Mitchell City Council has a new agreement with the Chamber to run the Palace gift shop. Here are the details.
Among the most notable changes are increasing the Chamber of Commerce’s rent to $140,760 – an increase of about $20,000 from the previous contract – and the city collecting 5% of all gross sales over $750,000 from the Corn Palace gift shop
MITCHELL — The Mitchell Area Chamber of Commerce will be running the Corn Palace gift shop this summer after the Mitchell City Council approved a one-year agreement with the organization.
While some city leaders were seeking to end its gift shop contract with the Chamber of Commerce in the spring and have Corn Palace staff take over the operation, a new agreement that increased the Chamber of Commerce’s rent by $20,000 to operate the seasonal gift shop inside the Corn Palace was unanimously backed Tuesday during a regular meeting by the council.
Mayor Bob Everson and Council President Kevin McCardle were among the city officials proposing to part ways with the nonprofit organization running the summer gift shop. Everson said the revenue made from gift shop sales could have reduced the deficit that the Corn Palace operates on each year , which has hovered around $230,000 to $350,000 in recent years.
“As we have been looking at this, the Chamber and Mitchell Area Development Corporation came forward with a proposal for one year,” Everson said.
According to the new gift shop agreement, the one-year contract that the council approved for the 2023 summer season has several changes compared to the previous agreement. Among the most notable changes are increasing the Chamber of Commerce’s rent to $140,760 — an increase of about $20,000 from the previous contract — and the city collecting 5% of all gross sales over $750,000 from the Corn Palace gift shop.
Under the terms of the existing contract that will soon expire in August, the Chamber of Commerce rents the Corn Palace floor from the city for $120,000 to set up the gift shop during the summer months. It’s unclear exactly how much revenue the summer gift shop makes, however, a 2018 tax report showed the Chamber of Commerce collected a little over $1 million in revenue from gross sales of inventory, according to the organization's most recent publicly available tax reports.
City Attorney Justin Johnson said the new contract will be set up to allow the city to decide whether to renew the gift shop contract with the Chamber of Commerce a year in advance. For example, if the council decided to renew or end an agreement with the organization for the 2024 tourism season, it would have to be decided by May 1, 2023.
Another key change in the contract is adjusting the Chamber’s rental fee with the rate of inflation and consumer price index, which has been soaring at a rapid pace over the past year.
“The big changes are this is going to be a one-year deal, and we’ve done some multi-year deals in the past. If we were going to do another contract for 2024, the intention would be for us to approve one of those by May 1 of next year so the Chamber has plenty of notice and they know whether they are going to have it that following year,” Johnson said.
Geri Beck, CEO of the Mitchell Area Chamber of Commerce, called the events leading up to Tuesday’s new contract agreement a “broken road.” Beck was thankful the council allowed the nonprofit organization another opportunity to run the Corn Palace gift shop.
“We’re glad to have the tourism concessions for another year, and hopefully we can agree for another year by May of next year,” Beck said during Tuesday’s council meeting.
Gift shop sales have been down about 25% since the start of this summer’s tourism season, according to Beck. With the tourism season getting in full swing, it’s unclear how Mitchell’s main tourist attraction will fare this summer amid record-high gas prices.
For over a decade, the Chamber of Commerce has operated the seasonal gift shop inside the Corn Palace and its year-round store across the street and collected the profits made from both operations, with the exception of the $120,000 annual rental fee that the nonprofit pays to the city. The Corn Palace Gift Shop inside the 601 N. Main St. building is not part of the contract agreement with the city since the Chamber of Commerce owns the respective gift shop.