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HomeMy WebLinkAboutMinutes 07/31/2003 CALL TO ORDER: ROLL CALL: Approval of Minutes Lodging Tax Revenue Projections LODGING TAX ADVISORY COMMITTEE Port Angeles, Washington Jnly 31, 2003 Councilman Campbell called the meeting of the Lodging Tax Advisory Committee to order at 3 :00 p.m. Members Present: Councilman Campbell, Councilmember Rogers, Carol Griffith, Patty Hannah, Bob Harbick, Jack Harmon, Michael Luehrs, and Dave Neupert. Members Absent: Jim Haguewood, Steve Oliver, and Bill Rinehart. Staff Present: Manager Quinn, Finance Director Ziomkowski, Parks & Recreation Director Connelly, Economic Development Director Smith, Clerk Upton, and Recreation Services Manager Cole. Others Present: Russ Veenema, Jan Harbick, Peter Ripley, Tony Griffith, Brian Gawley, Paul Lamoureux, and Dennis Bragg. Councilman Campbell opened the meeting by asking if there were any changes or additions to the agenda. The following discussion items were added: additional information on revenue projections, input from Parks & Recreation on generation of tourism, a request for funds from Art on the Town, and potential funding assistance for the Gateway project. Approval of Minutes: Michael Luehrs moved to approve the Lodging Tax Advisory Committee minutes of May 21, 2003. The motion was seconded by Patty Hannah and carried unanimously. Lodging Tax Revenue Projections: Finance Director Ziomkowski distributed a report showing Lodging Tax Revenues for the years, 1999 - 2003, noting that the revenue figures reflect the actual time of sale by the hotels. As of this date, revenues are approximately 14% below last year's revenues and, unless something of significance occurs, revenues should be approximately $380,000 for the year. In addition, if expenses stay on track as budgeted, $30,000 of reserves will be used. In the ensuing discussion, Economic Development Director Smith noted that $20,000 from reserves had been used coming into this year. He inquired as to whether there would be sufficient funds to meet budgeted expenditures in addition to the request being considered at this meeting. Director Ziomkowski responded that, in terms of cash flow, it is important to have sufficient funds in reserve to cover expenses pending receipt of the tax funds. Lengthy discussion followed, and Russ Veenema questioned the City's tracking of revenues at the time of sale as opposed to the actual time of receipt, as tax funds are distributed two months following the time of sale. Further, he felt that cost savings were realized in 2002 that essentially were rolled into 2003. Mr. Veenema felt that tourism had come a long way in the past couple of months, and July has proven to be a very good month as well. He was hopeful that the revenues could be made up as the year progresses, at least to the budgeted level of$409,000. Manager Quinn felt that it is unacceptable for any fund to go into the hole and, if it -1- LODGING TAX ADVISORY COMMITTEE July 31, 2003 Lodging Tax Revenue Projections (Cont'd) appears revenues aren't being generated as expected, now is the time to make the necessary adjustments. He suggested that it may be timely to review the unexpended funds to determine if adjustments should be made. Mr. Veenema indicated the Chamber expenses are $4,000-$5,000 below budget at this time; he advised the committee members that he is monitoring the situation closely and is looking at curtailing certain expenses if the revenues don't come in as expected. Lengthy discussion followed, and Bob Harbick recalled that the committee had established a level to be maintained for the reserves. Director Ziomkowski thought it was set at $75,000 - $100,000. Mr. Smith observed that, in the past, the committee, staff, and City Council have agreed on most issues. However, reminding the committee that it is serving in an advisory capacity, there may be some point where the staff may feel it necessary to offer a recommendation contrary to what is forthcoming from the committee. Councilmember Rogers stressed the importance of retaining a certain cash flow in order to cover expenses pending the receipt of tax funds. Director Ziomkowski indicated that, if all expenses are met as budgeted, the reserve will be down to $90,000 at year end. Parks & Recreation Tourism Report Parks & Recreation Tourism Report: Parks & Recreation Director Connelly submitted a report on the department's focus on activities and tourism, indicating it sponsored 22 tournaments and provided support to 4 other community events. The number of visitors totaled 17,000 for these events and activities, which were supported by the General Fund, the Recreation Activity Fund, as well as the Hotel/Motel funds. Mr. Connelly projected that $135,000 was spent in order to generate $1 million to the economy of the community. When asked how the Parks & Recreation Department calculates the return on investinent, Mr. Connelly responded that all participants are surveyed by the department to determine how participants spend their money. Discussion followed, and Director Connelly responded to Councilmember Rogers that there has been a 15% return on the investinent. In addition, Michael Luehrs inquired as to how much of the $1 million was spent on lodging. Recreation Manager Cole indicated their figures represent the July - July time frame but, as of December, there were over 2,200 room nights. Mr. Smith supported the notion of conducting surveys, and he felt this effort should be expanded City-wide in order to determine the overall return on investment. Mr. Smith advised the conunittee that, as community events are increased, there is a further demand placed on the City for staff support, participation, and in-kind services. He felt that the City needs to better track its participation, as it constitutes an unknown contribution to tourism. Additional Marketing Funds for 2003 Additional Marketing Funds for 2003: Councilman Campbell briefly reviewed the discussion held at the previous meeting, at which time consideration was given to using $100,000 from conference center funds for additional marketing efforts in 2003. Russ Veenema summarized a document contained in the meeting packet whereby he would continue the current focus in terms of concentrating on the drive market. He shared ideas submitted by others as to where additional funding could be spent, and he distributed a document delineating the return on an investinent of$50,000 in lodging tax funds. This investinent resulted in 14 events worth $1.2 million distributed throughout the community. Tim Smith revisited one of the committee's past goals in terms of increasing room sales during the shoulder and off-season time periods. Feeling that efforts are still falling short in that regard, he was uncertain whether the funding would create any improved trends during those periods. It is essential to improve reporting as to room nights in order to show increased occupancies that could be directly tied to lodging tax investment. Mr. Veenema indicated that a majority of the events are held in the off- season, and he proceeded to summarize information showing tourism comparisons from 2000 through 2002. During that time, there was an increase in room tax revenues of 2.3% and 2.5% in spite of reduced visitors throughout the State. - 2- LODGING TAX ADVISORY COMMITTEE July 31,2003 Additional Marketing Funds for 2003 (Cant' d) Mr. Veenema presented a recommendation from the Chamber Board of Directors as to how $100,000 could be spent, if the Lodging Tax Advisory Committee were to approve such an expenditure: Radio Buy with Seattle Station Radio Buy / Promotion Giveaway in Victoria Victoria Newspaper / Radio Ads Targeted Direct Mail Additional TV Ads Daily Escape E-Mail Downtown Mural Project Special Event Promotions $ 10,000 12,000 8,000 15,000 15,000 5,000 30,000 5,000 $100,000 Discussion followed with suggestions being made as to alternative marketing expenditures, such as billboard advertising or digital billboard advertising. lndividnal committee members spoke in support ofthe additional funding for marketing especially, as pointed out by Bob Harbick, in view of the loss incurred during the spring months. Mr. Smith felt it would make sense to take up to $100,000 out of the conference center accrual for some form of tourism promotion in order to address some of the committee's concerns expressed at the last meeting. He was particularly supportive of the proposal to also dedicate funding towards capital. Councilmember Rogers raised a question as to the mechanism for tracking the data to be certain the investment has been successful. Mr. Veenema noted that much of the investment would be for image advertising, something that is extremely difficult to track. However, Mr. Smith urged a continuation of the tracking of room night sales that can be presented in a visual form so that the committee can hopefully see a noticeable increase in occupancies following this marketing investment. Councilmember Rogers felt that, if the appropriate feedback is not received, it would be difficult to validate any tourism increase. Patty Hannah reminded the group that, in the past, she had suggested that all tourists be surveyed on an on-going basis. She felt that the information gained would be very valuable to this committee's efforts. Michael Luehrs envisioned a visual type of overlay, where one would present marketing investment and the other would depict room occupancies. Further, Mr. Luehrs felt there are some upcoming events that should have a positive impact on tourism, and it would be worthwhile to attempt a validation of some of the impacts to show that benefits did occur by virtue of the marketing investment. After further lengthy discussion, Jack Harmon moved to release $100,000 from conference center fnnds to be used for marketing. Discussion followed, and Patty Hannah spoke in support of the funding but also urged a thorough tracking of the expenditures and benefits gained. Carol Griffith seconded the motion. With regard to the proposed allocations of the $100,000, Manager Quinn urged consideration of a more balanced approach with more funding being directed to events because of the proven return on investment. For discussion purposes, he suggested 20% on special events, 40% for capital, and 40% for marketing. The group agreed that the allocations should be decided after a vote on the release of the funds. Paul Lamoureux, present in the audience, offered commentaries on the matter, after which Mr. Smith expressed the hope that the 2004 funding request would include the caveat that shoulder and off-season occupancies be tracked. Michael Luehrs noted, however, that the typical summer season is only 6 weeks; it would be helpful to clarify what constitutes the off-season, as it is desirable to extend the summer season. Councilmember Rogers sought clarification ofthe motion, which was restated to release $100,000 for the purpose of tourism marketing for a list of allocations to be developed and approved later. A vote was taken on the motion, which carried unanimously. Councilman Campbell reminded the group that this recommendation is subject to the approval of the City Council. Carol Griffith asked that Mr. Veenema bring the lodging owners together to seek their input before allocations are agreed upon; - 3- LOD'GING TAX ADVISORY COMMITTEE July 31, 2003 Additional Marketing Funds for 2003 (Cont'd) Art on the Town Project Additional Marketing Funds for 2003 (Cont'd) 2004 Request for Lodging Tax Funds however, Mr. Veenema indicated input was already obtained via the Chamber Board. In addition, Councilman CarnpbeIl felt it is this group's responsibility to establish the recommendations. Lengthy deliberations foIlowed on the matter of the individual aIlocations from the $100,000, after which Bob Harbick moved to spend $100,000 in accordance with the Chamber of Commerce proposal and as amended by the committee. Michael Luehrs seconded the motion. Art on the Town Project: Noting there are other requests before the committee for funding, Dave Neupert asked for further information relative to the Art on the Town project before the committee decides the level of aIlocations. Bob Harbick discussed the Downtown Association's efforts to purchase pieces of art for permanent display in the City. The Association has been attempting to raise the necessary funds in order to retain three pieces: San Juan Summer Moon, Gandy Dancer, and Storm Watch. A letter from the Downtown Association was distributed to the membership, and the Lodging Tax Advisory Committee is being solicited to support this effort in the amount of $20,000. Mr. Harbick spoke in support of funding this request from the $100,000. Additional Marketing Funds for 2003 (Cant 'd): Discussion followed on the merits of billboard advertising, and Jack Harmon shared information relative to the success of digital billboards. It was agreed that a digital billboard could be used to market the upcoming hydroplane race, and Mr. Veenema felt that all messages on a digital billboard should be event oriented. Discussion then centered around the mural project, something the Rotary Club would like to continue with added financial support. The next mural being proposed is the Pacific Fleet in the Harbor. Parks Director Connelly sought assistance in the amount of $3,500 for certain special events that haven't been funded; however, Mr. Veenema suggested that the practice of seeking this funding through the Chamber of Commerce is still valid. He indicated there is a committee within the Chamber that addresses the individual requests, and he emphasized the fact there is funding included in this proposal today for special events. Councilmember Rogers advocated that, in the 2004 budget, the City Council may want to have a specified percentage of lodging tax funds dedicated to capital. After further discussion, the group established the foIlowing aIlocations: Radio Buy with Seattle Station Targeted Direct Mail & Daily Escape E-Mail Additional TV Ads Downtown Mural Project Special Event Promotions Art on the Town Digital BiIlboard $ 10,000 15,000 15,000 10,000 10,000 20,000 20,000 $100,000 A vote was taken on the motion, which carried unanimously. Noting that occupancies are the most important factor in the tourist industry, Tony Griffith complimented the group for its decision. 2004 Request/or Lodging Tax Funds: Mr. Veenema briefly reviewed the request for funds for the 2004 budget, hoping to complete the process early on in order to meet expenses immediately foIlowing the New Year. Because of the lateness of the hour, it was agreed that another meeting should be held to consider this request. Therefore, it was agreed to meet again on Wednesday, August 20, 2003, at 3:00 p.m. Manager Quinn mentioned new legislation whereby there is an added ability to generate revenue in the lodging industry of up to $2.00 per night for facilities of 40 or more rooms. Brief discussion ensued. - 4- LODGING TAX ADVISORY COMMITTEE July 31,2003 Gateway Funding Gateway Funding: Manager Quinn briefly summarized the potential for Lodging Tax funds to assist in the Gateway project, ranging from $10,000 to $40,000. It was agreed that this matter should be deferred to the next meeting for consideration. The agenda for the next meeting will include overall revenue distribution, new tax revenues, the Gateway project. and the 2004 Chamber of Commerce funding proposal. Adjournrnent o further business, the meeting adjourned at 5:10 p.m. ~~ - 5 -