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Board of County Commissioners Page 2 of 6 May 28, 2014 FUNDING & ALLOCATION PROCESS Indian River County levies tourist development taxes totaling four (4) percent on transient rental transactions. The first three percent is divided equally between tourism promotion activities and beach renourishment. The fourth cent was levied to service debt associated with the acquisition of Dodgertown in 2001. The 1-1/2% dedicated for the promotion of tourist activity is allocated each year based upon recommendations of the Tourist Development Council. Staff proposed a funding level of $741,650 for Tourism Development for fiscal year 2014/2015. In accordance with the County's Lease Agreement with Historic Dodgertown, funding in the amount of $75,000 is budgeted from the Tourist Development Tax to pay costs associated with Historic Dodgertown's promotion of tourism in the County. This leaves a funding level of $666,650 for tourism development agencies for fiscal year 2014/2015, an increase of $13,337 from the current year. It should be noted that the funding level recommended by staff is available due to the planned use of $70,000 of Tourist Tax Fund Balance next fiscal year. This is a decrease from the planned use of $87,438 during the current year. During the economic downturn, the use of fund balance has been recommended to avoid significantly reducing tourism promotion activities which would have the impact of further reducing tourism. However, in order to use this mechanism, additional fund balance needs to be accumulated during better economic times. While the County's overall economy—much like the national economy—has seen a relatively tepid level of growth, the tourism sector has seen relatively robust growth. Tourist tax revenues have been growing for five years, and current collections are up by about 45% from the low point in 2009. At this point staff recommends that the County phase out the use of fund balance for tourism promotion activities in order to ensure sufficient funds that may be needed for the next economic downturn. Each year, the Tourist Development Council reviews requests from agencies interested in providing tourism promotion activities for the County in accordance with Chapter 125.0104, Florida Statutes. The Board of Commissioners approved a policy on March 4, 2003, granting 70% of the tourism development dollars to the Chambers of Commerce as the "Designated Tourist Bureau." The remaining funds are distributed to other agencies in accordance with the rating process as approved by the Board of Commissioners. This rating process operates in a similar manner to various State grants programs, whereby the applications receiving the highest point total are funded on a priority basis. If funding is available, the highest ranked application is fully funded. Then, if funds remain, the second highest ranked application is funded. This process continues until all available funds are exhausted. 95