HomeMy WebLinkAboutPED 2020-08-17 Item 1E - LTAC - Lodging Tax Revenue and Ending Fund Balance ForecastCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning and Economic Development
FROM: Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: August 10, 2020
SUBJECT: Lodging Tax Revenue and Ending Fund Balance
ISSUE
Lodging tax revenue and ending fund balance discussion.
BACKGROUND
The City collects a 1 % charge on eligible stays at hotels, motels, and Airbnbs in the City. Under
Washington State law these funds can only be used for tourism promotion activities. With nearly
2,000 hotel rooms, the City is in the top five of lodging tax collection in King County, with just
over $800,000 in funds collected in 2019. This was the best year on record for the City. COVID-
19 has drastically impacted the lodging industry due to pullback in people travelling for work and
pleasure. Even as travelers return, it could be several years before the City returns to its pre-
COVID-19 lodging tax revenue.
The chart below outlines staff's initial, pre-COVID-19 lodging tax revenue projections and
revised projections.
Year
2020
2021
2022
2023
2024
2025
2026
Pre-
$800,000
$840,000
$882,000
$926,000
$972,405
$1,021,025
$1,072,076
COVID-
19
Revenue
Forecast
Revised
$400,000
$450,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
Forecast
Beginning this year, the City has started to draw down its lodging tax reserves due the pullback
in revenue and to respond to the tourist economic impacts associated with COVID-19. A copy of
the current six -year financial model, showing forecasted ending fund balance, is attached with
this staff report.
DISCUSSION
If we maintain current expenditures and there is no increase in revenue the City will begin to run
out of funds to support identified tourism programs starting in 2024. As part of the
comprehensive review of the City's tourism program the City will need to identify the elimination
and deferral of some programs. No decision is needed at this time. Staff will work with the City
Council and the Lodging Tax Advisory Committee on priority programs.
FINANCIAL IMPACT
Not applicable.
67
INFORMATIONAL MEMO
Page 2
RECOMMENDATION
Discussion only.
ATTACHMENTS
• Lodging Tax Six Year Financial Model, Updated July 14, 2020.
68 https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/CC Docs/Old W/2020 Info Memos/Memo, Lodging Tax Revenue and Ending Fund Balance, FINAL.doc
M.
DRAFT, DISCUSSION ONLY
Lodging Tax Six Year Financial Plan
Forecasted
Actuals
Year 2019 2020 Budget 2020, Updated 2021 2022 2023 2024
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
SavingLocalKC.com
$ 154,170
Destination Development
Wayfinding Plan Development and Installation
$
$ 50,000
SouthcenterArt lnvestements
$ 600
$ 39,400
Tukwila Pond
$
$ 125,000
World Cup Planning and Activiation
$
$ -
Ad minstration/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
Totals
$ 400,000 $ 450,000 $ 600,000 $ 700,000 $ 800,000 $ 4,569,095
$ 202,500 $ 202,500 $ 202,500 $
$ 75,000
$ 50,000 $ 150,000 $ 150,000 $
$ 10,000
$ 50,000
$ 5,000 $ 15,000 $ 15,000 $
$ 88,375 $ 50,000 $ 50,000 $
$ 154,170
$ 100,000 $ 150,000 S 100,000 S
$ 39,400 $ 75,000 $ 75,000 $
$ 125,000 $ 200,000 $ 200,000 $
$ 40,000 $ 40,000 $
$ 53,870 $ 59,674 $ 60,859 $
$ 18,411 $ 18,963 $ 19,532 $
$ 19,416 $ 19,998 $ 20,598 $
$ 30,000 $ 30,000 $ 30,000 $
$ 1,021,142 $ 1,011,136 $ 963,490 $
$ 1,957,330 $ 1,336,188 $ 775,052 $
$ 1,336,188 $ 775,052 $ 411,563 $
202,500 $ 202,500 $ 1,417,500
150,000 $ 150,000 $ 950,000
15,000 $ 15,000 $ 90,000
50,000 $ 50,000 $ 376,750
100,000
$ 100,000
$ 600,000
75,000
$ 75,000
$ 379,400
200,000
$ 200,000
$ 1,050,000
50,000
$ 50,000
$ 180,000
62,685
$ 64,565
$ 416,279
20,118
$ 20,722
$ 134,281
21,216
$ 21,853
$ 141,239
30,000
$ 30,000
$ 201,385
976,519
$ 979,640
$ 5,936,835
411,563
$ 135,043
135,043
$ (44,597)
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