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HomeMy WebLinkAbout10/13/2020 03 Council Review of Proposed 2021 Budget - 3 of 4 't..an,gtntj ka /iribl:"4 E$A aY BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 3. For Meeting of: October 13, 2020 ITEM TITLE: Council Review of Proposed 2021 Budget- 3 of 4 SUBMITTED BY: Bob Harrison, City Manager Steve Groom, Director of Finance & Budget SUMMARY EXPLANATION: This is the third of four scheduled study sessions on the proposed 2021 Preliminary Budget. 9:00 — Introduction— Bob Harrison Follow-up from prior session (if needed) Recap (brief) Steve Groom Lodging Tax Advisory Committee Recommendation 9:10 Policy Issues — 5-year Capital Planning introduction Department Presentations 9:20 RE ET— Scott Schafer 9:50 Parks — Ken Wilkinson 10:10 Water— Dave Brown 10:30 Arterial Streets — Scott Schafer 10:45 Questions, discussion, direction ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL BY THE CITY MANAGER RECOMMENDATION: ATTACHMENTS: 2 Description Upload Date Type D Council Options on LTAC narommendation 10/912020 ExecuM Summary D LTAC 2021 grant application 101912020 Backup Material 3 i ' 1 �? ky.1 FINANCE TO: City Council FROM: Steve Groom, Finance Director Jeff Cutter, City Attorney DATE: October 9, 2020 RE: 2021 Budget— Lodging Tax Advisory Committee (LTAC) recommendation LTAC met on June 9th, August 14th and August 27th to review applications for the 2021 Budget Lodging Tax. The committee received several applications during the publicly-noticed application period from March 1st through June 1st. City Council's options for the 2021 Budget are: 1) Accept the LTAC's proposal, or 2) Submit a revised proposal to LTAC for review and comment, restricted to the LTAC-proposed recipients (45 days prior to adoption, October 15th is 45 days prior to expected adoption on December 1') Following and attached to this memo are: • City proposal to the LTAC, considered at their August 14th meeting • LTAC's recommendation to city council • RCW§67.28.1816 and §67.28.1817 for reference * Lodging Tax Advisory Committee September 3, 2OZ0 City of Yakima City Council l29 North 2ndStreet, Yakima, Washington 9890l Dear City Council, The Lodging Tax Advisory Committee (LTA[) met on June 9`1, August 14m and August 27m to review applications for the 2021 Budget Lodging Tax, The committee received several applications during the publicly-noticed application period from March I't through June lx. The committee recommendation utilizes a 2020 Lodging Tax Revenue forecast of $l/3l[i00[i based on actuals through July 2020 and on hotel interactions with event and meeting planners. The committee sought to prioritize both city-owned facilities while seeking to reinvest lodging tax to maximize overnight hotel stays to the greatest extent possible. The committee's budgetary recommendation isasfollows: Revenue Forecast 3,310,000 Less Expenditures: Convention Center debt (347,051) Convention Center capital evp (72,90 Convention Center operations (606000) Visitor Center Operations (52,900) Sports Commission Operations (87,500 Capitol Theatre Operations (/5,000) 0Z0 (20,0W) Su^0nme (48,600 Total Expenditures (1,310,000) Surplus(deficit) Respectfully, Chair, Lodging Tax Advisory Committee 5 0+44. 1 • FINANCE TO: Lodging Tax Advisory Committee (LTAC) FROM: Alex Meyerhoff, Interim City Manager Steve Groom, Finance Director DATE: August 6, 2020 RE: Proposed 2021 Budget Lodging Tax allocation Recommendation: Anticipating inclusion in the Proposed 2021 Budget, staff requests LTAC review and comment on this proposed allocation: Convention Center debt $ 347,051 Convention Center operations 606,000 Visitor Center Operations 76,500 Sports Commission Operations 87,500 Convention Center capital exp 72,949 1,190,000 Capitol Theatre Operations 206,000 YKM Airport 50,000 Sun Dome (State Fair Park) 48,600 Total $ 1,494,600 Background: Because the COVID-19 emergency has created unprecedented new financial challenges which will likely include a protracted downturn in lodging tax over the next 18 months, it is prudent to allocate a portion of the lodging tax fund balance. Allocation of existing fund balance would be outside the scope of LTAC's role of prioritizing community grant applications within forecasted revenue, therefore staff proposes a limited $94,600 draw from forecasted reserves of$762,000 and requests the LTAC committee's review and comment. Within the purposes authorized by RCW 67.28, the staff suggests prioritizing: 1) City-owned tourism-related facilities, 2) Overnight hotel stay generation, 3) City council's strategic priorities that also have relevance to tourism (i.e. fiscal sustainability, airport, and downtown as a destination), 4) Sports activities that generate overnight hotel stays, and 5) Marketing of Yakima as an overnight tourism destination. 6 f w FINANCE RCW 67.28.1816 Lodging tax—Tourism promotion. 1. Lodging tax revenues under this chapter may be used, directly by any municipality or indirectly through a convention and visitors bureau or destination marketing organization for: a) Tourism marketing; b) The marketing and operations of special events and festivals designed to attract tourists; c) Supporting the operations and capital expenditures of tourism-related facilities owned or operated by a municipality or a public facilities district created under chapters 35.57 and 36.100 RCW; or d) Supporting the operations of tourism-related facilities owned or operated by nonprofit organizations described under 26 U.S.C. Sec. 501(c)(3) and 26 U.S.C. Sec. 501(c)(6) of the internal revenue code of 1986, as amended. 2. a) (a) Except as provided in (b) of this subsection, applicants applying for use of revenues in this chapter must provide the municipality to which they are applying estimates of how any moneys received will result in increases in the number of people traveling for business or pleasure on a trip: i. Away from their place of residence or business and staying overnight in paid accommodations; ii. To a place fifty miles or more one way from their place of residence or business for the day or staying overnight; or iii. From another country or state outside of their place of residence or their business. b) i. In a municipality with a population of five thousand or more, applicants applying for use of revenues in this chapter must submit their applications and estimates described under (a) of this subsection to the local lodging tax advisory committee. The local lodging tax advisory committee must select the candidates from amongst the applicants applying for use of revenues in this chapter and provide a list of such candidates and recommended amounts of funding to the municipality for final determination The municipality may choose only recipients from the list of candidates and recommended amounts provided by the local lodging tax advisory committee. c) i. All recipients must submit a report to the municipality describing the actual number of people traveling for business or pleasure on a trip: A. Away from their place of residence or business and staying overnight in paid accommodations; B. To a place fifty miles or more one way from their place of residence or business for the day or staying overnight; or C. From another country or state outside of their place of residence or their business. A municipality receiving a report must: Make such report available to the local legislative body and the public; and furnish copies of the report to the joint legislative audit and review committee and members of the local lodging tax advisory committee. ii. The joint legislative audit and review committee must on a biennial basis report to the economic development committees of the legislature on the use of lodging tax revenues by municipalities. Reporting under this subsection must begin in calendar year 2015. d) This section does not apply to the revenues of any lodging tax authorized under this chapter imposed by a county with a population of one million five hundred thousand or more. 7 i 1 �? f w FINANCE RCW 67.28.1817 Lodging tax advisory committee in large municipalities—Submission of proposal for imposition of or change in tax or use—Comments. (1) Before proposing imposition of a new tax under this chapter, an increase in the rate of a tax imposed under this chapter, repeal of an exemption from a tax imposed under this chapter, or a change in the use of revenue received under this chapter, a municipality with a population of five thousand or more shall establish a lodging tax advisory committee under this section. • A lodging tax advisory committee shall consist of at least five members, appointed by the legislative body of the municipality, unless the municipality has a charter providing for a different appointment authority. The committee membership shall include: o (a)At least two members who are representatives of businesses required to collect tax under this chapter; and o (b)at least two members who are persons involved in activities authorized to be funded by revenue received under this chapter. Persons who are eligible for appointment under(a)of this subsection are not eligible for appointment under(b)of this subsection. Persons who are eligible for appointment under (b) of this subsection are not eligible for appointment under (a) of this subsection. Organizations representing businesses required to collect tax under this chapter, organizations involved in activities authorized to be funded by revenue received under this chapter, and local agencies involved in tourism promotion may submit recommendations for membership on the committee. o The number of members who are representatives of businesses required to collect tax under this chapter shall equal the number of members who are involved in activities authorized to be funded by revenue received under this chapter. o One member shall be an elected official of the municipality who shall serve as chair of the committee. o An advisory committee for a county may include one nonvoting member who is an elected official of a city or town in the county. An advisory committee for a city or town may include one nonvoting member who is an elected official of the county in which the city or town is located. o The appointing authority shall review the membership of the advisory committee annually and make changes as appropriate. (2), Any municipality that proposes imposition of a tax under this chapter, an increase in the rate of a tax imposed under this chapter, repeal of an exemption from a tax imposed under this chapter, or a change in the use of revenue received under this chapter shall submit the proposal to the lodging tax advisory committee for review and comment. • The submission shall occur at least forty-five days before final action on or passage of the proposal by the municipality. • The advisory committee shall submit comments on the proposal in a timely manner through generally applicable public comment procedures. • The comments shall Include an analysis of the extent to which the proposal will accommodate activities for tourists or increase tourism, and the extent to which the proposal will affect the long-term stability of the fund created under RCW 67.28 1815. • Failure of the advisory committee to submit comments before final action on or passage of the proposal shall not prevent the municipality from acting on the proposal. • A municipality is not required to submit an amended proposal to an advisory committee under this section. 8 Application for City of Yakima FY 2021 Lodging Tax Grant Funds Incomplete and/or late applications will not be considered. Applications may not be changed or amended by the applicant after the submission deadline. Organization/Agency Federal Tax ID Number Contact Name Title Mailing Address City, State, Zip Code Phone Number Email Tourism promotion activities Tourism related facility Event/Festival: Name of Event/Festival Location Date Non-Profit(attach copy of current non-profit corporate registration with Washington Secretary of State) Public Agency(name): Amount requested: $ 1 9 Description of tourism-related activities or event: Budget Information- How will the funds be divided within the budget? Supplies $ Advertising $ Operating rentals $ Travel $ Other O $ Number of attendees from a fifty (50) mile plus radius expected: Number of Yakima overnight stays expected to be generated: Target markets and region(s)(should be at least a 50 mile radius away): Type of marketing to be used: Target audience(s): Attach up to two additional pages of details if needed. I understand that if selected, my organization/agency may be required to enter a service contract with the City of Yakima. Printed Name: Signed: Date: (electronic signature permitted) 2 10 Submittal Instructions: APPLICATION RELEASE: April 1,2020 APPLICATION DEADLINE: June 1,2020 SUBMIT ORIGINAL AND 10 COPIES TO: City of Yakima LTAC Committee C/O Finance Department 129 North Second Street Yakima WA 98901 or email to: fmanceinfora)yakiniawa.goy REQUIRED DOCUMENTS: 1. Completed and signed application (electronic signature permitted) 2. An itemized budget of the amount you are requesting from the City. 3. Optional: If you provide brochures and supplemental information about your event, organization or program, include 10 copies. Preference will be given to proposals from qualified entities for: 1) Funding projects concerned with operating or improving City owned facilities that generate overnight tourism; 2) Year-round tourism promotion and sales efforts through the destination marketing organization The City Council has authorized the LTAC to advise and make recommendations to the City Council regarding the allocation of revenue received from the special excise taxes on lodging collected within the City. The City Council is the funding authority for Hotel Motel Excise Tax grant funding received by the City. LTAC will first forecast lodging tax revenues, then will assure operating costs and debt service is funded. Subsequently will recommend full or reduced funding to the City Council. The Council has the authority to either accept or deny those recommendations. BACKGROUND: State Law Excerpts RCW 67.28.1816—Use of Lodging Tax Fund. Lodging tax revenue under this chapter may be used, directly by any municipality or indirectly through a convention and visitors bureau or destination marketing organization for: a. Tourism promotion; 3 11 b. The marketing and operations of special events and festivals designed to attract tourists; c. Supporting the operations and capital expenditures of tourism-related facilities owned or operated by a municipality or a public facilities district created under chapters 35.57 and 36.100 RCW; or d. Supporting the operations of tourism-related facilities owned or operated by nonprofit organizations described under 26 U.S.C. Sec. 501(c)(3) and 26 U.S.C. Sec. 501(c)(6) or the internal revenue code of 1986, as amended. RCW 67.28.080 —Definitions. • "Municipality" means any county, city or town of the state of Washington. • "Operation" includes, but is not limited to, operation, management, and marketing. • "Person" means the federal government or any agency thereof,the state or any agency, subdivision, taxing district or municipal corporation thereof other than county, city or town, any private corporation, partnership, association, or individual. • "Tourism" means economic activity resulting from tourists, which may include sales of overnight lodging, meals, tours, gifts, or souvenirs. • "Tourism promotion" means activities and expenditures designed to increase tourism, including but not limited to advertising, publicizing, or otherwise distributing information for the purpose of attracting and welcoming tourists; developing strategies to expand tourism; operating tourism promotion agencies; and funding marketing of special events and festivals designed to attract tourists. • "Tourism-related facility" means real or tangible personal property with a usable life of three or more years, or constructed with volunteer labor, and used to support tourism, performing arts, or to accommodate tourist activities. • "Tourist" means a person who travels from a place of residence to a different town, city, county, state, or country, for purposes of business, pleasure, recreation, education, arts, heritage, or culture. For Questions Contact: Steve Groom City of Yakima Finance Department 129 North Second Street Yakima WA 98901 (509) 575-6070 4 Distributed at the Meetingf0 SS 10/12/2020 • 2021 Budget— . �f r •Study Sesion #3 Capital Budget Department Presentations City Manayger If ntrow Y�1 i i Clear - Reliable' - ' Trustworthy �` } i x 2021 Budget4r,:; r - Capital"Presentations 9:15 Capital Budgeting—Steve Groom 9:20 REET—Scott Schafer 9:50 Parks - Ken Wilkinson 10:10 Water— Dave Brown 10:30 Arterial Streets—Scott Schafer 10:45 LTAC Recommendation Clear ,•_, Reliable ,; ' Trustworthy` =._', 1 10/12/2020 e1",11111 01,War 2021 Capital -'- Budgets 2022 09:1 43' 4, .4 ,0gt 44! 4:44444:4 444444 Z.a..77=4.4 4 4,44 4::.44 444 4.4444:414.44444 2.14,551 L555.1.1 1251555,1 11,, 33723,33 1,33313 31.3.3,20, 3.333.3,1*-333,3,13 531 4,33.5233 3.1 333,1, 32 3Q 155 555[155, .4:44„:444 4,3 Oh 333.2", ,3333 333 333,I, YON, 334.5,1 ail 1, 3.43,4 Now., 1,,Y 0.3.3 30,34 (+3,333 33,3,043, 333,5 4, 2,33,13 11,333.) 7,33, :33,1.33,31 33,1,3, .,3"3M 0733, 31. .30,1 3,1 C.33.33.33,33.343 3', 13,3.1 "II.. 713 43 3,03" 3.33 .1.3 4,5 3,3,3 333 31, ”I 3:3 3,3,413 5,1 3,3 ..155.11, 4,3 33.333, 03,1 ,33,31 1,33,3,3 34,3. 5,1V, 'Ia.,von 1, 333,, 3.2.1,33, 1,33, i"3/16,1 3.313 131 bow ;10,0 MAL, 3.3333 0,31. V,30.3.51. 33.3343.. 7,4,33 41,3: •Oa ,Z14 , .62}4 or. 4.74.4,1, 4.411.2. 0,40. 4,3,41 SOC: tyee.ms.nt .151 555,115 )43,, 3,1033 3,3,1," ."3.331, 3,3, 333,33. 3.33,33,...33.43.3333 "..33 .333 33,14, .33,33 -31-3333 , , " 3" • ' •t , 3.. , 0 2:5-t,b'pltat,S`d/d.g' .'61,:,7-':-.‘, Goal 1. Full menu of future projects 2. Capture costs 3. Project revenues 4. Plan ahead .7TTTTc-taFT;r',77-77T-TCFcellaqTT:72777:fi,,irt.T1v2.:::-.- 2 10/12/2020 . 'a :rrt 2021: udget { k a Cap»ital ftresntation„s r, 9:20 REET—Scott Schafer 9:50 Parks - Ken Wilkinson 10:10 Water— Dave Brown 10:30 Arterial Streets—Scott Schafer • Clear' s'.`e=Reliable" TGustworthyL`�.L] Lodging-Tax Advisory Corn rn ittee' Process defined by RCW • LTAC committee members:recipients and collectors • LTAC committee confirms applicant eligibility • City forecasts revenue,consults LTAC • Committee makes budget recommendation to City • Recommendation put into preliminary 2021 Budget • City council's options: • Adopt as recommended • Communicate change to LTAC Clear,•,:' .7a=- Reliable-` •=-err Trustworthy ' • Lodging Tax Revenue • Forecast 3 10/12/2020 LTAC Recommendation Mopted Budget C(AC m20 Requests 2021 proposed Bud et Re nommerWaoon Revenue fotv!tmt 1,624000 1.aCQ000 •000 I.31411) less.evnung City obligations Convention Center debt 11111111111CM111111111115731 3.17 C61 Convention Center Capital evp 111111111111=11111111111111111=11111111111MINIIIIIIIEM" Convention Ce nteraperaUons 4R9,600 606100 tidal 0 605,CC0 isiror Center Operations IIIIIMIErE11011111.1373.11.11155:3®i sports Commissienoperabpy 11111111111110E:11111111111111111M31111111MMEIIMWICI immemzi 1.194000 1,190.000 1.166400 United Theatre Operations 1SS910 2C6C00 206000 710[11 Sunwnre 11.1110=11 d$600 Airport 104000 54C00 11111111111111 S02O IMMEI0MIIIIIIIIIMIIMMECCal IvLseum 111111111111111111 14000 11.1.11.111 Total b tensn 5vdtn IoeMMU t S A a f * s �i"4 '. '`r rrtt .. :1.;:* e t, °A.,z yp �, d . r, '.1rL as xh'z� _a,'!!! J1 .in '.�. ' M�''f,«`1 ? ; ; j sn 2'.ti t, �I. .. ,' ay Cr1ten- Defined by RCW Spent on: 1. Tourism marketing 2. Marketing and operations of special events and festivals designed to attract tourists 3. Supporting the operations and capital expenditures of tourism-related facilities owned or operated by a municipality or a public facilities district or non-profit Applicant eligibility: 1. To increase number of overnight stays,travelers>50 mi. Wrap-up City Manager / Council Discussion and Input 10:45 r. Clea .;'Reliable — ;Trustw`brthy A 4 10/12/2020 f Wrap yp ,� Review placeholders? Add to remaining meetings? Direction to staff? I -. Clear•••' Reliable.-- ` " Trustworthy '1 =;Next Sessions Thursday 10/15—Policy discussion • Fund Balance Policy •Vehicle Replacement funding • Mill site development funding • Refuse Rate Analysis and proposal `Key Dates `i �r� 6 Council Study Session 1 Oct 8 Council Study Session 2 13 Council Study Session 3 15 Council Study Session 4 I 3 Public Hearing and Ordinances on Ad Valorem Tax Rate INov I 3 1st Budget Public Hearing 17 Last budget changes 17 2nd Budget Public hearing IDec I 1 Adopt Budget 5 10/12/2020 . .-- :- - ' ' f[ _':, '... ,...': '.''' . ' 'f'. ' .' ' '--„,- 4, 2.021 `Bu* get Pr.oce'ss . An increasingly well-managed city y 6