HomeMy WebLinkAboutItem 01 Springfield Transient Room Tax Revenues, Spending and Future Strategies and Projects AGENDA ITEM SUMMARY Meeting Date: 4/7/2014
Meeting Type: Work Session
Staff Contact/Dept.: Jeff Towery, CMO Staff Phone No: 541-726-3700
Estimated Time: 40 Minutes
S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and
Innovative Government Services
ITEM TITLE: SPRINGFIELD TRANSIENT ROOM TAX REVENUES, SPENDING AND FUTURE STRATEGIES AND PROJECTS
ACTION
REQUESTED:
At this time, staff asks Council to provide direction on two key Transient Room
Tax (TRT) related topics;
• In light of the TRT analysis of projected revenues, expenses, and
accumulated reserves (Attachment 5), would Council like Staff to solicit community project proposals for remaining available funds through a
formal process, which would include Council review and selection, or continue making contributions to TRT reserves, or a combination of both?
ISSUE
STATEMENT:
Springfield’s Transient Room Tax funds are generated by taxing overnight hotel
stays in Springfield. The City has spent room tax revenues historically on general fund, economic development, and tourism related activities. Staff will discuss with
Council the current revenues received, historical spending, and projected revenues
and expenses specific to upcoming projects and priorities anticipated to require TRT funds.
ATTACHMENTS: Attachment 1 – Transient Room Tax Council Briefing Memo
Attachment 2 – Historical Transient Room Tax Revenues and Current Projections Attachment 3 – Historical Annual Utilization of Transient Room Tax Revenues
Attachment 4 – Glenwood on the River Hotel and Conference Center Proposal Attachment 5 – Projected Transient Room Tax Revenues, Expenses, and Accumulated Reserves
DISCUSSION/ FINANCIAL IMPACT:
For every night stayed in a Springfield hotel, the City receives 4.5% of the room rate. This percentage is referred to as the Transient Room Tax or TRT. With over
1,400 rooms in the Springfield area, events and destinations generating more
visitors and increasing annual hotel occupancies also increase amounts of TRT funds received by the City, funds which are required by the State to be used in part
for tourism related activities. Because of this direct relationship, it is important to
be strategic in both supporting tourism related facilities, activities, events, and destinations and the spending of received TRT dollars.
See attached Council Briefing Memo for further discussion.
ATTACHMENT 1, PAGE 1 OF 2
M E M O R A N D U M City of Springfield
Date: 4/7/2014
To: Gino Grimaldi COUNCIL
From: Jeff Towery, Asst. City Manager
John Tamulonis, Community Dev. Manager
Courtney Griesel, Management Analyst
BRIEFING
Subject: Springfield Transient Room Tax Revenues,
Spending and Future Strategies and Projects MEMORANDUM
ISSUE:
The City’s Transient Room Tax funds are generated by taxing overnight hotel stays in Springfield.
The City has spent room tax revenues historically on general fund, economic development, and
tourism related activities. Staff will discuss with Council the current revenues received, historical
spending, and future projects and priorities anticipated to require Transient Room Tax funds as
well as the potential to establish a formal process for TRT fund requests and evaluations.
COUNCIL GOALS/
MANDATE:
Provide Financially Responsible and Innovative Government Services
BACKGROUND:
For every night stayed in a Springfield hotel, the City receives 4.5% of the room rate. This
percentage is referred to as the Transient Room Tax or TRT. With over 1,400 rooms in the
Springfield area, events and destinations generating more visitors and increasing annual hotel
occupancies also increase amounts of transient room tax received by the City, funds which are
required by the State to be used in part for tourism related activities. Because of this direct
relationship, it is important to be strategic in both supporting tourism related activities, events, and
destinations and the spending of received TRT funds.
Historical & Projected Revenues& Spending
The tourism industry, as with all industries, remains in recovery following the recession. The
steady climb from FY10 revenues of $680,000 include $970,000 in funds received during FY13
and projected annual revenue for FY 14 of $1.1M. Attachment 2 illustrates past trends of annual
revenues received.
Historically, the City of Springfield utilized Transient Room Tax dollars in several ways
(Attachment 3);
Undesignated General Fund Supplement
The general fund currently receives the largest portion of TRT dollars (5/9 or about
55.5%) for undesignated purposes.
General Fund Designated
TRT dollars fund a number of specific City programs spanning the Library, Development
and Public Works, and the City Manager’s Office Communications program. Many of
these programs have, or have had for a time, direct or indirect links to increases in
tourism related activities or improving the community’s appeal for tourism.
Ongoing Tourism and Economic Development Program Expenses
A portion of funds received are distributed to a number of programs and projects directly
MEMORANDUM 4/2/2014 Page 2
ATTACHEMENT 1, PAGE 2 OF 3
linked to the support of tourism related events, amenities, and development. These
projects are expected to generate overnight stays in Springfield hotels, directly impacting
the TRT funds received. These ongoing activities and expenses are outlined in
Attachment 5.
Contribution to Reserves
Historically the City has moved some TRT funds to a reserve account to be used later for
either a significant upcoming tourism related project or event or to fund a tourism related
community challenge grant program for local projects and events.
The use of TRT funds, as outlined above and shown in Attachment 3 and Attachment 5, are at
Council discretion and not mandatory or set by policy. However, the current allocations reflect
how TRT funds are currently included in the proposed FY15 budget.
Future Projects and Strategies
Projects
The City could continue supplementing with TRT the designated and undesignated general fund
activities as it has in the past. If so, by the end of this fiscal year (FY14), without utilizing current
TRT reserves of about $333,000, another $180,000 in TRT room tax revenue is projected and
could be utilized for TRT eligible projects or for further contribution to TRT reserves.
One significant project for City Council review is the Glenwood on the River Hotel and
Conference Center project proposed by the Glenwood H&CC, LLC development team
(Attachment 4). The Hotel and Conference Center project proposes the development of a vibrant,
high-profile, $25.8M hotel with approximately 150 rooms and a $17.1M Conference and Events
Center with nearly 20,000 sq. ft. and events and meeting space. The proposed City contribution to
the project is $2.5M over 10 years specifically for the turn-key construction of the Conference and
Events facility. Attachment 5 provides Council with projected TRT forecasts which include the
revenues and expenses associated with supporting the proposed Conference Center development.
With the projected FY14 TRT revenues and current reserves, the City of Springfield could provide
funding to ensure the success of the Conference Center development. However, projected
revenues alone would not support all projected expenses, including Conference Center support,
and would require utilization of TRT reserves. This information is also reflected in Attachment 5.
Because of the limited funds, it is important to have Council discuss and provide some direction to
staff regarding strategies for evaluating future requests for TRT funds.
Strategy
Staff would like Council to provide direction for the use of available TRT revenues and reserves in
anticipation of potential projects, events, and partnership requests and opportunities in the future.
Council will have the opportunity to determine if the funding of the Glenwood on the River Hotel
and Conference Center development should become a priority for TRT fund expenditure over the
next ten years. The Conference Center project is a long-term investment which is expected to add
new capacity to the region for events and overnight hotel stays, thus creating increased, ongoing,
opportunities for future TRT revenues. This priority project will limit the ability to fund other
TRT related projects in the immediate future, during construction and start-up, requiring a strategy
for evaluating and selecting near-term project proposals and contributions to TRT reserves.
Attachment 5 is included as a financial tool to assist Council in making the decision to authorize
or not authorize the support of the Glenwood on the River Hotel and Conference Center
development during the April 7th Joint Regular Session with the Lane County Board of
Commissioners.
Should Council determine to support the Conference Center project, during the initial
development start-up time frame, Council might advise staff as to whether remaining available
funds and reserves should be utilized for other community projects and asks or to build further
TRT reserves. If Council is interested in funding other community events and projects, staff might
MEMORANDUM 4/2/2014 Page 3
ATTACHEMENT 1, PAGE 3 OF 3
solicit community project proposals for an approved amount of TRT funds. This solicitation could
require a formal application and evaluation process to help Council determine how to strategically
spend the remaining funds available for TRT related community projects, not otherwise desired to
be placed in TRT reserves.
RECOMMENDED ACTION:
At this time, staff asks Council to provide direction on two key Transient Room Tax related
topics;
In light of the TRT analysis of projected revenues, expenses, and accumulated reserves
(Attachment 5), would Council like Staff to solicit community project proposals for
remaining available funds through a formal process, which would include Council review
and selection, or continue making contributions to TRT reserves, or a combination of
both?
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ATTACHMENT 3
ATTACHMENT 4, PAGE 1 OF 3
ATTACHMENT 4, PAGE 2 OF 3
ATTACHMENT 4, PAGE 3 OF 3
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