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Home My WebLink AboutTIP Fund AnalysisTourism Investment Program TIP Fund Overview Kevin Chatellier, Director of Budget and Management Services August 19, 2025 1 Tourism Growth Investment Fund •1993 – Council established TGIF •Dedicated revenues to support projects to maintain image as resort city through capital projects and operational support. •Established the Resort Investment Committee (RIC) and Resort Area Advisory Committee (RAAC) •Dedications •2.5% Hotel Room Tax Rate •½% of Restaurant Meals Tax Rate •20% of Amusement/ Participatory Sports Tax Rates •Various Fees (Mobile Vendors, Open Air Café, Boardwalk Telescope Fees, Rent from the 14th/15th Street Pier, Parking Tickets) 2 Tourism Growth Investment Fund Continued •TGIF Projects Funded •Virginia Marine Science Museum Expansion •Oceanfront Connector Parks •Beach Erosion Control/Hurricane Protection (Seawall/Boardwalk) •Resort Streetscape Improvements •Atlantic Avenue Trolly Lanes •Rudee Walk 3 First Major Projects Fund •2001 – Council established Major Projects Fund •Dedicated revenues for culture and tourism related projects. •Dedications •80% of Amusement/ Participatory Sports Tax •2.5% Hotel Tax Rate •0.56% Restaurant Tax Rate •5₵ Cigarette Tax Rate •Major Projects Funded •Convention Center •Sandler Center •Aquarium Parking 4 Tourism Investment Program Fund (TIP) •2011 – Council merged TGIF and Major Projects into TIP Fund • provide opportunities for future SGAs, resort area maintenance, beach events, and Economic Development Capital Projects. •Dedications •5% Hotel Tax Rate •$1/ Room Night Flat Tax •1.06% Meals Tax Rate •80% Amusement and Participatory Sports Tax Rate •20% redirected in FY 2024-25 Budget to Arts and Humanities Dedication •5₵ Cigarette Tax Rate •Franchise Fees and Rental Income 5 TIP Fund Overview Revenue Dedications TIP TAP Open Space General Fund EDIP Major Projects TOTAL Hotel Tax 5% / $1 1% / $1 -2%--8% Restaurant/Meal Tax 1.06%0.5%0.17%3.5%-0.77%6% Amusement Tax 8%--2%--10% Cigarette Tax (per pack)5¢--54¢16¢-75¢ •FY 2025-26 TIP Operating Budget is: •Operating- $25.2 million •CIP Support- $30.7 million •Reserves maintained to support future debt service associated with $413 million of programmed bonds in the CIP 6 TIP Fund Annual Operations •Cultural Affairs ($520,500) •MOCA Advertising •Boardwalk Art Show •ViBe District Investment •Parks and Recreation ($1,380,538 & 12 FTEs) •Landscape Special Zone Management •Public Works ($5,154,047 & 26 FTEs) •Recycling •Resort Building Maintenance •Beach Operations •Resort Area Street Sweeping 7 TIP Fund Annual Operations Continues •Convention and Visitors Bureau ($11,278,312 & 10 FTEs) •Resort Management Office •Advertising, Marketing and Promotion •Management of the Entertainment Contract •Holiday Lights •Festival Contract Coordination and Management •Non-Departmental ($1,161,109) •Hampton Roads Transit •Emergency Medical Services ($1,228,647) •Lifeguard Services 8 TIP Fund Capital Improvement Projects •17th Street Improvements- Phase 1 Pacific to Cypress •$48,843,040 •17th Street Regional Stormwater Management Facility •$28,700,000 ($10 M from State Revenue) •Atlantic Avenue Street Improvements •$48,100,000 •Atlantic Park Development Acquisition •$9,194,182 •Atlantic Park Entertainment Venue •$54,997,614 •Atlantic Park Parking •$45,950,000 •Atlantic Park Streetscapes •$6,000,000 •Atlantic Park Offsite Infrastructure •$36,567,955 ($17 M from General Fund) 9 •Convention Center Capital Maintenance •$52,929,218 ($15,096,496 is PAYGO) •Oceanfront Capital Projects Reinvestment •$600,000 annually ($6.1M from General Fund) •Oceanfront Restrooms •$2,833,484 •Resort Parking District •$26,125,000 •Rudee Loop Park Development •$50,000,000 •Sports Tourism Infrastructure •$19,500,000 •Virginia Beach Sports Center Maintenance •$7,336,120 •Virginia Beach Amphitheater Capital Maintenance •$200,000 annually ($3.8 M from General Fund) TIP Fund Operating Assumptions Revenue •Hotel Room •2% growth annually •Restaurant Tax •3% growth annually •Amusement/ Participatory Tax •2% growth annually •Cigarette Tax •5% reduction annually •Rental Income/ Various Fees •0% growth annually Expenditures •CVB/ Parks and Recreation/ Public Works Operations •3% growth annually •HRT Contract •7% growth annually •Entertainment Contract •3% growth annually •Lifeguard Services •5% growth annually •Debt Service •Every other year issuance •5% interest 10 Five Year Forecast 11 FY 26 Adopted FY 27 Projected FY 28 Projected FY 29 Projected FY 30 Projected Revenues Hotel Room (5%)22,970,852 23,430,269 23,898,874 24,376,852 24,864,389 Hotel Room - Flat ($1 / room night)2,756,419 2,756,419 2,756,419 2,756,419 2,756,419 Restaurant Meal (1.06 %)19,619,699 20,208,290 20,814,539 21,438,975 22,082,144 Amusement (80%) 7,578,563 7,730,134 7,884,737 8,042,432 8,203,280 Miscellaneous Revenue (Atlantic park CDA)2,088,240 2,088,240 2,088,240 2,088,240 2,088,240 Cigarette (5 cents)404,996 384,746 365,509 347,233 329,872 Other Revenues 1,043,028 1,043,028 1,043,028 1,043,028 1,043,046 Total Revenues 56,461,797 57,641,126 58,851,346 60,093,179 61,367,390 Expenditures Operations 20,723,153 21,319,485 21,938,184 21,580,209 21,496,568 Debt Service 26,345,109 28,291,967 27,169,107 45,611,338 44,317,526 Reserves 4,993,535 4,088,240 3,088,240 2,088,240 2,088,240 PAYGO 4,400,000 2,800,000 1,150,000 1,500,000 1,143,060 Total Expenditures 56,461,797 56,499,692 53,345,530 70,779,787 69,045,394 Revenues Less Expenditures 0 1,141,435 5,505,816 (10,686,608)(7,678,004) Cumulative Fund Balance 54,217,809*55,359,244 60,865,060 50,178,452 42,500,447 Fund Balance Percentage 94%94%101%82%68% How much does it take to move the needle? Tax Type Spend per Tourist Avg. Hotel 3.3 People Tax Collected TIP Portion Food $75.30 $248.50 $14.91 $2.63 Lodging $48.26 $159.25 $14.74 $8.96 Amusement $19.57 $64.59 $6.46 $5.17 Sales $34.88 $115.09 $1.15 - Total $178.01 $587.42 $37.26 $16.76 12 Context Scenario $1 M Total Tax $1 M Tax for TIP Room Nights to Generate 26,839 59,652 Tourist Spend to Generate $15.7 M $35.0 M Capital Investment- Cost Recovery Scenario Scenario 1- Funded City Project Project $ 50,000,000 Debt Service $ 5,000,000 Other Direct Taxes $ - Overnight Tourist Tax Profile $ 37.26 Room Nights Needed to Generate 134,193 13 Scenario 2- Private Partnership Funded Project Project $ 50,000,000 Debt Service $ 5,000,000 Taxable Real Estate Improvement $50 M $ 485,000 Overnight Tourist Tax Portion $ 37.26 Room Nights Needed to Generate 121,177 Amusement Tax - Discussion 14 Year Budget Actual Difference 2008 $ 5,156,523 $ 5,012,284 (144,239) 2009 $ 5,592,040 $ 5,315,842 (276,198) 2010 $ 5,295,696 $ 5,126,501 (169,195) 2011 $ 5,700,550 $ 5,314,873 (385,677) 2012 $ 5,339,451 $ 5,472,204 132,753 2013 $ 5,560,563 $ 5,471,906 (88,657) 2014 $ 5,941,774 $ 6,015,026 73,252 2015 $ 5,836,125 $ 5,902,808 66,683 2016 $ 6,443,446 $ 7,034,791 591,345 2017 $ 6,201,490 $ 6,804,344 602,854 2018 $ 6,331,312 $ 6,344,252 12,940 2019 $ 6,872,387 $ 6,885,955 13,568 2020 $ 7,019,378 $ 6,719,969 (299,409) 2021 $ 3,705,707 $ 3,407,669 (298,038) 2022 $ 4,498,652 $ 7,553,665 3,055,013 2023 $ 7,254,292 $ 9,236,340 1,982,048 2024 $ 7,780,275 $ 9,473,204 1,692,929 2025 $ 8,067,622 $ 10,856,415 2,788,793 2026 $ 9,473,204 Average ($168,017) Hotel Tax - Discussion - 250,000 500,000 750,000 1,000,000 1,250,000 1,500,000 1,750,000 2,000,000 2,250,000 2,500,000 2,750,000 3,000,000 $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 $50,000,000 $55,000,000 $60,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Room Night 8% Base 15 Capturing the “Shoulder Season” 16 Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun FY 25 804,903 442,823 623,891 544,487 434,206 331,976 297,655 274,280 343,258 421,132 516,365 539,619 FY 24 556,473 658,403 594,630 500,376 408,248 317,574 268,470 306,235 389,946 501,652 469,136 403,289 FY 23 555,301 719,089 612,560 517,739 407,950 337,726 284,027 265,397 332,039 418,029 455,195 474,884 FY 22 577,159 713,434 617,409 493,997 483,991 335,772 293,949 224,988 285,063 372,751 445,756 473,813 $2 Per Room Night Per Month Thank You Questions? 17