T-R PHOTO BY ROBERT MAHARRY - Marshalltown Area Chamber of Commerce President/CEO John Hall addresses the city council about the hotel/motel tax revenue split during last Monday night’s meeting. The council voted 4-3 to continue allocating 56 percent of the revenues for the Chamber to promote tourism and recreation opportunities while keeping 44 percent for any lawful council-designated purpose.

The Marshalltown city council spent the last hour-plus of its nearly three-hour open session on Monday evening discussing options for the general fund as they, along with City Administrator Carol Webb and Finance Director Diana Steiner, work toward finalizing the Fiscal Year 2026 budget.

Webb opened the conversation with a recap of how the budget negotiations have progressed thus far as she and the council have worked to make up a shortfall initially estimated at around $1.36 million — with the caveat that the city has money available in its council designated Local Option Sales Tax (LOST) fund to make up the difference.

An initial round of reductions the council agreed upon reduced the projected shortfall to $1,076,145, and there were a few items Webb and city staff had promised to return to the council for further consideration. The first, which took up the majority of the discussion on Monday night, was potentially reducing the Marshalltown Area Chamber of Commerce’s share of hotel/motel tax revenue to a 50/50 split with the city. Currently, the Chamber receives 56 percent to the city’s 44 percent, and Iowa law stipulates that at least half of hotel/motel tax revenues must be spent on “the acquisition of sites for, or constructing, improving, enlarging, equipping, repairing, operating, or maintaining of recreation, convention, cultural, or entertainment facilities including but not limited to memorial buildings, halls and monuments, civic center convention buildings, auditoriums, coliseums, and parking areas or facilities…or for the promotion and encouragement of tourist and convention business in the city or county and surrounding areas.” When the tax was first implemented in Marshalltown, the Convention and Visitors Bureau, which has since been merged into the Chamber, received 90 percent of the revenues.

Webb said the total estimated hotel/motel tax revenue for FY2026 is $625,000 — under the current 56/44 agreement, the Chamber would receive $350,000, and the city would receive $275,000 — and opened up the floor for council comments. Citing the general fund deficit, Councilor Gary Thompson suggested that the city should keep all of the money and spend 50 percent of it on upgrading parks and operating the Veterans Memorial Coliseum.

“How do we tell the taxpayer that we have a possibility to recoup $300,000, but we’re gonna give it away so hotels and restaurants can make money off of conventions? So I guess my position is until we figure out how to get this city out of a deficit, we need to maximize the funds that are coming our way,” he said. “So that’s where I’m at. Not going to 50 percent, going to zero.”

As Webb and Mayor Pro Tem Mike Ladehoff welcomed Chamber President/CEO John Hall to the speaking podium, Thompson wondered why the council would care about the impact it would have on the nonprofit organization and how it is funded. In response to another question from Councilor Melisa Fonseca, Webb said half of the revenue had to be spent on marketing or tourism activities, which drew a rebuke of “No, it doesn’t” from Thompson.

“Not necessarily through the Chamber. Other cities use this revenue for their library. They might use it for their arts center. They might use it for some other purpose, but it needs to be related — 50 percent of it needs to be related to that in some way,” Webb said. “I think what Councilmember Thompson is saying is true. You can find, probably, some of those opportunities within the city to do that kind of thing.”

Thompson added that the money could go toward the Riverview Park improvements to lower the amount the city has to borrow for it. Hall then stepped forward and explained that the tax was originally imposed by voters with the support of the business community to capture additional retail, restaurant and hotel sales opportunities.

“Councilor Thompson, while I can appreciate there may be legal other uses for these funds kept in the city, I think that there would be serious concern from the business community as to the impact that you would unilaterally have on their business should these efforts cease,” Hall said.

Back in 2021, he added, the Chamber took a voluntary cut from receiving 67 percent of the revenues to 56 percent due to the city facing budget constraints at the time. Over the last few years, he said the Chamber’s tourism branch has seen increased costs for AI tools to track where visitors are coming from and going once they enter the community.

He went into further details about tourism efforts and presentations to various statewide organizations with a focus on economic return on investment to the community along with some of the “unconventional” events they’ve drawn to Marshalltown — the state high school eSports showdown three times a year, a powerlifting conference led by Jake Reynolds of Black Iron Barbell, a recent 16″ Softball Hall of Fame ceremony and pro wrestling showcases, to name a few.

“These events and activities. The recruitment and retention of these events takes considerable staff time, conversations, collaboration and dollars to invest in short-term needs and long-term growth,” Hall said.

Most sporting events and conferences, he noted, require bid fees ranging from $500 to $10,000, and the Chamber needs sponsorship money to even be at the table. He highlighted some of the projects the organization has invested in, including the first phase of Marshalltown Arts and Civic Center (MACC) renovations, YMCA/YWCA pool upgrades, the little league fields, the American Legion golf course and eSports endeavors.

Compared to similar communities, Hall said Marshalltown is still lagging behind in large multipurpose sports facilities and 500-person convention centers, which has cost the community opportunities to host larger conventions. Currently, Marshalltown has 200 fewer hotel rooms than Fort Dodge, and Hall worried that further cuts would jeopardize efforts to level the playing field.

Hall then shared the success of bringing the annual gathering of the annual Jeep Club to the Oak Ridge MX Park near Garwin and the investment in “Meet in Marshalltown” rubber ducks, which are shared as tokens of appreciation between Jeep owners. If the Chamber’s revenue share is reduced, he predicted it would lead to cuts in local events, capital project investments, sponsorships and advertising.

“In essence, what it does is it just makes it harder for us to compete. I know the budget issues that you all are facing. I’ve sat in the council meetings and reviewed all the packets,” Hall said. “What I can say is, and I’ll continue to reiterate, is (that) the opportunity is to grow out of these challenges, but we cannot cut ourselves to financial prosperity as a community. And if we want to get back to the thriving times, it’s gonna take growth and it’s gonna take investment. And I would say that from a tourism perspective, our return on investment has been substantial and can continue to be, but we would ask respectfully that you continue at that 56 percent funding and allow us to continue to grow. While we grow, your budget grows as well.”

Councilor Mark Mitchell asked Hall about the Chamber’s total assets, which he responded were somewhere around $2 million while noting that “a good portion” was pledged as part of a five-year economic development campaign. Overall, Hall said, the organization’s budget comes from about 50 percent public and 50 percent private funds. Tourism efforts are publicly funded, Chamber efforts are almost entirely privately funded and economic development efforts are split roughly 50/50 between public and private.

Mitchell asked how much property the Chamber owns, and Hall replied that the Marshalltown Industrial Park (MIP), a branch of the Chamber, has several properties at the new industrial park on the east side of town along with two downtown properties.

“Why don’t we liquidate some of that and use that money instead of coming to the city and wanting money?” Mitchell asked.

Hall said those dollars were raised privately and specifically put toward those efforts, and Mitchell wondered about the plans for developing the properties. Hall told him he didn’t come prepared to run through each parcel but could do so on an individual basis in the future. Councilor Melisa Fonseca sought a more detailed breakdown of how the Chamber is funded and how its operations are divided, and Hall said it was roughly one-third tourism and hotel/motel tax, a third is membership and a third is economic development.

Councilor Jeff Schneider spoke on the importance of seeing the long-term picture and “planting seeds” for the future and felt the council would be foolish to abandon its agreement with the Chamber. In response to a question from Schneider, Hall said the 56 percent figure would be agreeable to the organization in light of the 11 percent reduction a few years ago.

“I think the values of the Chamber of Commerce are pretty well aligned with our economic development that we want to do here for the city. I’m gonna support continuing with the 56 percent,” Schneider said.

Fonseca then asked Webb what other entities or organizations could qualify for the 50 percent of the funding, and Webb said it would depend on their scope of service. Not all cities work directly with their Chamber, she noted, but Webb didn’t feel they had the expertise internally.

Hall referenced measurables and metrics to track the way the city funds are used and said they plan to bring forward a contract including those details, and Councilor Greg Nichols expressed a desire to see comparisons with other similar sized communities and felt the city had “a lot to promote.”

Thompson commented that the $125,000 annual allotment for the Arts+Culture Alliance could be paid out of the hotel/motel tax along with cultural events that would not have to be channeled through a nonprofit along with parks. He added that the Chamber wasn’t advertising the business he formerly owned, the UPS Store, during conventions, and felt it amounted to free advertising for hotels and restaurants, allowing them to make the most money. He also sought data on overnight stays from conventions and wondered aloud if the Chamber’s efforts were playing a role in generating the revenue.

Hall said the Chamber works on a broad range of marketing efforts despite admitting that a dollar for dollar return on conventions as compared to the amount of hotel/motel tax generated would be missed every time.

“What we can show is the dollars used for improvement of conventions matched for the dollars back, and that’s how we try to work on some of those, in particular, those traveling convention activities that they happen one year in one community and then they move somewhere else,” he said. “We know, based on historical data, how many folks are staying overnight, so we measure our hotel/motel tax investment into it based on that, and we measure it typically based on the overall hotel/motel tax investment, not just a portion… So we end up spending a disproportionate amount, but we know that it’s necessary for supporting our hotels and then the retail restaurants.”

While noting that the businesses are generating the money, Thompson asked why restaurants and hotels couldn’t do their own advertising instead of having another organization do it for them. Hall responded that it was a matter of reaching people who primarily live outside of Marshalltown as they will be the ones visiting and staying in hotels.

During the public comment period, Mark Eaton referenced the recent federal investigations into organizations like USAID and the effect it could have on Main Street USA, and he reiterated a previous call to formally merge the Marshalltown Central Business District (MCBD) and the Chamber, which already share a building. The MCBD collects no membership fees and receives about $94,000 from the city annually to operate, he said, so combining the two organizations could free up that money.

Eaton also voiced his frustration with the Chamber receiving public money from the city and Marshall County but not having any county business people on its board of directors while instead including the city administrator and a county supervisor along with Marshalltown Community School District (MCSD) Superintendent Theron Schutte and Iowa Valley Community College District (IVCCD) President Anne Howsare Boyens, both of whom serve in ex-officio roles.

“According to state code, economic development activity is supposed to be open records, and we don’t have open meetings and we don’t have open minutes from the economic development that the Chamber is doing,” he said. “Give them the money if we have it, but we need to have more open records and more open meetings and more open dialogue on the taxpayer portion of the activities.”

Ladehoff took the opportunity to ask Eaton if he believed that any entity receiving tax money should have open books, to which he responded “Correct.”

“Your business received tax money from the federal government. Can I walk in and look at your books?” Ladehoff asked.

“Nope, there’s no law that says that. There’s no law that says you have the right to do that, but there is a law that says you have to, if you got taxpayer money, any nonprofit that gets taxpayer money is open records, just like we didn’t inspect your business that you got state grants for,” Eaton replied.

He added that the state’s board overseeing open records has ruled in favor of emails, even to a public official’s personal account, are subject to Freedom of Information Act (FOIA) requests, but it’s hard to know what to request when the meeting agendas aren’t made public.

Ladehoff said there would be “winners and losers” among Iowa communities in the next several years and referenced Keokuk, which has lost its three biggest employers and its hospital while the population plummets. He served on the council when the original hotel/motel tax was implemented, and the split was then 90/10.

“Things don’t just happen here in Marshalltown. Some people think they will, and that’s fine. But in my opinion, having been part of so many different activities here in town, half the time the Chamber’s in there somehow — helping, directing, providing manpower, funding, that type of thing,” Ladehoff said. “So in my opinion, I’m gonna agree with Jeff. I think we stay at the 56 percent. I believe we can look at it again next year depending on what the state gets to us this year. We’ll have time to look at that.”

Councilor Barry Kell worried about rushing to a decision without assessing the impacts and said that while the 50/50 split would return about $37,000 to the city, it could mean losing opportunities in the future. Kell referenced the recent announcement that the state swimming meet is moving to Iowa City.

“I’m tired of losing, and that’s what it seems like we continue to do is lose events, lose opportunities. Whether the Chamber helps us change that course or not, I think that’s open for discussion, but us making a decision here, we’re looking at dollars and we’re not looking at the totality of what could come with any decision we make,” he said.

Nichols motioned to keep the split at 56/44 for budgeting purposes but also expressed his support for more open records on how the money contributed to the Chamber is spent. Hall responded that he has been involved with Chambers and economic development organizations for over a decade — all public/private partnerships — and he had never been subject to open records laws, which would be a point of contention on his end.

“In regards to open records or open components to this, I’d be happy to discuss what reporting looks like and what that all looks like,” Hall said. “As we’ve continued to promote, one of the pieces as it relates to this public-private partnership is to have the public sector at our board tables to be that observation and additional oversight as it relates to the operations of the organization, and so that is why we have the city administrator on our board is presumably to help serve in that capacity and that role is presumably to help serve in that capacity and that role and bring forth anything that would be of concern or question to the city. But I’m happy to explore what that looks like further and figure out a solution that works for all.”

Thompson wondered if such an arrangement with the Chamber violated city policy and needed to go out for bid, and Steiner said it would depend on whether it was classified as a sole source.

“I think you would have difficulty doing that, but you’re not gonna hire the Oskaloosa Chamber of Commerce to come in to do that. You could put it out for bid,” Steiner said.

Thompson clarified that private marketing firms could perform the work and would “love” to have the city as an account. Kell then made a motion to keep the split at 56/44 for budgeting purposes with a second from Nichols before public commenter Jim Shaw sought clarification on who could bid for the services.

Dave Grieve advocated for the necessity of advertising a community and felt there was more to be done to promote everything Marshalltown has to offer. He said the community struggles most because of its poverty and the fact that its largest employer, JBS, pays “substandard” factory wages.

“If you want to be rich in a town, your number one employer should be the highest payer,” he said.

Ladehoff asked Grieve to “stay on subject,” and he responded that the issue was raising incomes in Marshalltown while also elaborating on the differences between the National Chamber of Commerce and the National Federation of Independent Business (NFIB).

“The Chamber is more for corporate America. The NFIB is for small business. We need to have something that fights for everybody. Everybody needs opportunity,” he said before Ladehoff cut him off to ask if he had any opinion on the hotel/motel tax split. “Go to 50 (percent).”

Schutte, the final public commenter, offered a positive assessment of the local Chamber’s work since he returned to serve as superintendent of his alma mater nine years ago. Compared to the other communities where he has lived over the last 40 years of his career, Schutte credited the work of Hall and his predecessor, Lynn Olberding, as “bar none” the best he had witnessed.

“I think, for the six percent that you’re talking about cutting would just be cutting our opportunity to continue to make Marshalltown the best place it can be for people to live, learn, work and play,” Schutte said.

He credited the Chamber for helping to bring the state eSports tournament to Marshalltown, and despite the impending loss of state swimming, Schutte said the MCSD, IVCCD and the Chamber are working together to put together a successful bid for the state cross country meet in the future. As the leader of the city’s third largest employer, he also touted the Chamber’s efforts to make the community appealing for MCSD staff through its efforts to add housing and amenities like trails, the Water Plaza and the MACC.

“We’re on the right path. I’ve also been in the position that the city council is in having to make tough decisions and cuts. I don’t envy that, and I hope I don’t find myself in that position anytime soon. But I just encourage you to try to do everything you can not to shortchange one of the biggest assets we have for moving this community forward,” Schutte said.

He encouraged the council to keep the funding split at 56 percent. The motion to do so passed by a 4-3 vote with Schneider, Kell, Ladehoff and Nichols in favor and Thompson, Mitchell and Fonseca opposed.

As the discussion wrapped up, Nichols said he would like to continue exploring the metrics and tools to track the effectiveness of tourism efforts, and Mitchell asked for a list of the Chamber’s assets and finances. Webb also promised to check into the open records questions.