McLennan County commissioners heard a plan from their financial adviser Tuesday that would keep a voter-approved venue tax in place for 40 years.
The move would help the county get the most out of a bond tied to the tax that will fund an overhaul the Extraco Events Center grounds.
Under state law, a venue tax bond issuance is for up to 30 years, SAMCO Capital Markets senior managing director Mark McLiney said.
“Thirty years wouldn’t get us as much funds as 40 years and it would end the venue tax after 30 years,” McLiney said.
To get more bond funding, the county can issue a 90-day note in April, then refund the sale in June, he said. State law allows for refunding bonds to be issued for 40 years, he said.
“In the ideal world, we’d issue one bond and take it out for 40 years,” McLiney said.
McLennan County voters in May 2017 approved a 5 percent tax on short-term car rentals and a 2 percent hotel occupancy tax. The generated revenue will solely go toward renovations of the 60-acre site off Bosque Boulevard, co-owned in part by the county, city of Waco and Waco Independent School District.
Revenue from the taxes is expected to reach $1.95 million this year, McLiney said.
That would mean an average of $35,000 per month for the car-rental tax and $128,000 per month for the hotel tax, he said.
The county needs several months of revenue collected to show investors the trend, he said.
The car-rental tax generated almost $165,000 in revenue between July 1 and mid-January, and the hotel tax brought in more than $524,000 between Aug. 1 and mid-January, County Administrator Dustin Chapman has said.
The county needs several months of revenue collected to show investors the trend, McLiney said.
“We need to have and needed to have a little bit history prior to going to sell these bonds and getting bond ratings and bond insurance,” he said. “We’re starting to see the impact and estimate what the annualized revenue would be.”
County Attorney Mike Dixon told commissioners recently that the county has a high general revenue bond rating, but its short history collecting a venue tax is what matters for the rating of this bond.
Officials have said it may be necessary to split the proposed $34 million project in to two phases if the county is unable to get enough backing in one bond.
There is a continued increase in hotel rooms and rates per room in the area, McLiney said. An estimated 468 new hotel rooms will be added in the county this year, and another 358 are expected in 2019, he said. The county’s room count is pushing 5,000, he said.
The average room revenue daily rate in 2016 was $82 up from $70 in 2013, he said.
“I’ve had questions, what is our busiest time of the year,” McLiney said. “Well, I have the quarterly report from Waco Convention and Visitors Bureau, I can see it. But we don’t have a full 12 months of history to say, ‘July and August is our best month.’ ”