HomeMy WebLinkAboutCDN 2018-10-09 Item 2C - Budget - 2019-2020 Biennial Budget: Lodging Tax404
4�z City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Community Development and Neighborhoods
FROM: Brandon J. Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: October 2, 2018
SUBJECT: 2019/2020 Lodging Tax Budget
ISSUE
Proposed budget for Lodging Tax (101 Fund) for 2019/2020.
BACKGROUND
The City charges a 1% special excise tax on certain overnight stays in area lodging businesses
and short-term rentals (stays under 30 days). Per Washington State Law, the use of these funds
is limited to tourism promotion activities.
Lodging tax funds are used to support a variety of tourism promotion activities within the City.
Historically, the City has provided funding for Seattle Southside Regional Tourism Authority
(SSRTA), the Museum of Flight, and Starfire Sports. As part of the branding process completed
in 2017, the City expressed a desire to expand access to funding and support smaller events
within the City in order to expand the tourism environment of the City. In 2018, the City provided
funds to support the Rave Green Run, hosted by the Seattle Sounders and Renton Comic Con,
two smaller events brought into the City.
Historical Lodging Tax Revenue
The Seattle region's overall economic boom continues to increase the need for hotel rooms in
the area. Supply of hotels rooms in the area continues to increase. In 2017/2018, the area saw
an increase in hotel properties in Renton, SeaTac, Des Moines, and Tukwila. Hotel revenue is
forecasted to continue to grow in 2019/2020; however, at a much slower rate due to supply
starting to catch up do demand.
Year
2012 2013
2014
2015
2016
2017
2018
Amount
$822,033 $526,832
$596,781
$677,691
$710,267
$736,784
$764,767
(projected)
Growth
MI= .9%
13.27%
13.55%
4.08%
3.07%
3.07%
DISCUSSION
The following outlines staff's lodging tax revenue estimates for 2019 and 2020.
Year
2019
2020
Projected Revenue
Amount:
$775,000
$800,000
Projected Growth (Based
budgeted amounts):
2.66%
3.23%
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INFORMATIONAL MEMO
Page 2
Staff is predicting little growth for the lodging tax funds for 2018 and 2019, with growth
limited to inflation. Increase supply (more rooms) will depress overall room rates as new
hotels come online in the region.
Proposed 2018/2019 Expenditures for Lodging Tax
The following are the general areas of spending City Administration is anticipating for
lodging tax funds in 2019/2020. 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. LTAC
reviews lodging tax funding requests are monthly basis, with applications for 2019/2020
scheduled to be considered this fall. If the LTAC and Council approve lodging tax
requests that exceed these placeholder amount, the Council may need to amend the
budget.
• Continue Southcenter 50 celebration.
• Identify and/or create a Tukwila signature event for the region.
• Increase total number of recipients of lodging tax funds, including identifying how
to support smaller events that help build a tourism destination for the City.
• Work with Seattle Southside Regional Tourism Authority and Seattle Southside
Chamber of Commerce on south end restaurant week.
• Increase total lodging expenditures in the City by at least five percent per year.
• Complete wayfinding program in Southcenter District.
• Explore possible implementation of a banner program in the City, specifically in the
Southcenter District, along Tukwila International Blvd, and Interurban Ave S.
Staffing Costs
For 2019/2020 the budget also includes a .5 FTE. This is not a new position. LTAC staff
support; oversight of lodging tax contracts; and coordination of the City's tourism
promotion activities are currently done by the Business Relations Manager in the
Mayor's Office. This position is currently funded 100% by the general fund.
Administration is proposing to split the cost for this position 50/50 between the general
and lodging tax funds.
RECOMMENDATION
Staff recommends that the Committee forward this section of the budget to the
Committee of the Whole for review. If there are not recommended changes, City
Council consensus will be requested to move the lodging tax budget forward to the final
budget package in November.
ATTACHMENTS
• Proposed 2019/2020 Lodging Tax Fund Budget
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Z:ICouncil Agenda Items\Finance110.9 CDNIInfo Memo Lodging Tax Budget.docx
DEPARTMENT: Mayor's Office
FUND: Lodging Tax Fund
RESPONSIBLE MANAGER: Brandon Miles
Description
FUND NUMBER: 101
POSITION: Economic Dev. Liaison
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).
2017-2018 Accomplishments
• Completed and launched new Tukwila tourism and economic development brand. Strategic
Goal 5
• Worked collaboratively with the cities of SeaTac and Des Moines, through Seattle Southside
Regional Tourism Authority, to increase demand for overnight tourists in the region. Strategic
Goal 5
• Supported two new events in the City, Rave Green 5k and Renton Comic Con. Strategic Goal
5
• Began Southcenter 50 celebration, in partnership with Seattle Southside Chamber of Commerce
and Westfield Southcenter. Strategic Goal 5
• Tukwila was selected as the host city for the new Major League Rugby team, Seattle Seawolves.
Strategic Goal 5
2019-2020 Outcome Goals
• Continue Southcenter 50 celebration. Strategic Goal 5
• Identify and/or create a Tukwila signature event for the region. Strategic Goal 5
• Increase total number of recipients of lodging tax funds, including identifying how to support
smaller events that help build a tourism destination for the City. Strategic Goal 5
• Work with Seattle Southside Regional Tourism Authority and Seattle Southside Chamber of
Commerce on south end restaurant week. Strategic Goal 5
• Increase total lodging expenditures in the City by at least five percent per year. Strategic Goal
5
• Complete wayfinding program in Southcenter District. Strategic Goal 5
• Explore and potential implementation of a banner program in the City, specifically in the
Southcenter District, along Tukwila International Boulevard, and Interurban Ave S. Strategic
Goal 5
2019-2020 Indicators of Success
• Identification and recruitment of new activities, festivals, and events to bring to the City.
• Increased sales at hotels, restaurants, and entertainment establishments.
• More "feet on the streets" and "heads in beds."
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Revenue and Expenditure Summary
Lodging Tax
Actual
Budget
Percent Change
2016
2017
Projected
2018
2018
2019
2020
2018-19
2019-20
Operating Revenue
Hotel/Motel Taxes
$ 710,267
$ 736,784
$ 764,767
$ 755,000
$ 775,000
$ 800,000
2.65%
3.23%
Total General Revenue
710,267
736,784
764,767
755,000
775,000
800,000
2.65%
3.23%
Miscellaneous Revenue
Investment Eamings
1,576
5,695
9,858
3,000
3,000
3,000
0.00%
0.00%
Other Misc Revenue
-
-
-
-
-
-
0.00%
0.00%
Total Miscellaneous Revenue
1,576
5,695
9,858
3,000
3,000
3,000
0.00%
0.00%
Total Revenue
711,843
742,479
774,626
758,000
778,000
803,000
2.64%
3.21%
Operating Expenditures
Salaries & Wages
-
-
-
-
55,457
56,586
0.00%
2.04%
Personnel Benefits
-
-
-
-
17,847
18,411
0.00%
3.16%
Supplies
(11,722)
74
2,382
5,000
5,000
5,000
0.00%
0.00%
Services
399,127
479,487
505,304
596,086
596,086
596,086
0.00%
0.00%
Intergodt Services & Taxes
-
-
-
-
-
-
0.00%
0.00%
Total Operating Expenditures
387,405
479,562
507,685
601,086
674,390
676,083
12.20%
0.25%
Indirect cost allocation
35,000
35,700
36,414
36,414
18,741
19,416
-48.53%
3.60%
Total Expenditures
422,405
515,262
544,099
637,500
693,131
695,498
8.73%
0.34%
Beginning Fund Balance
623,120
912,558
1,139,775
920,375
1,370,302
1,455,171
48.89%
6.19%
Change in Fund Balance
289,438
227,217
230,526
120,500
84,869
107,502
-29.57%
26.67%
Ending Fund Balance
$ 912,558
$1,139,775
$1,370,302
$1,040,875
$1,455,171
$1,562,673
39.80%
7.39%
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Expenditure Detail - Salaries and Benefits
Lodging Tax
Position
Description
2018
FTE
2019
FTE
2019 Budgeted
Salaries Benefits
2020
FTE
2020 Budgeted
Salaries Benefits
Economic Development Liaison
0
0.5
$ 55,457 $ 17,847
0.5
$ 56,586 $ 18,411
Department Total
0
0.5'
$ 55,457 $ 17,847
0.5
$ 56,586 $ 18,411
Expenditure Detail - Supplies and Services
Data presented here is related to the Lodging Tax Advisory Committee (LTAC).
Lod in Tax
Account Number
Actual
Budget
2016
2017
Projected
2018
2018
2019
2020
101.00.557.300.31.00 Supplies - Office & Operating
$ 7
$ 74
$ 2,382
$ 5,000
$ 5,000
$ 5,000
101.00.557.302.31.00 Supplies -Office and Operating
(11,729)
-
-
-
-
-
Total Supplies
(11,722)
74
2,382
5,000
5,000
5,000
101.00.557.300.42.00 Communication - Sprint, MCI, Eblast
(127)
-
-
-
-
101.00.557.300.42.01 Communication - Postage
-
(6,393)
-
-
-
-
101.00.557.300.43.00 Travel - Parking, meals, mileage, air trawl
11
343
10,710
10,000
10,000
10,000
101.00.557.300.47.26 Utilities
683
-
-
-
-
-
101.00.557.300.49.00 Misc
2,766
9,856
9,805
20,000
20,000
20,000
101.00.557.301.41.00 Prof S\ics
-
123,337
72,102
100,000
100,000
100,000
101.00.557.301.44.00 Marketing
-
15,345
63,836
113,586
113,586
113,586
101.00.557.301.44.11 Marketing - Starfire Sports
12,500
-
-
-
-
-
101.00.557.302.41.00 Prof Secs - Conversion Study & SSRTA
337,500
270,000
198,125
202,500
202,500
202,500
101.00.557.302.41.01 Prof Svcs - SW King County Chamber
-
-
-
-
-
-
101.00.557.302.41.03 Prof Secs - Community Events
16,202
67,000
150,000
150,000
150,000
150,000
101.00.557.302.41.05 Museum of Flight
35,000
-
-
-
-
-
101.00.557.302.43.00 Travel - Mileage, parking, etc.
314
-
-
-
-
-
101.00.557.302.49.00 Misc - Misc incidental costs
279
-
725
-
-
-
101.00.557.303.44.10 Athertising - SeaTac marketing projects
(6,000)
-
-
-
-
-
Total Services
399,127
479,487
505,304
596,086
596,086
596,086
Total Supplies, Services
$ 387,405
$ 479,562
$ 507,685
$ 601,086
$ 601,086
$ 601,086
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