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HomeMy WebLinkAboutCOVA-TRT Staff Report Deschutes County Department of Administrative Services Tom Anderson, County Administrator MEMORANDUM DATE: December 30, 2013 TO: Board of County Commissioners FROM Tom Anderson, County Administrator SUBJECT: Proposed COVA Grant Agreement ____________________________________________________________________________ Background: On November 5, 2013, the voters of Deschutes County approved a 1% increase (from 7% to 8%) in the Transient Room Tax (TRT) imposed on overnight accommodations in unincorporated Deschutes County. Beginning in FY 2014-15, in accordance with the ballot title and state law, 70% of the new 1% tax increment will be transferred to the Deschutes County Fair & Expo Center for marketing purposes, and 30% will be transferred to the County General Fund for critical public services. During budget decisions last year, a significant change was made to the allocation of TRT as part of the adopted FY 2013-14 County budget. Specifically, after authorized expenses and transfers, the historical allocation of remaining TRT in Fund 170 (the most recent 1% increase in TRT prior to this year) was sent to the Central Oregon Visitors Association (COVA) for tourism promotion purposes. The FY 2013-14 budget changed the allocation to 60% COVA and 40% for the Fair & Expo Center. In recognition of the 2013 increase in TRT, it is proposed that the allocation to COVA in Fund 170 be restored to 100% COVA after authorized expenses and transfers. The table in Attachment 1 shows actual TRT allocations in FY 2011-12 and FY 2012- 13, the changes made in the FY 2013-14 budget, and (based on FY 2013-14 TRT estimated collections) proposed new changes to the allocation in FY 2014-15 and beyond. Staff has negotiated a new proposed Grant Agreement with COVA that reflects the proposed allocation change, as well as changes to the timing and method of COVA’s communication and reporting to the Board of Commissioners, along with certain notification obligations of the County with respect to COVA. Discussion: Financial Questions/Issues 1) Fund 160 - The $25,744 transfer to the Fair & Expo Center was done to help balance the F&E budget in FY 2007-08, and has been largely retained since then. As part of the FY 2014-15 budget preparation, a decision will have to be made to continue the transfer, eliminate it or increase it. As 70% of the new 1% increase will go to F&E, the case can be made to eliminate it. Conversely, since the new TRT is intended to be used for marketing, and given the elimination of the $82,800 transfer to F&E in Fund 170 which along with the Fund 160 transfer has been used for F&E operations, the Board could consider increasing it. 2) Fund 160 – It is expected that in FY 2013-14, for the first time the $2,650,000 obligation to the Sheriff’s Office will be met entirely with TRT and that no General Fund allocation will be necessary. The question then is how to allocate any TRT in excess of $2.65M. Options include the General Fund, Fair & Expo Center, COVA and the Sheriff’s Office. 3) Fund 170 – The $82,800 transfer to the Fair & Expo center was eliminated with the adoption of the FY 2013-14 budget. See question 1) above for discussion. 4) Fund 170 - The FY 2013-14 budget was adopted with the change to a 60% COVA/40% Fair & Expo Center allocation. Staff proposes that the percentage allocation be used for actual receipts, whether they fall below or above budget estimates. Alternatives could include holding to the budget estimate for Fair & Expo and paying anything in excess of or short of budget estimates to COVA, or vice versa. 5) New 1% - Similar to 4) above, staff proposes that the percentage allocation between the Fair & Expo Center and General Fund transfers be used for actual receipts, whether they fall below or above budget estimates. While staff believes that at least 70% of actual receipts must be used for eligible tourism related purposes such as the Fair & Expo Center, any TRT collections in excess of the General Fund budget estimate could also be allocated to Fair & Expo. Summary of major proposed Grant Agreement elements: Begins 7-1-14. Shall automatically renew each year thereafter. Includes notification requirements to COVA on proposed funding reductions. In addition to a proposed annual budget and marketing plan, includes the requirement for twice yearly presentations to the Board of Commissioners on COVA’s performance under the approved marketing plan. COVA would receive 20% of net TRT receipts in Fund 160 (the “first 6%”), as they have historically. COVA would receive 100% of net TRT receipts in Fund 170 (the “6-7%”), as they did prior to FY 013-14. COVA would not receive any TRT receipts from the new 1% increase authorized in November. The total amount granted to COVA may be more or less than the County’s budgeted appropriation, depending on actual receipts each year. 180 days notice is required by either party for termination without cause, although the County may terminate the agreement with 30 days notice for material breach. Requested Board Action: Provide direction on financial questions/issues and Grant Agreement elements. Staff will incorporate necessary changes and return the Grant Agreement to a business meeting for final discussion and approval.