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Hotel/motel BID petition to come before council tonight

A petition to place a $2 nightly fee on Mitchell hotel and motel rooms is slated to come before the Mitchell City Council tonight. The petition calls for creating a business improvement district (BID) that would tax hotels and motels is the final...

A petition to place a $2 nightly fee on Mitchell hotel and motel rooms is slated to come before the Mitchell City Council tonight.

The petition calls for creating a business improvement district (BID) that would tax hotels and motels is the final piece in the financial puzzle for the planned second ice rink at the Mitchell Activities Center. City officials, and the general manager of two Mitchell hotels, said last week they are close to finalizing the BID.

A BID is a self-taxation arrangement in which businesses agree to pay a fee, with the money going toward a specific project. Council President Jeff Smith said while the BID petition will be presented tonight, it will take some time before it can be finalized.

"(City Attorney) Carl Koch contacted me and relayed that he is working on the legal aspect of the hotel BID and there is a formal process to start such a BID so it cannot be approved Monday night," Smith said in an email to The Daily Republic.

Dave Helleloid, the general manager of the Days Inn as well as the Comfort Inn and Suites, both in Mitchell, is leading the effort to create a BID, which would expire as soon as $400,000 is collected. That would be added to $2.5 million to pay for the MAC expansion.

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Helleloid said the BID is being pitched as a way to support the ice arena. Adding a second rink would allow more hockey tournaments and other events to be held in the city. That would bring more people to Mitchell in the winter, supporters claim, boosting hotel and motel revenue, along with other businesses.

However, not all hotel/motel owners in town are backing the BID.

Bryan Dixon owns the Coach Light Motel, located at 1000 W. Havens Ave., and is against the BID, at least how it is currently structured.

"At the present $2 a room charge, I do oppose it," Dixon said Friday. "My rate, working on a single rate, it increases our tax rate by 13 percent. A more expensive hotel room on the interstate, it increases it 10 percent. I don't think my guests should have to pay 3 percent more than everybody else."

He said a sliding scale would be fairer, with hotels on the highway charging a $2 fee, and motels in the city charging $1. Dixon said he isn't convinced the BID will do much for his business.

"The ice sheet is not going to benefit my small hotel at all. The hockey teams aren't going to stay here; we don't have a pool and we don't have that many rooms," he said. "I'd like to see something at the Corn Palace. I wouldn't be opposed to a BID if it was for the betterment of the town."

Dixon attended a meeting last week with hotel and motel owners and Council President Jeff Smith. Despite claims last week that there were at least nine owners behind the BID, Dixon said that may not be accurate.

"It was still up in the air on how many had officially signed that," he said.

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Smith said five motel owners attended the meeting.

"This meeting was very cordial and professional. We basically talked about how a hotel BID will be used, the dollar amount of the BID and the length of time," he said. "The hotel owners had very good questions and we had a great conversation. We have 17 hotels in Mitchell so it is very tough to get everyone in the same meeting together so it was beneficial that five of the owners took time to discuss the potential BID. We will continue to meet and discuss the potential hotel BID and hope to have an answer in April."

Dixon charges $41.99 per person per night. Of that, 8.5 percent is tax. Adding another $2 will dramatically increase the amount of taxes his guests pay, he said.

Construction workers often stay at his motel for a week or more at a time, and "grandmas and grandpas" spend a night or two, Dixon said. Adding additional costs to these people is a bit of a burden, he said.

"It's not always just the tourists," Dixon said. "That's what they keep trying to say."

If the BID is approved, and collects $400,000, that would be added to $2 million that the city raised through bond sales and pledged for the MAC project, and another $500,000 that the Mitchell Ice and Hockey Association has promised to donate.

In addition to discussing the BID petition, the council is scheduled to consider approving the bids for work on the project. The entire project is now forecast to cost $2.875 million, but estimates for all work and items have yet to be submitted.

"As I understand what will happen at the next council meeting is actual bids from contractors that add up to $2,561,155 will be presented for approval," Smith said. "The funding sources will be $2,000,000 from the city bonds, $500,000 commitment from the Mitchell Skating and Hockey Association, and $61,155 from contingency funding.

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"This will allow the project to proceed in April in hopes that the completion date will be this fall," he said. "Then if a hotel BID is presented and approved, the other items that add up to approximately $400,000 will be put forth for possible approval."

To put all the money in place, the council will consider approving Resolution 3089, a contingency transfer of $61,155 for the MAC project, and will also hold the first reading of Ordinance 2432, a supplemental appropriation of $374,543. The money will come from the city general fund and would be repaid from the BID, if it is approved.

Mark Puetz, the project coordinator for Puetz Corp., which created the design for the project, said his firm presented the city with two options -- A scaled-down version at $2.6 million, and an option with more restrooms, locker rooms, an enhanced lobby area and other improvements for $2.9 million.

"The city chose the latter as it would create a more complete facility," Puetz said.

The bids that were opened last month included:

--$1,315,604 to Palace Builders, of Mitchell, for general construction.

--$623,853 to Rink Tek, of Little Canada, Minn., for rink construction.

--$234,000 to Puetz Corp., of Mitchell, for architectural and inspection services.

--$150,895 to Paulson Sheet Metal, of Mitchell, for heating, ventilation and air conditioning.

--$106,091 to Powertech Electrical Services, LLC, of Brandon, for electrical.

--$104,378 to Krohmer Plumbing, of Mitchell, for plumbing.

--$58,000 to Howe Heating & Plumbing, of Sioux Falls, for fire suppression.

Cost estimates for some other items, including a sports floor to cover the ice arena for non-skating events, a sound system, bumper boards, an additional engineering contract for testing during construction and a contingency pool for unforeseen costs, have yet to be compiled.

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