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August events drive $23,000 in revenue from Mitchell's hotel BID

A busy August stuffed the city of Mitchell’s coffers with nearly $23,000 from a new $1-per-night tax on occupied hotel and motel rooms. The tax, which the city started collecting Aug. 1, is imposed on the city’s 17 hotels and motels through a business improvement district. A BID is a self-taxation arrangement in which businesses agree to designate the tax revenue for specific projects — in this case, an ice sheet and a sports authority.

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The city collected $22,702 from the BID for August, according to Finance Officer Marilyn Wilson.

The city began collecting the BID tax at a busy time for the city’s hotels and motels, with Dakotafest and the Corn Palace Festival both drawing large crowds to the city in August.

“I was pleased with the numbers,” said Mayor Ken Tracy. “I think it’s a good start.”

An unofficial survey conducted by The Daily Republic in May found the city’s hotels and motels had a combined total of 1,081 rooms. That means if every hotel and motel room in the city had been occupied every night in August, the city would have collected $33,511. Based on the $22,702 actually collected that month, the city’s hotels and motels had an occupancy rate of approximately 68 percent.

Half the revenue generated by the BID, or 50 cents of every $1 imposed, up to $400,000, will be used to help fund the ongoing construction of a second indoor ice sheet at the Mitchell Activities Center. The $2.8 million expansion of the MAC should be largely completed by the end of the month, according to Parks, Recreation and Forestry Director Dusty Rodiek.

The other half of the BID revenue will be used to create and fund a local sports authority. The goal of the sports authority will be to create and attract more events, and get more people staying overnight in the city.

The half of the BID tax for the sports authority will expire after three years. If BID tax collections for the ice arena haven’t reached $400,000 by that time, collections would continue at 50 cents per room, per night until the $400,000 threshold is reached. Once that threshold is reached, the tax would end.

A sports authority committee has already met multiple times, Tracy said.

“I think that we’re going to be able to utilize that money to enhance our room rentals throughout the year,” he said.