Chief
06-03-2008, 04:48 PM
Via E-mail. This is in answer to the constant drumbeat of Urban Legends that continue to build about the Vancouver Hilton. This appears to be an executive summary, but it answers a lot of the spurious questions (and allegations) that CAVE members make on a regular basis.
To be honest, I have labored under some of these mistaken notions as well. Please read this document in it's entirety, as it has a great deal of very interesting information.
Date: 30 May 2008
Hotel/Convention Center Operations in 2007
The year 2007 marked the second full year of operations for the facility. More than 114,000 people attended 1,360 events at the Convention Center during the year. The Hotel/Convention Center generated revenues of over $13 million in 2007 – an 8% increase over 2006’s total revenue of about $12 million. Net income in 2007 was approximately $2.2 million – a 30% increase over 2006’s net income of about $1.7 million. The 2008 budget projects continued growth in both revenues and profits over 2007.
The Hotel/Convention Center employs 212 people, of which about 188 or 89% live here in Vancouver/Clark County. Total payroll costs in 2007 were about $5.7 million - a significant monetary injection into the local economy. In addition, the Hotel/Convention Center is securing goods and services from local vendors for its operations. During 2007, $1.7 million was spent with vendors within Washington State. Of that amount, $927,000 or 55% was spent within Vancouver and the broader Clark County area – another injection into the local economy.
With the addition of the Hotel/Convention Center into the Vancouver lodging market, local market studies show that the competitive set of hotels in Vancouver has fared well, with occupancy in the local market remaining stable and room rates increasing year over year. Using the Convention and Visitors Bureau monetary assumption that the average guest for the hotel has a daily expenditure for the local economy of $311 per day, the Hotel occupancy had an estimated economic impact in this community of approximately $17 million during 2007.
During the course of 2007, the Hotel/Convention Center hosted 22 Vancouver based and focused non-profit events under the Community Events Policy, compared to 18 similar events in 2006. Under this policy, events are done on an at-cost basis, which provides a direct, positive impact to the community via the respective charities. The Hotel also contributed to other charitable organizations via gift certificates - used in charitable fund raising efforts throughout the community - for either the restaurant or for guest rooms.
More about the Hotel/Convention Center
The Vancouver Hilton Hotel & Convention Center opened on June 15, 2005. The facilities include a 226 room hotel, a full-service business center, Gray’s at the Park Restaurant – an American Bistro, a fitness center with indoor pool, and 30,000 sq. ft. of function space in two ballrooms and nine meeting rooms.
The Hotel/Convention Center is managed by the Hilton Corporation. Hilton has no ownership interest in the facilities. Hilton manages the facilities on a fixed fee basis. In future years, Hilton would be entitled to an additional fee based on the facility’s performance.
The Hotel/Convention Center is the first LEED certified hotel in the Hilton chain. The facility’s LEED certification – Leadership in Energy and Environmental Design – obtained in 2006, has garnered nationwide media attention and demonstrates the successful combination of stylish design and environmental sustainability. This media coverage focuses as much on Vancouver as it does on the Hotel/Convention Center – an important issue for the identity of Vancouver as a destination.
In 2007, the Hotel implemented an Environmental Management Program that furthered their efforts toward sustainable operations. Through this program the Hotel planned to obtain Green Seal Certification which would speak directly to the green/sustainable operations of the property. This program includes composting items such as food and other materials, the baling and re-selling of cardboard, the recycling of paper, glass, plastic and other materials. The Hotel became the first in the world with both LEED and Green Seal certifications when it received certification from Green Seal in May 2008.
Hilton is in the process of negotiating a collective bargaining agreement with the HERE Local #9, the Hotel Employees & Restaurant Employees union. Negotiations with the union commenced in October 2006 and are ongoing.
Additional Information
The Hotel/Convention Center is leased by the Downtown Redevelopment Authority (DRA) from the Vancouver Public Facilities District (PFD) which owns the property. The DRA is a special purpose governmental entity established in 1997 by the City under RCW 35.21.730-757. The DRA is governed by a seven-member Board of Directors appointed by City Council. The DRA Board approves the annual budget for the Hotel/Convention Center. The DRA employs an asset management firm - a specialist in lodging and convention facilities – to monitor the operations of the Hotel/Convention Center and to advise the DRA Board on operational, financial, and budgetary issues. The PFD is a municipal corporation existing under Chapter 35.57 RCW and chartered by the Vancouver City Council. The five members of the PFD Board of Directors are also appointed by the City Council.
The DRA issued bonds in 2003 to finance the construction of the facilities. The City has a 4% lodging tax and dedicates one-half of the lodging tax revenue (a special 2% lodging tax) to the project and for the repayment of the bonds. By law, this revenue stream can only be used for tourism-related activities. The State, through City and County Public Facilities Districts, effectively provides 0.033% of State sales tax revenues to the project and for the repayment of the bonds. By law, this State revenue, in the form of a sales tax credit, must also be used for this type of regional facility. The bonds are paid from these tax revenues and from Hotel operating revenues. To date, all debt payments on the DRA bonds have been paid in full and on time as scheduled.
Beyond the revenue sources noted above, the City has a limited contingent payment obligation on the bonds if tax and hotel operation revenues fall below a specified amount on an annual basis. To date, the City has not come close to being required to make payments under this contingent obligation.
Frequently Asked Questions Regarding Tax Revenue Support of the Facility:
Are city general fund revenues used to support the ongoing operations of the hotel/convention center project?
No. City general fund revenues are not used to support the ongoing operations of the hotel/convention center project.
Are tax revenues outside of the City’s general fund used to support the hotel/convention center project?
Yes. The tax revenues come from two sources: lodging taxes, and state sales tax credits.
Can lodging tax revenues and the state sales tax credits be used to hire police officers or firefighters, or to build roads and parks?
No. Lodging tax revenues and state sales tax credits are restricted-use funds and can only be used for very specific purposes. They cannot be used for general governmental purposes like public safety, transportation, or parks.
Who pays the lodging tax and how are the revenues used?
Anyone that stays in a hotel within the city limits pays a 4% lodging tax as part of the hotel bill. The lodging tax revenue received by the City can only be used for tourism and related activities, such as convention centers. One-half of the lodging tax revenue generated within Vancouver is committed to the hotel/convention center, and the other half is utilized to foster local tourism events.
The revenue cannot be used for general governmental purposes such as public safety, transportation, or parks.
What is the state sales tax credit and how is it used?
In 1999, the state legislature authorized public facilities districts to impose a sales and use tax of 0.033 percent to be used for “regional centers” such as convention centers (RCW 82.14.390). This is not an additional tax but rather a pre-existing tax imposed by the State and distributed back to the local level for “regional centers”.
Most of the sales tax revenue that is charged locally on retail sales goes to the State’s general fund for State general governmental purposes. A small portion remains at the local level for City, County and C-Tran purposes. Under the state sales tax credit program, 0.033 percent of the State’s sales tax revenue is allowed to be used on the local level to support “regional centers” such as the City’s convention center. The funds cannot be used for any other purpose. The revenue cannot be used for general governmental purposes such as public safety, transportation, or parks. Essentially, this is a new source of revenue coming from the State to be used on the local level for a very specific purpose – the convention center.
What is the total amount of City lodging taxes and state sales tax credits dedicated to the hotel/convention center for 2008?
$1.8 million is committed from these two revenue sources for the hotel/convention center in 2008. However, projections indicate that revenues available from these two sources will be well in excess of $2.0 million, as they have been since the hotel/convention center opened in June 2005.
Is the City of Vancouver contributing any other tax revenues to support the hotel/convention center project besides sales tax credits from the State and a portion of the City’s lodging tax revenue?
No.
Does the City have any other obligations to support the hotel/convention center?
Yes. The City has a limited, contingent obligation to assist in paying debt service on the bonds used to build the hotel/convention center, but only in extraordinary circumstances. The hotel/convention center opened in June of 2005 and to date, no payments have been made by the City to the hotel/convention center under this limited, contingent obligation.
To be honest, I have labored under some of these mistaken notions as well. Please read this document in it's entirety, as it has a great deal of very interesting information.
Date: 30 May 2008
Hotel/Convention Center Operations in 2007
The year 2007 marked the second full year of operations for the facility. More than 114,000 people attended 1,360 events at the Convention Center during the year. The Hotel/Convention Center generated revenues of over $13 million in 2007 – an 8% increase over 2006’s total revenue of about $12 million. Net income in 2007 was approximately $2.2 million – a 30% increase over 2006’s net income of about $1.7 million. The 2008 budget projects continued growth in both revenues and profits over 2007.
The Hotel/Convention Center employs 212 people, of which about 188 or 89% live here in Vancouver/Clark County. Total payroll costs in 2007 were about $5.7 million - a significant monetary injection into the local economy. In addition, the Hotel/Convention Center is securing goods and services from local vendors for its operations. During 2007, $1.7 million was spent with vendors within Washington State. Of that amount, $927,000 or 55% was spent within Vancouver and the broader Clark County area – another injection into the local economy.
With the addition of the Hotel/Convention Center into the Vancouver lodging market, local market studies show that the competitive set of hotels in Vancouver has fared well, with occupancy in the local market remaining stable and room rates increasing year over year. Using the Convention and Visitors Bureau monetary assumption that the average guest for the hotel has a daily expenditure for the local economy of $311 per day, the Hotel occupancy had an estimated economic impact in this community of approximately $17 million during 2007.
During the course of 2007, the Hotel/Convention Center hosted 22 Vancouver based and focused non-profit events under the Community Events Policy, compared to 18 similar events in 2006. Under this policy, events are done on an at-cost basis, which provides a direct, positive impact to the community via the respective charities. The Hotel also contributed to other charitable organizations via gift certificates - used in charitable fund raising efforts throughout the community - for either the restaurant or for guest rooms.
More about the Hotel/Convention Center
The Vancouver Hilton Hotel & Convention Center opened on June 15, 2005. The facilities include a 226 room hotel, a full-service business center, Gray’s at the Park Restaurant – an American Bistro, a fitness center with indoor pool, and 30,000 sq. ft. of function space in two ballrooms and nine meeting rooms.
The Hotel/Convention Center is managed by the Hilton Corporation. Hilton has no ownership interest in the facilities. Hilton manages the facilities on a fixed fee basis. In future years, Hilton would be entitled to an additional fee based on the facility’s performance.
The Hotel/Convention Center is the first LEED certified hotel in the Hilton chain. The facility’s LEED certification – Leadership in Energy and Environmental Design – obtained in 2006, has garnered nationwide media attention and demonstrates the successful combination of stylish design and environmental sustainability. This media coverage focuses as much on Vancouver as it does on the Hotel/Convention Center – an important issue for the identity of Vancouver as a destination.
In 2007, the Hotel implemented an Environmental Management Program that furthered their efforts toward sustainable operations. Through this program the Hotel planned to obtain Green Seal Certification which would speak directly to the green/sustainable operations of the property. This program includes composting items such as food and other materials, the baling and re-selling of cardboard, the recycling of paper, glass, plastic and other materials. The Hotel became the first in the world with both LEED and Green Seal certifications when it received certification from Green Seal in May 2008.
Hilton is in the process of negotiating a collective bargaining agreement with the HERE Local #9, the Hotel Employees & Restaurant Employees union. Negotiations with the union commenced in October 2006 and are ongoing.
Additional Information
The Hotel/Convention Center is leased by the Downtown Redevelopment Authority (DRA) from the Vancouver Public Facilities District (PFD) which owns the property. The DRA is a special purpose governmental entity established in 1997 by the City under RCW 35.21.730-757. The DRA is governed by a seven-member Board of Directors appointed by City Council. The DRA Board approves the annual budget for the Hotel/Convention Center. The DRA employs an asset management firm - a specialist in lodging and convention facilities – to monitor the operations of the Hotel/Convention Center and to advise the DRA Board on operational, financial, and budgetary issues. The PFD is a municipal corporation existing under Chapter 35.57 RCW and chartered by the Vancouver City Council. The five members of the PFD Board of Directors are also appointed by the City Council.
The DRA issued bonds in 2003 to finance the construction of the facilities. The City has a 4% lodging tax and dedicates one-half of the lodging tax revenue (a special 2% lodging tax) to the project and for the repayment of the bonds. By law, this revenue stream can only be used for tourism-related activities. The State, through City and County Public Facilities Districts, effectively provides 0.033% of State sales tax revenues to the project and for the repayment of the bonds. By law, this State revenue, in the form of a sales tax credit, must also be used for this type of regional facility. The bonds are paid from these tax revenues and from Hotel operating revenues. To date, all debt payments on the DRA bonds have been paid in full and on time as scheduled.
Beyond the revenue sources noted above, the City has a limited contingent payment obligation on the bonds if tax and hotel operation revenues fall below a specified amount on an annual basis. To date, the City has not come close to being required to make payments under this contingent obligation.
Frequently Asked Questions Regarding Tax Revenue Support of the Facility:
Are city general fund revenues used to support the ongoing operations of the hotel/convention center project?
No. City general fund revenues are not used to support the ongoing operations of the hotel/convention center project.
Are tax revenues outside of the City’s general fund used to support the hotel/convention center project?
Yes. The tax revenues come from two sources: lodging taxes, and state sales tax credits.
Can lodging tax revenues and the state sales tax credits be used to hire police officers or firefighters, or to build roads and parks?
No. Lodging tax revenues and state sales tax credits are restricted-use funds and can only be used for very specific purposes. They cannot be used for general governmental purposes like public safety, transportation, or parks.
Who pays the lodging tax and how are the revenues used?
Anyone that stays in a hotel within the city limits pays a 4% lodging tax as part of the hotel bill. The lodging tax revenue received by the City can only be used for tourism and related activities, such as convention centers. One-half of the lodging tax revenue generated within Vancouver is committed to the hotel/convention center, and the other half is utilized to foster local tourism events.
The revenue cannot be used for general governmental purposes such as public safety, transportation, or parks.
What is the state sales tax credit and how is it used?
In 1999, the state legislature authorized public facilities districts to impose a sales and use tax of 0.033 percent to be used for “regional centers” such as convention centers (RCW 82.14.390). This is not an additional tax but rather a pre-existing tax imposed by the State and distributed back to the local level for “regional centers”.
Most of the sales tax revenue that is charged locally on retail sales goes to the State’s general fund for State general governmental purposes. A small portion remains at the local level for City, County and C-Tran purposes. Under the state sales tax credit program, 0.033 percent of the State’s sales tax revenue is allowed to be used on the local level to support “regional centers” such as the City’s convention center. The funds cannot be used for any other purpose. The revenue cannot be used for general governmental purposes such as public safety, transportation, or parks. Essentially, this is a new source of revenue coming from the State to be used on the local level for a very specific purpose – the convention center.
What is the total amount of City lodging taxes and state sales tax credits dedicated to the hotel/convention center for 2008?
$1.8 million is committed from these two revenue sources for the hotel/convention center in 2008. However, projections indicate that revenues available from these two sources will be well in excess of $2.0 million, as they have been since the hotel/convention center opened in June 2005.
Is the City of Vancouver contributing any other tax revenues to support the hotel/convention center project besides sales tax credits from the State and a portion of the City’s lodging tax revenue?
No.
Does the City have any other obligations to support the hotel/convention center?
Yes. The City has a limited, contingent obligation to assist in paying debt service on the bonds used to build the hotel/convention center, but only in extraordinary circumstances. The hotel/convention center opened in June of 2005 and to date, no payments have been made by the City to the hotel/convention center under this limited, contingent obligation.