Page 56 - FY17 Adopted Operating Budget
P. 56

Tourism Investment Program Fund - This reflects the merging of the Tourism Growth Investment Fund and the Major
Projects Fund. Both of these funds received dedicated revenue streams to fund tourism and other economic
developed related capital projects. Revenues in this fund are primarily generated from: 5.0 cents of the Hotel tax (0.5
for Beach Events); 1.06 cents of the Meal tax; 5 cents per pack of the Cigarette tax, and 100% of Amusement (10%
Admissions and 5% Participatory) tax.

Estimated revenue is expected to decrease by 1.3% when compared with the current year’s revenue estimate. This
reflect declines in the Amusement, Hotel, and Cigarette taxes from underperformance from FY 2014-15, but rate of
growth in this decline was offset by growth in Restaurant Meal taxes.

Tourism Advertising Program Fund - The Tourism Advertising Program Fund generates revenue for increased tourist
advertising by: a levy of a $2 charge per hotel room night (effective January 1, 2017 the charge increases from $1 to
$2); a one-half cent tax on Restaurant Meals; and a one-cent on Hotel tax.

Estimated revenue is expected to increase by 5.1% above last year’s estimate for FY 2016-17, and reflects the increase
in the room night charge as well as growth in Meal tax revenues that offset the decline in this fund’s portion of the
Hotel (8%) tax.

Agricultural Reserve Program Fund (ARP) - This program is designed to promote and encourage the preservation of
farmland in the rural southern portion of the City, in which agricultural uses predominate, by means that are
voluntary rather than regulatory. Revenue was initially derived from a 1.5 cent increase in the Real Estate Tax. In FY
2004-05, due to the rising value of real estate assessments, this level of funding was reduced from 1.5 cents to 1 cent.
A similar analysis revealed that the dedicated amount could be lowered to 0.9 cent in FY 2005-06, primarily again due
to rising real estate assessments. In FY 2015-16, an additional reduction of .34 cent will occur within this fund with the
revenue being redirected to support City and School operations.

Total revenue is expected to be $4,197,607, which represents a 26.6% increase for FY 2016-17, and reflects the use of
Specific Fund Reserves (fund balance) to provide sufficient funds to acquire 300 acres of property (if qualified
applicants submit to this program).

Tax Increment Financing Funds - The Code of Virginia (Sect 58.1-3245 – 3245.5) authorizes the use of Tax Incremental
Financing (TIF), which can serve as a means of financing the cost of public improvement in an area. The financing
mechanics work as follows: for the target geographical area covered by the TIF, the current real estate assessments
are anchored as a base, and subsequent increases in real estate taxes derived from increases in assessments are
earmarked to a fund from which public improvements are paid. TIF’s are often set for predetermined limits, usually
associated with the funding of these improvements. All TIF related revenues are excluded from the City/School
Revenue Sharing Formula. A substantial reduction in the Real Estate tax will affect the cash flow of these TIF’s,
particularly the Central Business District-South. The City has established three TIF’s, which are described below:

 Sandbridge TIF - The Sandbridge area, which is an important real estate and aesthetic asset of the City, has long

     battled sand erosion. Over the years, the City has pursued a multi-front strategy of funding sand replenishment:
     seeking Federal funds; appropriating local funds; and establishing the Sandbridge Special Services Tax District.
     The establishment of this TIF is another method to ensure stability to this area. These revenues are designed to
     reserve the revenue for future costs, and these revenues are transferred directly into the fund, $9,926,570 for FY
     2016-17. A financial analysis indicates that sufficient monies will be available in the future to fund sand
     replenishment and transfer surplus funds from the TIF to finance various projects in the CIP.

 Central Business District-South TIF (Town Center) - Town Center is associated with a public-private partnership to

     develop a high-rise office, hotel, and retail complex in the Pembroke area of the City. These revenues are funding
     the debt service costs associated with the construction of public parking, and these revenues are also transferred
     directly into this fund, $7,777,493 for FY 2016-17.

Fiscal Year 2016-17      Revenues

                     56
   51   52   53   54   55   56   57   58   59   60   61