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Home My WebLink AboutCOW 2016-10-10 Item 3E.1 - Budget Review - 2017-2018 Biennial Budget: Lodging Tax FundCO uNcm AGENDA S ----------------------------- - - - - -1 nitials Meefiq Date Prepared by Ma is repi eW�repiey) A( I ?N DA I,i,j, m Trn..i Review Lodging Tax Fund 2017-2018 Proposed Budget 10/10/16 VC ❑ Resolution Mt g Date ❑ Ordinance Mig Date ❑.Bid,lfivard Mi Date [:]1-1ub&.HeaHq M1 g Dal e F-1 Other MI g Date SPONSOR ❑ Council ❑ Mayor [:] JJR [:] DCD Z.Finan6v [:] Hre [:] TS' [:] P&R [:] Police [:] PWI SPONSOR'S Council is being asked to review the Lodging Tax Fund 2017-2018 proposed budget. If no SUMMARY changes are requested, Council consensus will be requested to move 2017-2018 proposed budget forward to the final budget package for approval in November. Rj,'1Vij','1WI,1'D 13Y ❑ cow mtg. ❑ CA&P Cmte Z F&S Cmte ❑ Transportation Cmte F-1 Utilities Cmte ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. DATE: 10/4/16 COMMITTEE CHAIR: SEAL RECOMMENDATIONS: SPONSOR/ADMIN. Finance COMM11THE For Information Only; Forward to Committee of Whole for Discussion COST IMPACT / FUND SOURCE ExPE'NDITURt, Ril,"QUIRFID AMOUN'r BUDGETED APPROPRIATION REQUIRED Fund Source: Comments.- MTG. DATE RECORD OF COUNCIL ACTION 10/10/16 ITEM INFORMATION 3.E. (1) 65 STAFF SPONSOR: VICKY CARLSEN I C)MG, INA], A(; I ?Nrm DATE: 10/10/16 A( I ?N DA I,i,j, m Trn..i Review Lodging Tax Fund 2017-2018 Proposed Budget CNIT,"(33ORY Z Discussion Mi Date 10110116 1:1 Motion Mt g Dale ❑ Resolution Mt g Date ❑ Ordinance Mig Date ❑.Bid,lfivard Mi Date [:]1-1ub&.HeaHq M1 g Dal e F-1 Other MI g Date SPONSOR ❑ Council ❑ Mayor [:] JJR [:] DCD Z.Finan6v [:] Hre [:] TS' [:] P&R [:] Police [:] PWI SPONSOR'S Council is being asked to review the Lodging Tax Fund 2017-2018 proposed budget. If no SUMMARY changes are requested, Council consensus will be requested to move 2017-2018 proposed budget forward to the final budget package for approval in November. Rj,'1Vij','1WI,1'D 13Y ❑ cow mtg. ❑ CA&P Cmte Z F&S Cmte ❑ Transportation Cmte F-1 Utilities Cmte ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. DATE: 10/4/16 COMMITTEE CHAIR: SEAL RECOMMENDATIONS: SPONSOR/ADMIN. Finance COMM11THE For Information Only; Forward to Committee of Whole for Discussion COST IMPACT / FUND SOURCE ExPE'NDITURt, Ril,"QUIRFID AMOUN'r BUDGETED APPROPRIATION REQUIRED Fund Source: Comments.- MTG. DATE RECORD OF COUNCIL ACTION 10/10/16 MTG. DATE ATTACHMENTS 10/10/16 Informational Memorandum dated !9/26/16 Draft Lodging Tax Fund 2017 - 2018 Proposed Budget Minutes from the Finance and Safety Committee meeting 10/4/16 (Unavailable) 65 City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance and Safety Committee FROM: Brandon J. Miles, Business Relations Manager CC: Mayor Ekberg DATE: September 26, 2016 SUBJECT: 2017/18 Lodging Tax Budget ISSUE Proposed Budget for Lodging Tax (101) Fund for 2017/2018. BACKGROUND The City charges a 1 % special excise tax on certain overnight stays in area lodging businesses. The use of these funds is limited to tourism promotion'. The lodging fund is currently going through a significant amount of transition. For nearly 13 years, the City of Tukwila operated Seattle Southside Visitor Service (SSVS), which was responsible for promoting the City to overnight guests. Through interlocal agreements, the cities of SeaTac and Des Moines were also part of SSVS2. These cities provided funding to the City of Tukwila to support the operations of SSVS. The funds provided by these cities were placed into the City's lodging tax funds and then used to pay various expenses. At the end of 2015, most of the day to day activities of SSVS transitioned to the new Seattle Southside Regional Tourism Authority (SSRTA), a public development authority formed by the City of SeaTac. All City of Tukwila employees employed at SSVS, accepted jobs at SSRTA. Additionally, the City transferred most of the assets of SSVS to SSRTA. Historical Revenue Tukwila Lodging Tax Review Over the past few years, the Seattle region has been experiencing a significant increase in occupancies at area hotels and motels. This summer room rates in the City peaked at nearly $400.00 a night. The boom in the Seattle region can be attributed to: 1. The strength of the national economy (more people are traveling for leisure and business); 2. The growth of the Seattle economy, which results in business travelers coming to the area; and 3. The lag in new supply of hotel rooms to keep up with demand. ' See the memo dated September 23, 2016 entitled, "Permitted Use of Lodging Tax Funds" for more details. 2 At one time the City of Kent was also a member of SSVS. 67 INFORMATIONAL MEMO Page 2 The following outlines the past four years of lodging tax collections and anticipated collection for 2016. DISCUSSION The following outlines staff's lodging tax revenue estimates for 2017 and 2018. Year: 2017 2018 Projected Revenue Amount: $733,000 $755,000 Projected Growth: 3% 3% Aprojected DISCUSSION The following outlines staff's lodging tax revenue estimates for 2017 and 2018. Year: 2017 2018 Projected Revenue Amount: $733,000 $755,000 Projected Growth: 3% 3% Staff is predicting little growth for the lodging tax funds for 2017 and 2018, with growth being the result of inflation resulting in higher room rates. Staff does anticipate lower occupancies in the City and thus lower room rates as a result of new hotel rooms coming online in the Seattle region. Proposed 2017/2018 Expenditures for Lodging Tax The following are the general areas of spending City Administration is anticipating for the lodging tax funds for 2017/2018. Note, these are placeholders for now as State Law requires that all formal requests be reviewed by the City's Lodging Tax Advisory Committee (LTAC), which then forwards a recommendation to the City Council. The LTAC review of funding requests will occur later this year or early next year.' If the LTAC and Council approve lodging tax requests that exceed these placeholder amounts, the Council may need to amend the budget. The proposed lodging tax budget for 2017/2018 can be divided up into three specific categories: 1. Basic Operations 2. Tukwila Day Marketing 3. Third Party Applications 1. Basic Operations Basic operations includes office supplies, training, travel, meals for committee meetings, memberships for trade groups, and education for city staff when working on tourism. The largest cost in this category is the indirect cost allocation. The indirect cost allocation is the charge the City places on the lodging tax funds to support operations and support the general fund provides, such as paying for technology services, legal, insurance, facilities, accounting, etc. 3 Projected lodging tax for 2016 is 5% above actuals collected in 2015. To date, lodging tax collection is up 6.74% when compared with the same time period in 2015. 4 See the memo dated September 22, 2016 entitled, "Lodging Tax Approval Process" for more details on the process for approving expenditures of lodging tax funds. 68 DCouncil Agenda Items\Mayoes Office \LTAC Businesses \Memo 3, Budget Memo.docx INFORMATIONAL MEMO Page 3 Category 2017 Proposed 2018 Proposed Notes Professional Budget Budget This category Office Supplies $5,000 $5,000 includes consultant Training, $10,000 $10,000 The funds are Parking, Travel, available to all city Conference, and employees and Meals. elected officials for training and events related to tourism promotion. Memberships, $20,000 $20,000 The funds are Registrations, available to all city and Education employees and elected officials for Marketing $150,000 $150,000 memberships and education related to tourism promotion. Indirect Cost $35,700 $36,414 Transfer to general Allocation fund for city services such as accounting, technology, legal, insurance, and facilities. Total: $70,700 $71,414 2. Tukwila Day Marketing Economic Development Staff is working to promote Tukwila in the region to day visitors. The goals of this program is to increase revenue in area restaurants, retailers, entertainment venues, and hotels, while also improving the perception of Tukwila in the Puget Sound region. In order for any marketing effort to be successful it needs to be sustained and long term. Category 2017 Proposed Budget 2018 Proposed Budget Notes Professional $167,500 $100,000 This category Services includes consultant work to help in the creation of Tukwila brand for day marketing; development of a marketing strategy; development of digital and print ads; photography; and research; and other data. Marketing $150,000 $150,000 This would include purchasing of ads in ZACouncil Agenda Items\Mayoes Office \LTAC Businesses \Memo 3, Budget Memo.docx 69 INFORMATIONAL MEMO Page 4 3. Third Party Applications Lodging tax funds can be used by third parties to fund a variety of activities, capital purchases, marketing, and operations. Historically, the City has provided funding to the Museum of Flight, Starfire Sports, the Southwest King County Chamber of Commerce (now known as the Seattle Southside Chamber of Commerce), and the SSRTA. These third party applications provide an opportunity for the City to support groups in the City that can help bring tourists to the City while also creating a great community environment. A significant amount of the proposed third party funding is proposed to go to SSRTA. SSRTA is the successor to SSVS and is responsible for marketing the City, under the "Seattle Southside" brand to overnight visitors. The amounts proposed to be provided to SSRTA come from an interlocal agreement, executed in 2014, with the cities of Tukwila, Des Moines and SeaTac. Category 2017 Proposed 2018 Proposed digital and print Budget Budget media; direct SSRTA $270,000 $202,500 sponsorship of events by the City; development of day visitor website; and other. Total: $317,500 $250,000 SeaTac, and Des 3. Third Party Applications Lodging tax funds can be used by third parties to fund a variety of activities, capital purchases, marketing, and operations. Historically, the City has provided funding to the Museum of Flight, Starfire Sports, the Southwest King County Chamber of Commerce (now known as the Seattle Southside Chamber of Commerce), and the SSRTA. These third party applications provide an opportunity for the City to support groups in the City that can help bring tourists to the City while also creating a great community environment. A significant amount of the proposed third party funding is proposed to go to SSRTA. SSRTA is the successor to SSVS and is responsible for marketing the City, under the "Seattle Southside" brand to overnight visitors. The amounts proposed to be provided to SSRTA come from an interlocal agreement, executed in 2014, with the cities of Tukwila, Des Moines and SeaTac. Category 2017 Proposed 2018 Proposed Notes Budget Budget SSRTA $270,000 $202,500 Amounts proposed were determined from the 2014 interlocal agreement with the cities of Tukwila, SeaTac, and Des Moines. Other $100,000 $150,000 The City is anticipating funding requests from the Museum of Flight, and Starfire. Funding requests may also be received from other groups. Total: $370,000 $352,500 The proposed lodging tax budget meets the City's goals of promoting the City to day visitors, overnight visitors, and providing funding for third parties interested in doing events in the City. Additionally, the fund remains strong, with a proposed ending fund balance in 2018 of just over $900,000. 70 Z: \Council Agenda Items \Mayor's Office \LTAC Businesses \Memo 3, Budget Memo.docx INFORMATIONAL MEMO Page 5 RECOMMENDATION Staff recommends that the Finance and Safety Committee forward this section of the budget to the Committee of the Whole for review. If there are no recommended changes, Council consensus will be requested to move the lodging tax budget forward to the final budget package in November. ATTACHMENTS • Proposed 2017-2018 Lodging Tax Fund Budget ZACouncil Agenda IternsWayoes Office\LTAC BusinessesWerno 3, Budget Merno.docx 71 72 DEPARTMENT: Mayor's Office FUND: Lodging Tax Fund RESPONSIBLE MANAGER: Brandon Miles FUND NUMBER: 101 POSITION: Business Relations Manager Description: This fund consists of proceeds from a special excise tax on lodging charges and is used to promote tourism (both day and overnight) within the City (Chapter 67.28 RCW). 2015-2016 Accomplishments * Continued efforts to market Seattle 8outhgide as a premier travel destination as outlined in the Lodging Tax Advisory Committee's recommended annual marketing initiatives and media buy. * Completed transition of Seattle Goutheide Visitor Services (GGV8) to Seattle Goutheide Regional Tourism Authority (GGRT/\). * Transferred S8VG assets to GGF<TA. + Continued efforts to market Seattle 8outhsida as a premier travel destination resulted in 83.816 (in the cities ofTukwila, SeaTmc. and [}oa Moines) room nights and $31.2 million generated in direct tourist spending. * Transitioned administration of lodging tax funds from SSVS to Mayor's Staff. * Conducted review of operating procedures for Lodging Tax Advisory Committee and updated as needed. * Completed research on day marketing activities, including identifying consultant to assist in creating o day marketing strategy. 2017-208 Outcome Goals * Complete, |aunoh, and implement strategy, branding, and marketing campaign to promote Tukwila businesses bz Puget Sound residents. * Continue collaborative marketing initiative for overnight tourists with the cities of Des Moines and 8eoTac. via Seattle 8outheide Regional Tourism Authority. * Explore other activities and events to bring to the City to generate more sales for hote|e, nesdourenta, retai|ero, and entertainment establishments. 2817-2O18 Indicators mf Success + Launch and implement day marketing campaign. * Identification and recruitment of new activities, faetiva|a, and events to bring to the City. * Increased sales athotels, raatouronis, and entrainment establishments. Revenue and Expenditure Summary Tourism 74 Actual Projected Budget 2016 -17 2017 -18 2014 2015 2016 2016 2017 2018 % Change % Change Operating Revenue Hotel /Motel Taxes $ 596,781 $ 677,971 $ 711,000 $ 630,000 $ 733,000 $ 755,000 16.35% 3.00% Total General Revenue 596,781 677,971 711,000 630,000 733,000 755,000 16.35% 3.00% Intergovernmental Revenue 834,137 862,011 - - - - 0.00% 0.00% Miscellaneous Revenue Investment Earnings 555 711 738 - 3,000 3,000 0.00% 0.00% Other Misc Revenue 8,580 10,788 - - - - 0.00% 0.00% Total Miscellaneous Revenue 9,135 11,499 738 - 3,000 3,000 0.00% 0.00% Total Revenue 1,440,053 1,551,482 711,738 630,000 736,000 758,000 16.83% 2.99% Operating Expenditures Salaries & Wages 325,180 320,890 - - - - 0.00% 0.00% Personnel Benefits 97,877 99,082 - - - 0.00% 0.00% Supplies 28,189 33,559 500 - 5,000 5,000 0.00% 0.00% Services 1,010,877 952,751 392,483 392,500 717,500 632,500 82.80% - 11.85% Intergodt Services & Taxes - - - - - - 0.00% 0.00% Total Operating Expenditures 1,462,123 1,406,281 392,983 392,500 722,500 637,500 84.08% - 11.76% Capital Expenditures Capital Outlay 14,533 - - - - - 0.00% 0.00% Total Capital Expenditures 14,533 - - - - - 0.00% 0.00% Indirect cost allocation 102,498 97,925 35,000 35,000 35,700 36,414 2.00% 2.00% Total Expenditures 1,579,154 1,504,207 427,983 427,500 758,200 673,914 77.36% - 11.12% Beginning Fund Balance 714,946 575,845 623,120 389,674 906,875 884,675 132.73% -2.45% Change in Fund Balance (139,101) 47,275 283,755 202,500 (22,200) 84,086 - 110.96% - 478.77% Ending Fund Balance $ 575,845 $ 623,120 $ 906,875 $ 592,174 $ 884,675 $ 968,761 49.39% 9.50% 74 Expenditure Detail - Supplies and Services Supplies include miscellaneous supplies. Services include marketing costs to attract visitors to the area, Seattle Southside Regional Tourism Authority (SSRTA), and potential requests by third parties. Historical data represented here is prior to SSRTA. Tourism 75 Actual Projected Budget Account Number 2014 2015 2016 2016 2017 2018 101.00.557.300.31.00 Supplies - Office & Operating $ 25,892 $ 33,326 $ 500 $ $ $ 101.00.557.302.31.00 Supplies -Office and Operating 2,297 184 - 101.00.557.303.31.00 Supplies - Meals and Refreshments - 48 - Total Supplies 28,189 33,559 600 101.00.557.300.41.02 Prof Svcs - Public relations 17,500 10,000 22,500 101.00.557.300.41.03 Prof Svcs - Mailhandlers & Cascade E- 57,960 76,223 - Commerce, SeaTac Visitor Center staff 101.00.557.300.4112 Prof Svcs - Website development and maintenance, SliceHost, DMAI 23,551 24,549 Empowerment, event calculator 101.00.557.300.42.00 Communication - Sprint, MCI, Eblast 35,235 19,393 101.00.557.300.42.01 Communication - Postage 36,589 13,598 101.00.557.300.43.00 Travel - Parking, meals, mileage, air trawl 18,539 19,999 101.00.557.300.45.00 Rental - Office equipment leases 52,452 23,682 101.00.557.300.45.94 Rental - 'Equipment Replacement Fund 1,500 1,650 101.00.557.300.45.95 Rental - Equipment Rental 0 & M 2,090 2,368 101.00.557.300.47,00 Public Utility - - 101.00.557.300.48.00 R&M - Equipment repairs and maint. 148 82 101.00.557.300.49.00 Misc 32,348 38,127 101.00.557.300.49.01 Misc - Printing 1,265 3,197 101.00.557.300.49.08 Misc - PPI credit card fees 668 1,078 101.00.557.301.44.10 Marketing - Washington State Visitors Guide, Scenic Byways, AAA, online 171,659 179,360 advertising, Rotary 101.00.557.301 A4,11 Marketing - Starfire Sports 31,772 25,000 101.00.557.301.44A2 Marketing - Social media ad buys, research, Experience WA ad, stock 65,362 66,818 photos, Green Rubino contract 101.00.557.301.44.15 Marketing - Tourism map, planners - 38,756 101.00.557.302A1.00 Prof Svcs - Conversion Study & SSRTA 25,112 1,363 101.00.557.302.41.01 Prof Svcs - SW King County Chamber 20,000 - 101.00.557.302.41.02 Prof Svcs - Public relations - 54 101.00.557.302.41.03 Prof Svcs - Community Events - - 101.00.557.302.41.05 Museum of Flight 35,000 36,795 101.00.557.302.41.06 Prof Svcs - Agency staff 85,424 63,986 101.00.557.302.42.00 Communication - Postage 3,833 1,691 101.00.557.302.43,00 Trawl - Mileage, parking, etc - 147 101.00.557.302.44.00 Advertising - Sponsorships - - 101.00.557.302A9.00 Misc - Misc incidental costs 25 - 101.00.557.303.44.10 Advertising - SeaTac marketing projects 172,843 185,086 101.00.557.303.44.11 Advertising - Mall shuttle 120,000 119,750 101.00.557.300.47.26 Advertising - Mall shuttle - - Total Services 1,010,877 952,761 22,500 1 101.00.594.570.64.03 Capital - Machinery and Equipment 14,533 - - Total Other 14,633 - - Total Supplies, Services and Other $1,053,599 $ 986,310 $ 23,000 $ 75 Expenditure Detail - Supplies and Services SSRTA 76 Actual Projected Budget Account Number 2014 2015 2016 2016 2017 2018 101.00.557.300.31.00 Supplies - Office & Operating $ $ $ 500 $ $ 5,000 $ 5,000 Total Supplies 500 5,000 5,000 101.00.557.300.41.02 Prof Svcs - Public relations 22,500 - - 101.00.557.300.42.00 Communication - Sprint, MCI, Eblast (127) - - 101.00.557.300.43.00 Travel - Parking, meals, mileage, air travel - 2,500 10,000 10,000 101.00.557.300.49.00 Misc - 20,000 20,000 101.00.557.301.41.00 Prof Svcs and memberships 167,500 100,000 101.00.557.301.44.00 Marketing - 150,000 150,000 101.00.557.302.41.00 Prof Svcs - Conversion Study & SSRTA 337,500 337,500 270,000 202,500 101.00.557.302.41.01 Prof Svcs - SW King County Chamber - 20,000 - - 101.00.557.302.41.03 Prof Svcs - Community Events - - 100,000 150,000 101.00.557.302.41.05 Museum of Flight 35,000 35,000 - - 101.00.557.302.43.00 Travel - Mileage, parking, etc 148 - 101.00.557.302.49.00 Misc - Misc incidental costs 279 101.00.557.303.44.10 Advertising - SeaTac marketing projects (6,000) 101.00.557.300.47.26 Advertising - Mall shuttle 683 Total Services 392,483 392,500 717,500 632,500 101.00.594.570.64.03 Capital - Machinery and Equipment - - - - TotalOther - - - - Total Supplies, Services and Other $ $ $ 392,983 $ 392,500 $ 722,500 $ 637,500 76