Update on Occupancy and Prepared Food and Beverage
Update on Occupancy and Prepared Food and Beverage Taxes and Interlocal Agreements Stakeholders January 23, 2019 www. wakegov. com/roomfoodtax 1
Presentation Overview I. History and Context II. Wake County Destination Strategic Plan III. IV. Financial Review – Revenues and Financial Models Stakeholder Review Process • V. Request for Information Results Future Meetings www. wakegov. com/roomfoodtax 2
Authorizing State Legislation v v v State legislation approved in 1991 and amended in 1995 Tax levies 6% on occupancy stays; 1% on prepared food and beverage Revenues must be used for projects supporting arts, cultural, sports or convention Revenues in FY 95 = ~ $12 million Revenues in FY 18 = ~ $55 million Revenues projected for FY 34 = ~$104 million www. wakegov. com/roomfoodtax 3
Governed by Interlocal Agreements • • An interlocal agreement between the City of Raleigh and Wake County along with 20 amendments articulate the oversight and uses of the revenues 20 th Amendment calls for a public review • Review Financial Models • • • Current Projections and Forecast Review PNC Capital Plan Review Convention Center Capital Plan Inclusive of stakeholders Complete by January 1, 2020 www. wakegov. com/roomfoodtax 4
Operating Principles During the last review process, stakeholders created Operating Principles to articulate the values of the community and stakeholders as it relates to the uses and governance of hospitality taxes in Wake County. www. wakegov. com/roomfoodtax
Since Our Last Review • • Review Team monitored revenue performance, assisted with revenue recommendations for budget and developed review process Review Team includes staff representatives from: • • Centennial Authority City of Raleigh Greater Raleigh Convention and Visitors Bureau Town of Cary Town of Knightdale Town of Morrisville Wake County Hospitality Alliance www. wakegov. com/roomfoodtax
Since Our Last Review • Facility Cap. Ex Plans completed • • Small Projects Competitive Process Completed • • • Raleigh Convention Center Raleigh Performing Arts Center (Duke Energy Center) Cary Sports Facilities (baseball, soccer, tennis) 9 projects submitted requests for >$10 M for projects totaling >$75 M 5 projects awarded funding Wake County Destination Strategic Plan Completed by JLL www. wakegov. com/roomfoodtax
Wake County Destination Strategic Plan Denny Edwards President and CEO, Greater Raleigh Convention and Visitors Bureau
Destination 2028
Destination Strategic Plan Findings The recommendations on funding are based on those projects with the potential to most positively impact increased overnight visitation using the following guidelines…
Guidelines • Generate overnight visitors tied to funding • Utilize assets that are proven to cause overnight stays • Identified target markets with corroborating research • Require direct tracking of program conversion • Leveraging partners and creating collaborative projects
JLL Recommendations and Priorities
Meetings and Conventions • Raleigh Convention Center enhancements and expansion • A new downtown full-service hotel
Sports • Multipurpose indoor sports complex • PNC Arena upgrades and enhancements
Leisure • Create funding for signature events and blockbuster exhibits
Required Measurement and Metrics
Thank you! DENNIS EDWARDS, PRESIDENT AND CEO, GRCVB 919. 645. 2656 or dedwards@visit. Raleigh. com
Financial Review www. wakegov. com/roomfoodtax 18
Financial Models on website www. wakegov. com/roomfoodtax
Financial Planning Models v v County serves as fiscal agent Financial models jointly maintained v v Major Facilities Cash Flow Model – Wake County Convention Center Complex Financing Plan - City of Raleigh Consider long-term expenditure commitments within a model sensitivity analysis to minimize project and financing risk with debt repayment the highest priority Maintain fund balance targets that provide adequate margin of error to minimize financing risk should revenue estimates fall short of projections www. wakegov. com/roomfoodtax 20
Occupancy Tax Revenue 21
Occupancy Tax Revenue 22
Prepared Food Tax Revenue 23
Prepared Food Tax Revenue 24
Revenues Since 2016 Review Major Facilities Model – Approved with 20 th amendment Major Facilities Model – Year-End FY 2018
www. wakegov. com/roomfoodtax 26
A Quick Primer on the Agreements • Section 1: • First dollars out – per legislation, specific entities get money before any projects are funded: • Wake County Cost of Collection/Administration • • City of Raleigh “Holdback” • • $680 K for visitor-related activities and programs Town of Cary “Hold Harmless” • • 3% of gross proceeds for administering and collecting the taxes 5% of occupancy for public relations, and visitor-related programs and activities Greater Raleigh Convention & Visitors Bureau • Approximately 22% of total Occupancy taxes and up to $675, 000 Prepared Food and Beverage tax for operational expenses associated with promotion of travel, tourism and conventions www. wakegov. com/roomfoodtax 27
A Quick Primer on the Agreements • Section 1: (Cont’d) • Centennial Authority • • PNC Arena Debt Service • • Approx. $5. 2 million annually; paid off in FY 2020 (Total = $60 M) PNC Arena Maintenance • • 7% for operational expenses for PNC Arena Paid off in FY 2021 (Total = $22 M) Wake County and Raleigh • • • $1 million per organization per year for discretionary projects Wake supports Marbles, Five County Stadium maintenance Raleigh supports Duke Energy Center for Performing Arts www. wakegov. com/roomfoodtax 28
A Quick Primer on the Agreements • Section 2: 85% of all net revenue dedicated to the Convention Center • • RCC - Debt Service, Maintenance and Operating Performing Arts Center Maintenance Support Business Development Fund Section 3: 15% of remaining net revenue available for other qualifying uses • • Cary Sports Facilities; paid in full FY 2019 (Total = $10 M) Competitive Projects Fund; $2 M annually • Next competitive process to begin late 2019 www. wakegov. com/roomfoodtax 29
Major Facilities Cash Flow Model www. wakegov. com/roomfoodtax 30
Convention Center Complex Financing Plan www. wakegov. com/roomfoodtax 31
Review Process and RFI Results www. wakegov. com/roomfoodtax 32
2019 Interlocal Review Schedule • • September/October – Briefed Wake County Commissioners, Raleigh City Council and stakeholders October 2018 – Released Request for Information (RFI) • • Goal of RFI: Seek to learn about capital projects that are being planned or proposed in Wake County related to arts, culture, sports or convention from period 2019 – 2024 with a minimum project cost of $20 million that may request interlocal funds at a future date January 10, 2019 – Received RFI responses www. wakegov. com/roomfoodtax 33
Results of Request for Information (RFI) Organization Project Name Total Project Estimated Cost Centennial Authority PNC Arena Enhancements $200 million to $300 million City of Raleigh Convention Center Complex Friends of Raleigh/Wake County Stadium Marbles Kids Museum Raleigh/Wake County Stadium $309. 5 million to $388. 5 million (within next 10 years ) Not included Museum Expansion $45 million North Carolina Football Club North Carolina Museum of Art Town of Cary Downtown Entertainment and Sports $150 million Center NCMA East Building Renovation $25 million to $30 million Indoor Multiuse Sports Facility $123 million to $131 million William Peace University Performing Arts Venue $30 million to $32 million www. wakegov. com/roomfoodtax 34
2019 Interlocal Review Schedule • • • January/February 2019 – Stakeholders meet to review financial models, results of capital maintenance plans for Raleigh Convention Center Complex, PNC Arena and Cary Sports Facilities and opportunities for future investments March 2019 – Develop recommended modifications to financial models to address findings of facility studies and new investments March/April/May 2019 – If funding available, conduct process for consideration of additional investments www. wakegov. com/roomfoodtax 35
Future Meeting Dates • Thursday, February 14, 2019 - 8: 30 am Duke Energy Center for Performing Arts • Thursday, February 28, 2019 - 8: 30 am Herbert Young Community Center - Cary • Thursday, March 14, 2019 - 8: 30 am TBD • Thursday, March 28, 2019 - 8: 30 am Raleigh Convention Center – Room 304 www. wakegov. com/roomfoodtax
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