AGENDA #4n

memorandum

to:                  Mayor and Town Council

from:            Roger L. Stancil, Town Manager

subject:       Funding for Chapel Hill/Orange County Visitors Bureau

date:             June 25, 2008

PURPOSE

The purpose of this memorandum is to propose an approach to increased funding for the Chapel Hill/Orange County Visitors Bureau (CVB). This proposal is in response to interests expressed by the Council at a budget work session.  The increased funding is consistent with the Council’s interest in providing increased resources for economic development.

BACKGROUND

The CVB submitted a budget request to the Council to increase the CVB’s allocation from occupancy taxes to 13.7%, or $150,000 for FY 09.  The CVB estimated revenues from the Town’s occupancy tax at approximately $1,094,000. The Manager’s Recommended Budget, as adopted by Council June 9, 2008, estimated occupancy tax revenues at $935,000 and an allocation to the CVB of $100,000, or 10.7%.  Negotiations with the CVB director about the Town’s allocation were still underway as of the June 9 Council meeting. I committed to the Council to complete those negotiations and report to the Council on June 25.

DISCUSSION

The focus of negotiations was a mutually acceptable approach to increasing the allocation to the CVB without decreasing funds available to the Town’s operations in the FY 09 budget. The means to that approach was the difference in revenue projections by the CVB and the Town for FY 09.  I propose the following, which Bureau Director Laurie Paolicelli deems workable:

• Amend the FY09 adopted budget to increase the projected occupancy tax revenues to $1,000,000 and increase the budgeted payment to the CVB to $130,000, or 13%.
• Beginning July 1, the Town will make payments to the CVB based on the $130,000 budget.
• If the Town’s actual revenues exceed $1,000,000, the Town’s payments to the CVB will be one-half of the revenues over $1,000,000 until the additional $20,000 the CVB requested is paid.  The Town will pay the CVB 13% of all revenues in excess of $1,040,000
• At the end of the third quarter (March 2009), the Town Manager and CVB Director will review the status and results of this agreement and report to the Council.

RECOMMENDATION

I recommend that the Council take the following action [adopt (2008-06-25/R-13)]:

• Authorize the manager to execute an agreement with the CVB that reflects the recommendations above;
• Authorize the manager to present a budget amendment to the Council in September 2008 reflecting the terms of the agreement;
• Authorize the manager to make any payments to the CVB before the budget amendment is approved at the rate reflected on the agreement.