Iowa State officials are facing a little skepticism, and the Memorial Union has encountered a few complications with plans to expand and renovate Hilton Coliseum by pumping $5.8 million into meeting new regulations and adding seats.

The existing Hilton Bond Reserve and FEMA Funds will pick up $3.45 million in expansion costs, which will pay for more restroom facilities and wider exits to comply with new fire safety and American Disabilities Act regulations.

However, almost $2.4 million in funding still is needed to bring an additional 1,465 seats to the lower level and balcony, and university officials are looking to the residents of Ames to cast their votes of support.

Last Tuesday, university officials lobbied the Ames City Council for its approval of a 2 percent hotel-motel tax increase for the next 10 years to fund the additional seating costs. ISU officials told the city council upgrading Hilton is important to the community of Ames because tourism profits the coliseum brings boost the economy.

Further complications arose surrounding the hotel-motel tax increase because the residence halls and the Memorial Union’s hotel provide rooms for out-of-town guests.

The city council deemed the residence halls exempt from the tax but decided the MU should pay along with other privately owned hotels and motels in Ames.

Kathy Svec, marketing director for the MU, said if the MU’s hotel were to charge customers the hotel-motel tax, the entire operation’s tax-exempt status with the IRS could be jeopardized.

Svec said if the MU lost its tax-exemption things at the MU “would really fall out the bottom.”

The Memorial Union was founded as a nonprofit, private, educational corporation — which the IRS categorizes as a 501c3 organization — allowing it to be exempt from taxes, she said.

Jim Huss, president of the Memorial Union Board of Directors and professor of hotel and restaurant management, said the MU has “worked hard” for its “highly-prized status,” and it will not act in any way that might possibly jeopardize that status.

“I would anticipate once you start with an activity that would indicate you’re taxable, that the IRS might say, ‘Why are they doing this?’ and eventually it could lead to the loss of a tax-exempt status for the entire operation,” he said.

However, the Memorial Union Board of Directors, comprised of students, faculty and alumni, has come up with a contingency plan to financially support the Hilton renovations. If the plan is passed, the board has agreed to contribute between $10,000-$25,000 per year for 10 years, but Huss said the MU won’t pay it as a tax.

The city council approved the first reading of the ordinance for the Hilton expansion and renovation with a vote of 5-1 and expects to read it two more times before letting the voters decide.

The single disapproving vote came from Ames City Councilman Herman Quirmbach, associate professor of economics at ISU, who questioned the legitimacy of the project. He expressed concern as to whether it is fair to use the hotel-motel tax in revamping a university building.

Quirmbach said the majority of hotel and motel guests who would pay under the ordinance are visitors of ISU students.

“If your grandmother comes for graduation, that’s who they’re going to tax. If your aunt and uncle come to town to take you out to dinner for the night, that’s who they’re going to tax,” he said.

ISU Athletics Director Gene Smith spoke at the Jan. 26 city council meeting, and Quirmbach said he understood that the people who would most benefit from additional seating are the “high-dollar donors” for athletic events.

He said Smith mentioned Hilton needed more appropriate seating for athletic donor clubs, even though they didn’t expect to sell more tickets for sporting events.

“If you take Gene Smith at his word, the seats aren’t for students or the average fan,” Quirmbach said. “They’re for the high-dollar donors, and you end up taxing families of students to pay for seating high-dollar donors.”

Murray Blackwelder, vice president for External Affairs, said the additional seating isn’t a concern for athletic events, but the main motivation for installing extra seating is to keep abreast of competition in the entertainment industry.

Mark North, executive director of the Iowa State Center, pointed to dollar figures and calculated the economic interest concerts bring the community.

“I’ve stated all along that the revenues that Hilton generates as a whole helps the other facilities at the Iowa State Center maintain reasonable user costs,” he said. “The renovations will ensure that we’re competitive in bringing out-of-town guests to concerts who will then spend money on gas, food and lodging and in some of the other retail shops. The city of Ames does benefit.”

Blackwelder originally said each concert brings $900,000 to Ames. But North said there had been some “miscommunication between officials and the economist.”

The recalculated and more accurate figure is $340,000 per concert, which supports 52.3 jobs in the area, North said.

But Quirmbach said he “doesn’t buy it” because officials said only two of the seven concerts that came to town last year sold out.

“They couldn’t sell the seats they had, and yet they want us to believe that they need 1,500 more empty seats or the concert business is going to dry up and blow away,” he said.

Quirmbach also had a problem with how officials put the proposal together. He said they didn’t research the economic impact of Hilton until after they began lobbying for the project.

Dave Swenson, research associate and professor of economics, did the economic impact study. He said university officials didn’t use the numbers as he might have.

Swenson said university officials looked at the gross number instead of the more accurate figure, which only includes money brought to the community from out-of-town guests.