ORANGE COUNTY MAYOR Jerry L. Demings P.O, BOX 1393, 201 SOUTH ROSALIND AVENUE, ORLANDO, FL 32802-1393 PHONE: 407-836-7370 « FAX: 407-836-7360 « EMAIL: MAYOR@OCFL.NET August 18, 2023 TO: Commissioner Nicole Wilson, District 1 Commissioner Christine Moore, District 2 Commissioner Mayra Uribe, District 3 Commissioner Maribel Gomez Cordero, District 4 Commissioner Emily Bonilla District 5 Commissioner Michael Scott, District 6 FROM: Mayor Jerry L. Demings Ae SUBJ: ‘Tourist Development Tax Projects Funding Proposal ‘Commissioners, by now you have received the supplemental information provided by the large entities that submitted funding requests for consideration to the Tourist Development Tax Citizen Advisory Task Force (TDT Task Force), and you have received Comptroller Phil Diamond's memorandum regarding his financial outlook and considerations in projecting available Tourist Development Tax (TDT) capacity. County staff will provide the draft PowerPoint presentation for the work session, which will include the history of TDT financings, key provisions associated with issuing debt and potential available cash flow for future TDT. This information is in addition to the extensive work performed by the TDT Task Force and the significant amount of information and documentation that was presented to you by the TOT Task Force, consultant, and staff at the July 25 Board of County of Commission meeting. | remain committed to honoring the recommendations of the TDT Task Force. Their input is the basis for this correspondence. With this substantial amount of data, my hope is that the Board of County Commissioners (Board) will be prepared to make decisions on August 22, 2023, regarding future commitments of TDT for eligible projects. | am providing my proposal for use of the available funds, based on the analysis conducted by Comptroller Diamond, our financing team, and the work of the TDT Task Force, to help facilitate a focused and deliberate Board discussion next Tuesday. As you have seen, the Comptroller's very conservative estimate is a range of approximately $800 million to $900 million that will be available for bonding TDT eligible projects at this time (and please note the significance of “at this time’, which | will elaborate later in this memo). County staff and our financial advisor concur that a reasonable and still conservative debt capacity amount to use for now is $900 million with our minor tweak of assuming a 30-year term. While many of us, and especially those entities seeking funding, had hoped that the debt capacity amount would be much higher allowing us to meet all the current requests, the prudent decision is to work within the debt capacity amount provided by the Comptroller and County staff in this initial decision phase. The good news is that the financing process, timing, andTourist Development Tax Projects Funding Proposal Memo August 18, 2023, Page 2 of 4 projected revenue stream does allow us to make some immediate investments towards arts and culture. Before | address the large projects, | want to reiterate my commitment to the arts and the positive impact they have on our community. Within the TDT funds available to us, we have the financial capability to accomplish most of what the TDT Task Force recommended for the Application Review Committee (ARC) and Arts and Cultural Affairs grant programs. After accounting for debt service on bonds, the financial analysis estimates between $20 million to $30 million available each year above the amount required to maintain the $300 million reserve stabilization floor, ARC is the primary source of funding for arts-related capital and special event funding. | suggest we provide ARC with $15 million annually from FY2024-FY2028 for a total investment of $75 million towards community arts and cultural facilities and special events. For Arts & Cultural Affairs, we can increase the funding structure to 5% of the 1* through 4" cents of TDT, and we can add $500,000 in annual fixed funding to increase the Venue Subsidy Program over the next § years. This will result in an approximately $5.5 million increase in our support to Arts & Cultural Affairs, With the increase in ARC and Arts & Cultural Affairs funding, the Board can expand criteria to enhance opportunities to fund geographically dispersed projects, community theaters in partnership with local arts organizations, amphitheaters, and events in all portions of unincorporated Orange County. As you recall, the Greater Orlando Sports Commission requested an additional $440,660.50 per year for operating funds, and an additional $6 million per year for the Sports Incentive Fund. The TDT Task Force supported this request. | am proposing the County allocate the additional operating funds, $440.660.50/year, from our TDT revenue, and we have VisitOrtando provide the additional $6 million/year for the Sports Incentive Fund out of the existing funding VisitOrlando already receives from the County, i.e., there would be no need for an additional allocation of TDT funds from the County's TDT cash flow. | am supportive of the project prioritization and recommendation of the Task Force and consider completion of the Orange County Convention Center (OCCC) project as my priority. As you know, the Board previously approved this project, and but for the pandemic, it would be nearing completion. | made the necessary decision to halt all work on the Convention Center in 2020. The project was in final design at the time, and the Board had selected and awarded a contract to a Construction Management team to build the facility. OCCC has demonstrated that the benefits of building Phase 5A are stil relevant in this post- pandemic period. The project will provide substantial economic benefit to this community, creating jobs, bringing in visitors from outside of the region and start to infuse new dollars into our local economy, achieving a notable return on investment, However, the revised estimate for the entire project is now in the $825 million to $900 million range. Thus, essentially it wouldTourist Development Tax Projects Funding Proposal Memo ‘August 18, 2023 Page 3 of 4 require all the available debt capacity the Comptroller estimates will be available at this time. Accordingly, | propose proceeding with just onestage of the project for now, Project 5A (the Ballroom/Meeting Space/Concourse Connection). Project 5A has an estimated cost of approximately $500 million. We will monitor the performance of TDT revenue over the next few years and if funds become available, the Board of County Commissioners may reconsider ‘completion of Project 5B at OCC. The project with the next highest ranking by the Task Force is Camping World Stadium, The ‘Supplemental Information Form provided by Florida Citrus Sports (FCS) shows the estimated amount to complete the “original vision’, ie., replacing the upper terrace decks and add a 100,000 square foot fieldhouse at $400 million. Adding a canopy/oof would require an additional $400 million. | propose allocating $400 million for Camping World Stadium’s upper terrace deck and fieldhouse project. The economic impact and job creation data is shown in the supplemental information packet. Proceeding immediately with these two projects, project 5A of the Orange County Convention Center at an estimated cost of $500 million and Camping World Stadium upper terrace decks/fieldhouse at an estimated cost of $400 million, commits the debt capacity amount the Comptroller currently estimates may be available. Also, this proposal still enables us to immediately make a strong commitment to the arts by providing $15 million a year over the next 5 years for ARC and an additional $5.5 million to Arts & Cultural Affairs. IF TDT revenue outperforms the current projections, we can commit a certain amount of annual DT revenue beyond what we need for debt service and the arts funding described above, to the University of Central Florida (UCF) for the football stadium tower project they prioritized in their Supplemental Information Form, to assist with its cost. | will task the Fiscal and Business Services Office to run an analysis to determine the financial viability of this option, ie., what would be appropriate thresholds, how much might be generated on an annual basis, etc. In essence, UCF would receive whatever excess amount materializes within a set threshold for a period of time necessary to reach the targeted amount. As you may know, the Amway Center is funded from the 6" cent, of TDT, and by State Statute, this source can only be used for marketing and a facility that houses a professional sports team. It is the funding source the County made available to the City of Orlando (City) In the 2007 Community Venues agreement. Currently, 50% of the revenue from the 6" cent of TOT revenue goes to the City of Orlando and 50% goes to Visit Orlando. Once the City retires all debt associated with the 6" cent, remaining funds can only be used for marketing, Le., it cannot benefit any other projects we are considering, nor can it be used for arts. One option is to extend the number of years we make the 6" penny available to the City, which will provide sufficient revenue for Amway Center improvements.Tourist Development Tax Projects Funding Proposal Memo August 18, 2023 Page 4 of 4 The City of Orlando would be responsible for issuing, or reissuing, any debt associated with the project. We can limit the allowable uses, as well as the maximum amount of revenue the City of Orlando can utiize from the extension of the 6" cent of TDT. It has no effect on the debt capacity analysis and removes Amway Center from competing with the other project requests. However, this offer to extend the 6" cent will be contingent on the City of Orlando and/or the Orlando Magic contributing a meaningful amount to the Amway Center project as well. The County would not cover the full amount requested and will negotiate an agreement with the City of Orlando on the appropriate share of funding. Fred Winterkamp will be prepared to detail the concept of extending the 6" cent for this project at Tuesday's work session. In closing, | believe this proposed use of available TDT funding, for TDT eligible projects, maximizes economic benefit, job creation and return on investment. | am deliberately spreading the dollars to several projects, recognizing this may cause some discomfort in how those applicants sought to deliver their projects, especially our OCCC. However, this allows us to keep several elements and areas of our community active, drive more construction, provide some certainty of our desire to maintain competitiveness in the marketplace, preserve the jobs that currently benefit from the presence of these venues, grow our small business ecosystem, and equally important, energize our arts and cultural community. Our decisions will be informed by the Comptroller's fiscal outlook, which many may consider very conservative, thus reducing the number of projects we can pursue at this time. However, it is the prudent approach to take given some of the unknowns that can affect our market. | am optimistic about our future and will closely monitor TDT revenue with hopes that it will perform stronger than what is currently forecast. | am sure the Comptroller also hopes the TDT growth exceeds his estimates. We can reassess in late 2025 or early 2026 and if we have strong TDT growth in 2024 and 2025, we will revisit our ability to accommodate more project financing for other community venues potentially including the OCCC,.Camping World Stadium Canopy, or the Dr. Phillip's Center. ook forward to our discussion on Tuesday. JLD/am Phil Diamond, Comptroller, Orange County Comptroller's Office Byron W. Brooks, County Administrator Roseann Harrington, Mayor's Chief of Staff Jeff Newton, County Attorney Lisa Snead, Assistant County Administrator Fred Winterkamp, Manager, Fiscal and Business Services Office ‘Stephanie Taub, Assistant Manager, Fiscal and Business Services Office