Tourist Development Tax

June 9, 2009

Orange County

Background Revenue Outlook TDT Expenditures Summary

Outline

Background Revenue Outlook TDT Expenditures Summary

Outline

TDT• Short-term lodging tax• State TDT law has

different uses for 1st to 4th cents, 5th cent, and 6th cent levies

Background

• Orange County levied TDT at 2% in 1979

• Currently TDT is at 6%• State Law governs uses• Not allowed for: roads, schools,

public safety, etc.• Added tourism levy for convention

centers, tourism promotion, sports, arts, and museum costs

Background

• First Four Cents - for priority tourism related expenses in the Tourist Development Plan prepared by the Tourist Development Council and approved by the BCC

• Fifth Cent for convention and sports debt

• Sixth Cent – Sports debt and Tourism promotion (approved July 2006)

Background

Historical Revenue Growth: 10.5% Avg Annual TDT Growth (1979-2008)

Background

Inception to date growth rate is 10.5%

15 year TDT growth rate is 5.7%

5 year TDT growth rate is 8.6%

Background

Background Revenue Outlook TDT Expenditures Summary

Outline

Collection Trends (in millions)

* Projected

Revenue Outlook

TDT collections were up by 3.1% in FY08

Fiscal year TDT collections are down by 15.8%

February & March 09 collections down by 28%; April collections down by 15%

Revenue Outlook

Hotel occupancy is down

Room rates are down Projections for FY09

now indicate an 18% decrease from FY08 actual collections

FY10 budget will be set at the same level as our FY09 projections

Revenue Outlook

Background Revenue Outlook TDT Expenditures Summary

Outline

First 5 Percent

TDT Expenditures

• TDT expenditures for the first 4 percent are authorized by County ordinance in the TDT plan

• These expenditures are based on a prioritized flow of funds

• The fifth percent is for debt service payments

First 5 Percent

TDT Expenditures

Debt Service

Debt Reserves

OCCC Operations

Transportation

O/OCCVB

Arts and Other

TDT Revenues

Priority Funding

Priority funding based on revenue availability and BCC approval

TDT Expenditures (1st-5th)

TDT Reserves

Projected Expenses (in millions):2009 2010Debt Service $ 73.2$ 73.2Convention Center Operations 10.0 10.0O/OCCVB Funding 19.6 19.6Convention Center Capital 10.0 10.0Arts 3.4 2.8History Center 2.8 2.8Hotel Surcharge Repayment 2.0 2.0Other .8 .7Contract TDT Payment for Venues 9.6 0.0 Total $131.4 $121.1

TDT Expenditures (1st-5th)

72.9

73.2

73.2

73.2

10.0 21.4

22.1

19.6

19.610.0

8.9

10.0

8.3

8.9

8.2

8.1

10.0

10.0

4.9

4.6

9.6

$0 $20 $40 $60 $80 $100 $120 $140

2007

2008

2009

2010

Debt Service OCCC OperationsO/OCCVB Arts & OtherOCCC CIP Contract TDT Payment

$140.1

$135.9

$115.0

$115.0

In Millions

Actual

Est.

Total Revenues

Est.

Actual

TDT Model Revenues vs. Expenses

TDT Expenditures (1st-5th)

Debt Service

Debt Reserves

OCCC Operations

Transportation

O/OCCVB

Arts and Other

TDT Revenues

Priority Funding

Priority funding based on revenue availability and BCC approval

TDT Expenditures (1st-5th)

TDT Reserves

OCCC Historical Operating Subsidy: Operations Subsidy is a direct TDT payment

Fiscal Year

Operating Revenue

Operating Expense

SubsidyNeeded

09-10* $41,800,000 $57,300,000 $15,500,000 08-09* $43,500,000 $59,600,000 $16,100,00007-08 $58,423,857 $67,321,035 $ 8,899,17806-07 $50,485,445 $60,859,947 $10,374,50205-06 $53,248,069 $58,596,836 $ 5,348,76704-05 $48,407,724 $57,524,114 $ 9,116,390

* Projected

TDT Expenditures (1st-5th)

Debt Service

Debt Reserves

OCCC Operations

Transportation

O/OCCVB

Arts and Other

TDT Revenues

Priority Funding

Priority funding based on revenue availability and BCC approval

TDT Expenditures (1st-5th)

TDT Reserves

Arts & Other Expenditures 2009:Tax Collection Expense $400,000 Central Florida Sports Commission $135,000 Florida Classic $137,500 Arts $3,360,000 NBC Action Sports Tour (X-Games) $75,000 Orange County Regional History Center $2,814,000 Repay Hotel Surcharge $2,000,000 Contract TDT Payments for Venues $9,604,300

TDT Expenditures (1st-5th)

Debt Service

Debt Reserves

OCCC Operations

Transportation

O/OCCVB

Arts and Other

TDT Revenues

Priority Funding

Priority funding based on revenue availability and BCC approval

TDT Expenditures (1st-5th)

TDT Reserves

$71mReserve for Debt Service

$56mReserve for OCCC

$127 million of TDT reserves as of April 30, 2009

TDT Reserves

Historical CIP: CIP is paid from available TDT reserves

Fiscal Year Actual CIP

08-09* $15,800,00007-08 $4,600,00006-07 $4,860,00005-06 $4,240,000

TDT Expenditures (1st-5th)

* Projected

Orange County Convention Center

• TDT collections are down due to the economic recession

• Reduced OCCC attendance due to business travel restrictions

• Additional Operations Subsidy Needed

2009 TDT Budget Challenges

TDT Expenditures (1st-5th)Orange County Convention Center

• Reduce positions - $3m reduction in wages & benefits

• Reduce discretionary expenditures

• Utilize CIP/reserve funding to increase operations subsidy

• Consider utilizing Arts capital allocation for convention center operations subsidy

2009 & 2010 TDT Budget Strategies

TDT Expenditures (1st-5th)Orange County Convention Center

• Continue to monitor revenues & TDT collections

• Continue to evaluate efficiencies & operational savings

• Evaluate operating subsidy and determine if future adjustment is needed

Long Term Strategies

TDT Expenditures (1st-5th)Orange County Convention Center

Potential TDT Refunding• Partial refunding of

1998 TDT bonds for savings

• Callable October 2009• Depends on volatile

municipal & credit markets

TDT Expenditures

Potential TDT Refunding• Minimum savings

threshold of 4%• $4.4m total net present

value savings• $470k annual savings

• Will be on BCC consent agenda June 23rd

• Briefings will offered

TDT Expenditures

First Five Percent• City planned to use

excess TDT payments from first five percent to:•Finance construction

of performing arts center (first priority)

•Finance renovation of Citrus Bowl (second priority)

Community Venues

• TDT reserves met the $130 million requirement in September 2008

• City receives all collections above “base amount”

• Base amount is $133.1 million in FY09

First 5 Percent

Community Venues

$135.8$130.5 $133.1

$0

$20

$40

$60

$80

$100

$120

$140

$160

2008 2009 2010

Base amount TDT 1st-5th Revenues

TDT Revenues vs. Base Amount (in millions)

Actual Projected Projected

Community Venues

$135.8$130.5 $133.1$140.1

$0

$20

$40

$60

$80

$100

$120

$140

$160

2008 2009 2010

Base amount TDT 1st-5th Revenues

TDT Revenues vs. Base Amount (in millions)

Actual Projected Projected

Community Venues

$135.8$130.5 $133.1$140.1

$115.0

$0

$20

$40

$60

$80

$100

$120

$140

$160

2008 2009 2010

Base amount TDT 1st-5th Revenues

TDT Revenues vs. Base Amount (in millions)

Actual Projected Projected

Community Venues

$135.8$130.5 $133.1$140.1

$115.0$115.0

$0

$20

$40

$60

$80

$100

$120

$140

$160

2008 2009 2010

Base amount TDT 1st-5th Revenues

TDT Revenues vs. Base Amount (in millions)

Actual Projected Projected

Community Venues

6th Percent

TDT Expenditures

County approved 6th percent in July 2006 ½ is for additional advertising

to promote tourism (front loaded for the first two years)

½ is for City to help finance the new arena for the City/Magic

TDT Expenditures

CVB received 100% collections for the first two years - $56.6 million

10 year payback City/Magic receive 50% of 6th

penny plus $2.8 million CVB receives 50% of 6th penny

minus $2.8 million After payback, CVB and

City/Magic will have received 50% each

TDT Expenditures

TDT ExpendituresContract 6th Cent Revenues & Debt Service:

 Projected Contract 6th Cent Payment

Minimum Net Debt Service

Excess Revenue/Shortfall

2009

$14,328,065

$10,734,784 $3,593,281

2010

$14,328,065

$17,669,419

$(3,341,354)

2011

$15,584,709

$17,819,419

$(2,234,710)

2012

$16,841,353

$18,284,419

$(1,443,066)

2013

$18,221,778

$18,596,419 $(374,641)

2014

$19,738,208

$18,870,419

$867,789

Background Revenue Outlook TDT Expenditures Summary

Outline

TDT collections are down due to the recession

Attendance & operating revenues for the OCCC are down

Additional OCCC operations subsidy will be needed

Challenges for Community Venues

Summary

Tourist Development Tax

June 9, 2009

Orange County