After losing $2.3 million, a non-profit tourism organization has announced it will close.
Two months ago, Go Cedar Rapids held a three-day festival called “newbo evolve”, an event that brought artists Kelly Clarkson, Maroon 5 and others to the city of five seasons but it lost $2.3 million.
Afterward, the company’s CEO, Aaron McCreight, and its director, Scott Tallman, were fired. Go Cedar Rapids then brought in interim CEO Jim Haddad in to try and clean up and handle the large debt.
On Friday, Haddad announced that the debt was too much for them to overcome and the only option left was to close up shop. A vote by the board on Thursday solidified the decision.
Haddad said the $2.3 million debt still looms; $1.5 million is still owed to the bank and another $800,00 to vendors.
“It’s unfortunate. There are no winners in this situation,” Haddad said.
Haddad said because there are no assets that Go Cedar Rapids owns, it’s likely none of that money will be repaid but he said despite better efforts there was no way for the organization to get around the debt.
“We just couldn’t find an effective way to get around that our stakeholders would continue to support us. We’re roughly a $2 million organization. Half of our money comes from the hotel-motel tax. Another quarter of it comes from a destination fee program and those people are paying us to provide services. They’re not paying us to pay off debt,” Haddad said.
Despite having a number of individuals connected to the city, the city of Cedar Rapids says they bare no responsibility on what happened because Go Cedar Rapids is a separate organization.
“Go Cedar Rapids is not the city of Cedar Rapids. It is a separate entity. It’s unfortunate. We feel bad for those vendors that didn’t get paid but at the same time it wasn’t the city that ran that event,” Casey Drew, the city’s financial director, said.
Cedar Rapids provides half of the funding for Go Cedar Rapids through the motel tax. The city also advanced them $500,000 for the newbo evolve festival.
“Part of our agreement was that if it wasn’t paid back by September 1, the first and second quarter payments which we allocated for them for this fiscal year would be withheld and paid back the loans,” Drew said.
Go Cedar Rapids is no more, effective on October 15 which means nine employees are out of a job. Haddad would not comment on whether the employees will receive any benefits or severance packages once unemployed.
According to Drew, the city doesn’t have plans to bring back the festival next year but with Go Cedar Rapids gone, the city has lost its convention and visitors bureau to handle tourism.
For the next 12 to 18 months, the city will be working with Venuworks, a group already contracted by the city to manage operations for the convention center and ice rink. Drew said an additional contract will be drawn up with Venuworks for them to absorb some responsibilities to also market the city and attract events to it.
“With Go Cedar Rapids ceasing operations, we wanted to make sure we continued to promote the city of Cedar Rapids tourism, special events, sporting tournaments and conventions. So, we feel, at this point in time, it’s best for us to step and provide those services,” Drew said.
Drew said the city will be tasked into further looking into what a future convention and visitors bureau would look like for the city.