 reflects a Room Tax collection of $2.6 million compared to $2.3 in 2007, which was a short year and had fewer municipalities. The anomaly of the Operating Loss of -$905,100 was disbursement of 2007 monies in 2008. Kufrin said the large balance at the end of 2007 was paid over the first five months of 2008. We no longer carry a large end-of-year balance. This was partially done because permit holders questioned why the Tourism Zone would hold money; we should not be carrying a reserve fund. The money now goes to the DCVB.

Page 5 � Statement of Cash Flows. This is different from page 4 because it�s shown on a cash basis.

Pages 6-9 � Legalities about municipalities and our accounting policies. There is accounting language on how statements are put together. Note B on page 8 is cash and investments; Note C talks about DCVB agreement and obligation to give them 66%. The Finance Committee meeting on April 27 noted that our agreement with the DCVB requires an annual audit report; we�re waiting for that.

Page 10 is schedule of Room Tax Revenue by Municipality; this schedule will be added to as the years go on. Again, 2007 was a short year, starting in May for tax collection.

Konecny explained the Management Letter: For government audits, Schenck issues internal control and compliance, checks and balances. Last year, the comment was that the Commission members should be involved in reviewing the financial records, which did occur this year. Everything went well. Schenck�s team checked specific properties� reports as tests; the current arrangement is working well. They found no internal control weaknesses or other negative findings.

The only open item is audit report from DCVB; Konecny will be glad to review it. Kufrin thanked Schenck and especially Dianne Lensert and Kerber Rose for keeping everything in order and the countless paperwork they do.

Larson moved to accept the 2008 Audit/Management Letter; Johnson seconded. All ayes.

Report by Door County Visitor Bureau on Marketing Efforts
Denis said e-marketing is beginning to work and the website hits are catching up with aggressive marketing and advertising. Kufrin said Legislative Days in the Madison paper talked about summer vacations; many are not planning them. Denis said vacationers planning to spend time closer to home (�staycation�). We�re close enough to metro areas to get away for long weekends; anecdotally, reservations are good.

The insert (herein attached) is the fire sale ad that is currently running in all major nearby markets including targeted Wisconsin ZIP codes; it�s a 500,000 circulation with co-op ads on the back. The Certified Ambassador brochure begins in May 19, and there may be added classes and more training in the fall. The training is not only on the customer service but knowing the county�s resources so the Ambassadors can cross-promote. There�s an increase in tourism spending of $80 million from 2007 to 2008; this is a new study, more in-depth than in the past. Door County was part of the larger picture, and the DCVB paid to have numbers examined more accurately to this county. There are three websites included in the report to download the full report and one for the DCVB spring marketing campaign and ads. The third is for the Ambassador program.

Neddersen asked about the major indicator of our share of Door County�s total state tourism revenue; it says we have 3.7% of the total. What was it in 2007? Denis is not sure; she will find out. Most communities stayed flat or went down. Nelson said Moneypenny�s report at the press conference included the fact that we�ve moved up in ranking; we were behind Lake Geneva and we�re now No. 6 behind Brown, Milwaukee, Dane, Sauk, etc. We�re in good position, Denis said.

Kufrin asked if study results that the DCVB paid for were validated. Denis said the state research director and others questioned it; it�s extrapolation, a bottom-up study. They had questions about how numbers were broken out. Kufrin said the numbers compared to TZC numbers are overstated by 30%; many numbers in their reports don�t match the actual numbers generated by tax collections. Denis isn�t surprised; Davidson Peterson reports have been compared to other reports that don�t match. It�s research the state uses as a guideline from the overall state tax collection, plus interviews with lodging members and visitor sampling, and that determines the numbers. Kufrin said it was substantially off; how did they come up with 8,700 employees? Bruce Hill has gotten comments on the same thing. It depends on how people look at the study; Hill tells people not to get overly focused on raw numbers. We need to celebrate the flatline volume of Door County tourism from 2001 on, which now has been broken. The percentage is not as important as the upturn.

Denis said there were questions from Jack about employment part-time equivalent being extrapolated; Jack can address that firsthand. Weddig had the same question about $80.8 million in 2008, and we budgeted $3.17 million for all income; if you took 5.5% of the $80.8 million, that�s 4.445 mil, which is more than $1 million above our revenues. Denis said there have been questions over the years, and many reports have been used to measure economic impact. The Council on Tourism did an in-depth study and decided to stay the course because it�s a report used for many years. Hill said his background in marketing research shows that following trends is more worthwhile than just looking at numbers, which is a sampling methodology. He agreed with Hill that comparison is more important than percentages. Nelson asked if they�re going to use the same reporting and methodology next year to have a baseline; Denis said yes.

Denis said the PowerPoint is being worked on for the Annual Meeting. Kirkland said the Annual Audit/Report should be mailed 10 days ahead of the meeting, but timing isn�t going to allow for that. The Conversion Study from eBrains has come; the whole report will be forthcoming as well as an Executive Summary. The Finance Committee said it�s important that it be in lay language.

Nelson said as an innkeeper he�s excited about what they�re doing; the insert ad is excellent. eBrains is ramped up, the half-page in �O� magazine will drive business. The DCVB is doing e-postcards; the first was Festival of Blossoms, and the second was on behalf of the lodging properties. There was a 50% click-thru when 2% to 3% is average.

Tice questioned the map of Door County. Denis said it�s from the Visitor Guide, and the color coding matches the communities. Tice is concerned about Northern Door and Sturgeon Bay are lumped in two groups; the communities in Southern Door are not delineated. Denis said all events are listed separately, but they will change the map for future. Denis said we need business entities in the smaller Southern Door municipalities to develop their brands; they do not have business entities to do that now. Kufrin said to just use different shades of red with all listed. Benzshawel asked if it could be done on the website; Denis said it would be done right away. Johnson thanked those who speak about the county as a whole. Kufrin said everyone should speak up with concerns.

Kufrin introduced Bruce Hill as new Community Marketing Fund Communications and PR. Hill started on Monday as a liaison between the DCVB and the communities; he�ll be disbursing funds from the CMF budget. All the budgets are ready; Hill said he has contacted local marketing communities and is setting up meetings in various locations. Initial meetings will be a needs assessment.

Report from Finance Committee
The Committee is having a June 9 meeting at 8:30 a.m. with Associated Bank�s representatives to talk about investments and current status.

Compliance Committee
Tice stated they have had three meetings so far, the first one with Vande Castle about policies and chain of command. Kerber Rose and Kirkland had given reports on what is currently being done and Compliance will work again with them. The attorney was concerned that Lensert not be personally involved with any of the clients; no discussion unless called by TZC or Commission to explain something. Tice put forth a Resolution with a chain of command. The Resolution gives the Commission authority to adopt the policy; all compliance matters would go through the Compliance Committee and then to the TZC before any legal action is taken. Confidentiality in a large body is an issue, and Vande Castle also advised that confidentiality is utmost until it becomes a civil case.

Kufrin felt that the direction is backwards; the Compliance Committee should come up with procedures and policies, and then come back to the TZC to approve the action Resolution. He felt the Resolution as it stands can be implemented without further direction because policy is not written yet. Tice said he doesn�t want to rewrite the policy; the Compliance Committee should be in control to the point of legal action. He does not want to give specific steps; for example, incorrect report, Lensert would know first, and she would contact the Compliance Committee and Kirkland and recommendations. Then Kirkland sends a letter or phone call and so on. If there�s no response, Kirkland turns it over to the Compliance Committee. It�s standard procedure. If a permit holder refuses to comply and it�s worth the effort to pursue, it would come back to the TZC to proceed into court action. He has no problem with the Compliance Committee giving a monthly report as to its progress without naming names.

Kufrin felt there has to be a written critical compliance factors and steps to follow. A list of the actions and decisions should be spelled out; there are some rules in the bylaws but the Compliance Committee can recommend changes. Tice said they are going through all bylaws, etc., and highlighting fees. They�ve picked the top categories such as non-permitting, people paying late, or not giving numbers. Larson said it�s in their heads but we need an SOP for each person, �Here are the three steps.� Tice agreed and pointed out the current Resolution does say �when the policy is adopted� but gives a direction to head. Benzshawel agreed that the process should be written before we delegate authority. Boston said we�re discussing semantics; the wording of the Resolution may differ but it was requested. She said all information has been collected and will be even-handed for enforcement. The Committee is meeting again on Monday. Tice has no problem presenting all at once. He withdrew the Resolution.

Wedding asked if the deadline for compliance would take into consideration the date the municipality joined. Tice said at this point, the entire county would have 30-day grace. What about past collections? Tice said if they�re behind in payments, they could be pursued. Benzshawel asked if there�s a state law regarding sheriff�s department involvement. Kirkland said the sheriffs are on hand for audits but not beyond that. Tice said the county�s authority has been passed on to the TZC by all the municipalities. Johnson said under some circumstances, can towns and villages assess for collection? Kufrin said in 2007, different communities had different ideas on enforcement. We said if it comes to the TZC, the policy would be uniform across the Zone. The legal cost of enforcement would be borne by us. We have to take someone to court. (Holtz left the meeting.)

Tice felt the TZC should use different opportunities to get a legal notice out to the public as a press release or on cable TV channels, etc. Perhaps mailing them in tax bills in the fall. Kufrin will put it on the Sister Bay website; perhaps other communities should do the same. Second attachment is a Legal Notice, which will be put in the papers in ad format by Kirkland

Wedding liked the idea of the legal notice out to everyone, but everyone who gets it knows if they�ve been renting, there�s a grace period and then they�re �caught.� Kufrin suggested that the notice is that you have to be in compliance; if not, you�re subject to prosecution. Tice said just remove the deadline date; if some say they aren�t aware, we can ensure all property owners get it and no excuse after that. Kufrin said to ask all municipalities to put on their websites, on standard bulletin board/library/fire hall. Boston said most do put inserts in the tax bills; that would accomplish out-of-state notification to get all to understand the responsibility. Tice said it could be done annually. LeClair said it would be a direct notice to owners but if others are taking care of renting, they may not be notified if they�re in violation. Owners need to be made aware that they�re in violation. Tice said the agents would also be notified. Kufrin said it would be 40,000 inserts; who pays? Boston felt the municipalities should take responsibility for their own since it�s their ordinances. Boston and Tice said might have to change the agreements with the municipalities to make it mandatory to post the Legal Notice. Tice will readjust current Legal Notice to go in the Advocate, Pulse, Reminder, Washington Island papers. It will probably be $150 per ad.

Discussion on 2009 Annual Report
Benzshawel asked if we could have Moneypenny talk about where the report money comes from. Kufrin said the report appears everything went up $84 mil instead of stating that it�s a benchmark and the economic impact was $484 mil; that�s a different spin. Kufrin said our numbers and their numbers don�t match; that�s the challenge. Nelson said you can�t explain slice of pie because room tax is strictly lodging; Moneypenny can say we drove day trippers.

Kufrin stated the TZC�s most important task is to review performance of DCVB; we�ve waited for state numbers to validate performance of previous year, so we need to have a performance review against the standards and objectives the DCVB set, which we did in May/June 2007. Kufrin said he�d like to see the state numbers separately to match their numbers to our specialized numbers. Johnson said Moneypenny mentioned vehicle traffic was down 10% last year; projections show increases. Kufrin said if we don�t believe the indicators are consistent, we have to talk about that with DCVB. That will be an agenda item with the performance discussion. Larson asked about our goal with the DCVB; they have a Board that evaluates them, we might seem to be micromanaging. Shouldn�t the DCVB evaluate its own program? Kufrin said he has no idea what their Board does; Larson said maybe their Board should also give a report. Neddersen said we approved the Strategic Plan and we get indices they can report on; the key is to look at the data and focus on that. Kufrin said he�s interested in terms of statistics, do stats match with the things we�re seeing and goals they�ve set? The DCVB has 36 members and there are 26 here, there are a lot of eyes, but he does not know what info goes to DCVB Board or if they analyze or make changes in proposals. We have to follow the entity agreement and say we�ve thoughtfully analyzed their data.

Benzshawel asked if the DCVB is acting on behalf of membership instead of permitted owners? You have to be a member of DCVB to be a Board member. We�re charged to represent the communities� interest. Benzshawel said the mix of membership in the DCVB, and the Board represents the memberships� interests. Kufrin said that could be potentially at odds with our interests. Larson asked if that Board should be reporting costs. Kufrin asked whether the TZC should meet with their committee/Exec Committee of fewer people. Can we get their Board members to attend the annual meeting? Maybe a few will show up. There was general agreement that we should invite their Board members to our performance meeting. Kufrin said we need to balance our responsibilities; there�s nothing other than their propose performance goals; we haven�t taken the steps that Brookfield did in asking their marketing entity to provide. There were key aspects to Brookfield that might work for us.

Weddig wants to know that their Board is asking similar questions, e.g., the report, lodging numbers, etc. He�s concerned about the spin on the economic impact report. Kufrin is not sure what the DCVB Board is asked to review and comment. Weddig asked if the TZC is obligated to talk about projections for 2009. Kufrin would rather not be the one to make those promises; it should be the marketing entity and Moneypenny. Lensert added that we�re the overview, not projections.

Current Comparable Occupancy 2009
Lensert said the reports will continue as previously, with the box at the bottom to update for late reports overall. Unadjusted versus adjusted has their own difficulties; look at trends more than exact numbers until they�re readjusted. Adjustments will be done twice a year. Included this month is a Financial Statement from Kerber Rose, a standard report they have to issue with standard verbiage. It�s not an audit, not a review; it�s standard language and adding a balance sheet.

Kufrin said Kirkland included in this month�s packet a report as to composition of membership; permit types. In May 2008, total permits were 696; May 2008, it�s up to 814. Last year, total units 3,844; now up to 4,626. Kufrin is asking the Department of Health for their list of permit holders. Department of Revenue still not contacting us; Weddig feels it�s a lack of manpower to follow up.

Consideration of Approving Reports and Payables
Nelson moved to accept as reports and approve payables; LeClair seconded. All ayes.

Kirkland gave update on non-compliant properties. Maple Grove Motel has been given to the courts; Outback and Dogg House have paid, and Beach Harbor Resort is in the process of paying all due but has not given us any statistics on rooms. Nelson felt we should advertise these legal actions in the press. Court dates are coming up with properties; we should wait until there are judgments before it�s released.

Neddersen urged Compliance Committee to get language about watching the budget regarding legal fees and stay within budgeted guidelines; for 2009�s budget, legal was about $9,000 and half of that has been used. If Vande Castle can answer questions by phone, etc., that would be best so he doesn�t have to travel. Kirkland noted that court costs can be added to those we legally pursue, as well as our own money in trying to collect; it was noted that that falls in with the option of the fine: �25% up to $5,000,� although Vande Castle warned not to set fines and penalties at the top, because the judge may rule and lower the fines. Pick a medium and, on some cases win and some lose. Tice asked if the fines and penalties get divided 70/30? Lensert said the money recouped from room tax fines and penalties is not addressed thus far.

Tice said that Compliance Committee meetings should be posted as usual, and Vande Castle felt it was a good idea that the notice is definitely posted at the place where the Committee is meeting. Also, Vande Castle felt that Kirkland�s name shouldn�t be on the posting; it should be the Secretary�s name, LeClair.

Consider a Motion to Convene into Closed Session
No closed session was necessary.

Adjournment
Larson moved to adjourn; Boston seconded. All ayes. The meeting adjourned at 11:10 a.m.

Respectfully submitted,

Kathy Kirkland
Administrative Assistant

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