Part of the city’s annual budget cycle is carving up the hotel occupancy tax pie, and those discussions began in August and will continue this month.
Assistant City Manager Manuel Chavez reviewed the proposed hotel occupancy tax (HOT) fund distributions for Fiscal Year 2020-2019 with the council during its Aug. 4 special meeting. The 2020-2021 Fiscal Year begins Oct. 1 and ends Sept. 20, 2021.
First, Chavez went over the HOT funds distribution in the current year’s budget.
“We started off the fiscal year by estimating $750,000 that we would receive in HOT funds. Obviously, when the COVID-19 hit, there was an effect on the HOT funds, and currently, we are estimating projected HOT funds revenue at the end of the fiscal year to be around $650,000,” Chavez said.
In a memorandum included in the council members’ information packet, Chavez noted the Del Rio Convention & Visitors Bureau had been slated to receive 35 percent of the HOT funds collected for the current year, an estimated $262,500.
The Del Rio Hispanic Chamber of Commerce was slated to receive 10 percent of the HOT funds collected during the 2019-2020 Fiscal Year, which runs from Oct. 1, 2019 to Sept. 30, 2020. That amount was estimated to total $75,000.
The other local organizations and the amounts they were to receive in the current fiscal year included the Whitehead Memorial Museum, $50,000; Shumla School, $21,000; Laughlin Heritage Foundation, $12,850; Brown Plaza Association, $15,000; Casa De La Cultura, $58,500; and Del Rio Council for the Arts, $47,000.
Also to be paid from the anticipated HOT fund revenues was a $154,441 transfer to the civic center fund and $47,000 to the HOT Fund Committee, which the city set up to hear one-time payment requests from individual organizations for specific events.
Chavez noted the organizations that had received HOT funds from the city got 50 percent of their annual budgeted disbursements on Nov. 21, 2019. That amount, Chavez said, covered the period from October 2019 to March 2019. The next HOT fund disbursement to the organizations was made April 9, which was to cover the organizations through May.
The final disbursements were made on July 31 and were to cover the organizations through the end of the fiscal year on Sept. 30, Chavez said.
In his memo, Chavez also noted each of the organizations was asked if the organization needed the full amount of the remaining HOT funds allocated to them.
All of the organizations said the budgeted funds were needed, with the exception of the Casa De La Cultura and the Del Rio Council for the Arts, whose representatives said most events planned through the end of 2020 had already been canceled.
Chavez said all of the organizations have submitted monthly reports through June 2020, which include monthly bank statements, copies of receipts and revenue/expense reports.
Each of the agencies requesting funding in 2020-2021 has submitted a new application for HOT funds, Chavez said. He also noted each agency has met with city staff and made a presentation about their organization and the work it has accomplished using the HOT funds provided by the city.
The presentations were made to a city committee approved by the council in June and comprised of Mayor Bruno “Ralphy” Lozano, Councilman Raul C. Ojeda, City Manager Matt Wojnowski, Finance Director Alberta S. Barrett and Chavez.
Chavez then presented the council with the recommendations for funding distributions for the 2020-2021 Fiscal Year. He said those recommendations had previously been shared with the agencies requesting funding.
“There is one requirement, and that is the promotion and advertisement of the city and tourism that we do have to fund one-seventh of the HOT funds that are received annually. And based, on, as of right now, we are estimating a revenue of $700,000 for Fiscal Year 2020-2021. With that, one-seventh amounts to $100,000. Again, that’s the only requirement that the city has to fulfill,” Chavez said.
He also noted the city is limited to disburse only 15 percent of HOT fund receipts under the arts category.
In his memo, Chavez wrote, “Based on all these factors, the (HOT funds) committee was able to recommend an amount close to what the agencies requested with the exception of one. In regards to the contracted advertising HOT fund dollars, the committee is recommending that the usual 45 percent that is set aside for the advertising and conducting solicitations and promotional programs to attract tourists and convention delegates be split between the Del Rio Convention & Visitors Bureau and the Del Rio Hispanic Chamber of Commerce.”
He noted the committee recommended the Del Rio Convention & Visitors Bureau and the Del Rio Hispanic Chamber work together to have one plan to promote the city, adding the Del Rio Convention & Visitors Bureau could still request funding for promotion of specific events throughout the year through the city’s standing HOT Funds Committee.
Chavez said the recommended change would lower the convention and visitors bureau percentage from the 35 percent it had received this year to 25 percent, or $175,000, and increase the Del Rio Hispanic Chamber’s percentage from 10 percent to 20 percent, or $140,000.
He said the Del Rio Convention & Visitors Bureau has appealed the recommendation.
Chavez also told the council members none of the eight organizations being allocated city HOT funds are receiving HOT funds from the county.
Chavez said the committee was also recommending a different split in the HOT funding for the arts organizations, with a recommendation for the Casa De La Cultura to receive $62,500 and the Del Rio Council for the Arts to receive $35,000. The Brown Plaza Association should receive $7,500 from the arts portion of the HOT funding and the remainder of its annual monies from the city from the historical portion of the HOT funding.
The final approval of the recommendations for funding will be made at the council’s Sept. 8 meeting, Chavez said.
Councilwoman Diana Bejarano Salgado asked how the committee had decided on the recommended split between the Del Rio Convention & Visitors Bureau and the Del Rio Hispanic Chamber.
“For me, the Hispanic Chamber of Commerce has always been struggling. If you’ll recall, they came to us asking for a facility. They were kind of homeless for awhile, and they’ve never had an opportunity to fully function to their full potential, and we thought this was an opportune time, with the information they presented to us ... to reinvigorate and reimagine the city’s perspective on how to manage social distancing and virtual events,” Lozano replied.
Salgado also asked if the Hispanic chamber has established its own visitors bureau.
Lozano said that question could be asked of Hispanic chamber officials when they made their presentation to the council.
Councilman Jim DeReus said he would hold his questions until after the Hispanic chamber made its presentation, saying he had similar questions about the rationale behind changing the funding for the two organizations.
DeReus asked Chavez if any of the groups had even applied to the county to receive HOT funds.
Chavez said he did not know.
“The county’s collecting HOT funds just like we are and the benefits these groups provide is not solely for the city, so I think we need to stress that’s another source of funding for these groups, and groups have to look for every possible funding source,” DeReus said.
Councilman Alfredo “Fred” Carranza Jr. worried aloud about “the hit” the Del Rio Convention & Visitors Bureau was taking from the decrease in tourists because of COVID-19 and the addition of a deep cut in funding from the city.
“There’s some concerns there, but I think we need to get all of the information before we can make a final decision,” Carranza said.