Watertown council approves $90,000, three-year grant for Downtown Watertown Collective with accountability MOU

The Watertown City Council voted Feb. 2 to approve a three-year funding commitment of $90,000 to the newly formed Downtown Watertown Collective, agreeing to a memorandum of understanding the mayor said will ensure city oversight and performance reporting.

City Manager Alan Steger told council the request—$30,000 a year for three years—came after the Collective incorporated in December and outside the normal budget cycle. He said the city could cover the initial year from its ‘third-penny’ lodging and entertainment fund, which he described as generating roughly $1.3 million a year and holding a fund balance in excess of $1 million.

A delegation of downtown business owners and community leaders urged support in public testimony. "This new organization would boost their brand and promote existing business and foster the creation of new businesses in the Downtown Watertown neighborhood," said Alicia Hollien, a Collective representative. Megan Olsen, another Collective organizer, told the council the group is seeking a three-year launch model and emphasized private backing: "We are not asking to stay on the city books past 3 years," she said, noting a matching grant from the Watertown Community Foundation and early membership growth.

Council discussion focused on two fault lines: whether the city should act quickly to seize momentum and whether the council had enough time and detail to safeguard taxpayer dollars. Council members who supported the funding cited the 2050 strategic plan and research showing downtown investments often return higher local economic multipliers; opponents asked for more time, specific spending restrictions and fuller opportunity for all council members to weigh in.

Councilman Jerns moved to defer action for two weeks to gather more input and allow absent council members to participate; that motion failed on a roll call vote. Finance officer Bob Zine then called the roll on the funding motion; the record includes Heuer Aye, Pauline Aye, Mormon Nay, Durrance Aye, Shutti Aye and Allen Aye. The mayor declared, "Motion carries."

To address accountability concerns raised in public comment and by council members, the council accepted a memorandum of understanding that sets a three-year term, limits how grant funds may be spent without prior written approval, requires the Collective to keep and provide financial records to the city, obligates the organization to produce an annual impact report, and lists programmatic expectations including four signature events per year.

The council approved the grant alongside several routine items on the agenda, including a contract closeout with Helms & Associates and location transfers of liquor licenses for Downtown Sushi and a Cowboy Country business, plus two plats. The administration said the MOU and reporting requirements are intended to become a model for future city grants to outside organizations.

Mayor (speaking as mayor) framed the council’s action around accountability: "We are going to stop calling them donations. We are going to call them accountable grants." The council’s vote closes the procedural step; next actions include finalizing the MOU language, working with the Collective on a job description and hiring plan for a downtown coordinator, and establishing the reporting schedule the MOU requires.

The council returned to other business and adjourned after brief reports from the city manager on upcoming meetings and a planned March rollout of Code Red emergency notifications and an ethics hotline.