Good morning, everyone. Welcome to this meeting of the City of Denton Hotel Occupancy Tax
and Sponsorship Committee. It is 10.03 a.m. on June the 11th. Our first item on the agenda
is hold a discussion and appoint a committee chairperson. Council Member Armitage.
I would like to nominate Jesse Davis. I'll second that. Mr. Davis, I presume you're
okay with that? Yes, thank you, Deb. I appreciate that and
accept the nomination. Okay.
Yes, sir. Do we need an official vote on that, I presume?
Yes, sir. It's all in favor of Council Member Davis
becoming the new chairperson of the Hotel Occupancy Tax and Sponsorship Committee signified
by saying aye. Aye.
Aye. All right. Motion carries unanimously. It is
your meeting, Mr. Chairperson. Wonderful. Thank you, sir. With that, we'll
move on to item 1B, consider approval of the minutes from May 14, 2020. Is there a motion
to approve or any discussion on the minutes? I move to approve.
I'll second. There's been a motion and a second. All
those in favor say aye. Aye.
Aye. Any opposed? None. So the minutes are approved
from the May 14th meeting. Moving on to item 1C, receive a report, hold
a discussion and provide recommendations regarding a budget change for Denton County
Friends of the Family. And I believe we have a, do we have a presentation on this one or
just conversation? No, sir. I just have a conversation. The
Denton County Friends of the Family is a sponsorship recipient this year who already received their
$1,500 to help put on a Friends of the Badge luncheon this year. And due to the situation,
they are moving it to some type of virtual event in the next couple of months. And so
they're asking that their $1,500 budget, which was earmarked in the contract for a venue
cost, be moved to other items such as plaques and gift cards for the recipients of the event
that they will still be able to have but do it virtually. So that is the main ask. And
I will just have to amend the contract with your approval of this item, which will be
executed by the city manager. Okay. Is there a motion on this item or any
conversation? Councilmember Armitage. I move to approve. I'm happy to have conversation
if others want to, but I'm fine with that. Yeah, I'll second that motion.
Okay, there's a motion second for approval of this item. All those in favor?
Aye. Aye.
And opposed? I'll vote aye as well. And that item is approved. Item 1D, receive a report,
hold a discussion and provide recommendations regarding hotel occupancy tax revenue and
hotel occupancy tax and sponsorship expenses for current year FY 2019-20.
Okay, there is a presentation on this one. So I will share my screen and give me a second
to bring that up. All right. Everybody see that? There we go. Okay. This item is being
brought to you. It's a little bit of a repeat from our last meeting. We are going to discuss
the current year shortfalls and we gathered information from the recipients per your request
from the last meeting. So we'll have that embedded in here. But the first couple of
slides are a little repetitive. So it's just an overview of what we're going to talk about
and then we'll get into more details about the actual recipients feedback that they provided
to us in this last week. So our objectives are just to go over the hot program, the revised
estimates, the recipient feedback, and then any discussions or recommendation you'd like
to give to staff. So the program overview is that the applications are presented to
the subcommittee meeting annually. We estimate revenues and establish the funding recommendations
and request to you annually during usually the June or July meeting this year. Each recipient
is provided with a contract that has an approved budget use of funds and how those budgets
are paid out can be anything from a lump sum to four quarters spread throughout the program
year. The quarterly reports that are embedded in the contract as requirements come in 30
days after the finished quarter. And then the program year is from January 1 to December
31, for hot recipients. Currently we have 19 contracts that are administrated in this
calendar year. The majority do receive 25% of their budget in four quarterly payments.
We have a few others that have lump sum payments and we have a few others that have two payments
that will give them their full budget depending on where their event is throughout the program
year. We also have three city departments or committees that receive funding as well.
We have the Public Art Committee that receives at least 2.4% of the hotel revenue projected
for this current year. We also have the Civic Center and the Waterworks Park. Those are
all internal recipients that use their funding within the city's fiscal year. Last meeting
we had a question on how we work the fiscal year with the program year for the recipients.
So we created this little timeline here and I think the most important thing we need to
note on this one is in Q4, the city's last quarter in September, I actually cut those
checks out of the current fiscal year and I hold those until the next month for the
recipients to actually receive those. So they receive them in the fourth quarter but I still
have my four quarter payments in the actual fiscal year of the city. So this is a slide
that has been updated for you. The year to date column is the main one that has been
updated and we have received one more month of revenue from the hotel properties and that's
where you will see the 1.4 million. We received $83,000 for April business which is 75% below
budget and they also reported to me about 24% in occupancy for the entire month of April.
So that is the first and largest decline we have seen since the COVID-19 has come into
play. March receipts were down a little bit but really in April we saw a large decline.
>> Mr. Chair, can I ask a question? >> Absolutely. Mayor Watts.
>> I know that with our sales tax, that's usually like for March sales tax, we'll get
them in mid-June. Is it the same timetable for the hotel occupancy taxes?
>> The occupancy taxes run a month delay. So the year to date you see in front of you
with the 1.4 is October business through April business.
>> Okay. Okay. 1.4. So you're saying then for May, our May numbers will come in about
when? >> The end of June. The end of this month.
So hopefully when we meet in July, I'm going to have only one more month with me.
>> Okay. All right. Because I just -- I mean, I know April probably is going to be the worst
month hopefully. So typically then you're saying we would get about $300,000 -- between
$250,000 and $300,000 a month in hotel taxes budgeted?
>> Well, we kind of extrapolate it out depending on the time of year. But this time last year,
we got about $275,000. And the current year budget was $313,000.
>> Okay. All right. Thank you. Appreciate it, Chair. Thank you, sir.
>> Yeah. So a related question. And I apologize first because I used to serve on the CVB board.
So I know that somewhere I have this information that I can look up. I just didn't have -- I
wasn't able to before the meeting. But can you say off the top of your head, Randy, when
in general are the times of feast and famine in the hotel occupancy in City of Denton?
>> I could probably take an educated guess. I'm no expert. But I know obviously the summer
months are pretty good. And we also have the NASCAR races, amazingly enough, would fill
our hotels. In addition to the university's graduations and football games and parents
weekends, those were a lot that also brought full capacity to the city. Other than that,
we were pretty average. We stayed pretty well to meet budget over the whole year. But those
upticks, you know, were in the spring with some of the events and then some fall information
as well. >> Thank you. Thank you.
>> Yes, ma'am. The other items that have changed on this slide since last time is the last
three lines, estimated unspent funds, which we will go over in detail in future slides.
But under the estimate column, recipients, hot recipients only have estimated that they
are not going to use $476,000 in the full budgets that they have received, whether it's
due to canceled events, postponed events, doing less than they have in years past. And
those are just some savings that they foresee and project in their own budgets. And we will
have that in detail. So that original change in fund balance when we brought to you last
time was the million dollars, and then the estimated unspent is currently 476,989, which
we will illustrate in the next slide. So this is the hot current year program 20. We have
a budget of $2.5 million. And so far, the applicants or recipients have spent 655,000.
They're estimating to spend another 1.3, and then the unspent balance that they're projecting
is the 476,989. And at this point, we have 15 events that are planning their events as
normal and adjusting for anything that comes through any declaration or any CDC rules and
regulations. We have four events that created a new date within their contract, and they'll
still be having their event. They've just adapted a little bit. And then we have four
events that were completely canceled. So that is the overall status of our current recipients.
And in detail, you've seen the next two slides, which there's many events, so we have to take
it in two slides. So this slide shows you in the first column, the payments each organization
has received so far, the name of their event, the name of their organization, if they've
canceled or if they have not, and then their budget and all their expenses are expected
to spend. So I don't think we need to go over those line by line now. We may refer back
to the slide when we get to the conversation, but your end right column will show you what
is expected to be unspent for this event. And at the bottom right, you can see the total
of the $469.99. And these are for the hot funds only.
Randy, I do have a question on these slides before we move on. Are there any of these
kind of, so we're preparing ourselves for the conversation ahead. Are there any of these
that in your conversations with these groups, you had any kind of red flags, like, you know,
the way you're talking about doing that event doesn't sound like it's going to be within
the contract or you're talking about making some major changes that aren't really in line
with the grant you're receiving. Are there any of those that we need to kind of be thinking
about before we start the conversation? I think the only one that may take some
consideration because they did not go into great detail. So a lot of them are adapting
with all the CDC rules and projecting that hopefully, you know, more of the businesses
and more of the processes are opening up so the events that are coming in August, September
and November, you know, won't have any restraints. But the only one that has told me that they
are doing something a little bit different is the current Juneteenth event happening
within the next week. And they're doing something virtual. Is there a plan? They're showing
here on the chart that they expect to spend $5,000 of their $21,000. I do not know exactly
what those expenses are yet. But I think that would just be a conversation that we would
have if you're interested in supporting a virtual event due to the Hot Fund expenditure
statute and what it states those goals are. Councilmember Armitage? So can you explain
why the Juneteenth event that council approved that's happening, that's kind of with another
group in conjunction with the traditional Juneteenth group, why the Hot Funds can't
be, you know, reallocated to that? I assume there's a very good reason, legal reason.
But if you could just explain. Are you asking if this original budget could be or should
be or might be moved to the new group that's talking about doing a Juneteenth event? Yeah,
yeah. Juneteenth and Cinco de Mayo are right under a contract by the Denton Parks Foundation.
So these funds belong to the Denton Parks Foundation, who these two organizations work
under. And so those are two separate groups, first of all. The original Juneteenth that
we see here that was approved for Hot Funds only has no association at this point with
the new event. So in the auspices of the Hot Committee and the Parks Foundation, we're
only talking about the original Juneteenth virtual event. I understand. So that would
mean that legally, you know, it would be like having a new applicant pass the deadline,
right, without having applied for Hot Funds. In other words, there's no legal basis grounds
to shift those funds over to a different event. Is that right? Right. Number one, they haven't
requested anything from the city Hot Group or sponsorship. And number two, it's the Parks
Foundation's discretion to spend those funds. Yeah. Okay. Got it. Got it. Yes. Yes. Randy,
just on this. So I understand what I'm looking at here. Estimated unspent balances. Those
are the balances that when we surveyed all the recipients, they're saying, we probably
aren't going to spend this money. I mean, is this a commitment to not spend this money
or is this just some guesstimate? The request is to give us an estimate on what they thought
they may not spend based on the current conditions. Okay. So it could change. Yeah, that means
that it could change either way. Like when I'm looking at this, I see that the lion's
share of that 460 or 476 is obviously the Chamber of Commerce, Denton Visitors, Discovery
Denton Welcome Center. Do we have an idea of what those savings represent or what those?
Yes. Okay. Not in great detail, but I can tell you that obviously the Welcome Center
was closed for a little bit. So those expenditures were not expended. They have had some staff
change. They had one or two from the Welcome Center depart completely, so they had salary
savings. And then obviously they can't market a location that is technically closed and
having no events. So I think there's just a broad spectrum of items that just weren't
able to be used and expended. And so they can't spend a lot of time ramping up with
the unknown on what events are going to come and what are not. So I think that is a good
estimate of what they may truly not spend. Okay. And on the North Texas Fair and Rodeo,
so in essence, so let me just back up. So the ones that don't have any estimated unspent
balance means they're going to expend their full allocation of the hot funds allocation
for this year, the budgeted amount. That is their expectation. Yes, sir. If they haven't
spent it already with their event. Okay. And we're expecting to have a decrease in revenue
of almost looks like the expectation is half. Correct. Okay. You are correct. And so then
taking all the unspent, all the projected fund balance that we talked about last time,
you're saying that if every, if this whole snapshot happened the way it is, then our
fund balance would be $1.433 million at the end of this fiscal, at the end of this year,
the hot funds year. Are you referring to this slide six up here in the 1.4 down there? Yeah.
Well, the one point it says updated fund balance estimate is 1.433. At the end of yes, I am
correct. Because it says 9.56 in the preliminary FY 2021. Right. But down here it looks like
you're crediting out or adding back the estimated unspent funds. I think we're trying to show
what the estimated unspent funds would do if we did choose to use that to help our shortfall
in revenue. There's some things to play in that. Number one is that these are unspent
funds and it's an estimate, first of all. And second of all, they normally don't come
into play until the end of the contract year. They aren't due to return these funds until
the end of their contract. So I won't be getting them until January of 2021, you know, or another
possibility depending on the committee's interest is, you know, could we use this dollar amount
to reduce the current allocations for these events as part of the strategy to take care
of the deficit? So I mean, this is just a working estimate. There's definitely nothing
in definition there on how to assist the shortfall. Okay. All right. Because I know last time
when we when we saw this first estimate line without the estimated unspent and so forth,
if we funded everybody for our contract, our fund balance dropped from two million to nine
hundred and fifty six thousand. Correct. And it seemed like the conversation was, well,
we didn't want to really make a decision yet. We wanted to see what the need was. And so
that's the conversation we're having today. Okay. Okay. I'm sort of talking about to myself.
So no worries. Yeah. You know, I think so. I think some of the conversation to it goes
into do you want to try to handle this this year versus next year and consider the applications
when they come forward? And Randy knows the specifics, but there's there's some there's
some of the events that had expenses prior to the event being canceled that they're they're
expended expensed contracts this year are going to carry over to next year. So it should
lessen their request next year as well. So there is a nuance with each one. That's my
mentor. Do you have a question? Actually, I realize I was just going to kind of start
deliberating, but I just realized we're not really quite done. The the hot. So so let
me know when when we're ready. Are we do we plan to discuss the hot funds and then move
on to the sponsorships and discuss that separately? You know what, let's go ahead and Randy, if
it's all right with you, let's go ahead and get through the sponsorship slides. I mean,
it's just such a smaller pot of money to talk about. And then we can come back and talk
because I think we probably think about it more in terms of events and money expended
by event than we do, you know, which bucket of money it comes from. So let's get through
those first. OK, so here was the last slide on the hot hot current status, which shows
the four seventy six nine eighty nine. Let's see what is next here. So the next is the
sponsorship budget, which is very short amount of information. The current budget for that
is eighty seven to fifty five. They've all received their money already. There's no shortfall.
There's no revenue that is depicting what happens in this in this fund. So we have seven
that are planning their event as normal to do have a new date within the contract, and
we do have six that are canceled. So they have expended fifty eight thousand of the
eighty seven as you can see here. The next slide will just go into the details of those.
So here we have whether they're canceled or not canceled, how much they're spent on their
budget and then what again what they're expected to return to the city. So it falls in the
same character as the hot funds, except for we don't have to make any shortfall decisions
in this fund. So this shows that currently unspent estimated balance is twenty two thousand
three eighty two of the total. So this one really is just a general update to let you
know what the status is and that they are trying to move forward as best they can within
their program year, which is our fiscal year. So this one is a little bit different. They
do all have their money. They have received it and they're just adapting as they go. And
the ones that will be canceled will be returning their funds once. Yes. And this goes back
to David's comment. So let's just take this slide number eleven, the sponsorship current
status. So when I look under the Fourth of July fireworks, I see twenty five thousand
and my understanding is that's primarily to have purchased the fireworks. That is correct.
They already have them. And so what we're saying and I'm trying to OK, like Arts and
Jazz Festival, I guess my point being if somebody has spent money to purchase something for
an event that they haven't used or they're not going to be able to use, are we anticipating
that their budgets will their ask will be reduced by those funds or that they're I mean,
the twenty five thousands already been spent. So next year, let's say, for example, I would
think the Kiwanis would only be asking for fifteen thousand because that is the conversation
that we will have because there's two here that you just pointed out. And the hot funds
also have the arts and jazz in it. And she's and that has spent thirty thousand for the
hot. OK, so what we can do and what we've talked about, pardon me, is that the ones
that have expended and will be participating in the programs next year, we will amend their
contract so that the twenty five thousand dollars for this one or the thirty thousand
dollars for arts and jazz and hot will be included and afforded to expand to the twenty
twenty one year. And then that will be in consideration for July 4th. They always ask
for forty thousand. So when they ask for twenty twenty one, it will be less of the pyrotechnics
they've already paid for. If that is the direction you all provide to us. OK, thank you. And
are any other questions on sponsorship? OK, that's the last page. So that's the end of
the slideshow. And what we're requesting is that the discussion we had from the last meeting,
you all are. I'll bring this down if we need to. There we go. That you all were going to
take a more tailored approach. So we came back this time with the itemized information
from each each organization, whether it be hot or sponsorship, which I think hot obviously
needs to be provided more more background. But we have those tailored itemized. Budgets,
if you will, what they're expending, what they're not expending and what they're planning
to do with their vets. So we are open to take whatever direction you all already speak with.
So can you help us understand to let's say this doesn't happen too often. The city has
to ask for its money back in these kind of deals. Can you tell us how that I know when
you cut the checks, I know when you write the contracts, if an event, some event doesn't
happen as planned, they don't expend the money as they plan to something goes different.
At what point do we have kind of accountability over that? And if they've already been issued
a check for that quarter, or maybe we're in Q4, and they've already got all their money,
and their event doesn't go as expected, they don't spend what they expected to, they spend
funds in a way that's different from what we would have been what we really budgeted
for them to, how does that process go? If we have to have those kind of more difficult
conversations, the hot process is a quarterly one. And so they get quarterly funding, and
then they have to report to me 30 days after that what they spend it. And so that goes
throughout the year. And then when we get to the December mark, and they have money
left on the table, they report to me by the January and provide another quarterly report
with the amount of unspent funds. So whether they have their event, or they had a rainout,
or maybe they got some advertising given in kind that they were planning on spending,
and they didn't spend it, whether it's $500,000 or $10,000, that quarterly reports will keep
me in the process throughout the entire year. And that fourth quarterly report when we finalize
that number will show the imbalance due to the city. And I would collect those funds
in January of the following calendar year.
Okay. So, and it looks like just kind of cocktail napkin numbers, we're expecting about 50% less
in revenue in the hot funds. We have expected to be, the return to us are not expended,
somewhere between like 18, 19%. So we've got, you know, a 25 or 30% shortfall, basically,
but we've got to decide whether we just eat that through the fund, or we go start amending
contracts and making changes and cutting budgets. Is that about right?
Yes, sir. Whether we do it in the current year, reduction, use fund balance, or, you
know, adapt the next year as well.
And I would add, obviously, that's contingent on those estimates, and the estimates that
we got are not binding in any way. So if we follow the current process, we just kind of
have to wait until December and see what comes in and see where we stand. So we wouldn't
know that going into the fiscal year. And obviously, as things continue to change each
month, it is possible that some of these events come back sooner than they think.
So for me, you know, my thinking on this is, I look at, you know, where is most of the
money going to? And obviously, it's to the Chamber of Commerce, as CBB, Discovery, Denton,
and Welcome Center. And I think, you know, how cannot be reduced and reallocated, and
then, and thinking about kind of the function of that in terms of tourism in Denton, which
is the reason for being of hot funds, and kind of thinking about the non-quantifiable
in dollars, you know, impact of what that would mean for tourism in Denton, and also
thinking about in terms of dollars, you know, what the impact would be in reducing that
budget. So I look to reduce from there, and then I look at the second biggest expenses,
the triple digit, I mean, six figure expenses, and, you know, and when it comes to those,
you know, I'm not, for me, it's more difficult to think about how cuts should happen or shouldn't
happen. So for me, kind of the big question for me personally is how much to reduce from
that biggest piece of the pie, and then the question that we talked about this past season
about the county, and you know, I still feel like I did then that, you know, I feel uncomfortable
with us giving hot funds to another taxing entity. The county is unique in that among
all of these. So anyway, that's just kind of where I stand in my thinking on this. That's
how I'm approaching this, if that makes sense.
Thank you. Mayor Watts? Oh, you're on mute, Mayor.
Okay, now I get to be on the other side of it. Yeah. So what I'm hearing is that, well,
for me, these unspent funds aren't necessarily them taking a cut. It's just whatever they
were going to be spending them on, it just hasn't occurred. Like, let's say, for instance,
in the Chamber of Commerce, this isn't them saying, oh, we're going to cut our spending
from now to the end of the year so that we can save hot funds money. This is saying we
didn't have to pay rent. We didn't have to pay utilities, really. We didn't have all
those expenses with being open, and we've lost some salary. So this is a reallocation
or reanalysis of their budget. So this isn't necessarily money that an organization is
having to take a hit on. They're not being defunded a portion of their budget that they
need. This is the amount of money that they're saying they don't need as far as an estimate.
Is that my understanding? That is what they presented, is there are
some shortfalls due to some salary savings, which are a fact, but they've also taken the
time to look at their whole budget to see what's more realistic. If they didn't need
to, could they spend more than they are here? Possibly, if they were given direction and
we could go forward, but this is their estimate with some solid salary savings and reducing
some things that they had to during the closings. So for me, I don't really have any heartburn
either way on how we handle this, except that I don't want to have the entire shortfall
whether they're, you know, I'm glad we have this unspended amount. So if they just kept
the money, let's say, or I guess if they don't spend it, do they technically have to give
it back? I mean, legally? Yes, sir. It's in the contract.
Okay. So if that all stays the same, then they're going to have to write us a check
back. And so that would go straight into the reserve fund, the fund balance. Is that correct?
Yes. All right. Then I guess I'm trying to understand
when you say either take care of it this year or next year, what were you, help me understand
what you were describing there? We could reduce and during the last meeting
in May, kind of laid out some of those, you could decide to reduce the fourth quarter
payment to the entities. And that would be kind of handling it this year as opposed to
just letting the process play out the way it is in the contract where we would get those
funds back next fiscal year. Okay. Great. Honestly, I'm probably okay with
the latter approach, as long as those people have indicated savings that we can pretty
much, I know it's an estimate, but that we can rely upon that because the fund balance
is, it looks good to me at the end of this year, even if we have the short, if they pay
the money back, we're at 1.4. So that means we pulled about half a million out of the
fund balance to help with this. And I don't think that's unreasonable. That is part of
the reason we have the fund balance. The other is, is to ensure that if something comes along
that's good for tourism, that we have some funds that we can move towards that.
So I'm comfortable with if it plays out as indicated in this line under estimate on page
six, slide six, with an updated fund balance of 1.433, I say we just put a stake in the
ground and then next year we'll look at the analysis based upon what we see moving forward.
Because by the time we look at the budget, or somebody looks at the budget too, I guess
we'll look at the budget this year, we'll have an idea of what May and June collections
are, which will indicate, you know, how are we coming back and things such as that. So
I'm okay with, as it seems to be laid out, just getting the money back per the contract.
As long as it's real close to this amount, quite frankly, I mean, and I don't know if
we need to send something out saying to people, look, this is sort of what we're anticipating.
If you don't, it's really far off from what you estimated not to spend, we need to have
some understanding of that. So people just don't go out and spend it just because they
can because we haven't said we're going to reduce your budget. So I want to make sure
we have some kind of benchmark in that regard. So that's where I am on it. I mean, I'm okay
if it plays out this way to just move forward with the new fund balance at 1.4 or approximately
there.
Councilmember Armenter, did I see your hand a moment ago?
Yes, but then I realized that you had not yet weighed in Councilmember Davis, so I want
to hear you.
Thank you. No, I think you both raise excellent points. The only thing I would really add
to the conversation is the purpose of these funds is exactly what we're talking about.
An event happens that puts heads on pillows in hotels and that generates additional hot
revenue. Some of these, I'll just pull the rodeo out for one, that's an event that we
know puts heads on pillows. We know from the community markets economic analysis, we know
they put some heads on pillows. And so I would say if we were to at this point, not being
even I guess we're halfway through the program year, a little more through the fiscal year,
if we were to start pulling back money now or making big cuts now or forcing people to
reevaluate events, we're kind of shooting ourselves in the foot on future hot funds
revenue. It looks to me like some of these events are going to need, you know, our economic,
our hotel tourism industry needs the injection of cash, frankly. These events need to happen
or this industry is going to take a big hit. So I think for all those reasons, I agree
that the mayor said put a stake in the ground. I was going to say that we let it ride whatever
metaphor or cliche you want to use. It seems like the conversations that we're needing
to have with the program entities, they know we're watching, they know that we're curious
about how they're going to spend their money and how they're going to run their events.
They know that we're expecting those reports just like we do every year. But that's not
a reason necessarily to start cutting budgets yet. I think we let it ride for now. Councilmember
Armit. So thank you. So obviously, it's that's the consensus. I just want to just to kind
of check with the two of you about the question. And by the way, I agree with you Councilmember
Davis that something like the rodeo that has an impact on what the funds will be for next
year is really important. And for me, that goes for all of the events. But again, when
it comes down to it, it's these two of the Welcome Center, which I know helps to promote
these events, right. And then the issue of the county, which for me is a separate issue
of just kind of their their own taxing entity, you know, should we be kind of giving to the
county in the first place, not nothing about the quality of this, of what they do and its
ability to put heads of heads on beds and or whatnot. So, you know, those two issues
are important to me. If I would like to, if it were up to me, I guess, you know, I would
say look at the remainder of what's left in this, not in the estimated unspent balance,
but in the expected to spend category. You know, in other words, what they haven't spent
yet that they expect to spend. And I see that, you know, Welcome Center $830,000. And the
county where the county go, $30,000. So we've got, yeah, you know, and add that to the $35,000.
So anyways, we've got $30,000 from the county, $830,000 from Chamber of Commerce, the Welcome
Center that they still expect to spend. I would like to see that come back into the
fund for next year. And if they would have, I would like to see all of it from the county
and from the Welcome Center, you know, I would like to ask them how do you, you know, how
are you justifying this $830,000 and kind of give it a, give that more scrutiny than
we normally would, you know, because of the circumstances. So anyway, it sounds like that's
not the consensus, but I just, I wanted to let you know kind of more specifically that
that's where I'm standing. And, you know, I'm curious if either of you have any input
on that for now, or you'd rather just not discuss it since the consensus isn't there.
I'm fine either way. Well, I think you raise a, you raise good points. What would you think
about coming back to those items say in the late July or August timeframe, because my
thinking is we don't have projections yet through the summer. You know, normally we
have some summer events, we can kind of expect what some of our revenues are going to be
for the summer. But I mean, things could be different just in a couple of months as things
either open up or open up more slowly than anticipated, or there could be some changes.
My concern with the, I'm not going to weigh in on the county aspect, but on the CVB and
Chamber of Commerce, my concern would be some of those are kind of what I'll call fixed
or structural costs, you know, personnel running the Welcome Center, things that if they turn
the lights on, the electric bill is going to be the same regardless of people are coming
in or not, you know. So I'd kind of like to get some more, before we started talking about
pulling back from their budget, I'd really like to get some more granularity from them
on what are you, how are you spending, what are you spending? We know there's some kind
of intuitive savings from the COVID situation, but also what are you, what are you doing differently?
Like Randy said, you know, they're not, the Welcome Center wasn't open, they weren't,
they weren't advertising spaces, they weren't promoting Denton as the destination during
some of those times, but at the same time, maybe that industry, they stepped some things
up that they didn't necessarily do last year. Maybe they're advertising in two publications
instead of one for third quarter of the year, you know. So maybe just later in the summer,
we could get before the end of our fiscal year, before those September cut and hold
checks get cut, we can get an update on those big, those big ticket items. Would that be
okay? Yes, absolutely. Absolutely. I would love that.
Randy, it looks like you've got something to say.
I would just like to note of the Chamber CVB's $1.3 million budget, only $235,000 of that
is the Welcome Center. So we do, we do have that broken out and it's all salaries.
Okay, thank you. All salaries. Okay, sure. Thank you. Yeah. So maybe, yeah, so, yeah,
the next time this comes to us, when we see this, because we'll, I imagine, what is it,
did you say August, when it comes to July, August? I just threw those out, maybe late
August, early, late July, early August, because before the fair is what, mid August, so, or
early to mid August. We won't have their numbers back, but we'll maybe at least have another
month or two of revenue numbers under our belt and we'll know a little bit better what
we're looking at. Yeah, yeah, so that, yeah, that sounds good.
And so when that, when that time comes, I myself would love to see, in addition to the
slides like this, that these slides that just break everything down, like an Excel sheet,
a separate slide on CVB, Chamber of Commerce. I'm not saying don't include it in this list
of everything else, but also something else that really gives that a bit more attention,
the breakdown of that. Sure. Well, it sounds like Mayor Watts, did
you have something else to add? Yeah, just real quick. Help, remind me when
the committee will begin to look at allocations for the next budget year. When are we starting
to do that? Is that next month? Yes, we are a month behind, technically. We
usually do this in June, because our budget process goes along with the city. So I'm going
to put out the applications for HOT in sponsorship today. And they're going to be back the first
week of July, next week, July 16, when we should be making decisions and recommendations
on 2021. So in one month, I'll only have one more month of revenue to forecast and look
at for 2021. We'll have to turn that budget into a budget.
To me, that's going to be the real challenge. I mean, this is, you know, we're looking at
this just, to me, the line where it says we've got a fund balance of 1.4, that's sort of
worst case scenario unless somebody really spends a lot of money that they said they
weren't going to spend. If somehow the Chamber of Commerce or the CVB doesn't spend the 830
or the rodeo, which they will, that's the worst case scenario. The big challenge, and
I think we need to somehow include this in the applications that go out, is that there's
no way we're probably going to be able to, number one, do a very accurate forecast on
the next year's revenue. And number two, it's probably not going to be, even if we could,
it's going to be less than what we forecasted for this last year just because of everything
drawing out and especially with cases going up and all these kinds of things. So that's
going to be the challenges for these applicants to understand that even if they kept everything
the same, their whole budget the same as they did this last year, it's very likely that
we won't have the funds generated to be able to pay that is what my hunch is. But I could
be wrong, but I think that's a, I mean, I think that's a very realistic scenario. So
anyway, I want to just throw that out because next month will be a challenging discussion.
Absolutely. And then the flip side of that challenge, too, is a lot of these, this is
not the only revenue stream for a lot of these events. And there are other revenue streams
are going to be challenged as well. So they're going to be coming to us, we're going to say
there's less than the pot and they're going to say we need more from the pot than I did
last year. And we're just going to have to, we're just going to work that out. It's going
to be rough. Yes, Councilmember Armitage. Something that I've been thinking about and
please who's in charge, I guess that would be Mac, just tell me if I'm off topic and
then I'll put this in concluding remarks because this is something I planned on bringing up
in concluding remarks, which is the next item. And my feelings won't be hurt if it is off
topic. Would you, would you rather, I think, I think we're kind of at a stopping point
with this one. Would you rather that we just move off this agenda and call concluding items?
I'd rather just kind of put this out here first, just in case we could deliberate on,
just in case that's a possibility. And by the way, the two of you might not want to
in which case so, but I would be curious to know y'all's feedback on it if that's allowable.
And that is that, you know, because Hot Funds is all about hotel revenue and the hotel industry
is really struggling right now. And, you know, the amount of money that they bring in determines
everything for these funds. I would like to have the, you know, people from the hotel
industry or CVB, you know, people in CVB who are, who are focused on hotels, specifically
hotel and tourism and to come before us and to tell us what kinds of ideas they have about
new creative ways to bring in hotel revenue that could help, you know, amp up these funds.
I'm not off topic, Mac, are you sure? Yeah. I think you're getting close to the line or
maybe. Okay. So in which case then, my concluding remark will be really short. I'll just say
what I said. But anyway, I did want to throw that out there in case there is any chance
that to hear y'all's ideas on it. But I'm really curious to hear. I know that they're
thinking about it. And by the way, I'm not saying that that we that this is a matter
of like the city giving them money to do what they're talking about, but for us to hear
what they're thinking about, have that conversation. Okay. Well, real quick to wrap up this agenda
item and then come back on including items. Are there any other questions on kind of what
sounds like the consensus to hold Pat and see how things go and then revisit this conversation
in the late summer? Are there any other any other discussion or comment on that? Randy?
I just want to clarify a couple of things that I need to walk away with the aspect of
having some type of virtual expenses in the current year. If that is something we want
to consider because we have one that is attempting to do that. And once that is done, there are
others that may want to take that Avenue. So I need declaration on that. And then also
on the couple events, arts and jazz and Kiwanis that have spent funds for this year that are
going to be held over for next year that we can go ahead and accept that and let that
play out in an amended contract for next year. Have those let's let's do that last one first.
Have those groups said that's like I don't know how what the shelf life is a fireworks
or if it's a if it's a store credit with the with the vendor, you know, we didn't we didn't
pull those from your inventory. So we get them back. We can we can use them at a future
date. Have those groups all indicated that that's their preference that the an amended
contract to to allow the expenditures you're talking about or so far since they like for
arts and jazz, it's a deposit for musicians. And so if we pull that back, then they no
longer have the the artist or group set for the new date. So the deposit is holding those
groups or performances for them and they can do that. They've already said they could.
And so they've spent that money. They'd have to get the money back from the artist, pull
it back in and then refund it to us and Kiwanis is just paid an invoice. They get a discount
for paying in advance. I think they paid December of last year. So they don't actually have
the fireworks or anything done. They just pay the invoice in advance. So both of those
two entities that I know of are the main ones that are saying, you know, they'll hold it
over for next year. We just need to do on our end. But we need to do them in the contract
to allow them to do so. I think I find that deficit. So you kind of nodding your head
there, too. I mean, both of those sound pretty reasonable. Oh, yeah. Actually, to me, I mean,
those are my my dream answers. You know, number one, I was I'm glad you asked about that Castle
member Davis. I was worried about do we have an enormous building full of fire because
that's a lot of fireworks. So I was hoping that would be the answer. And, you know, how
can we if that's the case, how can we protect it? But yeah, so I'm really glad. And then
just knowing that this this money went to artists instead of for, you know, sunk cost
in advertising for an event that's not going to happen. And I'm not saying the artists
are just, you know, spend spend going and paying off their rent for an entire year with
those deposits. But that makes me feel really good to know that. So anyway, I'm glad to
hear both answers. And those are good questions. Thanks. Mayor, did you have anything on that?
No, I think if we can just carry that over. But I think we need to communicate to those
organizations that to fully expect that we expect that their contract ask next year will
be minus whatever funds that they've held over for this year and have spent for parts
of their event for the following year. And Randy, it looks like your other question
was the the virtual events and the events that are kind of shifting what they're doing
to a virtual event. My first thought there was if it's inside the contract that we that
we have with them. And that's, that's kind of an easy call. Are you saying that there
are some that would need a contract amendment because their budgets are very different?
Or, or just kind of generally, what's the committee's feeling about that? I think it's
a question of legality issue because of the the hot statute state, state the heads in
beds and promoting tourism. If you have an online event, you don't have any tourists
here or here to see that. So the the ones that are interested do have a budget already
for musicians or site operation types of things that they could expend on it. But they would
be spending on an event that was happening in person. And now they're they're trying
to move that so it's really about missing the target of the statute of the heads in
beds and promoting tourism. Can I give a lawyer answer? Maybe Matt can tell me how good it
is. Maybe there's a stretch in the statute, maybe it's not. But, you know, we give CBB
money, and they spend some of that money promoting Denton outside of Denton. Some of what they
do is advertising outside of Denton, sending personnel to trade shows, and marketing opportunities.
If we think of a virtual event as a marquee internet billboard for for Denton and for
Denton tourism, and then not to mention an event, let's say, you know, everybody knows
the arts and jazz festival is everybody knows what the blues festival is, people know about
our Juneteenth celebration. If those events take a hiatus, you know, you miss a year and
a big annual event, your attendance the next year may not be what it was the year before
the one you missed. So I think there's some interest in promoting tourism and continuity
of an event. Not to mention some of these events that can bring in, you know, headline
acts and a musician. Maybe that musician is playing from their basement or their garage.
But we're still saying in Denton, we rate the caliber of musician that is today playing
from their garage, but next year, come back and see him in person. Mack, would that get
us a little that kind of thinking get us a little closer to the statute?
It does. Yeah, initially, when the COVID thing was happening, and just starting, there was
some discussion about how these funds could be used throughout the state. A lot of cities
were wrestling with it. And that's kind of the one area where there was some justification
potentially to do some alternative funding with the hotel taxes is marketing specifically,
which is allowed under the statute. But yeah, we'd have to look at specifically what they're
planning to do and make sure that component of it's there, that the city actually is being
marketed and promoted during their virtual event. But yeah, that's the one way you might
be able to get there is through the marketing justification. Mayor, Councilmember Armenter?
Mayor, I think I saw your hand first. Do you have any heartburn about that?
Well, the only the only question I have is, if we make that policy decision, does that
substantially change the estimate for the funds not spent?
Right now, Juneteenth is the one that is promoting the the virtual event. And so they're only
estimating to need $5,000 out there, 21 to do that. So those are the only facts that
I know for virtual. I think others will consider it if things change. But if they can have
in person events, they're going to do that first.
Because didn't we really? Didn't our last agenda item sort of address that policy question
indirectly because they went to a virtual meeting and we said that they could just go
ahead and keep those funds for that virtual meeting? Is that it wasn't that decision sort
of applied in that? Or did I miss something there?
I don't recall the Friends of the Family event, the Friends of the Family, that sponsorship
funds, which don't have any restrictions. So on the Juneteenth virtual, because there
is going to be a Juneteenth in person. So I mean, it might be from a different group,
but yet. Yeah, okay. So that's really the only one you're talking about is the $5,000
for the Juneteenth. So far, yes, sir. And that won't change a contract amendment because
they have this the funds to spend on those things already. And they just won't be physical.
And so we can handle that within the staff. Yeah, okay. Are you okay with that Councilmember
Armitage? Yes, I think as I understand it, can you just repeat it in a nutshell exactly
what this means in terms of for the for funding? I think the if I can in Randy and Mac, tell
me if I'm off here. But the question was, does a virtual event meet the qualifications
for Hot Funds expenditures? The there's some wiggle room in the statute and how you interpret
or how you read it. And that if you consider a marketing, excuse me, if you consider a
virtual event, marketing for the city, then that's an allowable expenditure of Hot Funds.
And so even if you don't have people coming into town, going to hotels, that kind of stuff,
as long as the city sees it as a marketing tool, then that could qualify under Hot Funds.
And then the mayor's question got us to that we're talking, talking really about roughly
$5,000 is the are the funds in question. I guess the other possibility to though, with
the other groups Juneteenth is if the Parks Foundation made a decision that they were
going to become involved with the other groups event, they could still be within contract
to do that. But to date, we haven't seen that they're gonna that they're gonna do that.
Is that right? Correct. So far, they are not under the umbrella of the Parks Foundation,
the new in person event. And this is the first year doing it. So, you know, they might work
out a relationship. Okay, yeah, so excellent. And thank you. And I was just I was just want
to make sure we weren't making a commitment about how a specific, you know, group versus
another group could count their their virtual, you know, marketing, but it is just kind of
an across the board way of way of looking at it. So I completely agree. I think that's
great. You know, I wondered too about I'd be curious to know about what what kinds of
ideas that the hotel industry might have about how hotels could be used for virtual events.
I don't know if you, for instance, you know, if musical event where you have the, you know,
you have a band that's playing from the hotel. So that would be a way that are we are we
discussing the concluding items at this point? Oh, no, no. It's a little off. Yeah, okay.
So, but my point being that a virtual event could use hotel space in a way that that brings
in hotel revenue. It's what I'm saying. In other words, not putting heads on. Well, actually,
it could even be putting heads on beds. So with that, Mac, you know, if a virtual event
could be shown to use hotel space, contribute to hotel revenue, you know, with with with
that count with that help. Well, it certainly puts us in a better position if the hotel
is actually getting people to come in and use the hotel. If they're staying there, ideally,
that's that's like, that's the gold standard. We need people to be in our hotels. That's
the primary purpose. So yeah, anything along those lines would help. Yeah, but but does
like hotels used as event space? Even if people don't stay the night, that's that is still
hotel, hotel revenue, right? Or does the this hot funds? That's not occupancy revenue, right?
Okay. Yeah, okay. Mayor, I see your hand there. Do you have something? No, no, I'm just, I'm
just trying to keep the company. Yeah, I think we were all like, I'm just trying to, it sounds
like it was related to the concluding item request of additional revenue. I probably
didn't articulate it well enough. But yeah, I'm just trying to think about other ways
that virtual events could, you know, could could fall under that the description of the
legal description of hot funds and hotel revenue heads on beds. But you're right. So specifically,
occupancy means occupying rooms overnight, right? Randy, are there any other unresolved
issues we need to talk about in this conversation? I don't think so. Okay. Well, then that concludes,
I think we don't need a motion for that. This is all kind of direction, correct? Yes. That
concludes this agenda item. Our final agenda item is number two, concluding items. Councilmember
Armenter, if I'm articulating this correct, you'd like to hear a report of some kind from
CVB or the hotel industry about kind of how they see things unfolding from here and the kind of
things that we could partner, partner with them on to put their industry in a better position
going forward from the COVID crisis. Is that? Yes. Yeah. You know, and I would throw in the word
creative and the word brainstorming, you know, so kind of for them to be asked, you know, what
creative new ideas do you have? What brainstorming have you done about
ways to bring in more hotel revenue, hotel occupancy expenses, tax revenue,
that in the pre-COVID economy wasn't even something you would think about, you know?
And I would be really surprised if we hear, oh, we haven't really given any thought to that.
I'm sure people are spending every, you know, are losing sleep over that and people can get really
creative in a crunch. So I would just love to know what all those ideas are. And I would also throw
in the word obstacles too. I'd like to know from them, like what obstacles exist to, if any, to
these different ways of conceiving, bringing in hotel occupancy tax and yeah, how can we, how can
we help with that? Good deal. Randy, did you catch that? Yes, sir. Good. Any other concluding items?
All right. With that, I think we've exhausted our agenda and I thank y'all so much for the
work going into this and we'll see you the next time. Thank you. Thank you. Thanks.