Two potential sources of city funding exist for local tourism in Kodiak. One is annual revenue from the city’s bed tax, which is generated by vacation rentals, like AirBnB. The other is a sort of city-maintained savings account that has been growing over the past several years.
In fiscal year 2019, for instance, the city had close to $586,295 in its Tourism Development fund. Earlier this year, that fund was up to almost $1 million by end of March that number had risen to $998,253.
Acting City Manager Josie Banke said there are no parameters on how money from that fund can be spent, other than to benefit Kodiak’s tourism.
“In knowing that, in seeing that, and watching it [the fund] grow, we are looking ideas from Discover Kodiak and their board to promote tourism to Kodiak. Banke said city management or Discover Kodiak can request funding for projects that the city council can then approve and pull money out of the Tourism Development fund to finance the project.”
Discover Kodiak, being the local visitor’s bureau, has a specific agreement in place to receive $108,000 annually in city funding. There are only a couple of “council-approved tourism programs” in town, meaning Discover Kodiak is the main one recognized by the City Council. But if the council does not spend money in the Tourism Development fund on Discover Kodiak or other tourism projects, then it essentially stays where it is, without earning interest or benefiting local tourism projects. According to the city’s draft budget for fiscal year 2025, roughly $300,000 could be taken out of the Tourism Development Fund’s balance this year to be used for an unnamed project, potentially a pocket park downtown.
“I really, truly thank each and every one of you that support local tourism. I think it is the sort of renewable resource in our community. I don’t think that Kodiak will ever not have people that want to come here, because we’re such a special place,” Brock Simmons, the executive director of Discover Kodiak said.
During the council’s work session last week on May 7, he highlighted how his organization’s funding from the city has remained flat for the past several years, despite more money being available from the city’s growing tourism account.
“The acting city manager and myself have been working on an addendum, an amendment to the Discover Kodiak and city financial contribution contract. I think that’s like Marty had said earlier in the meeting [work session], that number has not been moved for at least over a decade,” Simmons stated.
The current agreement between the city and Discover Kodiak is in effect through the end of June, 2025.
Simmons said if he had more money he would add a third employee, full time, to the small Discover Kodiak staff so he can continue to expand and grow local tourism. The organization is also looking to partner with other entities in Kodiak who are involved in tourism, such as the Alutiiq Museum and the Island Trails Network (ITN). Simmons told KMXT that he sees tourism as a way to fill the local economic gap left by the fishing industry’s current struggles.
“And unfortunately, it’s just the times we live in, that things are getting more expensive; publications are getting more expensive, website development and management is getting more expensive,” Simmons said.
Kodiak sees thousands of tourists every year, which means the money from local tourism will likely keep going up, through cruise ships and independent travelers.
Per city code, up to 70% of the annual bed tax revenue rate which is set at 5% on all transient rooms in city, can go directly to a council-approved tourism program each year. Twenty percent or more for tourism enhancement projects, such as beautification within the city, development of which shall be solely at the council’s discretion; and ten percent for the administrative costs associated with such programs. Whatever isn’t used from the year’s bed tax revenue goes into the Tourism Development fund.
Banke said this fiscal year [2025], the city is projected to take in roughly $318,540 in bed tax revenue from vacation rentals, which is about $30,000 less than 2022 and 2023.
“Revenue used to come in through sales tax for long term rentals, and now that revenue is coming in as bed tax for these Vacation Rentals by Owners (VRBOs), Air BnBs, and so that’s why we are seeing the increase,” Banke explained.
That means Discover Kodiak would be eligible to receive $222,978 from the city. But the agreement it signed with the city last year on July 31, 2023 provides just half that amount, $108,000, on an annual basis.
During the May 7 work session, the council could not take any formal action, but council members seemed supportive of the idea to increase the city’s contribution to Discover Kodiak.
“In being a funder, as the city is, I’m interested in outcomes. That’s what I am interested in,” Kodiak Mayor Pat Branson said. “In those contracts that we have, and we have several out there with different entities in town, and we get reports with the numbers, which you [Discover Kodiak] have done very well. But what are those outcomes?”
Acting City Manager Banke said she plans to present an amended agreement, between Discover Kodiak and the city, to the Council at an upcoming work session next month.
