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Shenandoah council to review CVB governance, auditors warn narrow allowed uses for hotel tax
Summary
Public comments and council discussion on July 9 urged formation of a CVB oversight board and clearer marketing strategy; staff warned the hotel occupancy tax (CVB) is tightly restricted and auditors/comptroller scrutiny limit permissible spending without legal justification.
West Stevens, during the citizens forum, urged the council to adopt a board to guide the Convention and Visitors Bureau’s marketing strategy, saying the city is drawing about $2,000,000 a year in hotel-occupancy tax revenue and lacks a cohesive plan for spending it.
City staff cautioned council members that state and auditing rules tightly constrain how hotel-occupancy (CVB) tax receipts may be used. Lisa, the staff member presenting the budget, said the city must break out CVB expenditures to the comptroller each year and that auditors review whether items are truly CVB-eligible. She cited past examples where local projects paid with CVB funds were subsequently questioned by auditors, requiring repayment or reclassification.
Council members and staff discussed allowable categories — including advertising, tourism promotion and, under specific statutory carve-outs, historical restoration and preservation — and emphasized that legal review and clear documentation are essential before using CVB funds for events or amenities. One council member summarized the constraint bluntly, saying the lack of a legislative carve-out limits what cities can use CVB funds for to tourism-focused activities.
Several council members asked staff to prepare benchmarking of peer CVBs, a clearer inventory of upcoming events and sponsorships, and options for a governance model that would bring hotel operators, council members and staff together. Staff said the CVB director was not present and the council would revisit CVB specifics at a future workshop with more detail.
The council did not take formal action on CVB governance on July 9; staff committed to provide comparative benchmarks, a clearer accounting of current CVB expenditures, and legal/audit guidance for proposals that aim to drive ‘heads in beds’ while avoiding auditor disallowance.
