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TAX DEDICATIONS CAPACITY& ARTS FUNDING OPTIONS 4.23.24Tax Dedications Capacity and Arts and Culture Dedication Options April 2 3, 2024 Dedication Overview Dedication Fund Balance (FY 23 ACFR)FY 2024-25 Estimated Revenue from Dedications Outdoor Initiative (1990)*$7,807,054 $3,700,028 Parks and Recreation Special Revenue Fund (1993)*$10,789,614 $27,293,610 Tourism Investment Program Fund (1993)$53,821,900 $54,450,847 Economic Development Investment Program (1994)$4,829,108 $1,598,476 Agriculture Reserve Program (1995)$19,504,292 $7,085,160 Open Space Fund (1995)$6,542,215 $7,781,454 Tourism Advertising Program Fund (1996)$11,061,972 $17,226,868 Central Business District (Town Center) TIF (1999)$7,458,253 $10,978,916 Flood Protection Bond Referendum (2021)*$26,366,368 $32,276,839 Total $148,180,776 $162,392,198 *These dedications were removed from consideration for reduction as existing needs already meet or exceed these revenue dedications, or any reduction will reduce the fund’s capacity to sustainably support debt obligations.2 Potential Modest Dedication Redirection 3 •Methodology was three pronged: 1.Does dedication/fund have a budgeted reserve or positive fund balance? 2.If redirected, will capacity remain to cover existing obligation/intent? 3.If redirected, will fund balance remain above 15%? •Narrowed focus to ARP, Open Space, Town Center TIF, TAP, TIP, and EDIP •Increased pay-go from each dedication (excluding Town Center TIF) reduced General Fund obligation by $2.3 million •Example, TIP $800,000- “Oceanfront Capital Project Reinvestment” and “Virginia Beach Amphitheater Capital Maintenance” Resolution: Arts and Culture Dedicated Funding On March 19, 2024, City Council adopted a resolution directing the City Manager to create options for establishing a dedicated funding source for arts and culture from existing funding dedications, excluding the General Fund. These options were to be provided to City Council 20 days from adoption of the Resolution, or by April 8, 2024. On April 5, 2024, a staff report was sent to council providing: •Funding capacity within existing dedications •Options for consideration to establish an Arts and Culture dedication 4 Agricultural Reserve Program Proposed Projected Projected Projected Projected Projected FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 Expenditures Operating 259,355 267,136 275,150 283,404 291,906 300,664 Existing Debt 4,347,629 3,871,104 5,172,433 3,383,878 2,358,463 2,049,073 New Debt 2,862,498 3,132,327 3,410,252 3,696,513 3,991,363 4,295,058 CIP Pay-Go 1,490,000 1,490,000 1,490,000 1,490,000 1,490,000 1,490,000 Total Expenditure 8,959,482 8,760,567 10,347,835 8,853,796 8,131,733 8,134,795 Total Revenue 9,558,973 9,665,510 11,371,096 9,976,320 9,285,157 9,256,081 Revenue Minus Expenditures 599,491 904,943 1,023,261 1,122,524 1,153,424 1,121,286 Base Fund Balance 20,103,783 21,008,726 22,031,987 23,154,511 24,307,936 25,429,222 Base Fund Balance % 208.0%184.8%220.8%249.4%262.6%282.1% Potential Redirect 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 New Fund Balance 18,103,783 17,008,726 16,031,987 15,154,511 14,307,936 13,429,222 New Fund Balance % 187.3%149.6%160.7%163.2%154.6%149.0% 5 Central Business District (Town Center) Tax Increment Financing (TIF) Fund 6 Proposed Projected Projected Projected Projected Projected FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 Expenditures Debt Service 4,122,207 3,408,033 3,351,214 3,155,633 1,369,356 1,310,664 New Debt 7,000,000 6,825,000 6,650,000 6,475,000 6,300,000 Transfers 150,000 150,000 150,000 150,000 150,000 150,000 Cityview 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Total Expenditure 5,272,207 11,558,033 11,326,214 10,955,633 8,994,356 8,760,664 Total Revenue 10,980,916 11,295,283 11,119,082 11,452,594 11,796,112 12,149,936 Revenue Minus Expenditures 5,708,709 (262,750)(207,132)496,961 2,801,756 3,389,272 Base Fund Balance 17,590,621 17,327,871 17,120,739 17,617,700 20,419,456 23,808,728 Base Fund Balance % 155.7%155.8%149.5%149.4%168.1%190.3% Potential Redirect 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 New Fund Balance 14,090,621 10,327,871 6,620,739 3,617,700 2,919,456 2,808,728 New Fund Balance % 124.7%92.9%57.8%30.7%24.0%22.4% Economic Development Investment Program (EDIP) Proposed Projected Projected Projected Projected Projected Projected FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 FY 40 Expenditures CIP Pay-Go 1,598,476 1,502,567 1,412,413 1,327,668 1,248,008 1,248,008 631,864 Total Expenditures 1,598,476 1,502,567 1,412,413 1,327,668 1,248,008 1,248,008 631,864 Total Revenue 1,598,476 1,502,567 1,412,413 1,327,668 1,248,008 1,248,008 631,864 Revenue Minus Expenditures - - - - - - - Project Balance 4,091,621 - - - - - - Unobligated Project Balance 4,091,621 - - - - - 7 Open Space Fund Proposed Projected Projected Projected Projected Projected FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 Expenditures Operating 578,613 622,319 643,136 664,685 686,993 710,089 Debt Service 1,215,517 511,102 511,171 459,918 -- CIP Pay-Go 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 Total Expenditures 4,794,130 4,133,421 4,154,307 4,124,603 3,686,993 3,710,089 Total Revenue 7,781,454 8,014,897 8,255,344 8,503,005 8,758,095 9,020,838 Revenue Minus Exp.2,987,324 3,881,476 4,101,037 4,378,402 5,071,102 5,310,749 Base Fund Balance 12,038,633 15,920,109 20,021,146 24,399,548 29,470,650 34,781,399 Base Fund Balance %150.2%192.8%235.5%278.6%326.7%374.3% Potential Redirect 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 New Fund Balance 7,038,633 5,920,109 5,021,146 4,399,548 4,470,650 4,781,399 New Fund Balance %87.8%71.7%59.1%50.2%49.6%51.5% 8 Tourism Advertising Program Fund (TAP) Proposed Projected Projected Projected Projected Projected FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 Expenditures Operating 17,698,103 18,087,461 18,485,385 18,892,064 19,307,689 19,732,458 CIP Pay-Go $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 Total Expenditures 18,198,103 18,587,461 18,985,385 19,392,064 19,807,689 20,232,458 Total Revenue 17,279,968 17,661,281 18,052,873 18,455,028 18,868,039 19,292,209 Revenue Minus Exp.(918,135)(926,180)(932,512)(937,036)(939,650)(940,249) Base Fund Balance 10,083,257 9,157,077 8,224,564 7,287,528 6,347,878 5,407,629 Base Fund Balance %57.1%50.7%44.6%38.6%32.9%27.4% Potential Redirect 0 0 0 0 0 0 New Fund Balance 10,083,257 9,157,077 8,224,564 7,287,528 6,347,878 5,407,629 New Fund Balance %57.1%50.7%44.6%38.6%32.9%27.4% 9 Tourism Investment Program Fund (TIP) Proposed Projected Projected Projected Projected Projected FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 Expenditures Operating 25,819,551 25,402,598 24,258,171 23,887,276 24,540,971 25,220,373 Debt Service 28,604,542 25,294,256 24,707,707 45,853,281 40,991,321 39,862,763 CIP Pay-Go 2,450,000 4,400,000 2,800,000 1,150,000 1,500,000 1,143,060 Total Expenditures 56,874,093 55,096,854 51,765,878 70,890,557 67,032,292 66,226,195 Total Revenue 55,343,875 56,526,416 57,740,630 58,987,175 60,266,737 61,592,460 Revenue Minus Exp.(1,530,218)1,429,562 5,974,752 (11,903,382)(6,765,556)(4,633,736) Base Fund Balance 43,228,764 44,658,326 50,633,079 38,729,697 31,964,141 27,330,406 Base Fund Balance % 76.5%77.3%85.8%64.3%51.9%43.4% Potential Redirect 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 New Fund Balance 41,728,764 41,658,326 46,133,079 32,729,697 24,464,141 18,330,406 New Fund Balance % 73.8%72.1%78.2%54.3%39.7%29.1% 10 Summary 11 Fund FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 ARP $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 Open Space $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 TAP ------ TIP $1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000 EDIP $4,091,621 ----- Town Center TIF $3,500,000 $3,500,000 $3,500,000 $3,500,000 $3,500,000 $3,500,000 Total $16,091,621 $12,000,000 $12,000,000 $12,000,000 $12,000,000 $12,000,000 Some Arts and Culture Dedication Options •Option 1 – 20% of the Amusement tax •As ticket sales generate amusement tax revenue, this option is closely aligned with the arts. •Option 2 – Surplus of the Town Center TIF •Town Center is home to the Sandler Center for Performing Arts as well as the Zeiders American Dream Theater, both of which hosts several organizations that could benefit directly from an increased arts and culture dedication. •Option 3 – Redirection of Portion of Cigarette Tax revenue •This revenue is a source of business incentive grants and could be a source of additional non-profit grants. 12 Questions & Discussion 13 FY 2023-24 Funding for Arts & Culture Cultural Affairs- General Fund Cultural Affairs Salaries $ 1,152,458 Arts and Humanities Commission $ 650,000 MOCA $ 240,000 Sandler Center $ 730,000 Dewitt Cottage & Lifeguard Station $ 130,000 Cultural Affairs- Operating Budget $ 583,147 Subtotal $ 3,485,605 Regional Grants- General Fund Virginia Symphony Orchestra $ 25,000 Virginia Arts Festival $ 350,000 MOCA - Regional Grant $ 135,000 African American Cultural Center $ 80,000 Pride at the Beach $ 10,000 Philippine Cultural Center of Virginia $ 75,000 Sonrise Music Festival $ 50,000 Subtotal $ 725,000 Cultural Affairs- Tourism Investment Program Fund MOCA Advertising $ 180,000 MOCA Boardwalk Art Show $ 200,000 ViBE $ 140,500 Cultural Affairs- Juneteenth $ 50,000 LAMB Foundation- Juneteenth $ 50,000 Subtotal $ 620,500 CVB- Tourism Investment Program Fund Pride at the Beach $ 90,000 Neptune Festival $ 475,000 Jackelope Festival $ 1,000,000 Symphony by the Sea $ 150,000 Point Break Festival $ 750,000 Subtotal $ 2,465,000 Capital Improvement Projects Heritage CIP $ 300,000 Amphitheater CIP $ 200,000 MOCA CIP Project $ 1,000,000 Subtotal $ 1,500,000 Total $ 8,796,105 14