City Council - Workshop Meetings

City Council Workshop Meeting Ash North and South Conference Rooms October 19, 2022 | 6:30 p.m. This City Council Workshop meeting is taking place virtually and at Woodbury City Hall in the Ash North and South Conference Room. Members of the public may attend the meeting in person and may also join the meeting using a PC, Mac, iPad, iPhone or Android device. Watch the Live Meeting Public comments will be accepted during the meeting both in person and by using the link to the virtual meeting to join the meeting and then submit your questions via the online Q&A feature within the meeting. Questions regarding the meeting will be taken between the hours of 8:00 a.m. to 4:30 p.m. at 651-714-3524 or at council@woodburymn.gov. Questions received after 4:30 p.m. will be responded to in the next three to seven business days. Please note that all agenda times are estimates. 6:00 p.m. Dinner – Birch Conference Room Workshop Agenda 6:30 p.m. 1. 2023 Employee Medical Insurance Benefits 22-253 7:15 p.m. 2. Destination Marketing Organization Business Plan 2023-2028 22-254 8:00 p.m. 3. Break 8:10 p.m. 4. 2023 Legislative Initiatives 22-255 8:40 p.m. 5. Administrator Comments and Updates1 8:45 p.m. 6. Mayor and City Council Comments and Commission Liaison Updates1 8:50 p.m. 7. Adjournment 1 Items under comments and updates are intended to be informational or of brief inquiry. More substantial discussion of matters under comments and updates should be scheduled for a future agenda. The City of Woodbury is subject to Title II of the Americans with Disabilities Act which prohibits discrimination on the basis of disability by public entities. The City is committed to full implementation of the Act to our services, programs, and activities. Information regarding the provision of the Americans with Disabilities Act is available from the City Administrator's office at (651) 714-3523. Auxiliary aids for disabled persons are available upon request at least 72 hours in advance of an event. Please call the ADA Coordinator, Clinton P. Gridley, at (651) 714-3523 (TDD (651) 714-3568)) to make arrangements.  1 City of Woodbury, Minnesota Office of City Administrator Council Workshop Letter 22-253 October 19, 2022 To: The Honorable Mayor and Members of the City Council From: Clinton P. Gridley, City Administrator Subject: 2023 Employee Medical Insurance Benefits Summary The City of Woodbury’s employee benefit program year ends on December 31, 2022. The City has purchased competitive medical insurance from the Public Employee Insurance Program (PEIP) since 2019. Based upon significant claims experience, the 2023 premium rates will increase by 50 percent. Since being notified by PEIP on September 30 of this significant rate increase, staff has conducted analysis and research regarding this issue and how best to proceed. The City Council is scheduled to authorize the employee medical insurance benefits at the October 26 City Council meeting, then providing for employee open enrollment immediately following that action. Recommendation Staff recommends renewal with PEIP, retaining the current premium cost splits, but reducing the City’s HSA contribution by 25 percent. Please see the recommendation detail beginning on page 3. Governance Mode • Fiduciary - Stewardship of tangible assets, oversees operations and ensures efficient and appropriate use of resources, legal compliance and fiscal accountability. Fiscal Implications With the medical insurance premium renewal set to increase 50 percent, the total cost increase above the 2023 budgeted employer premium contributions amount, at the current cost-sharing percentage, is estimated to be $918,100. It is anticipated that there will be a 2023 budget gap of $825,000 for the General Fund. City staff is proposing the use of the General Fund $115,000 budgeted contingency, retention of the $500,000 Capital Improvement Fund (CIF) transfer, $188,500 reduction of the employer HSA contributions, and $21,500 from other labor reimbursements to resolve this funding gap. Council Workshop Letter 22-253 October 19, 2022 Page 2 The retention of the underspending in the General Fund is just a one-time solution for 2023. Any future solutions for the continuation of $500,000 transfer to the CIF will need to be identified again in the upcoming fiscal year. The exact dollar increase for any of the benefit plans is dependent on employee enrollment choices during open enrollment and throughout the year. Policy There are no corresponding City of Woodbury policies for this Council item. Public Process This Council meeting will be the first public process for this item. Background As a local government, the City of Woodbury’s mission is accomplished largely by human resources. In order to retain and recruit talented municipal employees to accomplish the City’s mission successfully, the City provides a competitive wage and benefits compensation package. The benefits portion of this overall package includes employer provision and participation in group medical insurance, dental insurance, employee assistance services, life, short-term and long-term disability insurance. City staff consistently monitor wages and benefits to ensure that they are both competitive and balanced with overall City budget objectives. Medical insurance premiums and renewal increases are largely based upon actual claims paid compared to premiums paid over the past two years; this is called the loss ratio. Over the course of the past six years and prior, the City of Woodbury’s loss ratio has been poor, significantly so the past two years. In 2018, the City of Woodbury re-marketed the medical insurance benefits. Only three of eight providers chose to submit a quote for Woodbury business - Healthpartners at 29 percent, Blue Cross Blue Shield at 71.4 percent and Public Employee Insurance Program (PEIP) at 3.5 percent. The City elected to go with PEIP in order to leverage a programmed method of renewal ratings whereby Woodbury would be rated amongst all employees in the PEIP pool (50,000) instead of individual claims experience. At that time, the City also moved to only offering a High Deductible Health Plan with a corresponding HRA/VEBA and HSA contribution. These actions were accomplished in order to put the City on an appropriate long-term strategy to hopefully minimize annual cost increases from year-to-year. This strategy has worked for several years. Even with ongoing high loss ratio, through PEIP’s structure the City realized 10 percent and below increases to medical insurance (close to medical trend for these years). Unfortunately, in 2023, PEIP is unable to continue that underwriting model. Over the last two years, groups have left the program for expected short-term savings, rather than continuing to benefit from the long-term solution of a single pool. Most groups leaving had better than average claims experience, leaving higher risk groups remaining. The benefit of pooling all groups together is only realized with long-term commitment to the pool. For 2023, PEIP has now had to change to basing the renewal by each group’s own claims experience. For the City of Woodbury, the two year loss ratio is currently at 180 percent. This means that to merely break even, an 80 percent increase in premium would be required. The proposed increase from PEIP for medical insurance premiums in 2023 is a 50 increase to the premiums. Council Workshop Letter 22-253 October 19, 2022 Page 3 Options have been reviewed by staff in conjunction with the City’s Insurance Consultant CBIZ. Unfortunately, the large loss ratio make logical solutions such as re-marketing and self- insurance unrealistic at this time. Adding to the complexity of this issue is the City’s need to provide competitive insurance benefits. In recent years, Woodbury has experienced higher turnover rates and more challenging recruitments, with increased employee separations for comparable employment elsewhere, both in the public and private sector. Recommendation Detail 1. Cost-sharing Target Unadjusted, the City would bear 80 percent of the cost increase and the employee 20 percent. Recommended is lowering the employer contribution to the employee HSA per item 6, which lowers the City’s total medical benefits costs by 18.4 percent (General Fund and Enterprise Fund Costs). 2. Medical Insurance Provider Based upon the City’s loss ratio, re-marketing the benefits anticipate similar responses from the market to the current PEIP proposal. PEIP does offer very low administrative costs which does provide some savings. Staff is recommending the continued use of PEIP. During 2023, staff will be accomplishing significant research on other options and strategies. 3. Medical Insurance Plan Design The City offers a Qualified High Deductible Health Plan with a Health Savings Account. Employees pay the entire deductible initially then shared insurance to an out-of-pocket maximum. Health Plan Carrier and Primary Care Clinics are in four cost levels. Level 1 provides the most benefits and is the least costly with a:  $1,500 Individual/$3,200 Family ($3,000 per member) Deductible  $3,000 Individual/$6,000 Family ($5,000 per member) Annual Out-of-Pocket Maximum. A 2021 survey of the City’s comparable City market shows an average:  $2,071 Individual/$4,142 Family Deductible  $2,713 Individual/$5,668 Family Annual Out of Pocket Maximum. The City of Woodbury is near the average for deductible and out-of-pocket maximum employee cost requirements. PEIP only offers the one Qualified High Deductible Health Plan. This is their most cost-effective plan. Staff is not recommending a change to the City’s plan design at this time in order to retain the City’s competitive place in the market for retention and recruitment purposes. However, this is recommended to be reviewed as soon as practicable with possible changes recommended at that time. Council Workshop Letter 22-253 October 19, 2022 Page 4 4. Medical Insurance Premium Costs In 2023, the premiums will be the following: 2022 Monthly Premium 2023 Monthly Premium Employee $ 532.46 $ 798.69 Employee + Spouse $1,224.66 $1,836.99 Employee + Children $ 899.84 $1,349.76 Family $1,980.68 $2,971.02 A 2021 survey of the City’s comparable City market showed the City of Woodbury’s premium cost as being $265 lower for employee only coverage and $141 lower for family coverage. This is showing that the City’s cost for insurance premiums was within the average of the market at that time (2021). We do not have updated survey numbers to compare the City’s 2022 or 2023 monthly premiums. 5. Medical Insurance Premium Cost-Share The City provides the following percentages towards premiums: City Contribution Percentage Employee 85% Employee Plus Spouse 82% Employee Plus Children 85% Family 73% A 2021 survey of the City’s comparable City market shows the following average: City Contribution Percentage Employee NA Employee Plus Spouse 80% Family 72% The City of Woodbury has an efficient employee medical insurance program in that the City’s three bargaining units have “Me Too” clauses that stipulate that the City will contribute to the employee’s insurance benefits in the amount equal to the non-unionized employees. This system supports an equitable benefits structure for all employees. In order to retain market competitive placement and equitable benefits structure for all employees, staff is recommending the City retain the City contribution percentage. 6. HSA Contributions The City also provides a corresponding HRA/VEBA and HSA contribution ($2,000 employee, $4,000 all other tiers) in order to offset the medical insurance deductible and out-of-pocket maximum cost transfer to the employee. Council Workshop Letter 22-253 October 19, 2022 Page 5 City 2022 HSA Contribution Employee $2,000 Employee + Spouse $4,000 Employee Plus Children $4,000 Family $4,000 A 2021 survey of the City’s comparable city market shows the following average: City HSA Contribution Employee $1,879 Employee + Spouse $2,760 Family $2,609 Based upon the City’s over market contribution to the HSA contribution, staff is recommending the City’s HSA contributions be reduced in order to assist in the funding of the 2023 employer medical insurance premium increases. Staff is recommending that the HSA be reduced across the board by 25 percent: City 2023 HSA Contribution Employee $1,500 Employee + Spouse $3,000 Employee Plus Children $3,000 Family $3,000 This recommendation will result in approximately $188,500 in employer savings for medical insurance premiums. Written By: Jody Brown, Human Resources Manager Angela Gorall, Assistant City Administrator Approved Through: Clinton P. Gridley, City Administrator Attachment: Medical Insurance Primer  Office of the City Administrator Medical Insurance Primer The following primer is provided for the City Council regarding City of Woodbury Medical Insurance Benefits and history as of October 14, 2022: Loss Ratio that Inspires 2023 Renewal Medical Insurance Increase of 50% 2020 2021 Premium Paid $2,454,698 $2,682,313 Claims Paid $4,257,888 $5,027,855 % Difference/Loss Ratio 173% 187% Number of Claims Over $100,000 5 8 History of Medical Insurance Benefit Curtailment Description Year Medical Medical Curtailment Description Trend Increase 2004-2010 PEIP Pooled Insurance Option with low Administration Costs 2007 8.9% 5% Added High Deductible Health Plan 2008 9.7% 9.81% Added Contribution Requirement for Employee and Employee + Spouse 2009 9.4% 6.9% Changed Base Plan from $10 to $25 Co-Pay 2010 7.6% 3.84% Established 4 Tier System, Changed from July to January Renewal 2011 NA NA 2nd Half of 2010 Year 2012 7% 7.23% Remarketed 2013 5.7% 4% Reduced Increase by 4% because of Wellness Program participation 2014 6.5% 5% Reduced Increase by 4% because of Wellness Program participation 2015 7.8% 5.5% Remarketed 2016 7.8% 9% Rate Cap 2017 8% 7.19% Remarketed 2018 8% 8% Rate Cap 2019 6.16% 3.5% Moved to PEIP and Only Offered High Deductible Health Plan 2020 0% -2% PEIP HDHP Improved City Contribution Percentages 2021 12.98% 9.8% PEIP HDHP 2022 7.52% 9.8% PEIP HDHP October 19, 2022 Page 2 Medical Insurance Plan Design – Woodbury Provides Equitable Medical Insurance Plan Design to Comparable City Market. No Recommended Changes Deductible Out of Pocket Maximum City of Woodbury Single $1,500 $3,000 Average City Market Single Average (2021) $2,071 $2,713 City of Woodbury Family $3,200 ($3,000 $6,000 ($5,000 Member) Member) Average City Market Family Average (2021) $4,142 $5,668 Medical Insurance Premium Cost-Share – Woodbury Provides Equitable Premium Contribution to Comparable City Market. No Recommended Changes. City Contribution 2021 Average Percentage City Market Contribution Percentage Employee 85% (Unknown because of Cafeteria Plan Impacts) Employee Plus Spouse 82% 80% Employee Plus Children 85% NA Family 73% 72% Medical Insurance Premium Employee Cost – Woodbury Employees Pay Similar Premium Amounts as Comparable City Market. No Recommended Changes. 2021 2021 Average City Woodbury Market Employee Cost Employee $73 (Unknown because of Cafeteria Plan Impacts) Employee Plus Spouse $201 $296 Employee Plus Children NA Family $489 $541 HSA Contribution – Woodbury HSA Contributions are Above Average. Recommended Area to Assist with Increased Costs. City Contribution Average City Market Contribution Employee $2,000 $1,879 Employee Plus Spouse $4,000 $2,760 Employee Plus Children $4,000 NA Family $4,000 $2,609  2 City of Woodbury, Minnesota Office of City Administrator Council Letter 22-254 October 19, 2022 To: The Honorable Mayor and Members of the City Council From: Clinton P. Gridley, City Administrator Subject: Destination Marketing Organization Business Plan 2023-2028 Summary For almost 10 years, the City has reviewed and evaluated the potential of utilizing a local lodging tax to establish a Destination Marketing Organization (DMO), aka Convention and Visitors Bureau (CVB), to promote and market the City of Woodbury as a destination. The City has been unsuccessful to-date to receive special legislation for use of the local lodging tax for expanded purposes to support public recreation facility capital improvements. During this time, the City has grown and further developed into a destination with many high quality regional amenities including, but not limited to: the M Health Fairview Sports Center, Eagle Valley Golf Course, the soon to be renovated Central Park, shopping and dining opportunities, extensive medical services and as a location close to many other regional amenities. The City has an opportunity to further leverage these amenities, both public and private, to enhance the visitor experience in Woodbury and to attract new visitors or tourists. However, to do so would require the City to develop a new program of services focused on this work and a sustainable funding source to support such a program. The provided Woodbury DMO Business Plan provides the framework for the City to utilize the local lodging tax, without special legislation, to develop a program of services to market and promote Woodbury as a destination through a DMO. Recommendation Staff recommends Council review the Woodbury Destination Marketing Organization Business Plan 2023-2028 and provide feedback and direction on proceeding with ordinance consideration at the November 30 Council meeting. Governance Mode • Fiduciary - Stewardship of tangible assets, oversees operations and ensures efficient and appropriate use of resources, legal compliance and fiscal accountability. • Strategic - Setting priorities, reviewing and modifying strategic plans, and monitoring performance against plans. Focus is the “ends” rather than the "means”. Council Letter 22-254 October 19, 2022 Page 2 Fiscal Implications A special revenue fund and budget would be established and require Council authorization for implementation of a DMO and collection of local lodging taxes. The statutory allowed lodging tax is three percent. It is estimated that this would generate between $600,000 - $750,000. Policy Minnesota State Statute § 469.190, Local Lodging Tax Public Process  2013: Strategic Initiative 2013-2015 related to marking, branding and promotion of the City. Feasibility study completed by Zeitgeist Consulting and staff evaluated creating a CVB. Multiple Council workshops.  2014: Council decided to not proceed with establishment of lodging tax to fund a CVB.  2017: City began re-examining establishment of CVB. Included individual meetings with hotel management and two meetings with the business community.  August 16, 2017: Council workshop on Updated Analysis on Formation of a Woodbury CVB.  August 24, 2022: As part of the Council workshop packet, Council was provided Letter No. 17-221 dated August 16, 2017 Re. Lodging Tax.  Various meetings: Council approval of legislative agenda’s supporting special legislation regarding the local lodging tax. Background See the provided Business Plan for further background on DMO recommendations, local lodging tax requirements, DMO governance, DMO services, staffing and budget. Written By: Angela Gorall, Assistant City Administrator Approved Through: Clinton P. Gridley, City Administrator Attachment: Destination Marketing Organization Business Plan 2023-2028 Woodbury Destination Marketing Organization Business Plan 2023 – 2028 DRAFT -1- This page intentionally left blank -2-  Table of Contents Background and Recommendation...............................................................................................- 7 - Recommendation for Establishment of a Destination Marketing Organization (DMO) ....... - 8 - Implementation Timeline ...................................................................................................... - 9 - DMO Marketing Name .......................................................................................................... - 9 - Operational Challenges to the DMO ..................................................................................... - 9 - Operational Opportunities to the DMO ...............................................................................- 10 - DMO Purpose and Goals ..........................................................................................................- 10 - Roles of a DMO ..................................................................................................................... - 11 - Woodbury DMO Key Goals .................................................................................................. - 11 - Performance Measurement and Annual Reporting............................................................. - 12 - DMO Revenues and Local Lodging Tax ...................................................................................... - 13 - Local Lodging Tax .................................................................................................................... - 13 - Lodging Tax Special Legislation ........................................................................................... - 13 - Lodging Tax Collection ............................................................................................................ - 13 - Minnesota Department of Revenue (MNDOR) Tax Collection........................................... - 13 - City of Woodbury Tax Collection.......................................................................................... - 14 - Recommendation on Lodging Tax Collection Method ........................................................ - 14 - Woodbury Lodging Establishments ........................................................................................ - 15 - DMO Governance ........................................................................................................................ - 17 - Woodbury Recommended Governance ................................................................................... - 17 - DMO Governing Body...........................................................................................................- 18 - DMO Advisory Body .............................................................................................................- 18 - Financial Reporting and Tracking........................................................................................- 18 - DMO Services and Staffing.......................................................................................................... - 19 - DMO Services ........................................................................................................................... - 19 - DMO Staffing ........................................................................................................................... - 20 - DMO Proposed Budget ................................................................................................................ - 21 - Estimated Lodging Tax Revenues ........................................................................................... - 21 - DMO Expenditures ................................................................................................................. - 22 - Attorney General Opinions on Expenditures...................................................................... - 24 - -3- Appendix A: Example Websites ................................................................................................. - 27 - Appendix B: Proposed Annual Operating Budget ..................................................................... - 29 - Appendix C: Implementation Timeline ...................................................................................... - 31 - Appendix D: Minnesota Statute §469.190 Local Lodging Tax.................................................. - 33 - Appendix E: Department of Revenue Example Notice of Lodging Tax .................................... - 35 - -4- October 19, 2022 The Honorable Mayor and Members of the City Council City of Woodbury Subject: Woodbury Destination Marketing Organization Business Plan Dear Mayor and Council Members: The City of Woodbury is a destination that attracts visitors from outside the City for work, events, relaxation, sports, medical services, dining and shopping. Residents are also consistently seeking quality of life and new experiences in their own community. Leveraging the assets of Woodbury for high quality tourism and visitor experiences that result in community investment and economic development require an improved marketing and promotional effort to maximize that leverage. This Destination Marketing Organization (DMO) Business Plan provides the framework for the City Council’s consideration of a new sustainable funding source and the resulting services to be offered to market and promote the City of Woodbury as a community of choice and destination within the region. The City has a long history of using existing resources to the best of its ability to promote and share information about City assets, destinations and events. However, there is limited capacity without additional resources to fully realize the benefits of marketing Woodbury as a destination. We look forward to Council’s consideration and feedback about this plan and how to continue to make Woodbury a leading community in which to live, work and thrive. Note that the term of this business plan should be considered as no more than five years. There are a number of assumptions provided in the plan subject to a changing travel industry, the national economy, inflation, etc. Respectfully submitted, Clinton P. Gridley Angela Gorall City Administrator Assistant City Administrator -5- This page intentionally left blank -6-  Background and Recommendation The City of Woodbury has a long and continually growing reputation of being a destination for the east metro of the Minneapolis and St. Paul region. One of Minnesota's fastest growing cities, Woodbury is the state's 8th largest City. The population of close to 80,000 people and approximately 30,000 households is projected to reach over 100,000 by 2040 and is expected to continue attracting new residents for years to come. The City has consistently been recognized nationally as a great place to live, work and thrive. Woodbury is in close proximity to major employment centers, as well as the St. Croix River Valley, providing a beautiful natural setting and year-round recreational opportunities. Woodbury is known for its attractive residential neighborhoods, which are connected by more than 140 miles of multi-use trails. The City contains approximately 3,100 acres of parkland and eight small lakes, most with public parks and pathways. In addition, the following major amenities and features of the City attract visitors year round:  Central Park: An indoor park which features a play structure, meeting rooms, amphitheater, and is connected to the Washington County Library and YMCA. The facility will be undergoing a complete remodeling in 2024 and will include a future visitors center.  M Health Fairview Sports Center: A comprehensive sports center campus, including indoor ice arenas, outdoor ice rink, indoor field house, extensive outdoor fields, splash pad, and an Eagle Valley Golf Course all-inclusive playground.  Eagle Valley Golf Course: City run 18-hole golf course.  Shopping and Dining: Shopping and dining opportunities in Woodbury are abundant and include key areas such as Woodbury Lakes, CityPlace and Tamarack Village.  Medical Services: With more than 300 healthcare related businesses, totaling more than one million square feet of development, Woodbury has become known as a healthcare destination.  Location to Regional Amenities: Residents and visitors alike take advantage of the numerous cultural and recreational amenities of the Twin Cities area with convenient proximity to both Minneapolis and St. Paul. Museums, galleries, zoos and nature conservatories are abundant in the region. Numerous historic sites, professional sports (MLB Twins, NFL Vikings, NBA Timberwolves and NHL Wild) and world-class dining and entertainment are available nearby in addition to an international airport. -7- As demonstrated above, the City of Woodbury is a destination. As a destination, there are economic benefits to the region and City to ensure it continues to attract new and returning visitors, business travelers and tourists. Recommendation for Establishment of a Destination Marketing Organization (DMO)1 The recommendation as further detailed within this business plan is for the City of Woodbury to establish a Destination Marketing Organization or DMO. Within the tourism, destination marketing, and convention industry, there are several traditional and more modern organizational structures or options to consider. Appendix A provides a number of websites from regional tourism and destination organizations for reference.  Convention and Visitors Bureau (CVB): CVBs are not-for-profit organizations primarily funded by their local governments, usually through a portion of lodging taxes. Their mission is typically to promote the long- term development and marketing of a destination, focusing on convention sales, tourism marketing, and services. The CVB is responsible for creating public awareness about their destination and assisting in booking the meeting and event business that supports the destination.  Destination Marketing Organization (DMO): The terms CVB and DMO are often used interchangeably. Referred to as CVBs for many decades, destination marketing organizations began identifying themselves as DMOs in an effort to convey a less bureaucratic connotation to the traveling public. Similarly, many CVBs, such as Meet Minneapolis, have replaced the traditional “Convention & Visitors Bureau” portion of their name with a more descriptive, action- oriented name. DMO is generally considered a more contemporary designation. Every CVB is a DMO, but, technically, not every DMO is a CVB. Some destinations have no meeting facilities and consequently market to leisure travelers only; some focus solely on meeting and convention business and leave transient tourism marketing to other entities.  Destination Management Companies (DMC): DMCs provide their services to a customer for a fee. According to the Association of Destination Management Executives, a DMC is a “professional services company possessing extensive local knowledge, expertise and resources, specializing in the design and implementation of events, 1 Source information for various text within this plan provided by the Minnesota Association of Convention & Visitors Bureaus. https://www.minnesotacvbs.com/ -8-  activities, tours, transportation and program logistics.” Engaging the services of a DMC may be valuable after it is confirmed the hotel and facilities in a specific destination would be advantageous to be “managed” for the destination. Planners may have a multi- year contract to organize events and provide marketing services to the destination. As proposed for this business plan, the nomenclature of DMO is found to be most fitting to the proposal and is therefore recommended. The DMO would be an entity within the City’s organizational structure and would not be operated by an external organization or as a separate non-profit organization. Timeline Milestones Implementation Timeline See Appendix C for an implementation timeline for all  Consideration of local recommendations as included within this plan. There will be lodging tax: November several milestone steps necessary to implement this plan as 30, 2022 currently proposed, particularly the approval of a sustainable  Establishment of DMO funding source (local lodging tax) as well as the governing structure to be utilized for operation of the DMO. governance: Q1 2023  Commencement of local DMO Marketing Name lodging tax: April 1, The name of the DMO, as will be used in marketing materials 2023 or for a website, will be determined at a later date. This will require a further analysis of the marketplace for typically used naming conventions, optimization of search functions, maximizing general recognition by users, etc. For the purpose of this plan, the name of the DMO organization will be referred to as the Woodbury Destination Marketing Organization or Woodbury DMO. Operational Challenges to the DMO As an internal operation to the City of Woodbury, the DMO may also face some operational challenges in comparison to other DMOs or convention and visitor bureau type operations. Overall, most non-government organizations run as non-profits or are clearly not an entity of the local government.  As a part of the City of Woodbury government, all applicable state laws would need to be followed including those regarding purchasing, data practices, public usage of funds, gifts or donations. Employees of the DMO would be City employees thus subject to our City Code and personnel policies and procedures.  Should the DMO become directly involved in competitive processes for booking of events or tournaments there could be instances of the DMO being at a competitive disadvantage by not being able to offer services, incentives or prices in a manner similar to other organizations.  There may be marketing or promotional opportunities that are also constrained by following required rules or procedures.  The DMO may be challenged to find experienced staffing to work or lead the DMO with a non-traditional organizational structure. This may be viewed as a more risky professional opportunity to those in the industry and it may also be constrained by the inability to offer incentives or bonuses that may be applicable to similar positions. -9- Operational Opportunities to the DMO As an internal operation to the City of Woodbury the DMO and City can take advantage of many synergies and efficiencies compared to a stand-alone DMO. Those synergies and benefits include:  Communications, IT, financial and administrative support  Economic Development Commission advisory support and guidance  Staffing depth  Office spaces  Web and social media systems  Recreation facility connections  City relationship with Chamber of Commerce  City relationships with athletic and non-profit groups  Greater transparency with operations, finances and records. DMO Purpose and Goals The overall purpose for creation of a DMO for What is the Purpose of a Woodbury is similar to that of any CVB or DMO. DMO? Travel and tourism enhances the quality of life in the A DMO is an organization whose destination by providing jobs, local spending and attracting restaurants, shops, festivals, and cultural primary function is to attract and sporting events that cater to both visitors and visitors for the purpose of locals. All of which sustain and grow the local tax enhancing the local economy base. through purchase of room nights, food and beverage, retail items, According to the Explore Minnesota Tourism’s Economic Impact2 analysis for 2020, gross sales medical services, transportation or within tourism for Washington County was visitor services. $490,180,452 and employed 9,360, noting that 2020 was significantly impacted by the pandemic. In a draft Analysis of the Economic Impact of Athletic Tournaments in Woodbury, consultants estimated that $4,110,517 comes into the City of Woodbury annually in direct spending by visitors for athletic tournaments. On a regional basis, the City’s athletic tournaments have an impact of about $10.9 million annually. 2 https://mn.gov/tourism-industry/assets/22_FactSheet_tcm1135-518462.pdf - 10 - Roles of a DMO The potential roles of a DMO can be varied and will be refined over the years. The provided graphic helps demonstrate the roles that can be considered. Woodbury DMO Key Goals The following are key goals with regard to DMO operations and finances. Again, these will be further refined over time and simply provide a high level framework for future analysis. Operational Goals  Complete an in-depth strategic planning process to develop the detailed scope of work for the DMO as well as mission, vision, values and goals with associated timelines.  To provide a high quality and innovative online presence, marketing and promoting the City as a destination. Allowing the City’s existing website and on-line presence to be focused on government operations and services.  To continue to cultivate partnerships with business establishments supporting the tourism and visitors to Woodbury, supporting their success and ultimately the economic impact to the community. - 11 -   To preserve and enhance future and existing commercial businesses through investments in tourism and visitor engagement.  To establish a visitors center within the newly remodeled Central Park. Providing materials (digital or hard copy) and staff to provide a central point of contact for in- person destination services. Financial Goals  Be a financially self-sustaining entity with a dedicated non-property tax funding source.  To provide transparent comprehensive financial reporting, planning and analysis.  To provide sustainable income for needed major IT related improvements or replacements over time to ensure the long-term high quality success of the DMO.  To maintain a fund balance appropriate to address any needed emergencies, funding disruptions or downturns, and unique funding opportunities. Performance Measurement and Annual Reporting An annual report of performance measures and financial results would be recommended to be produced and reviewed by the established governing and advisory bodies of the DMO. This should be accomplished prior to annual budget review or approvals. Any and all reporting should be available on the DMO website. - 12 -  DMO Revenues and Local Lodging Tax Establishment of a City of Woodbury Destination Marketing Organization (DMO) and achievement of marketing and promotion of the City as a tourist or convention center is reliant upon a sustainable funding source. As proposed, the necessary funding source will be a local lodging tax as permitted by Minnesota Statute §469.190 (see Appendix D). Local Lodging Tax MN Statute §469.190 Per Minnesota Statute §469.190, the City may by  Tax up to 3% on gross ordinance impose a tax of up to three percent on receipts the gross receipts from lodging establishments.  95% shall be used for Ninety-five percent of the gross proceeds from any marketing and promoting tax imposed shall be used by the City to fund a local as tourist or convention convention or tourism bureau for the purposes of center marketing and promoting the City as a tourist or convention center.  Tax collection by MN Department of Revenue Lodging Tax Special Legislation or by the City  Approved by ordinance Per the City’s adopted 2022 Legislative Agenda, the City of Woodbury would continue to support special legislation regarding State Statutes §469.190 Local Lodging Tax that would allow Woodbury more flexibility to utilize up to two- thirds of the lodging tax for capital improvements to public recreational facilities and the remaining one-third used as allowed under the law – to fund a local destination marketing organization. The City intends to continue to pursue this legislative agenda item; however, to date the City has been unsuccessful on implementation. Lodging Tax Collection Lodging tax collection can occur by two methods, either collection by the Minnesota Department of Revenue along with general sales and use taxes or directly by the City. Minnesota Department of Revenue (MNDOR) Tax Collection Per statute, the City may agree with the Commissioner of Revenue that a tax imposed shall be collected by the Commissioner together with the tax imposed by chapter 287A (General Sales and Use Taxes), and subject to the same interest, penalties, and other rules and that its proceeds, less the cost of collection, shall be remitted to the City. The MNDOR was contacted to verify their cost of collection. Per the MNDOR as of August 2022, the approximate cost to implement would be $10,000 - $15,000 which is taken out of monthly payments3 until it is paid off. In addition, a small percentage each month is taken for 3 MNDOR noted that roughly 80% of revenue received is paid five days after the close of the previous month and then the remaining 20% would be paid out 35 days later. The second payment is when the administrative fee is taken out. - 13 - administrative fees. For budget purposes, it was therefore estimated that fees would be $15,000/year plus a 1% administrative charge on the total tax collected. This results in an approximate MNDOR collection fee of $21,900 for 2024 (see Appendix B). According to the MNDOR Sales Tax Fact Sheet 164S (May 2022), the Department administers collection for the following lodging taxes:  Giants Ridge Recreation Area (City of Biwabik)  Rochester  Lake County  St. Paul  Lake of the Woods County  Minneapolis  Mankato  Two Harbors As part of the MNDOR’s responsibilities, they will notify the public of the new local tax at least 60 days before it begins and register businesses located in the taxing jurisdiction for the new local tax. See Appendix E for an example notice of implementation of a lodging tax for the City of Mankato with collection to be conducted by the MNDOR. If taxes are collected by the MNDOR, certain City staff must complete annual disclosure training. The training provides data privacy information before employees can access non-public taxpayer data. City of Woodbury Tax Collection Collection of the lodging tax may be implemented directly by the City. Details of such process would be included within the lodging tax adoption ordinance. Key sections that would need to be detailed include, but are not limited to:  Procedures on when payments are due to the City, likely 25-30 days after the end of the month when taxes are collected.  Use of a tax return form as would be provided by the City. Would likely require details on gross receipts, tax collected, collection dates, signatures, and details on any uncollectable amounts or charges subject to the tax.  Process for the examination of the tax return form and requirements on adjustments, notices or demands.  Process and procedures for refunds.  Process and procedures for failing to file a return.  Details on penalties and interest.  Details on an appeal and hearing process. Recommendation on Lodging Tax Collection Method After reviewing the two methods of lodging tax collection, staff is recommending that collection occur through the Minnesota Department of Revenue. It is roughly estimated that the processes and procedures necessary for City collection could potentially require 30-35 percent of time from one accountant position in the Finance Division. It is likely the collection would also require at least five percent of time from supervisors or the Chief Financial Officer directly to address issues, compliance or auditing requirements. Due to very limited staff capacity at this time and expected in the next five years, it is not recommended to have collection completed by the City. In addition, the collection fee from the MNDOR is found to be reasonable and likely lower than the costs expected to be incurred by the City if completed by existing staff. - 14 - Woodbury Lodging Establishments By Statute, the City may impose a tax of up to three percent on the gross receipts4 from the furnishing for consideration of lodging at a hotel, motel, rooming house, tourist court, or resort, other than the renting or leasing of it for a continuous period of 30 days or more. In addition, if applicable, a statutory City may by ordinance impose the tax on the camping site receipts of a municipal campground. By the definitions as included in statute, the following lodging establishments currently exist in the City. 4 Per the MN Department of Revenue, lodging tax also applies to taxable lodging related services. Examples include, but are not limited to, pay-per-view movies or games, purchases from minibars, room service, other services provided within a guest room. - 15 - This page intentionally left blank - 16 -  DMO Governance An ordinance will be required to establish the lodging tax per State Statute. However, the governance structure is not dictated by statute and simply states, “…shall be used by the statutory or home rule charter city or town to fund a local convention or tourism bureau…” The Minnesota Association of Convention & Visitors Bureaus (MACVB) represents more than 70 destinations statewide and provides a comprehensive list of members on their website5. The organizational structures include primarily convention and visitors bureaus, but also include chambers of commerce, tourism bureaus, destination marketing organizations, visitor associations, and many non-profits. While not every organization was reviewed in-depth, it does appear that almost all are non-profit entities that then likely have an agreement with their local jurisdiction(s) to operate as their local convention or tourism bureau. Although many cities appear establish a separate non-profit organization to operate and manage a local convention and tourism bureau, the City of Woodbury has confirmed with the Minnesota Department of Revenue that there is no statute or regulation that requires the formation of a separate non-profit entity. Consequently, the City is opting to internally budget and manage the operations of the DMO. Woodbury Recommended Governance Governance Recommendation The recommendation for the structure of the Woodbury DMO is to keep all functions internal and operated by  DMO is internal City function the City of Woodbury. A separate entity or (via ordinance) establishment of a non-profit is not recommended. An ordinance to that effect is recommended to ensure  City Council is governing clarity on the establishment of the DMO and its body assignment as the City’s convention or tourism bureau,  Economic Development providing consistency to the statute. Essentially, the Commission (EDC) is functions of the DMO would be similar to any other City department division, with a dedicated staff and budget. advisory body (ordinance An example of how this would function is the City EDA update) and HRA.  New Special Revenue Fund (via resolution) 5 https://www.minnesotacvbs.com/members/ - 17 - DMO Governing Body The City of Woodbury City Council is proposed to be the governing body of the DMO. The Council will approve the budget and be the final authorizing body for any items of the DMO consistent with existing City codes, policies, and directives. DMO Advisory Body Due to the unique nature of the services of the DMO and the funding structure, it is recommended that an advisory body be utilized to provide more in-depth analysis, review, and oversight of the DMO with the capacity to then provide final recommendations to the governing body, the City Council. Utilization of the City’s already established Economic Development Commission6 is recommended for this purpose. The Economic Development Commission (EDC) is currently responsible for developing an Economic Development Strategic Plan for the City, including long-range strategies for economic development. The commissioners recommend economic development policies and programs to the City Council and work with the City Council and staff to promote the City, attract economic growth and development, and retain businesses in the community. In addition, each year the EDC produces an annual report for the City Council detailing the community development activities of the past year. The report also provides a summary of residential and commercial construction activities and outlines the progress that has been made toward achieving the goals of the strategic plan. Updating the EDC ordinance to include its new function for supporting the DMO would be recommended. In addition, the EDC consists of 11 members appointed by the City Council to three-year staggered terms. Updating the ordinance to provide that at least one seat of the EDC be reserved or planned for a business, hotel or tourism representative is also recommended. Financial Reporting and Tracking All finances for the DMO would be reported, budgeted and tracked through a newly established Special Revenue Fund of the City. Special revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The City currently uses special revenue funds for a variety of functions including, but not limited to, Lawful Gambling Contribution Fund, Housing and Urban Development, Economic Development Authority, and Housing and Redevelopment Authority. A resolution establishing the special revenue fund would be required. In addition, a future Administrative or Council Directive may be advisable to address fund balance goals and a process to address fund balances below or exceeding established goals. 6 Woodbury City Code Chapter 2, Article VIII, Division 2 – Economic Development Commission - 18 -  DMO Services and Staffing In order to develop a proposed budget for the DMO, it is important to determine what services the DMO will provide and also what staffing will be necessary to successfully achieve providing such services. Over time, the services of the DMO will be refined by staff through further strategic planning and general learning through the start-up process. It is not the purpose of this business plan to fully develop the DMO vision, mission, values, or destination/marketing vision. The following is a high-level overview of anticipated services and staffing necessary to develop a proposed budget. DMO Services The services of the DMO are anticipated to fall within the following major categories: Prioritization of service development and an annual scope of services and goals will need to be developed by staff. It is anticipated that development of the website and establishment of the visitors information center will be high priorities. Focusing on event/athletic services are then likely the next priority followed by business partnership efforts which may require several years of operation before being fully developed. See Appendix A for some example websites from regional tourism organizations to provide further context on services typically provided. - 19 - DMO Staffing DMO staff would be new City of Woodbury employees that are also supported by existing staff. The proposed budget includes 1.0 full-time employee strictly assigned to the management and implementation of the DMO. In 2027, the addition of a 0.5 part-time employee is proposed. Staffing is also necessary for the visitors center at Central Park and these would be employees of the Parks and Recreation Department paid for from the DMO. It is anticipated that the Communications Division would also provide a level of support which has been accounted for in the budget. The following provides an overview of potential staffing and the support staffing needed for DMO operations7. The DMO Coordinator would report to an existing employee of the City, likely in a senior leadership position. The internal reporting structure or department assigned is to be determined. Further future staffing, not shown above, may include potential need for a 0.5 or a 1.0 full-time employee at the sports center and with expertise or a focus in athletic tournament recruitment and marketing or support as part of the DMO. 7 All titles are considered draft. - 20 -  DMO Proposed Budget The DMO proposed budget is based on the proposed services and staffing for the DMO as outlined in the previous section. Should there be any notable changes to services and staffing, then the associated budget as provided in this section must also be adjusted. At this time, it is planned that the DMO would be a designated special revenue fund allowing for segregation of revenues and expenses from other City activities while also allowing for annual auditing similar to other City funds. Key Revenue Assumptions Estimated Lodging Tax Revenues 1) Number of Rooms As with any projection of a new revenue source that is = 1,035 2) Average Daily Charge based on usage, there will need to be assumptions. How = $98.00 optimistic these assumptions are will be based on the risk 3) Occupancy Rate tolerance of the approving body, in this case the City = 62% Council. There are three key assumptions to be considered: Est. $688,600 Annual Lodging Tax Revenue 1) Number of Rooms: As detailed in a previous section, for the purposes of this report a total of 1,035 rooms will be utilized. At this time, the Community Development Department does not envision a scenario whereby new hotels are developed in the next five years. This figure should therefore be considered fairly stable, likely only subject to if a new hotel(s) is developed. 2) Average Daily Charge: Per CoStar provided data, the 2014-2019 average daily charge was $104.73. However, the average daily charge for all of 2021 was $90.01. In 2018, during a strong economy, average daily charge was $110.58. It is also assumed that average daily charges will increase over time and adjust with inflation. Overall, this is a figure that is more subject to instability and market factors. Again, assuming a more cautious approach, this business plan assumes an average daily charge of $98.00. For future years, a two percent increase was added per year to this assumption. - 21 -  3) Occupancy Rates8: The March 2022 occupancy rate was 60.1 percent, which was only 0.9 percent lower than the nine-year average for Woodbury. The historic average, for all months between 2014-2019 timeframe, was 71.4 percent. The highest average monthly occupancy rate was in 2014 at 73.9 percent. Assuming a more cautious approach is prudent, this business plan assumes an average monthly occupancy rate of 62 percent. Provided below are the latest hotel occupancy figures as provided by Explore Minnesota. Assuming operations for 365 days of a year, the resulting three percent lodging tax revenue estimate equals $688,600 (FY 2024 revenue). Other revenue is anticipated to be minimal, but may include interest income and tourism related grants or partnerships (such as with Explore Minnesota9). DMO Expenditures As a reminder, ninety-five percent of the gross proceeds from any tax imposed shall be used by the City to fund a local convention or tourism bureau for the purposes of marketing and promoting the City as a tourist or convention center. Therefore, five percent of lodging tax revenues received are unrestricted and are currently shown as a transfer to the City’s General Fund. 8 2022 © CoStar Group. Data as provided in STR Report, a publication of STR, LLC and STR Global, Ltd., CoStar Group companies, and is intended solely for use by paid subscribers. 9 Co-op marketing with Explore Minnesota: https://mn.gov/tourism-industry/industry-opportunities/partner-with-us/co-op- marketing.jsp - 22 - Appendix B provides the proposed annual operating budget for the DMO based on anticipated services and staffing. Note that it is expected that non-personnel expenditures will be higher in the early years of the development of the DMO. The start-up cost and establishment of a website, visitors guide, and other digital presence items in addition to potential consultant assistance will be higher in early years. Expenditures would then be planned to be more routine or maintenance related (see the DMO Staffing section for a review of proposed staffing). As shown, and as detailed in Appendix B, revenues are planned to exceed expenditures resulting in an annual fund balance for the years shown. - 23 - The proposed budget for FY 2025, after the DMO is more operational, is shown below indicating total expenditures by major category. Costs related to personnel will be the largest expenditure category. Attorney General Opinions on Expenditures The State Attorney General has provided opinions on several expenditure questions related to the use of lodging tax revenues. There are many specific areas of spending that are not explicitly clear just by reading the Statute on Local Lodging Tax (§ 469.190). The following is an overview of past opinions that may offer insight to the City’s proposed or future use of expenditures.  January 1985: Opinion that the City of Winona is not authorized to use ninety-five percent of the revenues generated by its lodging tax to build a cross-country ski trail. Proceeds could not be used for capital expenditures for a City.  December 1988: Question is whether the lodging tax proceeds transferred from the City to the Chamber of Commerce under the terms of the contract lose their character as “public” funds and become “private” in nature. Funds in question are subject to the same restrictions whether expended by the City directly or by the City indirectly. Question if the use of the lodging tax proceeds to reduce site rental costs for a convention constitute “marketing and promoting the City” within the meaning of the statute. Subject to the foregoing, the language of Minn. Stat § 477A.018, subd. 3 permits - 24 -  the lodging tax proceeds to be used to reduce convention site rental costs to encourage and assist organizations to hold their convention in the City.  February 1993: To pay for high school band uniforms was found difficult to see how the purchase of band uniforms could be perceived as marketing or promoting the City as a tourist or convention center. To pay for fireworks to be used at a Fourth of July celebration, noted it would seem heavily dependent upon the circumstances. If the fireworks were to make a significant contribution to a City’s effort to attract tourists or convention business, especially if the display was advertised outside the City for that purpose, it could be determined to be related to promotion and marketing for those purposes. If the display were essentially a local event for residents of the City and surrounding area it may not qualify. To subsidize a county fair, festivals or a local sports event, the opinion noted it would turn on whether the particular expenditure is reasonably related to a specific activity for attracting tourists or convention business. For example, subsidy for a statewide sporting event such as the Star of the North games to be held in the City would appear far more appropriate than underwriting an event essentially for local teams and their supporters.  October 2002: Clarified that five percent of the lodging tax proceeds is unrestricted as to use. Questioned if lodging tax proceeds could be used for the painting and maintenance of tourist attractions owned by the City. The opinion noted that while such a use could serve to enhance or preserve assets of the City, it is difficult to see how that action in itself would market or promote the City’s tourism or convention resources. Questioned if lodging tax proceeds can be used for seasonal decorations and decorative lighting. Opinion noted the same reasoning set forth in the above response. Questioned if lodging tax proceeds can be used to develop and maintain welcome signs. Opinion noted that the authority to expend lodging tax proceeds for welcome signs would be dependent upon the particulars of each sign. For example, a sign placed at the City limits merely saying, “Welcome to Proctor, population 2,852”, would not appear to have any particular marketing or promotional effect. On the other hand, a sign placed on a major highway notifying passersby of notable local attractions, or activities that would be of interest to tourists or convention planners would seem to be permitted. - 25 - This page intentionally left blank - 26 -  Appendix A: Example Websites The following are example websites from Convention and Visitor Bureaus or Destination Marking Organizations within the region (not all-inclusive).  Explore Albert Lea: https://www.explorealbertlea.com/  Visit Apple Valley: http://visitapplevalley.com/  Explore Minneapolis Northwest (Brooklyn Center, Brooklyn Park): https://www.minneapolisnorthwest.com/  Experience Burnsville Minnesota: https://burnsvillemn.com/  Discover Cottage Grove: https://discovercottagegrove.com/  Enjoy Eagan: https://eaganmn.com/  Explore Edina: https://exploreedina.com/  Visit Lakeville: https://visitlakeville.org/  Experience Maple Grove: New 501(c)6 non-profit DMO. https://www.maplegrovemn.gov/692/Experience-Maple-Grove  Visit Red Wing: https://redwing.org/  Discover Stillwater: https://www.discoverstillwater.com/  Discover St. Louis Park: https://discoverstlouispark.com/  Twin Cities Gateway (Anoka, Blaine, Coon Rapids, Fridley, Ham Lake, Lino Lakes, Mounds View, New Brighton, Shoreview): https://www.tcgateway.com/ - 27 - This page intentionally left blank - 28 - Appendix B: Proposed Annual Operating Budget - 29 - Destination Marketing Organization (DMO)/Lodging Tax Proposed Budget 2023 - 2028 Fiscal Year 2023 2024 2025 2026 2027 2028 REVENUE 3% Lodging Tax $516,450 $688,600 $702,400 $716,400 $730,800 $745,400 Interest Income $0 $300 $300 $300 $300 $300 Grants/Tourism Coop $0 $0 $0 $0 $0 $0 MNDOR tax collection fee ($18,165) ($21,886) ($22,024) ($22,164) ($22,308) ($22,454) TOTAL REVENUE $498,286 $667,014 $680,676 $694,536 $708,792 $723,246 EXPENSES 5% Unrestricted Use of Funds to General Fund $24,914 $33,351 $34,034 $34,727 $35,440 $36,162 Personnel Salary, taxes, benefits (1.0 FTE + 0.5 in 2027) $0 $130,000 $135,000 $140,000 $190,000 $200,000 Mileage, phone $0 $1,200 $1,200 $1,200 $2,000 $2,000 Conferences, training, education $0 $2,000 $2,500 $2,500 $3,500 $3,500 Dues, subscriptions $0 $2,000 $2,000 $2,500 $2,500 $2,500 Charge-Back to GF Visitors Center staffing (1.0 FTE, +0.5) $0 $69,200 $138,400 $142,600 $146,900 $151,300 Charge-Back to Enterprise Sports Center staffing $0 $0 $0 $0 $0 $0 Charge-Back to GF for Communications staffing $9,200 $36,800 $39,000 $41,300 $43,800 $46,400 Personnel Sub-Total $9,200 $241,200 $318,100 $330,100 $388,700 $405,700 General Administration Insurance $675 $900 $900 $950 $1,000 $1,000 Annual Audit $750 $1,000 $1,000 $1,200 $1,200 $1,300 Charge-Back to GF for Finance/accounting $14,550 $19,400 $20,000 $20,600 $21,200 $21,800 Charge-Back to GF for IT support $4,525 $18,100 $18,600 $19,200 $19,800 $20,400 Charge-Back to GF for HR support $500 $2,000 $2,000 $2,000 $2,000 $2,000 Charge-Back to GF for City Hall rent (office space TBD) $0 $3,000 $3,000 $3,500 $3,500 $4,000 Legal Fees $3,000 $2,000 $1,000 $1,000 $1,000 $1,000 Office Supplies $0 $5,000 $4,000 $4,000 $4,000 $4,000 General Administration Sub-Total $24,000 $51,400 $50,500 $52,450 $53,700 $55,500 Rent/Office Equipment Visitor Center (Central Park) rental 1 $0 $0 $22,000 $22,440 $22,889 $23,347 Kiosk(s) @ Central Park, Sport Center TBD TBD TBD TBD TBD TBD Rent/Office Equipment Sub-Total $0 $0 $22,000 $22,440 $22,889 $23,347 Marketing/Promotions Visitor's guide $0 $40,000 $20,000 $20,000 $25,000 $25,000 Advertising $0 $10,000 $25,000 $25,000 $30,000 $35,000 Social media ad campaigns $0 $5,000 $6,000 $8,000 $8,000 $8,000 DMO trinkets, branded items - Annual $0 $0 $0 $4,000 $4,000 $4,000 DMO trinkets, branded items - Start up $0 $10,000 $8,000 $0 $0 $0 Promotional conferences, booth event fees $0 $1,000 $1,500 $1,500 $1,500 $2,000 Direct subsidy/sponsorships $0 $0 $2,500 $5,000 $5,000 $5,000 Professional fees/consultants $5,000 $8,000 $5,000 $2,500 $2,500 $2,500 Map development (digital, hard copy) $0 $5,000 $10,000 $5,000 $5,000 $5,000 Photography/videography $0 $10,000 $5,000 $5,000 $6,000 $6,000 Postage $0 $2,500 $2,500 $2,800 $2,800 $3,000 Marketing Promotions Sub-Total $5,000 $91,500 $85,500 $78,800 $89,800 $95,500 Information Technology (IT) Unique website and CRM system - Creation $0 $90,000 $20,000 $0 $0 $0 Unique website and CRM system - Maintenance $0 $0 $20,000 $20,000 $25,000 $25,000 IT equipment (monitors, laptops, camera) $0 $8,000 $3,000 $2,000 $6,000 $2,000 IT Sub-Total $0 $98,000 $43,000 $22,000 $31,000 $27,000 Special Projects/Contracting Strategic planning $0 $45,000 $6,000 $6,000 $30,000 $6,000 Special Projects/Contracting Sub-Total $0 $45,000 $6,000 $6,000 $30,000 $6,000 TOTAL EXPENSES $63,114 $560,451 $559,134 $546,517 $651,528 $649,209 NET BALANCE (DEFICIT) Per Year $435,171 $106,563 $121,542 $148,019 $57,264 $74,037 Potential Year Ending Fund Balance $435,171 $541,735 $663,277 $811,296 $868,560 $942,597 1 Assumes figure of renting 100 sq. ft. directly attributable to marketing/tourism purposes at a lease at $18/sq. ft.  Appendix C: Implementation Timeline Task Completion Date Council Workshop – Lodging tax and October 19, 2022 business plan review Public-Industry information and Later October – November notification 2022 Council consideration of lodging tax November 30, 2022 adoption (collection not to commence until 4/1/2023) Notification to MNDOR of tax collection December 2022 (due 90 days before collection date) Notifications to entities required to collect TBD taxes (official notification to be completed by MNDOR) Council consideration of DMO ordinance Q1 2023 as necessary to establish governance and oversight DMO special revenue fund established (via Q1 2023 resolution) and budget amendment Commencement of lodging tax and April 1, 2023 established governance structure Implementation of DMO staffing and work Q3 2023 - 2024 plan Potential Administrative or Council Directive on special revenue fund (fund balances, procedures) - 31 - This page intentionally left blank - 32 -  Appendix D: Minnesota Statute §469.190 Local Lodging Tax 469.190 LOCAL LODGING TAX. Subdivision 1.Authorization. Notwithstanding section 477A.016 or any other law, a statutory or home rule charter city may by ordinance, and a town may by the affirmative vote of the electors at the annual town meeting, or at a special town meeting, impose a tax of up to three percent on the gross receipts from the furnishing for consideration of lodging at a hotel, motel, rooming house, tourist court, or resort, other than the renting or leasing of it for a continuous period of 30 days or more. A statutory or home rule charter city may by ordinance impose the tax authorized under this subdivision on the camping site receipts of a municipal campground. Subd. 2. Existing taxes. No statutory or home rule charter city or town may impose a tax under this section upon transient lodging that, when combined with any tax authorized by special law or enacted prior to 1972, exceeds a rate of three percent. Subd. 3. Disposition of proceeds. Ninety-five percent of the gross proceeds from any tax imposed under subdivision 1 shall be used by the statutory or home rule charter city or town to fund a local convention or tourism bureau for the purpose of marketing and promoting the city or town as a tourist or convention center. This subdivision shall not apply to any statutory or home rule charter city or town that has a lodging tax authorized by special law or enacted prior to 1972 at the time of enactment of this section. Subd. 4. Unorganized territories. A county board acting as a town board with respect to an unorganized territory may impose a lodging tax within the unorganized territory according to this section if it determines by resolution that imposition of the tax is in the public interest. Subd. 5. Reverse referendum. If the county board passes a resolution under subdivision 4 to impose the tax, the resolution must be published for two successive weeks in a newspaper of general circulation within the unorganized territory, together with a notice fixing a date for a public hearing on the proposed tax. The hearing must be held not less than two weeks nor more than four weeks after the first publication of the notice. After the public hearing, the county board may determine to take no further action, or may adopt a resolution authorizing the tax as originally proposed or approving a lesser rate of tax. The resolution must be published in a newspaper of general circulation - 33 - within the unorganized territory. The voters of the unorganized territory may request a referendum on the proposed tax by filing a petition with the county auditor within 30 days after the resolution is published. The petition must be signed by voters who reside in the unorganized territory. The number of signatures must equal at least five percent of the number of persons voting in the unorganized territory in the last general election. If such a petition is timely filed, the resolution is not effective until it has been submitted to the voters residing in the unorganized territory at a general or special election and a majority of votes cast on the question of approving the resolution are in the affirmative. The commissioner of revenue shall prepare a suggested form of question to be presented at the referendum. Subd. 6. Joint powers agreements. Any statutory or home rule charter city, town, or county when the county board is acting as a town board with respect to an unorganized territory, may enter into a joint exercise of powers agreement pursuant to section 471.59 for the purpose of imposing the tax and disposing of its proceeds pursuant to this section. Subd. 7. Collection. The statutory or home rule charter city may agree with the commissioner of revenue that a tax imposed pursuant to this section shall be collected by the commissioner together with the tax imposed by chapter 297A, and subject to the same interest, penalties, and other rules and that its proceeds, less the cost of collection, shall be remitted to the city. - 34 - Appendix E: Department of Revenue Example Notice of Lodging Tax - 35 - Mankato 3.0% Lodging Tax Starting October 1, 2021, Department of Revenue will administer the Mankato 3.0% Lodging Tax. Revenues will fund local tourism identified under Minnesota Statute section 496.190 and in Mankato Ordinance No. O-2021- 0726-4, Sec. 15.01. Lodging is the rental of a room or rooms for a temporary place to stay or live. Lodging facilities include hotel, motel, rooming house, tourist court, or trailer camp located within the city by a hotel or motel: • less than 30 days; or • 30 days or more, with no enforceable written lease agreement. o An enforceable written agreement must be entered into at the time of sale (day one or before) if the stay will be 30 days or more. The enforceable written agreement must include a termination clause, date, and signature. Lodging-related services provided within a guest room are taxable. Examples include (but are not limited to): • cots, cribs, refrigerators, roll-away beds, and exercise equipment • food or liquor from mini-bars and refrigerators • in-room safes • laundry and dry-cleaning services • pay-per-view movies and video games • room service or room delivery, including mandatory tips and gratuities • telephone access charges in guest rooms For more information, see Fact Sheet 164S, Special Local Taxes. Who Must Register and Collect the Tax All hotels, lodging facilities, accommodation intermediaries, and accommodations providers making sales in Mankato must register for Mankato Lodging Tax. Registering for the Tax If you file Sales and Use Tax returns online, you can register for this tax before the start date, or when you file the tax collected beginning October 1, 2021. To Register Before You File 1. Log in to e-Services and access your Sales and Use Tax account. 2. In the Sales & Use Tax section, select Manage Locations. 3. In the Existing Sales Locations list, select the Location Code number for the location you want to edit. 4. In the Available Actions section, select the Edit Location link. 5. If the General Information and the NAICS code are correct, select Next. 6. If you need to end a tax enter a date and select Next, if you do not need to end a tax, select Next. 7. Select the check box next to Mankato in the Lodging section, select Next. 8. Review the screen and make any changes for all local sales and use taxes. Select the Next button. Local Tax General Notice Last Updated: 7/27/2021 Mankato 3.0% Lodging Tax 9. Review the section titled Special Local Sales and Other Taxes – verify the Mankato Lodging is listed. If the new tax is listed, select the Submit button. 10. Review the Confirmation Summary. You can then select Close. To Register When You File in e-Services You can add a local tax when filing a return: 1. Select the link Add a Tax Line at the bottom of the return. 2. From the Tax Type Column, select the dropdown menu to select the local tax you need to add. 3. Enter the taxable dollar amount for the local tax. The new tax will be on your return the next time you file. To Register When You File by Phone You must register for this tax before you file your return. To register, call 651-282-5225 or email us at salesuse.tax@state.mn.us. If you send an email, include your Minnesota Tax ID Number. Reporting the Tax Report the Mankato Lodging Tax when you report your Minnesota Sales and Use Tax. Each tax is reported on a separate line of your return. Mankato Lodging Tax is line number 379. Calculating the Tax To calculate the tax: 1. Add the Minnesota General State sales and use tax rate to the 3.0% Mankato Lodging tax. 2. Add any other local taxes that apply. 3. Apply the combined rate to the sales prices. For more information see Fact Sheet 164S, Special Local Taxes. 4. Round the total to the nearest full cent. When to charge the tax Charge the Mankato Lodging tax when customers buy taxable items or services subject to lodging tax in Mankato, unless they give you a valid exemption certificate. Local Governments Local governments are required to pay the Mankato Lodging Tax. Generally, they must pay local special taxes in Minnesota, but not local general taxes. Local governments include cities, towns, counties, instrumentalities, political subdivisions, commissions, special districts, and government boards. Local Tax General Notice Last Updated: 7/27/2021 Mankato 3.0% Lodging Tax Information and Assistance Call: 651-296-6181 or 1-800-657-3777 (toll-free) Fax: 651-556-3102 Email: salesuse.tax@state.mn.us Write: Minnesota Department of Revenue Sales and Use Tax Division Mail Station 6350 St. Paul, MN 55146-6350 Visit our website at www.revenue.state.mn.us Local Tax General Notice Last Updated: 7/27/2021  3 City of Woodbury, Minnesota Office of City Administrator Council Workshop Letter 22-255 October 19, 2022 To: The Honorable Mayor and Members of the City Council From: Clinton P. Gridley, City Administrator Subject: 2022 Legislative Initiatives Summary The City Council annually adopts a unique Woodbury Legislative Program. This item is being reviewed ahead of the coming legislative session for advance direction to City staff, our legislative representatives and our state delegation. While the top priorities of the Legislative Program are largely the same as in previous years, the document has been streamlined to add greater emphasis to our priorities. The secondary, defensive positions of the City have been removed since those items tend to appear more in the League of Minnesota Cities, Municipal Legislative Commission and Metro Cites legislative programs. Governance Mode • Strategic (setting priorities, reviewing and modifying strategic plans, and monitoring performance against plans. Focus is the “ends” rather than the "means”). Recommendation Staff recommends Council provide feedback on the proposed 2023 Woodbury Legislative Program prior to consideration for adoption. Written By: Clint Gridley, City Administrator Attachments: Draft Woodbury 2023 Legislative Program 2023 Legislative Initiatives Top Priorities Community-Wide Permanent Water Treatment The Minnesota Department of Health (MDH) has established health standards for specific per- and polyfluoroalkyl substances (PFAS) and has issued health risk advisories on nine of Woodbury’s 19 wells since 2017, with additional advisories likely in the future. A temporary treatment facility is currently treating water from six of the affected wells, and a permanent facility is in the planning stages. State- managed 3M settlement funds will cover the construction of the base treatment facility and associated piping. However, there are three wells that are currently below the state health standards for PFAS level and, therefore, do not qualify for funding from the 3M settlement, at this time. Because our priority is to ensure water that meets state health standards is delivered to all residents without them having to carry the burden of these costs, we are requesting additional funding to connect these three wells to citywide treatment. Since Woodbury has a single-pressure water zone system, the most equitable and responsible approach is to treat the entire system. Resources are needed to set Woodbury’s water system up with the resiliency needed to meet the rapidly changing conditions and uncertain future of PFAS. The city is requesting congressionally directed spending to support the Well Manifold Pipe Project and elements of the effort to address PFAS not funded under the 3M settlement. If the funds are received to support this project, Woodbury is prepared to support the request with a 20% match from its Water Enterprise Fund. Central Park Renovation & Expansion For more than 20 years, the multi-purpose and intergovernmental Woodbury Central Park has been a place to play, connect, learn and have fun. However, after two decades of service and substantial regional growth, the facility needs significant updates and expansion so that it can continue to attract visitors from across the region for years to come. The Central Park Renovation Project has entered the design development phase. While the primary plan focuses on addressing maintenance, environmental and accessibility issues, there is also opportunity to expand the facility to better meet the community’s needs. Central Park draws visitors across the region and state, and its expansion will allow the gathering space to live up to its true potential of serving the diverse, growing population now and into the future. Special legislation to allow tax increment from TIF District No. 13 to be used for the “maintenance and facility and infrastructure upgrades” to Central Park, and extending its duration by five years. State bonding bill support of $18.5 million for the renovation and expansion of this regional facility A sales tax exemption for construction material purchases for the Central Park capital project. Capital Investment Flexibility For Recreational Facilities In 2023, the city plans to begin implementing a local lodging tax, as allowed by law. The revenue from this tax will be used for the creation of a Destination Marketing Organization to highlight amenities the city has to offer, including city facilities like M Health Fairview Sports Center and Central Park. Currently, under the lodging tax, the city can only use the revenue received for operational costs associated with a Destination Marketing Organization. The city needs to request special legislation to provide flexibility to use the lodging tax for capital investment projects, like public recreational facilities The city is requesting authorization to use up to two-thirds of the local lodging tax for improvements to public recreational facilities and the remaining one-third to be used as allowed under law. For more local government legislative priorities, please see: Municipal Legislative Commission https://www.mlcmn.org/advocacy League Of Minnesota Cities https://www.lmc.org/advocacy/legislative-policies/current-legislative-policies-priorities/legislative-priorities/ Metro Cities https://www.metrocitiesmn.org/legislative-policies