Amid pushback and even legal disagreements, the Ely Area Lodging Tax Board has delayed the distribution of lodging tax allocations for 2026.
Despite an earlier decision to partially fund requests submitted by the city of Ely, the Ely Chamber of Commerce and the Ely Tourism Bureau, payments were put on hold Monday and instead will be acted on at a meeting slated for Dec. 30.
That emerged from another contentious meeting of the lodging tax board, one that included protests related to the board’s earlier decisions to allocate $210,000 instead of $315,000 to the tourism bureau, also known as VisitEly.
The board also set aside up to $53,000 for the Ely Chamber of Commerce to help staff at the new trailhead building as well as up to $20,000 to the city of Ely for utilities and maintenance of that new facility.
VisitEly representatives and tourism bureau board members have both challenged those moves and contend they run afoul of the law, citing language that 95 percent of gross local lodging tax proceeds shall be used to fund a local convention or tourism bureau for marketing and promotion purposes.
That was a bone of contention Monday during the meeting at the Morse Town Hall, with lodging tax board chairman Terry Soderberg indicating that he had received assurances from an attorney retained by the board that the distributions to the Chamber and city were legal.
Chamber executive director Eva Sebesta noted that the letter of the law is already being followed.
“It’s the lodging tax board that 95 percent is released to, and they have at their discretion who they are going to work with,” said Sebesta.
Sebesta also cited examples across the state where communities are using lodging tax dollars in similar fashion to what the lodging tax board has proposed.
“To sit here and say the tourism bureau (must receive) 95 percent is totally disingenuous,” said Sebesta.
Soderberg added that he has been in contact with attorney Steve Overum who said what the board has proposed is “fine,” and that Overum noted that Duluth uses its lodging tax dollars to “fund many different entities.”
That generated significant disagreement from some in the audience, with one person shouting that “your attorney is ill informed.”
Ginny Nelson, a local business owner and president of the tourism bureau’s board of directors, also added “I do believe Duluth was grandfathered in to split their lodging tax in different ways.”
Paul Kess, Ely’s representative on the lodging tax board, asked for action to proceed with the payments and said “we would have to undo that decision to not pay these bills.”
“We’ve considered this for quite some time,” said Kess. “We have our attorney’s opinion that what we are doing is legal. There are people who dispute that but our attorney says we can. We can do this for a more balanced approach.”
St. Louis County Commissioner Paul McDonald, who is part of the lodging tax board, suggested waiting until the end of the month before taking further actions.
“I think we have some homework to do as we walk through this,” he said. “I wouldn’t have a problem taking some time. There were some issues brought up today that need to be researched a little bit, in my opinion. I just have some questions that I need to get some insight on.”
“I agree with Paul,” added Fall Lake supervisor Adam Masloski, who is also on the board Kess later reiterated his call that more should be done to support local events that bring people to the region.
“Events have been a big part of Ely’s attraction for quite some time,” said Kess. “I think it’s important to include them in the mix in how we fund these tourism efforts.”
Kess said he was “interested in building tourism off peak so that in the fall and winter we can get more people to fill the hotels.”
The Ely Area Tourism Board’s Abby Dare responded and pointed to a pilot program launched by the tourism bureau in 2025, providing additional promotional support to the Ely Winter Festival, Dark Sky Festival and Ely Film Festival.
She pointed to increases of up to 58 percent in monthly lodging tax receipts last winter as a sign of the success, and longtime Ely Winter Festival director Shauna Vega endorsed VisitEly’s efforts and said they paid off.
But Kess said, “I’m not just talking promotional stuff. As an event gets developed it needs some other kind of support whether that’s printed material or I don’t know.”
The board also heard Monday from Lacey Squier, who has hosted the “What’s Up Ely Podcast” for three years for VisitEly.
The podcast has fallen victim to a budget reduction in light of the uncertainty over 2026 funding, and Squier challenged the board to come up with a vision for utilizing lodging tax dollars.
“I’ve often wondered who’s in charge of orchestrating, conducting the orchestra that is the city of Ely, Ely Chamber of Commerce, and Ely Area Lodging Tax Board,” said Squier. “It occurs to me that through the change toward a more balanced budget as you would call it, it’s you guys. You guys are asserting yourselves as people whose job it is to create a strategic vision for how the tourism bureau and chamber and city will navigate the future... You are the people taking on this charge and I say with total seriousness that I look forward to the strategic visioning session.”
Dare also spoke again and cautioned about the impact that budget reductions will have on VisitEly’s promotional efforts.
“It’s not a modest trim but a structural reduction,” said Dare.
She added “the attack on our wages I feel pretty deeply offended by. Having a tourism economy we have found a way to grow this organization and pay people who do incredible work.”
