Organization responsible for Iowa festival that lost $2.3 million folds

Organization responsible for Iowa festival that lost $2.3 million folds
Go Cedar Rapids to cease operations, cites $2.3 million debt from Newbo Evolve
CEDAR RAPIDS, Iowa (KCRG) – Go Cedar Rapids has announced they will be ceasing operations on October 15.

Interim CEO Jim Haddad and the Board of Directors announced the news on Friday morning that the private and separate non-profit corporation would be ending.

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GO Cedar Rapids ceases operations, city to take over tourism and convention functions

Haddad says nine people will lose their jobs, but the Board of Directors will exist on paper while being inactive.

“The past few weeks have been a whirlwind of frustration and disappointment,” the company said on their post.

They said the past two months have been spent working on a plan to allow Go Cedar Rapids to keep functioning as a visitors bureau and finding a way to pay its obligations related to Newbo Evolve.

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“Unfortunately we could not develop a plan that all could support,” the organization said in a statement.

“The debt of approximately $2.3 million created by Newbo Evolve was too much to overcome. The economic burden of the debt would not allow GoCR to fulfill its mission expected of the organization by its stakeholders,” the statement said.

The organization says they would like to thank the current staff of GoCR for their efforts, especially in the past few months under the difficult circumstance, to promote the community and wish them well in their future endeavors.

Haddad says GO CR still owes $1.5 million to the bank, and $800,000 to vendors. Because the organization has no assets, they will all have to take a loss.

They say over the past two months they have been working on a plan that would allow GoCR to continue as a full functioning convention and visitor’s bureau and pay its obligations related to the Newbo Evolve festival.

The City of Cedar Rapids says they will be undertaking the marketing, tourism, and convention functions for the city.

Marketing Cedar Rapids as a destination for these activities plays an important role as an economic driver for any community – soliciting and supporting conventions and events which draw visitors to the area, said Casey Drew City of Cedar Rapids Finance Director. In light of Go Cedar Rapids decision to cease operations, the city recognized the need to undertake its own activities to fill this important gap to help support our local hotels, restaurants and businesses.

The operations by the City will be managed by VenuWorks, which is under contract with the city for the convention center and ice arena.

CEDAR RAPIDS — Facing more than $2 million of debt following this summer’s expensive “newbo evolve” music and cultural festival, the GO Cedar Rapids tourism organization will fold and leave unpaid vendors in the lurch.

Debt accrued by the August festival — $300,000 more than the organization’s $2 million annual budget — was too much to overcome, GO Cedar Rapids interim chief executive officer Jim Haddad told The Gazette on Friday.

“The real estate cliché is location, location, location. In this situation the cliché is debt, debt, debt and we could never get over that hurdle to find an effective way to pay off that debt,” he said.

Haddad, a former Yellowbook USA executive and financial consultant, was hired in late August to lead the private nonprofit organization out of the debt it took on during the first-time festival called “newbo evolve” on Aug. 3-5.

The festival featured musical acts Kelly Clarkson and Maroon 5, as well as celebrity speakers and other events.

The GO Cedar Rapids president and community events director were both fired in the days after the festival as the extent of the financial debacle became more clear.

Haddad said the organization considered all possible options to stay afloat, but declined to give specifics. Ultimately, the group’s board of directors Thursday approved plans to cease operations.

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GO Cedar Rapids’ nine employees will be paid for their last day but Haddad would not comment on whether they will receive severance pay or extended benefits.

“Everybody put forth their best effort to make this work. That’s little solace to our employees, little solace to the vendors who don’t get paid, but I can assure people we tried everything we possibly could,” he said.

Come Monday, the GO Cedar Rapids legal entity still will exist, but will become a dormant nonprofit and cease activities, he said.

With no assets or reserves, the debts — which includes a $1.5 million bank loan and hundreds of thousands owed to vendors — cannot be paid, he said.

“Essentially there are no assets to pay it off. As a dormant corporation, there’s no recovery,” he said, adding that the debts to vendors range in amounts. “Small, large, medium, in terms of debts, in terms of size of organizations. Large organizations, small mom and pop shops in the city.”

The city of Cedar Rapids announced it temporarily will take over the tourism bureau’s marketing role for tourism, conventions, meetings, sports tournaments and special events.

The city’s initiative is expected to continue 12 to 18 months on a transitional basis, a news release said.

“Marketing Cedar Rapids as a destination for these activities plays an important role as an economic driver for any community — soliciting and supporting conventions and events which draw visitors to the area,” Casey Drew, city finance director, said in the news release. “In light of GO Cedar Rapids’ decision to cease operations, the city recognized the need to undertake its own activities to fill this important gap to help support our local hotels, restaurants and businesses.”

Those operations will be managed by VenuWorks, which books acts for the U.S. Cellular Center, McGrath Amphitheatre, Paramount Theatre and the Cedar Rapids Ice Arena, among other venues in the state.

VenuWorks is determining staffing needs for the added operations, which will be funded using hotel-motel tax proceeds.

According to the news release, the city will promote community assets and work to solicit groups to hold meetings, conventions and events in Cedar Rapids and encourage tourism.

The city had been the main financial backer of GO Cedar Rapids for years, providing $1 million annually through hotel-motel tax revenues. GO Cedar Rapids’ annual budget increased recently from $1.6 to $2 million.


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