MN Hospitality Advocate

Star Tribune Columnist Highlights Vacation Homes

Posted in Lodging Issues, Resort Issues, State Laws, State Rules, Tourism Issues, Uncategorized, Vacation Home Rentals by hospitalityminnesota on July 4, 2010

In today’s Star Tribune Metro Section, columnist John Ewoldt touts vacation homes as an opportunity to enjoy the lake without the mortgage. He mentions http://www.VRBO.com, http://www.homeaway.com, http://www.greatrentals.com, http://www.vacationrentals.com and http://www.vacationrentals411.com.

I have seen several other recent references to vacation home rentals. Here’s what Ewoldt suggests: “Thanks to the recession, more second home owners have discovered that renting our their cabins, lake homes, condos and townhouses can make a second mortgage pay for itself.”

We argue the same and it is for this reason that the Minnesota Resort & Campground Association and Minnesota Lodging Association have for several years now pushed to have these properties regulated in the same manner as resorts, hotels and other licensed lodging facilities. The Minnesota Department of Health does have basic authority to license such facilities, but clarity in language would be helpful.

In the meantime, if you know of a vacation home being rented to the general public on a fairly consistent basis, please tell Gary Edwards, Minnesota Department of Health, (651) 201-4513, gary.edwards@state.mn.us.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Health Care Reform Isn’t Over Yet

Posted in Health Care Reform, Lodging Issues, Resort Issues, Restaurant Issues, Tourism Issues by hospitalityminnesota on March 24, 2010

While you might have thought the health care debate was over, it isn’t yet. Many potential steps remain before the final shape of this legislation is determined and its changes take effect. Today, the President signed the Senate-passed (and now House-passed) health bill into law. We now turn our full attention back to the Senate where Senators will begin tangling over the “fixer” or “reconciliation” bill (also passed by the House Sunday evening).

There are many concerns we have for the reconciliation bill, but below are some of the more troubling provisions for employers:

1. Employer mandate: The penalty for the “free rider” increases from $750 per employee to $2000 per employee if you don’t offer insurance for more than 50 employees. If you do offer insurance, but the employee share of premiums is “unaffordable” (greater than 9.5% of income), and that employee goes into the exchange and receives a tax credit, your fine is $3000 per employee!!

2. For the first time, it uses part-time employees when calculating how many full time employees for that determination of “over 50 employees”. The senate bill was silent on part-time workers.

3. A new 3.8% “Medicare” tax on non-wage income would be placed on high earners, income from interest, dividends, capital gains, and some profits from investments in partnerships and S-corporations. The revenues from the tax on unearned income would be credited to the Supplemental Medical Insurance trust fund. If the unearned income tax-and other proposed tax hikes on high-income individuals included in the President’s FY 2011 budget-become law, a high-income taxpayer could have an effective tax rate on capital gains and qualified dividends of 23.8 percent. Significantly, however, the effective tax rate on nonqualified dividends would be 43.4 percent.

4. The Cadillac tax on “high value” health plans is delayed from 2013 to 2018 – but it will now be only indexed to CPI inflation (Senate bill was CPI+1%). Since medical inflation is so much higher than CPI, this will, without a doubt, become the next Alternative Minimum Tax (AMT) and catch more and more plans every year.

5.  While stating they have removed the “Cornhusker Kickback,” the reconciliation bill also leaves in place special deals for Louisiana, Connecticut, the frontier states, and others, while adding in new special deals for states like Tennessee.

If the Senate makes any changes at all to the reconciliation package, it will have to go back to the House for yet another vote before going to the President for his signature.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Hospitality and Tourism Day at the Capitol a Huge Success

We’ll start with the numbers: We had more than 215 restaurant, lodging, resort and campground operators at the Minnesota capitol yesterday as we lobbied on behalf of one of our state’s major industries. John Edman, Director of Explore Minnesota Tourism, reminded us in his remarks that the leisure and hospitality industry generates 16% of the state’s sales tax revenue, and is responsible for 10% of the state’s jobs.

Our industry advocates heard about a number of key issues in a morning briefing session. In addition to updates from our Lobbyists Tony Kwilas and Bob Vanasek and myself, we heard from Joan Archer, Executive Director of the Minnesota Beverage Association, about efforts to build a coalition highlighting the positive things our industry is doing in the area of obesity and fighting back anticipated sweetened beverage taxes. Other key issues we discussed included the Post Labor Day School Start, mandatory breaks and sick time, a multi-purpose stadium for the Minnesota Vikings and other events, ignition interlocks and vacation home rentals.

After tremendous visits on the hill, we wrapped up with a new legislative reception at the Kelly Inn featuring some 20 convention and visitor bureaus who did a beautiful job showcasing their communities and highlighting the importance of hospitality and tourism in communities across the state. Some 40-50 legislators attended the reception even in the midst of late-night committee meetings and a chaotic night before the final committee deadline.

I want to use this opportunity to thank the Hospitality Minnesota team for their tremendous efforts in creating a great event, and the Minnesota Association of Convention and Visitors Bureaus for being tremendous partners.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Industry Scores Major Victories; Labor Day and Adult Entertainment

Over the past two days, the hospitality industry scored two major victories at the legislature. The first was defeat of a government operations bill that stepped deeply into the business practices of our industry. Wednesday morning, we defeated H.F. 3287 in the House State and Local Government Operations Reform, Technology and Elections Committee that would prevent state workers from booking rooms or meetings in Minnesota hotels that offer pay-per-view adult movies that link sex with violence. I was the sole testifier against the bill authored by Rep. Haws (DFL-St. Cloud), which has a companion Senate bill, SF 2861, authored by Sen. Taryl Clark (DFL-St. Cloud).

In my testimony, I chastised the advocacy community for turning immediately to legislation to solve this problem. I offered to sit with the advocates (groups seeking to combat sexual violence) to have a discussion about the issue and allow industry to gain a better understanding. I further suggested that the vast majority of this material is not viewed in hotel rooms, but rather on the Internet. We will continue to monitor this issue, but certainly believe this legislation simply went way to far in dictating business practices for our industry.

In the second victory, a house Education Committee stripped a Post Labor Day school start repealer from a Committee Bill by a vote of 11-9. This narrow victory in an Education Committee is a significant victory for the industry. While Labor Day school start opponents will likely try and amend bills on the floor of the House or  Senate to continue a repeal effort, we stand in a strong position given that the committee has spoken. In part, committee members suggested that we ought to give the 25 districts in the Southwest corner of the state time to work their experiment before we make other changes in the Labor Day statute. In particular, we thank Rep. John Ward (DFL-Brainerd) for his work on the Labor Day issue.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Commissioner Rules Against Industry

Posted in Campground Issues, General Advocacy, Lodging Issues, Resort Issues, State Laws, Tourism Issues by hospitalityminnesota on March 16, 2010

Education Commissioner Alice Seagren ruled late Friday against the industry in allowing a consortium of 25 school districts in the Southwest part of the state to start school before Labor Day. This ruling could have a devastating effect on the Post Labor Day school legislation, in that other districts are sure to copy this effort in an attempt to circumvent the Labor Day start law.

In addition to consolidating calendars and working collaboratively, the districts argued that they needed additional days throughout the year to boost test scores on standardized tests that all students take in the spring. They intend to start on August 23. It will be extremely difficult to determine what effect, if any, this early start actually has on student success, as there are several other factors in the proposal.

Nonetheless, we will keep a close eye on these districts’ test scores and see if in fact their claim brings with it any academic merit. We have long stated that additional time on task can be achieved without putting the Labor Day school start in peril.

It’s a disappointing day for the industry. We’ll push hard at Day at the Capitol on March 18 to reinforce the importance of Labor Day school and do our best to prevent the repeal movement to gain more momentum.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Hospitality Minnesota Testifies on Labor Day School

Posted in Campground Issues, General Advocacy, Lodging Issues, Resort Issues, State Laws, Tourism Issues by hospitalityminnesota on March 4, 2010

I testified yesterday morning before the Senate Education Committee regarding a proposed change in statute that would prevent Flexible Learning Year proposals, other than year-round, from starting before Labor Day.

The bill is Senate File 2785 sponsored by Senator Tom Saxhaug (DFL-Grand Rapids): Flexible learning year education programs pre-Labor Day start date prohibition.

At issue is a group of 25 school districts in the Southwestern part of the state that have proposed a collaborative effort regarding school schedules, sharing of resources and addressing community needs. As part of their proposal, these districts are seeking to start school before Labor Day. They have made a request to Commissioner of Education Alice Seagren for such an exemption to state law under the Flexible Learning Year (FLY) statute.

The discussion was energetic, and while we were there to talk about this bill only, conversation quickly moved to the entire debate over the Labor Day school start. Ed Becker from In We Go Resort in Nevis also testified, and did a marvelous job. Ed is a school board member and brought both perspectives to the committee.

With some confusion surrounding the current Flexible Learning Year statute, and a desire to get more answers, the committee laid the bill on the table for future consideration.

Meanwhile, Senator David Hann (R-Eden Prairie) is expected to introduce Senate File 2956, which outright repeals the Post Labor Day School law. We will continue to keep you updated via this blog and government affairs alerts to membership.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Resolutions Regarding Coast Guard “Six-Pack” License Pass

Posted in General Advocacy, Resort Issues, State Laws, Tourism Issues by hospitalityminnesota on March 2, 2010

Minnesota House and Senate committees yesterday passed resolutions urging Congress to address federal statutes regarding licensure of boat captains on federally navigable inland waterways. For a complete understanding of the issue, check the issue brief on our website.

The resolutions are SF 2780, authored by Senators Olson-DFL Bemidji, Koering, R-Fort Ripley and Chaudary, DFL-Fridley and its companion HF 3162, authored by Representative Dill-DFL-Crane Lake. The text of the bill essentially says that he Minnesota Legislature should resolve that Congress speedily enact legislation requiring the U.S. Coast Guard to develop licensing appropriate to smaller vessels operating on inland waters and to establish interim enforcement that addresses safety issues without penalizing small vessel operators for issues that do not relate to inland lakes.

This bill relates to the “six-pack” mandate that small boat operators on Coast Guard “navigable” waters are subject to burdensome licensing and testing. In the past, this federal standard had not been actively enforced, but that recently changed, bringing to light the inland lake problem. The actual text of the bill is available here.

U.S. Coast Guard qualifications for licensing of an Operator of an Uninspected Passenger Vessel (or “Six-Pack”) was not designed for most inland lakes or rivers nor for small vessels such as 16-20 foot outboard boats. For the past several decades, the Coast Guard has exercised discretion in its enforcement of the “Six–Pack” licensing. But recently, enforcement of the rules was stepped up, leading to discovery of the issue.

Minnesota’s tourism industry supports licensing and oversight to ensure public safety on Minnesota’s lakes and rivers. The state has over 500 guides who take anglers on inland navigable waters and hundreds of resorts and businesses that offer casual boat/pontoon rides to their guests. The Coast Guard licensure would be both expensive and burdensome for our resort operators and guides.

We’re pleased that our Minnesota legislators agree and commend the authors of the resolutions for highlighting the issue.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

What Role do We Play in New Vikings Stadium?

Posted in General Advocacy, Lodging Issues, Restaurant Issues, State Laws, Tourism Issues by hospitalityminnesota on February 18, 2010

Governor Pawlenty today in comments to Star Tribune Columnist Sid Hartman mentions several possible solutions for funding a Vikings stadium. These include capturing additional tax revenue a new stadium would generate, as well as a new Minnesota lottery game that could generate up to $12 million annually.

Pawlenty also mentioned that a local partner (i.e. Minneapolis or Hennepin County) must come with some revenues to be part of the solution. That sounds to us like a tax on the hospitality industry. One other way in which a city or county might generate dollars would be through a sales tax, but we see that as unlikely given recent sales and gas tax increases.

The Minnesota Restaurant, Lodging and Resort & Campground Associations have a long-standing policy that we expect to be part of the solution, as that’s in part how stadiums are funded across the country. But we do not feel the burden should fall unfairly on our hotels and restaurants, already suffering from a terrible economy. For our position paper, see our website at www.hospitalitymn.org under Government Affairs.

The overarching funding philosophy from the perspective of key legislators we’ve spoken with is this: those who benefit should pay. And in the minds of most legislators, the hospitality industry is one of the significant benefactors from a new stadium. There is clearly an overall value to having a top NFL team in Minnesota from a tourism perspective. And our hotel industry in the Twin Cities acknowledges a benefit from the Vikings.

The Vikings need between $29 million and $42 million annually to service the debt on bonds issued to build a new stadium. The higher number reflects a retractable roof. This assumes an owner contribution of approximately one-third of the cost of a new stadium (without a roof), which has been typical of most NFL stadiums.

The Vikings have compiled a list of the various funding mechanisms stadiums have used in the past. They include items such as lottery proceeds, hotel taxes, liquor taxes, restaurant taxes, sales taxes, memorabilia taxes and car rental taxes.

We’ve begun conversations within our industry, with the Vikings and with key legislators in regard to the industry’s position. In fact, two key legislators engaged in this process recently asked us to visit on the issue.

We certainly feel that the proposed owner’s commitment needs to increase. But nonetheless, roughly two-thirds of the funding will probably be from public sources. My questions for the industry are designed to generate feedback. Should we take an absolute positi0n against any lodging, food and beverage or liquor tax increases? What about one but not the others? If we did agree to any kind of tax, should a tax be statewide because the whole state benefits from the Vikings, or should it be more local because that’s what can pass politically? If we did agree to any kind of tax, what percentages should we consider? What are your thoughts on the hospitality industry’s participation in this Vikings stadium?

Whatever the solution, it’s going to be difficult to bring unity to our massive and varied industry. But leadership will be required to get this job done and as the statewide associations in the hospitality industry, we’re expected to play a role. We do agree that keeping the Vikings is important to our industry and our state. Undoubtedly, any decision our Legislative Committees and Boards of Directors reach will bring criticism. Such is the nature of leadership. It starts with feedback from you.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Vacation Home Rentals May See Solution

Posted in Lodging Issues, Resort Issues, State Laws, State Rules, Tourism Issues, Vacation Home Rentals by hospitalityminnesota on February 13, 2010

Over the past several years, the practice of renting out ones cabin to bring in revenue and offset property taxes and general maintenance expenses has become common. We call this vacation home rentals. In addition, websites have sprung up in significant numbers making it very easy for vacation homeowners to rent out their units (and many vacation homeowners have built their own sites.

For a good example, check out www.vrbo.com (vacation rental by owner). So why does our industry care? Because these vacation homes are now in the marketplace competing against private resorts and lodging properties, yet they do not have to meet the same regulatory requirements. They often do not collect sales tax, lodging tax, get inspected by the Department of  Health or meet DNR Shoreland Management standards.

The Minnesota Department of Health has the authority under current statute to inspect these properties, but has only recently begun to do so. In part it’s a manpower issue – they simply don’t have enough folks to chase down every private homeowner.  And in part, it’s because the problem has only become evident as the Internet has grown and the cost of entry into the marketplace has declined.

The Minnesota Resort and Campground Association and Minnesota Lodging Association care a great deal about this issue. Level playing field and public safety are key elements of the discussion. The Department of Health is preparing to move forward with some technical corrections to existing statute that will clarify their existing authority to inspect. It’s a great first step in ensuring that Minnesota’s vacationers are in safe facilities.

We’ll keep you posted as the initiative progresses.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota

Meetings with Key Legislators

Posted in General Advocacy, Resort Issues, Restaurant Issues, State Laws, Tourism Issues by hospitalityminnesota on February 11, 2010

As part of our 2010 Legislative Agenda, we felt it was important to meet with key legislators to share our issues and provide background and explanation. We met with House Commerce Chairman Joe Atkins (DFL-Inver Grove Heights) and talked about a wide range of issues, including beverage taxes, alcohol taxes, ignition interlocks, Labor Day School, video games of chance and more. We also had the opportunity to share time with the Chairman on the issue of Online Travel Companies and the possible taxation of their service charges for hotels.

We met with Senate Tax Committee Chairman Tom Bakk (DFL-Virginia) on many of the same issues. We visited with Rep. John Ward (DFL-Brainerd) on several key tourism issues, including Labor Day School, protection of local option Lodging Taxes, additional hospitality taxes and vacation home rentals.

In all cases, we are able to effectively share our concerns. With the session just under way, now is the perfect time to contact your legislators and share with them your issues. We have all of our issue briefs on our web site at http://www.hospitalitymn.org. Check those out and act today to reach your legislators.

Also, please prepare now to attend Hospitality and Tourism Day at the Capitol on March 18 at the Best Western Kelly Inn. This event is extremely important in showcasing the power of our industry.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations