Ely’s tourism bureau will get at least two-thirds of what it’s asking for in funding for 2026, and members of the Ely Area Lodging Tax Joint Powers Board left open the possibility that additional money may be approved.
The debate over how to spend area lodging tax proceeds got to that point during an at-times contentious meeting earlier this month.
The tourism bureau, which employs local contractors and has in recent years received 95 percent of the funds to market the area, pressed for a continuation of that practice next year.
But lodging tax board members, who represent local governments, have voted to also spend up to $20,000 with the city of Ely, to help cover maintenance and operations of the new trailhead building, as well as up to $53,000 with the Ely Chamber of Commerce to help staff that facility.
Those entities will also get just two-thirds of those allocations, for now, after a vote of the lodging tax board.
St. Louis County Commissioner Paul McDonald said he preferred the respective entities “share the pain” if there isn’t enough money available to meet all of the requests.
Barring an increase in revenues, it appears reserve funds must be used to fully fund each entity’s request in 2026, although the lodging tax board is taking steps to get more money and gain better lodging tax compliance from short-term rental units in the region.
“There’s a certain amount of people, about a third, that refuse until there’s nothing else they can do, whether you work on shutting them down,” said McDonald. “It’s going to take some time.”
The better than two-hour meeting on Nov. 5 included disagreement over whether the joint powers board could allocate funds to the city or the Chamber.
“We’re a little bit concerned that using some of this money to pay for utilities and snow plowing for a cityowned building is on the table,” said Ginny Nelson, a member of the tourism bureau’s board of directors.
But Terry Soderberg, a Morse Township supervisor and chair of the lodging tax board, said he’s been assured it’s a legal expenditure.
Ely representative Paul Kess agreed.
“We did check with our attorney to see if they are legitimate expenditures and they are,” said Kess.
The proposed additional uses for lodging tax revenues was a bone of contention for much of the meeting.
Abby Dare, the tourism bureau’s executive director, cited statute language and charged the funds should be used for marketing and advertising.
“Keeping the lights on isn’t advertising and marketing,” she said. “We have to tell people we built it.”
Eva Sebesta, executive director of the Ely Chamber of Commerce, said the Chamber found numerous examples across the state where lodging tax dollars were being used to help entities staff visitor centers.
“Utilities for a visitor center, operating costs for a visitor center, those are legitimate uses,” said Sebesta.
Sebesta added “there has to be somebody who answers the phone, works with those people once they’re here and that’s what the Chamber has done for over 100 years. If somebody wasn’t answering the phone or showing up to talk about trails, isn’t that marketing dollar wasted? We’re the boots on the ground who are helping to sell people on Ely.”
Dare has noted the funds to the tourism bureau support local contractors who work on a part-time basis to promote the region via an array of platforms.
“We feel professionally discredited,” said Dare. “There are people who work for the tourism bureau who don’t know if they’ll have a job next year.”
Discussion veered as well into an accurate count of Ely’s tourism numbers and the determination of whether ongoing marketing efforts are working.
The tourism bureau’s Whitney Woods said data shows both nationally and in Minnesota that tourism is down.
“Over 50 percent of the businesses this year in Minnesota reported lower traffic and profits this past summer,” said Woods. “In northern Minnesota we’ve seen an 18-to-20 percent decrease in Canadian arrivals due to the economic and political climate. Those are the headwinds that we are navigating. This is a difficult market. That’s why maintaining marketing is essential right now.
Woods pointed to a Colorado case study that showed a cut in marketing led to a 30 percent decline in revenue.
Woods said the tourism bureau has already made some adjustments and “strategic reallocation” in how funds are spent, and that the tourism bureau is in better position to do targeted marketing.
“One of the reasons it doesn’t work very well when you outsource marketing down to the Cities, they can not pivot the way we can,” said Woods. “We are on the ground and can change marketing strategies.”
Woods added “it looks like a big chunk is going to wages here,” but noted that spending with outside agencies will also fund wages “and the people who are doing the work.”
“Every dollar spent on local salaries, it circulates, and it’s going to get more work done and going to get better work done and it’s going to stay in Ely,” said Woods.
Local resort owner Bob LaTourell, who is on the tourism bureau board, said lodging tax spending has evolved from an era when “we bought a bunch of magazine ads.”
“We are invested in having a good plan here and spent a lot of time doing that,” said LaTourell. “Who’s the architect to do something better?”
Longtime local resort owner John Schiefelbein also chimed in, adding “Ely’s a tourism town. Look at the number of cars here from May to September. It’s a whole lot different in January, February and March.”
The debate flowed back to the best use of lodging tax dollars, and Sebesta reiterated that “visitor centers across the state are operated by lodging tax dollars. Visitor centers across the state are not doing this illegally. I realize it’s very different from what’s been done before, but what the city is asking for is not something that’s unheard of and is actually a common sense use of lodging tax dollars across the state.”
Council member Adam Bisbee called lodging tax dollars “the gas” and added, “I feel like we can go a lot farther with that money if we operate more efficiently.”
Another Ely councilor, Emily Roose, said, “I understand the visitor center is very important and that tourism dollars can go to that, but I don’t feel it’s being done effectively.”
Dare added “our whole plan is (based on receiving) 95 percent. If we get significantly less, things will be different in our plan. To trim off $80,000 or whatever would be a huge deal and affect what we’re doing.”
Kess suggested alternatives including a 50 percent allocation up front and revisiting the issue later on, but the group ultimately settled on a two-thirds allocation, to not only the tourism bureau but the city and Chamber as well.
He also defended his position in the wake of a council vote to back the tourism bureau’s request for $315,000.
“I asked both the clerk and the mayor and a councilor, was it a recommendation to me or do I have the freedom to vote as I see fit? And all three of them said I do have that discretion,” said Kess. “The city always does have the option to replace me on this board.”
