BEFORE THE DEPARTMENT OF COMMERCE

OF THE STATE OF MONTANA

 

In the matter of the adoption of NEW RULE I pertaining to the administration of the Regional Assistance Program

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NOTICE OF ADOPTION

 

TO: All Concerned Persons

 

            1. On February 9, 2024, the Department of Commerce published MAR Notice No. 8-99-210 pertaining to the public hearing on the proposed adoption of the above-stated rule at page 169 of the 2024 Montana Administrative Register, Issue Number 3.

 

2.  The department has adopted NEW RULE I (8.99.1401) as proposed.

 

3. The department has thoroughly considered the comments and testimony received. A summary of the comments received, and the department's responses are as follows:

 

COMMENT NO. 1: Multiple commenters requested simplification of the application process.  Specifically, one commenter requested the removal of barriers while retaining accountability measures, suggesting a process that resembles that used prior to the passage of SB 540 to provide supplemental funds to partners.  Separate commenters also alluded to a return to the previous process, which would blend these dollars with statutory appropriations each organization receives leading to management of a singular budget versus two.

 

RESPONSE NO. 1: Legal analysis prior to the development of the SB 540 Regional Assistance Program (RAP) guidelines determined that the previous process of transferring money directly to regions and convention and visitor bureaus (CVBs) under the marketing plan approval authority of the Tourism Advisory Council is not in line with the statute defining the authority of the Tourism Advisory Council (2-15-1816, MCA).  Therefore, the process for application and funding identified in the proposed SB 540 Regional Assistance Program guidelines will not be changed.  In terms of any additional administrative burden (i.e., budget management and reporting), the guidelines allow for 20% of the funding to be used for administrative expenses including personnel.  Therefore, no adjustments to the guidelines will occur.

 

COMMENT NO. 2: A commenter requested the department to consider industry representation on the RAP application review committee.  This would include, specifically, committee members who pay the lodging and facility use tax.  An additional commenter also made the request to enhance the RAP application review committee, by requiring one Montana lodging industry member from the private sector who collects and remits lodging taxes and one representative from a destination marketing organization (DMO).

 

RESPONSE NO. 2: The makeup of an application review committee is not established in guidelines.  Therefore, the guidelines will not be amended.  Additionally, it is unclear what is meant by "members who pay the lodging and facility use tax."  Any visitor paying a nightly rate to a lodging facility in the state would be considered someone who pays the lodging and facility use tax.  We do not anticipate having a lodging consumer on the committee.  Lodging facilities remit the lodging and facility use tax to the Department of Revenue.  They do not pay the tax.  Finally, having a DMO on a review committee for a program in which DMOs are the eligible recipients of funds presents a conflict of interest.

 

COMMENT NO. 3: A commenter said that a four-week window for submitting applications is a challenge. However, the commenter did not recommend a preferred timeframe.

 

RESPONSE NO. 3: A four-week application window allows for turnaround of funds to eligible organizations within the current fiscal year.  It is also in line with application periods of other Department of Commerce grants programs.  Therefore, the four-week application window will remain as is.

 

COMMENT NO. 4: Multiple comments were received saying that distributing 25% of the total funds up front and reimbursing the remaining funds is a challenge for a small organization, due to lack of operating funds to execute projects and administrative burden.  However, these commenters did not suggest a specific alternative.  Another commenter also said that 25% up front presents a hardship to their organization.  They suggested 50% up front and 50% two quarters later in the fiscal year, or quarterly.  An additional commenter also said that limiting to 25% of funding up front is an issue.  Their suggestion is to provide 100% of the funds up front or to break the funds into a couple distributions paid in advance (versus reimbursement).

 

RESPONSE NO. 4: After consideration, the department has decided to adjust the guidelines to issue quarterly disbursements.  Quarterly payments will be initiated upon contract signature.  Quarterly reports will be required to illustrate the appropriate expenditure of the previous quarter's funding and progress toward contract deliverables prior to the next quarterly disbursement.  In order to be considered appropriately expended, RAP recipients will be required to illustrate in the quarterly report that the previous quarter's funds were 85% expended during the quarter, along with a plan for how the remaining 15% will be expended, or it must be demonstrated that 100% of the quarterly funds upon which they are reporting are committed for expenditure by the end of a designated future quarter.  Though the department anticipates that initial disbursement will occur prior to the end of FY24, the first quarterly reporting deadline will not occur until September 30, 2024, and will continue on a quarterly basis from there (December 31, March 31, and June 30).  If a quarterly report has not been received by the department 30 days after the due date, then the department will consider the region or CVB to be in breach of contract.

 

COMMENT NO. 5: A commenter has requested clearer guidance on fund usage and fewer restrictions.

 

RESPONSE NO. 5: Given there were no specific recommendations to consider, no updates will be made to the guidelines.

 

COMMENT NO. 6: A commenter requested the addition of language to the guidelines that establishes a timeline for application approval and notification of award.  They suggested language that the department has 30 days to review the applications and issue the funds requested or notify the applicants their request is denied, or additional information is needed.

 

RESPONSE NO. 6: It is not necessary to include timelines for processing and approval of applications to be included within program guidelines.  Therefore, this request will not be added.

 

COMMENT NO. 7: A commenter requested a simplification of the application process by reworking the five items under section H to simplify and to delete item #2 since it is duplicative of provisions requested in item #1.

 

RESPONSE NO. 7: Provisions in item H(1) are specific to the inclusion of key performance indicators (KPIs) in alignment with those used to measure performance by the department.  Provisions in H(2) are specific to the requirement for proposed use of the funds to be tied, in detail, to regional or state resiliency plans, the Destination MT strategic plan, and/or the state's tourism marketing plan to illustrate alignment and facilitate collective impact.  Given these are distinct requirements and not duplication, no adjustment will be made to the guidelines.

 

COMMENT NO. 8: A commenter requested that the determination of initial award amount be equal to the difference between new revenue from the most recent four quarters of lodging tax collections and not on the difference between their most recent Tourism Advisory Council-approved budget and the minimums established in the current guidelines.  

 

RESPONSE NO. 8: The department has determined it will not adjust this guideline.

 

COMMENT NO. 9: A commenter requested the application cycle open no later than February 1 and close March 31, or open two funding windows per year in part to make the program available to newly recognized organizations.

 

RESPONSE NO. 9: The guidelines currently state that the RAP will open no sooner than March every two years.  The March date was intended to accommodate the dispersal of FY24 funds after the completion of the administrative rulemaking process in the program's first year.  This date can be amended in the guidelines 6 months after the guidelines become effective.  At that point, the department can adjust the guidelines to launch in February.

 

Separately, the current guidelines under review will be amended to create an interim application cycle in February (starting February 2025 and continuing two years after) to allow for newly recognized and contracted eligible organizations to apply to the program.

 

 

/s/ John Semmens                                       /s/ Mandy Rambo                            

John Semmens                                            Mandy Rambo

Rule Reviewer                                              Deputy Director

                                                                     Department of Commerce

 

Certified to the Secretary of State April 2, 2024.