Tourist Development Tax Funded Programs FY18 Recommended Operating Budget and Capital Programs June 6 th, 2017 1
Tourism Development Tax (TDT) Overview & Uses 2
Legislative Background of Tourist Development Tax (F.S. 125.0104) Legislative intent - To attract tourists, by both creating an attractive physical and programmatic environment for the enjoyment of tourists and by promoting the community to tourists to increase tourist-related business activities Statutory definition of a tourist - a person who participates in trade or recreation activities outside the county of his or her permanent residence or who rents or leases transient accommodations for a term of six months or less 3
Tourist Development Tax (TDT) Levies December 1 st 1980-1 st and 2 nd TDT pennies tax levied August 1 st 1987-3 rd TDT penny tax levied July 1 st 1996-4 th and 5 th TDT pennies tax levied Broward may levy up to 6 pennies 4
Statutory Uses of Five Cents TDT Acquire, construct, extend, enlarge, remodel, repair, improve, maintain, operate or promote publicly owned & operated convention centers, sports stadiums, sports arenas, coliseums, auditoriums, aquariums or museums that are publicly owned and operated or owned and operated by not-for-profit organizations and open to the public Promote Zoological Parks that are publicly owned and operated or owned and operated by not-for-profit organizations and open to the public Promote & advertise tourism in Florida, nationally & internationally, and/or to support an activity, service, venue, or event that is attractive to tourists 1 2 3 4 5 X X X X X X X X X X X Fund Convention and Visitor s Bureaus X X X Finance beach park facilities or beach improvement, maintenance, renourishment, restoration, and erosion control, including shoreline protection, enhancement, cleanup, or restoration of inland lakes and rivers (public access required) X X X TDT revenues may be pledged to secure and liquidate revenue bonds issued by the County for the purposes set forth in 1, 2, and 5 or for the purpose of refunding bonds previously issued for such purposes, or both X X X Pay the debt service on bonds issued to finance the construction, reconstruction or renovation of a publicly owned professional sports franchise facility or retained spring training franchise facility X X Pay the debt service on bonds issued to finance the construction, reconstruction or renovation of a convention center Pay the operation and maintenance costs of a convention center for a period of up to ten years, only if the tax was levied for this purpose X X 5
Tourism Overview 6
Greater Fort Lauderdale Average Occupancy Rate 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 OCT 69.1% 68.5% 73.2% 72.6% 68.4% NOV 72.7% 75.9% 78.2% 77.9% 77.0% * DEC 74.3% 76.6% 80.1% 79.2% * 77.0% * JAN 80.1% 83.2% 85.9% * 81.4% * 79.9% * FEB 87.4% 89.9% 92.8% * 87.1% * 87.1% MAR 88.0% 87.5% 88.3% 87.4% 87.3% APR 77.6% 81.4% 82.4% 81.0% * 80.9% MAY 70.7% 74.7% 74.8% 75.6% JUN 70.7% 72.0% 73.7% 73.0% JUL 72.1% 75.6% 78.1% 79.4% 40.0% OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP AUG 69.6% 75.3% 73.9% 73.0% SEP 59.6% 64.5% 66.1% 67.9% ANNUAL 74.3% 77.1% 78.9% 77.9% AVERAGE * Hotel occupancy in Greater Fort Lauderdale was the highest in the state. 7
Greater Fort Lauderdale Average Daily Rates $200.00 $180.00 $160.00 $140.00 $120.00 $100.00 $80.00 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 OCT $108.11 $106.80 $114.74 $119.34 $118.09 NOV $106.28 $114.67 $121.20 $134.29 $136.12 DEC $116.60 $125.13 $135.38 $144.25 $141.59 JAN $141.37 $150.15 $162.59 $171.75 $168.11 FEB $151.61 $164.70 $181.26 $187.01 $183.92 MAR $153.76 $160.58 $176.36 $185.57 $180.51 APR $125.41 $140.62 $147.49 $152.23 $155.54 MAY $109.46 $114.13 $118.87 $123.88 JUN $99.95 $104.05 $108.37 $111.65 JUL $98.48 $103.60 $108.85 $114.27 AUG $94.07 $99.62 $103.27 $106.05 $60.00 OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP SEP $92.38 $96.71 $101.98 $105.28 ANNUAL $116.46 $123.40 $131.70 $137.96 AVERAGE 8
Greater Fort Lauderdale Convention & Visitors Bureau RevPAR* Analysis FY13 FY14 FY15 FY16 FY17 $180.00 $160.00 $140.00 $120.00 $100.00 $80.00 $60.00 FY13 FY14 FY15 FY16 FY17 OCT $74.66 $73.17 $83.94 $86.69 $80.75 NOV $77.27 $87.01 $94.82 $104.56 $104.78 DEC $86.64 $95.82 $108.45 $114.31 $109.00 JAN $113.21 $124.96 $139.59 $139.73 $134.36 FEB $132.54 $148.11 $168.15 $162.90 $160.18 MAR $135.32 $140.53 $155.76 $160.57 $157.68 APR $97.37 $114.51 $121.55 $123.28 $125.79 MAY $77.36 $85.23 $88.60 $93.68 JUN $70.63 $74.88 $79.86 $81.52 JUL $71.04 $78.38 $84.96 $90.71 $40.00 $20.00 OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP AUG $65.48 $74.33 $76.32 $77.46 SEP $55.03 $62.07 $67.39 $71.51 ANNUAL $88.05 $96.58 $105.78 $108.91 AVERAGE * Revenue per available room Hotel industry performance metric = average daily rate multiplied by occupancy rate 9
Factors Contributing to FY17 Decline in Tourist Development Tax Revenues Mild Winter in Midwest and Northeast Hurricane Matthew (October 2016) Short-term rentals - Airbnb, Home Away & VRBO * Threat of a Travel Ban Airline Electronics Ban Currency Exchange Rates * Starting in May 2017 Airbnb will be charging customers and remitting back to the county the Tourist Development Tax, estimated $500k will be collected in FY17. Efforts to collect from other companies are ongoing. 10
History of Tourist Development Tax Revenue FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Forecast FY18 Proposed $42.8m $35.5m $37.6m $40.6m $44.6m $47.4m $53.0m $58.1m $61.9m $60.0m $62.1m FY09 TDT revenues declined 17% due to the economic recession In FY12 TDT revenues rebound above pre-recession levels TDT revenues incrementally grew from FY10-FY16 Revenues started to decline in FY17, consecutively for 6 months 11
FY18 Tourist Development Tax Revenue Factors 0.3% increase in TDT revenues over FY16 actuals 3.5% increase in TDT revenues over FY17 forecast Estimating $1.4m in TDT revenues generated from Airbnb rentals Vacation Rental bills filed during the 2017 legislative session had no impact on the collection of tourist development taxes Approximately 2,700 new hotel rooms are planned to come online in FY18 (approximately half included in forecast) 12
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FY17-22 Recommended Recurring Tourist Development Tax (TDT) Revenues & Expenses 14
FY17-22 TDT Recurring Revenue Forecast Recurring Revenues FY17 Modified Budget FY18 Recommended Budget FY19 Forecast FY20 Forecast FY21 Forecast FY22 Forecast TDT 5 Cents $62.6 $62.1 $64.0 $65.9 $67.9 $69.9 Convention Center** 9.2 9.2 8.9 8.6 8.3 8.1 Arena Operator Rent 4.0 *2.6 2.6 2.6 2.6 2.6 Sales Tax Rebate 2.0 2.0 2.0 2.0 2.0 2.0 Other Revenues 0.1 0.1 0.1 0.1 0.1 0.1 Less 5% -3.9-3.8-3.8-4.0-4.0-4.1 Total Recurring Revenues $74.0 $72.2 $73.8 $75.2 $76.9 $78.6 * Arena debt service was refunded in FY17, savings begin in FY18 of approximately $1.4m. ** Increases to Convention Center operation revenues will begin in FY23, after the expansion is completed. 15
FY17-22 TDT Recurring Expenditure Forecast FY17 Modified Budget FY18 Recommended Budget FY19 Forecast FY20 Forecast FY21 Forecast FY22 Forecast Recurring Expenses Marketing/Adv. & Promotions *$17.3 $17.3 $17.8 $18.4 $18.9 $19.5 CVB Staff and Expenses 6.5 6.7 6.9 7.0 7.3 7.5 Subtotal CVB $23.8 $24.0 $24.7 $25.4 $26.2 $27.0 Convention Center Staff and Expenses $1.7 $1.7 $1.7 $1.8 $1.8 $1.9 SMG Operating Expenses 12.1 12.2 12.7 13.0 13.5 13.8 Subtotal CC $13.8 $ 13.9 $14.4 $14.8 $15.3 $15.7 Cultural Contribution $0.6 $0.6 $0.6 $0.6 $0.6 $0.6 Revenue Collection 0.5 0.5 0.5 0.5 0.5 0.5 Debt Service 14.0 **12.6 12.6 12.6 12.6 12.6 Sub-Total Recurring Expenses $52.7 $51.6 $52.8 $53.9 $55.2 $56.4 * Additional $2.4 million in one-time marketing, advertising and promotional funding was added in the FY17 2 nd supplemental budget for a total of $19.7m. ** Arena debt service was refunded in FY17, savings begin in FY18 of approximately $1.4m. 16
FY17-22 TDT Recurring Capital Expenditure Forecast Recurring Expenses FY17 Modified Budget FY18 Recommended Budget FY19 Forecast FY20 Forecast FY21 Forecast FY22 Forecast Beach Projects $7.0 $7.0 $7.0 $7.0 $7.0 $7.0 Convention Center Maintenance 2.0 2.9 3.2 2.0 2.0 2.0 Arena Operations/ Capital Repairs 10.3 8.1 8.7 6.7 6.7 4.7 Convention Center Capital Maint. Reserve 1.0 1.0 1.0 1.0 1.0 1.0 Capital Challenge Grant 1.0 1.0 1.0 1.0 1.0 1.0 Reserve for Other TDT Projects & Programs 0.0 0.0 0.0 3.6 4.0 6.5 CC Expansion 0.0 0.6 0.1 0.0 0.0 0.0 Sub-Total Recurring Expenses $21.3 $20.6 $21.0 $21.3 $21.7 $22.2 TOTAL $74.0 $72.2 $73.8 $75.2 $76.9 $78.6 17
FY18-22 Recommended Tourist Development Tax (TDT) Supported Capital Project Details 18
FY18-22 Recommended Convention Center Capital Maintenance & Improvement Projects Convention Center Projects FY18 FY19 FY20 FY21 FY22 Digital Radio System Conversion $0.3 Concession Stand Renovation $0.8 Exhibit Hall & Expansion Restroom Renovations $1.5 $1.5 Elevator Controls Replacement/Upgrade $0.1 Escalator Replacement -Phase 1 & 2 $1.5 $1.5 Roof Replacement - Expansion $0.5 $1.2 Exterior Elastomeric Coating $1.0 Carpeting Replacement $0.3 $0.5 Minor Maintenance & Repair Projects $0.1 $0.1 $0.1 $0.1 $0.1 Kitchen & Operating Equipment $0.2 $0.1 $0.4 $0.2 TOTAL PROJECTS $2.9 $3.2 $2.0 $2.0 $2.0 19
Beach Projects Funding Strategy The County has to Upfront the Total Project Cost Revenue Sources Federal Grant Funding State Grant Funding County Local Share City Local Share Federal Projects: Segment 2 and Segment 3 Up to 58% of total project costs Up to 50% of the non-federal share 67% of remaining costs after federal & state grants 33% of remaining costs after federal & state grants Non-Federal Project: Sand Bypass 0% Up to 75% of total project costs 100% of remaining costs after state grants *Includes Port Contribution 0% 20
Recommended FY18-22 Beach Capital Appropriations Appropriations FY18 FY19 FY20 FY21 FY22 Segment 2 Mitigation/Federal Reauthorization $2,500,000 $0 $0 $0 $0 Segment 2 - Hotspot $0 $0 $1,795,000 $10,493,000 $10,390,000 Segment 3 Construction/ Federal Reauthorization $22,082,000 $9,947,000 $8,938,000 $0 $0 Sand Dune Grants $25,000 $25,000 $25,000 $25,000 $25,000 Sand Bypass - Monitoring $250,000 $258,000 $265,000 $273,000 $280,000 Sand Bypass Sand Recovery $1,565,000 $1,565,000 $1,565,000 $1,700,000 $1,700,000 Beach Program Support $515,000 $515,000 $515,000 $515,000 $515,000 Total Appropriations $26,937,000 $12,310,000 $13,103,000 $13,006,000 $12,910,000 21
Major Beach Capital Projects Total Project Costs Project Expenses + FY17 Budget FY18 CIP FY19-22 CIP Total Segment 2 $57.0m $2.5m $0m $59.5m Sand Bypass $36.4m $1.8m $7.6m $45.8m Segment 3 $15.8m $22.1m $18.9m $56.8m 22
Recommended FY18-22 Beach Capital Revenues Revenues FY18 FY19 FY20 FY21 FY22 City Reimbursements Segment 2 $4,508,000 $4,508,000 $0 $0 $0 State Grant Segment 2 $88,000 $0 $0 $0 $0 State Grant Sand Bypass $14,000,000 City Reimbursements Segment 3 City Reimbursement Sand Bypass $0 $0 $5,302,000 $5,302,000 $5,302,000 $516,000 $517,000 $516,000 $562,000 $561,000 Tourist Taxes $7,000,000 $7,000,000 $7,000,000 $7,000,000 $7,000,000 Interest Earnings $500,000 $300,000 $300,000 $150,000 $50,000 Less 5% -$25,000 -$15,000 -$15,000 -$8,000 -$3,000 Fund Balance $350,000 $0 $0 $0 $0 Total Revenues $26,937,000 $12,310,000 $13,103,000 $13,006,000 $12,910,000 23
FY18 Reserves (Funded by Forecasted FY18 Fund Balance) Reserves / Project FY18 Notes Arena Trustee Reserve $4.0m Required by bond covenants CVB Revenue Stabilization & Operations Reserve Convention Center Revenue Stabilization & Operations Reserve $6.1m $3.4m Three months of budgeted expenses Three months of budgeted expenses 24
Needs Competing for TDT Funding 25
Available Recurring TDT Funds Starting in FY20 FY20 $3.6m FY21 $4.0m FY22 $6.5m 26
TDT Funding Needs Convention Center Expansion debt service costs Convention Center Expansion operating subsidy Additional Marketing and Promotions Cost Increases in Beach Renourishment Arts/Culture 27
Convention Center Expansion and Hotel As of May 2017, remaining available budget for expansion is $26m In FY18, $3m is recommended in one-time funds towards the pay as you go funding for the expansion Project is currently in the pre-development/planning stage Cost estimates and project scopes are being refined Additional funding sources are being examined 28
Historical CVB Marketing/Advertising/Promotions (MAP) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Modified Budget FY18 Recommended Budget Includes Nonrecurring $10.9m $11.0m $9.2m $8.0m $10.6m $12.9m $14.5m $16.0m $15.7m $19.7m $17.3m FY17 Adopted MAP Budget $17.3m FY17 Modified MAP Budget $19.7m - includes mid-year adjustment of one-time $2.4m to increase our marketing efforts during the remainder of FY17, to counter the decline from the first half of the year FY18 Recommended MAP Budget $17.3m 29
History of Beach Renourishment Total Project Costs Year Project Total ($M) 1970 Pompano Beach (Seg II) 1.76 1971 Hallandale ( Seg III) 0.78 1976 John U Lloyd (Seg III) 2.96 1979 Hollywood/Hallandale (Seg III) 7.83 1983 Pompano/Laud-By-The-Sea (Seg II) 9.99 1989 John U Lloyd (Seg III) 5.68 1991 Hollywood/Hallandale (Seg III) 9.47 2005 & 2006 John U Lloyd & Hollywood/Hallandale (Seg III) 44.5 2015 & 2016 Pompano/ Laud-By-The-Sea/Fort Lauderdale (Seg II) 59.5 2019 & 2020 John U Lloyd & Hollywood/Hallandale (Seg III) 56.8 The Segment 2 2015/2016 is 100% truck haul method for sand delivery. The Segment 3 2019/2020 is a combination method of truck haul and dredge for sand delivery. 30
High Tourism Impact Tax Enables an additional one cent tourist tax that would generate approximately a net $11.8m per year, based on FY18 forecast After re-certification board can vote on levying the additional Tourist Development Tax After approved by the board, the additional tax can be effective the first day of the next month, needs to be stated in the ordinance 31
*Monroe County is eligible and levies the TDT penny for critical area of state concern Comparisons in the Southern/Central Region County Current TDT Cents Charged Max TDT Cents Indian River 4 5 Collier 4 5 Martin 5 5 Saint Lucie 5 5 Brevard 5 5 Charlotte 5 5 Sarasota 5 5 Manatee 5 5 Hillsborough 5 5 Broward 5 6 Monroe 5 7 * Lee 5 6 Palm Beach 6 6 Miami-Dade 6 6 Orange 6 6 Pinellas 6 6 Osceola 6 6 32
Next Steps August 10 th - County Administration will make presentation to the TDC on the tourist tax funded operating budget and capital programs August 29 th - If TDC has feedback or recommendations on the County Administrator s proposed TDT program budget, it will be discussed at the budget workshop on this date 33