Board of Directors Regular Meeting Agenda


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Meeting Date: 02/26/2014  

SUBJECT MATTER:
Receive, consider and act upon the service agreement between The Woodlands Convention & Visitors Bureau and The Woodlands Township regarding the carryover of surplus funds;
FISCAL IMPACT:
To be determined
BACKGROUND:
At its January 22, 2014 meeting, the Board of Directors requested a review of the Service Agreement between The Woodlands Township and The Woodlands Convention & Visitors Bureau (CVB). Specifically, the Board wanted to review Section III of the agreement, which outlines the Township’s funding requirements to the CVB. The agreement, approved by the Board in November 2013, is attached for reference.

In exchange for services provided to the Township by the CVB (as outlined in Section I), the Township generally agrees to provide funding to the CVB to the extent that CVB’s other revenue sources are not sufficient to cover budgeted expenditures. CVB’s other revenue sources include a 2% hotel occupancy tax, sponsorships, sales income from the ice rink, and revenues associated with the Waterway Cruisers. Based on a 2014 CVB operating expenditure budget of $3,438,509, CVB’s funding sources are as follows:

Revenue Source 2014 Budget % of Total
Supplemental Hotel Occupancy Tax
 
$1,539,382
 
44.8%
 
Sponsorships      312,500  
   9.1%
 
Waterway Cruisers      268,920  
   7.8%
 
Ice Rink Sales      200,500
   5.8%
 
Transfer from Township    1,117,227   32.5%

Total

 
$3,438,509

 
100.0%

 
Because the Township’s annual funding to the CVB is based on CVB’s budgeted expenditures rather than actual expenses incurred, the Township is obligated to fund the full $1,117,227 shown above even if the CVB does not fully spend its entire budget of $3,438,509. The only exception is for salary, benefit and facility expenses, which the agreement states shall be reimbursed by the Township based on actual costs incurred. Because CVB’s actual expenditures have been less than its annual budget, the CVB has generated revenues in excess of expenditures on an annual basis. These accumulated surplus funds have produced an undesignated fund balance for CVB equal to $644,854 at the end of December 2013. This fund balance is separate from the fund balance carried by the CVB related to the Waterway Cruiser program ($181,907 at 12/31/2013).

As originally discussed by the Township and CVB Boards, the purpose of building a fund balance from favorable budget variances was to provide future funding for a capital project such as a performance stage or other similar opportunity that supports CVB objectives. To date, no surplus funding has been spent.

RECOMMENDATION:
To be determined by the Board.
Attachments
CVB Agreement


    

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