A taxpayer-financed convention software venture will get one more bailout but will be shut down if it doesn't repay by mid-year, the Meet Minneapolis board decided Wednesday.The nonprofit board approved a six-month $75,000 internal line of credit to cover cash-flow problems at Internet Destination Sales Systems (IDSS), a for-profit arm of the convention bureau that develops tools for managing convention registrations, hotel vacancies and similar data.
Meet Minneapolis already is on the hook for $9.1 million in loans made by the city to finance IDSS. It also has advanced IDSS $600,000 internally, cutting its budget reserves in half.
Meet Minneapolis, which runs convention and tourism promotion for the city, started IDSS to increase revenues by selling the software to other convention bureaus. It persuaded the city to finance the venture from its convention-center fund. That's funded with sales and hospitality taxes. It guaranteed repayment if revenues were not sufficient.
Officials earlier projected a $600,000 pretax loss for IDSS for 2007, and didn't update the board on that figure. They presented a break-even budget for 2008 based on adding more software customers. There's also a $954,000 loan payment due to the city late this year. That's being deducted from the city's annual subsidy to Meet Minneapolis, forcing the organization to cut its budget.
IDSS needs a cash-flow loan because income will trail expenses until the second half of 2008, officials said. Prospects for a bank loan were reported to be dim, and the firm can't make today's payroll without more cash, they said.
The board, on a rare divided vote, narrowly rejected an initial proposal for a $75,000 line of credit. Hennepin County Commissioner Mark Stenglein, a board member, suggested that it may be time to shut or sell IDSS. The board then approved the line of credit for six months but with the proviso that IDSS be shuttered if the loan is not repaid.
Both motions were supported by City Council President Barbara Johnson. But Stenglein and other council members who sit on the board -- Lisa Goodman, Scott Benson, Gary Schiff and Ralph Remington -- voted against any further loans.
Steve Brandt • 612-673-4438