GRANTS, N.M. – The City of Grants is rolling out new standard operating procedures for lodgers’tax funding that sharply narrow what the Lodgers’ Tax Advisory Board will recommend, with a renewed emphasis on marketing and tourism promotion — and a clearer separation between advertising dollars and event or facility operations.
During a recent board discussion, city staff said the changes are meant to align local practices with the New Mexico Lodgers’ Tax Act and reduce audit and legal risk after years of what they described as blurred lines between marketing, facility operations and event expenses.
What’s Changing
The board’s role is being refocused on advertising and tourism promotion.
Under the city’s approach, the Lodgers’ Tax Advisory Board will primarily recommend spending tied directly to advertising, publicizing and promoting tourism – particularly efforts aimed at attracting overnight visitors.
“It’s about getting a return on investment,” City of Grants Clerk Fran Salas explained to the board.
Operational costs are being moved away from board oversight and into city contracts.
City staff said costs such as facility management, staffing, maintenance and certain event operations should be handled through separate contracts approved by the city, rather than through board-controlled lodgers’ tax awards. The city said this reduces paperwork, clarifies accountability and keeps marketing dollars from being diverted into general operations.
Salas and Grants Finance Director Victor Villalobos explained that state law requires minimum percentages of lodgers’ tax revenue to be spent on marketing and promotion:
• At least 50% of proceeds generated by the first 3% of the lodgers’ tax rate, and
• At least 25% of proceeds generated by any portion above 3%, must go toward advertising, publicizing and promoting tourism-related attractions and facilities.
Staff cited last year’s collections as an example, saying a significant minimum amount should have been dedicated to promotion, but that this “typically has not happened” in recent years as awards and reimbursements leaned more heavily toward event and organizational operating costs.
New Standard Operating Procedures
The new procedures outlined several specific requirements and restrictions for applicants seeking lodgers’ tax promotional funding: 60-mile targeting standard: Promotional efforts should primarily target visitors traveling from at least 60 miles outside city limits.
Prohibited uses: Awards should not be used for salaries, wages, benefits, utilities, insurance, rent, office supplies, routine maintenance, or general overhead. The city also listed entertainment, prizes, gifts, alcohol, and costs not directly connected to advertising and promotion as ineligible.
City branding requirement: Promotional materials paid for wholly or partially with lodgers’ tax funds must include the official City of Grants Lodgers’Tax logo, or include a sponsorship mention (such as on radio). The city said the approved logo is available through the city website.
No spending before approval: Organizations cannot incur costs and then seek reimbursement unless the award has been formally approved by both the board and City Council, with written notice provided to recipients.
Marketing plan required: Applicants must submit a marketing plan showing how promotional activities support the Lodgers’ Tax Act’s purpose. Awards $5,000 or less require a concise outline; awards above $5,000 require a comprehensive marketing plan for city review before contract execution.
Photo requirement: Reimbursement requests must include at least three high-resolution photos documenting the funded event. The city said the photos may be used for future tourism promotion, with photographer credit provided when applicable.
Eligible expenses clarified: Eligible costs include radio/TV/newspaper/ billboards/magazine ads, printed promotional materials (posters, flyers, brochures, postcards), postage for mailers, and paid digital/social media advertising.
Website limitation: The city said “website advertising” means paid promotional placement on thirdparty platforms — not website hosting, design, development, maintenance, security updates, or general IT work.
Board meeting frequency: The procedures state the board must meet at least six times per year.
Several board members expressed frustration that they felt the new procedures and the Grants City Council action moved forward without sufficient board involvement or advance discussion, saying they believed the board should have had a clearer role before the resolution went to council.
City staff responded that the resolution had been presented previously, in October, with a board packet with the upcoming changes in it, and that board members had the opportunity to ask questions before it went to City Council.
The larger concern from lodger’s tax board members, however, centered on whether their recommendations will be honored going forward – especially in cases where applicants later seek additional funding directly from Grants City Council in an effort to circumvent the will of their board.
Lodgers Tax Board Chairman Aaron Dean expressed confusion and allowed leaders from local nonprofits to discuss frustrations over how they will cover costs like insurance, cleaning and supplies if lodger’s tax awards are now focused strictly on advertising.
City of Grants Manager Andrew Valencia and Villalobos explained those needs should be handled through separate contractual arrangements rather than through the promotional awards process.
Items Tabled; Next Meeting Set
The board ultimately tabled part of its discussion agenda to return to the issue later.
The Lodgers’ Tax Advisory Board’s next meeting was announced for Feb. 26, 2026.
City staff also announced the city expects to implement a second funding “ask” for events running May through September, totaling $20,000, and encouraged organizations planning events during that period to begin coordinating with the city.
The City of Grants has posted a public notice that a quorum of board members may be present at Manager Valencia’s office on Feb. 4, though no official action will be taken.