HomeMy WebLinkAboutPED 2020-07-20 Item 1B - Budget - 2021-2022 Lodging Tax Budget UpdateCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning and Economic Development
FROM: Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: July 13, 2020
SUBJECT: 2021/2022 Lodging Tax Budget Process
ISSUE
Process and discussion of lodging tax budget for 2021/2022.
BACKGROUND
The City of Tukwila collects a 1 % lodging tax on all eligible stays in Tukwila hotels, motels, and
Airbnbs. Washington State law limits the use of lodging tax funds to tourism promotion activities.
Funds collected can be used by the City or third parties to help bring tourists (both day and night
tourists) to the City.
State Law allows the City to use lodging tax funds as follows:
• Tourism marketing;
• Marketing and operations of special events and festivals designed to attract tourists;
• Operations and capital expenditures of tourism -related facilities owned or operated by a
municipality or a public facilities district; or
• Operations of tourism -related facilities owned or operated by nonprofit organizations.
Historically, the City has used lodging tax funds for a variety of activities including providing
funds to Seattle Southside Regional Tourism Authority, the Museum of Flight, Starfire Sports,
Seattle Southside Chamber of Commerce, and the City of Tukwila. Funds have been used for a
variety of activities, such as marketing, small festivals, and sponsorship of tourist related events.
In 2019 the City collected $819,000 in lodging tax. The City ended 2019 with approximately $1.9
million of funds on hand. For 2020 the City is forecasting a significant drop in lodging tax funds
due to COVID-19. Staff is now forecasting that lodging tax fund revenues will only be about
$400,000.
DISCUSSION
Traditionally, the City awarded lodging tax funds to applicants on an ongoing basis, provided
funds were available. Starting in 2019 the City began to utilize a six -year financial model for
lodging tax. The idea with the six -year financial model was to be able to plan out future funding
opportunities and ensure that sufficient cash was maintained for these programs.
A review of past funding awards shows that the City is providing heavy funding for advertising'
and tourism promotion and very little funding in capital projects or festivals. In 2019 the City
made its first awards in tourism capital projects when it awarded funds for Southcenter art and
to develop a master plan for Tukwila Pond.
' When combined with the TPA funds collected at Tukwila hotels, just over $1.3 million dollars is being used for
marketing and tourism promotion activities. These funds are combined with funds from the Cities of SeaTac and
Des Moines and used by Seattle Southside Regional Tourism Authority.
INFORMATIONAL MEMO
Page 2
As part of the 2021/2022 lodging tax budget staff has identified several goals to try and address
in developing the budget:
1. Consider creating "buckets" with how lodging tax funds would be allocated. These
buckets would reflect the allowable used of lodging tax funds. Staff would work with the
City Council and Lodging Tax Advisory Committee on developing the specific "buckets."
2. Discuss geographical allocation of programs in the City receiving lodging tax funds. The
City should work to identify programs on Tukwila International Blvd that could receive
lodging tax funds.
3. Creation and sponsorship of events and festivals within the City.
a. Tukwila Pride
b. Baker Blvd Event
c. Food Innovation Network
d. Juneteenth Festival
4. Tourism capital projects.
a. Tukwila Pond
b. Riverwalk
c. Wayfinding Signage
5. Other items the Committee would like staff to examine.
Staff would like to work on the proposed budget in August and September. PED will be briefed
as we go through the update process. Staff would like input from the PED on items the
committee would like staff to review and research as part of this budget process.
FINANCIAL IMPACT
N/A.
RECOMMENDATION
Discussion only.
ATTACHMENTS
• Current Six -Year Lodging Tax Financial Model
https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/Council Agenda Items/Mayor's Office/PED, July 20/1-odging Tax Budget Process for
12 2021.2022/Informational Memorandum, Lodging Tax Budget.doc
DRAFT, DISCUSSION ONLY
Lodging Tax Six Year Financial Plan
Forecasted
Actuals
Year 2019 2020 Budget 2020, Updated 2021 2022 2023 2024 Totals
Revenue
Orginal Estimated Amount $ 800,000 $ 800,000 $ 840,000 $ 882,000 $ 926,100 $ 972,405
Lodging Tax Collection (Revised, 5/7/20) $ 819,095 $ 800,000
Expenses
Marketing, Sales, Major Sponsorships
Contracted DMO Services $
202,500
$ 202,500
SSRTA Emergency Funding
$ 75,000
Major Sponsorships Funding Request $
150,000
$ 150,000
Seattle Seawolvs
Seattle Southside Chamber of Commerce
$ -
Virtual Sports
$ 30,000
Small Event Development and Support $
10,000
$ 15,000
Digital Development and Website (Experience Tukwila) $
-
$ 88,375
SavingLocall(C.com
$ 154,170
Destination Development
Wayfinding Plan Development and Installation $
-
$ 50,000
Southcenter Art Investements $
600
$ 39,400
Tukwila Pond $
-
$ 125,000
World Cup Planning and Activiation $
-
$ -
Adminstration/Operations
Salary $
58,040
$ 56,586
Benefits $
18,124
$ 18,411
City Overhead Charge $
18,741
$ 19,416
Adminstration Expenses $
21,385
$ 30,000
$
116,290
Total Expenditures: $
479,390
$ 1,053,858
Starting Year Balance: $ 1,617,625
$ 1,957,330
Ending Fund Balance: $ 1,957,330
$ 1,703,472
$ 400,000 $ 450,000 $ 600,000 $ 700,000 $ 800,000 $ 4,569,095
$ 202,500 $ 202,500 $ 202,500 $ 202,500 $ 202,500 $ 1,417,500
$ 75,000
$ 50,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 950,000
$ 10,000
$ 50,000
$ 5,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 90,000
$ 88,375 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 376,750
$ 154,170
$ 100,000 $ 150,000 $ 100,000 $ 100,000 $ 100,000 $ 600,000
$ 39,400 $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 379,400
$ 125,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 1,050,000
$ 40,000 $ 40,000 $ 50,000 $ 50,000 $ 180,000
$ 53,870 $ 58,284 $ 60,032 $ 61,833 $ 63,688 $ 412,333
$ 18,411 $ 18,963 $ 19,532 $ 20,118 $ 20,722 $ 134,281
$ 19,416 $ 19,998 $ 20,598 $ 21,216 $ 21,853 $ 141,239
$ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 201,385
$ 1,021,142 $ 1,009,745 $ 962,663 $ 975,668 $ 978,763 $ 5,932,888
$ 1,957,330 $ 1,336,188 $ 776,443 $ 413,780 $ 138,112
$ 1,336,188 $ 776,443 $ 413,780 $ 138,112 $ (40,650)
Notes
Salary for Bus Manager is split 50/50 between general fund and lodging tax. Salary savings
reflects credit to lodging tax for 14 furlough days for 2020.
Revenue Increase(2021-2024) 0.05
Salary is assumed to rise 3% per year. 0.03
Benefits are assuemd to rise 3% per year. 0.03
Indirect Cost Allocation is assumed to increase 3% per year. 0.03
This document does not bind the City to provide funds nor does it authorize any funding. All use of lodging tax funds must be approved by LTAC and the City Council through an application process.
Overhead charge is charged to all special accounts and recoups the cost of the general fund to support the lodging tax fund. This include facilities, IT services, legal, and accounting.
Cells in yellow show pending applications.
Cells in green show approved applications.
Cells in red are budgeted items that have not been encumbered.
7/14/2020
BJ M
W