By Raiza Giorgi
The Solvang City Council abruptly cut off all city funding and canceled contracts on July 8 with the two local agencies that promote tourism and local businesses.
After recent indications that the council was dissatisfied with both arrangements, representatives of the Solvang Conference and Visitors Bureau and the Solvang Chamber of Commerce had presentations scheduled on the meeting’s agenda.
However, council members emerged from a closed session just before the public meeting and announced that both contracts had been canceled, giving 30 days’ notice, and said they would not hear the scheduled presentations.
The announcement stunned and angered supporters of the two organizations who were in the audience, and both Executive Director Tracy Farhad of the Visitors Bureau and Executive Director Tracey Beard of the chamber left the meeting with looks of astonishment. Neither was available for comment after the meeting.
The contracts with both groups had been approved just two weeks earlier, on June 24, with significant reductions in funding for 2019-20. That night the CVB was funded at $600,000 and the chamber was funded at $150,000, with Councilmembers Chris Djernaes and Daniel Johnson dissenting.
City officials indicated July 8 that they are willing to talk, and possibly renegotiate, with the two groups in the next 30 days. Meanwhile, they said, they have no plan for replacing the functions of the two groups.
The council had listed the purpose of the closed session as “Threatened Litigation,” but gave no reason as to why that allowed discussion and action on the two contracts.
After the session, Interim City Attorney Chip Wullbrandt said the vote was unanimous to give both agencies a 30-day notice. He would not say whether litigation had been filed or only threatened.
After the meeting, a Valley Star reporter asked Mayor Ryan Toussaint whether he envisioned renegotiating.
“It’s time for a fresh start and it is unfortunate that emotions have turned the Chamber and SCVB budget issue into a divisive emotional battle. The Council’s unanimous action provides the Chamber and SCVB with an additional short term funding while the City reviews its marketing needs in light of current budget constraints. This does not preclude the Chamber and CVB from future funding,” Toussaint said in an email message.
“It is important that the community understands that this Council is very supportive of the business and tourism industry. However, we can no longer ignore infrastructure needs of the community in favor of relational politics,” the mayor continued.
Several audience members gasped when the council announced its decision, and they encouraged the council to change it.
“I am absolutely appalled at the way you people have acted towards the CVB and the chamber. You are a bunch of Chicken S SOBs. You have virtually no idea of what the tourism council does and the amount of income generated by the tourism industry,” former councilman and business owner Ed Skytt told the council.
“None of you have experience with tourist trade … You have no experience promoting tourism and now wanting to hire another firm that has no history with the city of Solvang, or what we have gone through in the last 35 years to bring Solvang to what it is today,” Skytt added. “We will lose bed tax, sales tax and market share to other communities and wonder why there’s a shortfall in money. I have absolutely zero respect for this City Council,” Skytt said.
The Visitors Bureau is the city’s official tourism promotion agency, and the city has funded it for years in the belief that it has been effective in generating city revenue. Sales tax and hotel “bed tax” revenue account for more than half of the city’s general fund.
This year, the city’s general fund revenue is close to $9.5 million, of which sales and transient occupancy taxes (TOT) or hotel “bed tax” make up more than 65 percent, according to the budget.
TOT has increased 5.6 percent annually over the past five fiscal years to almost $5 million annually, and sales tax has increased annually just over 5 percent to $1.5 million.
Solvang resident and business owner David Rasmussen urged the council to fund the CVB because it has done a wonderful job.
In the public records binder of letters that are submitted after the council’s meeting packet is distributed, nearly 20 other local business owners and residents stated their support of the CVB and Chamber, saying they add value and help their businesses thrive.
“Solvang CVB – Tracy and her team play an imperative role in Solving success as a tourist destination and bringing visitors here to spend money which in turn supports our community and helps provide essential tax revenue, jobs and quality of life for residents,” wrote Jody Williams, a business owner and assistant director of the Elverhoj Museum of History and Art.
Jesse Verkler, who is an owner of the Hamlet Inn, said the work of the CVB has had a direct positive impact on her business.
“The CVB’s efforts brought in guests from all over the world — including busloads of Chinese tourists who come back with family for overnight stays,” Verkler wrote.
According to her booking.com profile, she said, Chinese guests account for 60 percent of her overseas visitors.
Chumash Tribal Chairman Kenneth Kahn also wrote in support of the chamber.
“Without the Solvang Chamber and its contribution to planning and participating in regional events, there will be fewer events in Solvang. Fewer events mean fewer reasons to visit Solvang, and without multi-day events there will be fewer multi-day hotel stays,” Kahn wrote. The tribe owns several local hotels.
The city’s overall budget of $19 million for the coming fiscal year is balanced with a surplus of about $575,000.
The CVB’s annual budget has been between $735,000 and $800,000 for the past several years. The chamber’s funding in 2016-17 was $16,000, but since then it had increased to $85,000 and a year ago it received $250,000 to step up marketing and educational programs for local business owners.
“This will have a devastating effect of the city’s economy. No one could do a better job than Tracy Farhad and the CVB. The amount of money they initially requested is within a normal range, unlike what council members think. Just look at Leavenworth, Washington. People from Solvang actually helped them with their town’s identity and they give their chamber and tourism agencies a healthy budget,” said local businesswoman Susan Williams, a former CVB board member.
Leavenworth had a population of 1,965 people as of the 2010 census, and the city website says the town was inspired and assisted by Solvang. Leavenworth’s town center is modeled on a Bavarian village. Their 2019 budget indicates they dedicated $351,629 to their chamber and close to $600,000 on tourism and marketing.
After his opposition to the funding at the June 24 budget approval meeting, Djernaes said in an email that “I have several ideas for lean team leveraging, smart marketing, social platforms, data analytics to bring more high spending tourism.”
Toussaint said that while he is pro-tourism, there wasn’t a way to account for the increase in revenue to be attributed solely to the efforts on the CVB and chamber. He added that the council didn’t have a plan of action if new contracts couldn’t be negotiated within the 30 days.
The next council meeting is scheduled for Aug. 12, more than 30 days after the decision to end both contracts, so a special meeting would be required to approve any new agreements.
Technical problems prevented the routine live streaming of the July 8 meeting, but it was recorded and the video has now been posted on YouTube.
It can be viewed by going to cityofsolvang.com and clicking on “City Hall” and then “City Council,” or by searching YouTube for “Solvang City TV.”