Resolution 2019-30664RESOLUTION NO. 2019 -30664
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE
FINANCE & CITYWIDE PROJECTS COMMITTEE AT ITS NOVEMBER 30,
2018 MEETING AND ADOPTING THE RESORT TAX RESERVE POLICY, AS
SET FORTH IN THE ATTACHED EXHIBIT A, WHICH SHALL REPLACE AND
SUPERCEDE THE RESORT TAX POLICY SET FORTH IN RESOLUTION NO.
2014- 28543, AND WHICH IS CONSISTENT WITH RECOMMENDATIONS OF
THE MAYOR'S BLUE RIBBON EMERGENCY RESPONSE COMMITTEE AND
THE CITY'S BUDGET ADVISORY COMMITTEE.
WHEREAS, the Mayor and City Commission recognize the necessity to adequately
provide the resources to operate the City in the event of a catastrophe; and
WHEREAS, such resources can be provided by the establishment of a permanent
reserve for such contingencies; and.
WHEREAS, the Mayor's Blue Ribbon Emergency Response Committee (BRERC) and
the City's Budget Advisory Committee (BAC), with support from the City Administration, has
recommended the revision of the existing financial policy, set forth in Resolution No. 2014 -
28543, for the establishment of a reserve in the Resort Tax Fund; and
WHEREAS, the National Advisory Council on State and Local Budgeting and the
Government Finance Officers Association recommends that jurisdictions establish a policy
governing the appropriate level of reserves for key funds; and
WHEREAS, the Finance and Citywide Projects Committee (FCWPC) met on November
30, 2018, and recommended that the City Commission revise the existing City of Miami Beach
financial policy for the establishment of a reserve in the Resort Tax Fund; and
WHEREAS, consistent with recommendations of the FCWPC, the BAC, and the
BRERC, the Financial Policy for the Establishment of a Reserve in the Resort Tax Fund, as set
forth in Exhibit A, should be adopted and should replace and supercede the Resort Tax Reserve
Policy set forth in Resolution No. 2014 - 28543.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, that the Mayor and City Commission hereby accept the
recommendation of the Finance and Citywide Projects Committee at its November 30,, 2018
meeting and hereby adopt the Resort Tax Reserve Policy, as set forth in the attached Exhibit A,
which shall replace and supercede the Resort Tax Policy set forth in Resolution No. 2014-
28543, and which is consistent with the recommendations of the Mayor's Blue Ribbon
Emergency Response Committee and the Budget Advisory Committee.
PASSED AND ADOPTED this 16th day of January, 2019
ATTEST:
'3Y
Rafa °I E. Granado, ity Jerk
NCORP ORATED;
fl. Gelber, Mayor
APPROVED AS TO
FORM & LANGUAGE
& FOR E ECUTION
1
City Attorney=s Date
EXHIBIT A
CITY OF MIAMI BEACH FINANCIAL POLICY FOR THE ESTABLISHMENT OF
A RESERVE IN THE RESORT TAX FUND
1. The City of Miami Beach shall maintain a minimum reserve in the Resort Tax Fund (Fund
160) of two months of total revenue of the 2% resort tax and shall have a goal of maintaining
a minimum reserve equal to six months of total revenue of the 2% resort tax.
2. Said goal of six months of total revenue of the 2% resort tax shall be established within the
timeframe of ten years effective as of October 1, 2019.
3. A permanent contingency reserve is hereby established in an amount not less than two
months of total revenue of the 2% resort tax in the Resort Tax Fund to be held for use in a
public emergency if and when an emergency affecting life, health, property, public safety, or
a significant economic impact on resort tax collections, and the expenditure of such funds is
authorized by a five - sevenths (5/7) vote of the City Commission.
4. Said contingency reserve shall be increased or decreased annually, but shall be maintained
at a minimum amount of two months of total revenue of the 2% resort tax of the then
existing Resort Tax Fund Budget.
5. As the reserve level increases over time to meet the six month goal, the minimum required
2% Resort Tax reserve will increase above the initial two months, as a moving floor,
beginning an attainment of the remaining target. For example, once the reserve attains the
four month target at the end of a fiscal year, the minimum reserve would increase to three
months and so on, until the six month minimum reserve is achieved.
6. Prior to any expenditures from this reserve, the Mayor and City Commission must declare
an emergency affecting life, health, property, public safety, or a significant economic impact
on resort tax collections, and authorize said expenditures by a five- sevenths (5/7) vote. The
Administration is directed to restore the reserve to its aforementioned level in an amount of
not less than five hundred thousand dollars ($500,000) annually, by an amendment to the
Adopted Resort Tax Fund Budget.
MIAMI BEACH
Resolutions - C7 B
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Jimmy L. Morales, City Manager
DATE: January 16, 2019
SUBJECT:A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF
THE FINANCE AND CITYWIDE PROJECTS COMMITTEE AT ITS
NOVEMBER 30, 2018 MEETING TO REVISE THE RESORT TAX RESERVE
POLICY CONSISTENT WITH RECOMMENDATIONS OF THE MAYOR'S
BLUE RIBBON EMERGENCY RESPONSE COMMITTEE AND BUDGET
ADVISORY COMMITTEE.
Legislative Tracking
Budget and Performance Improvement
Sponsor
Commissioner Micky Steinberg
ATTACHMENTS:
Description
o Resort Tax Reserve Policy Memorandum
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tAIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMITTEE MEMORANDUM
TO: Members of the Finance & City Wide Projects Committee
FROM: Jimmy L. Morales, City Manager
DATE: January 16, 2019
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE &
CITYWIDE PROJECTS COMMITTEE AT ITS NOVEMBER 30, 2018 MEETING TO
REVISE THE RESORT TAX RESERVE POLICY CONSISTENT WITH
RECOMMENDATIONS OF THE MAYOR'S BLUE RIBBON EMERGENCY RESPONSE
COMMITTEE AND BUDGET ADVISORY COMMITTEE
Recommendation
The Administration recommends the approval of the resolution accepting the recommendation of the
Finance & Citywide Projects Committee at its November 30, 2018 meeting to revise the existing
Resort Tax Reserve Policy.
Background
At the May 18, 2018 Finance & Citywide Projects Committee, the recommendations of the Mayor's
Blue Ribbon Emergency Response Committee were discussed. This Committee was created to
make recommendations to the Mayor and City Commission regarding proactive measures and
response plans to address any emergencies in the City and to protect and enhance the Miami
Beach brand. Of the five recommendations, two involved the Resort Tax Fund:
• The Committee recommends that sufficient funds from the RDA be released into the resort tax
reserve in order to fund the Commission policy of a three -month goal.
• The Committee recommends that a referral be made to the Finance & Citywide Projects
Committee to examine what the triggers to use reserve tax dollars should be set and discuss
what else can be done to maximize return of resort tax dollars.
The Finance Committee reviewed the proposed revised Resort Tax Reserve Policy at its November
30, 2018 meeting based on recommendations by the Budget Advisory Committee.
Analysis
Resort Taxes are a relatively volatile funding source as tourism is vulnerable to sudden changes in
economic conditions. In addition, the Resort Tax Fund currently transfers $35.8 million to the
General Fund to cover eligible tourism - related expenditures. This increases the risk factor as any
significant negative impacts to resort tax revenues will impact programs and services in both the
Resort Tax Fund as well as the General Fund. It is prudent and fiscally responsible to maintain a
sufficient reserve to insure against fluctuations in cash flow.
The Government Finance Officers Association (GFOA) recommends a minimal reserve policy of two
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REVISED RESORT TAX RESERVE POLICY
Page 2
months of operating expenses or two months of total revenues. The GFOA recommends that in
establishing a policy governing the appropriate level of reserves, a government should consider a
variety of factors including:
• The predictability of its revenues and the volatility of its expenditures (i.e., higher levels of
reserves may be needed if significant revenue sources are subject to unpredictable fluctuations
or if operating expenditures are highly volatile)
• The fund's perceived exposure significant one -time outlays (e.g., disasters, immediate capital
needs, etc.)
• The potential drain upon general fund resources from other funds as well as the availability of
resources in other funds
The current Resort Tax Reserve Policy was adopted in 2014 and developed through
recommendations from the Budget Advisory Committee and Finance & Citywide Projects
Committee. The Budget Advisory Committee recently reviewed the existing policy at their
September 11, 2018 and October 9, 2018 meetings and made a formal motion via an LTC on
October 22, 2018 that recommends changes to the policy as shown below.
The objectives of the proposed changes to the policy are to increase the goal of a minimum
reserve from three months to six months and create a moving floor where the minimum reserve
increases over time until it reaches six months. The amount of reserve in the minimum reserve is
subject to an emergency provision and five- sevenths vote by Commission. These changes address
the concerns of the Mayor's Blue Ribbon Emergency Response Committee. The Resort Tax
Reserve is currently funded at the targeted three months of total revenue of the 2% resort tax after
having been near the two month minimum reserve for the last two years.
REVISED RESORT TAX FUND RESERVE POLICY
1. The City of Miami Beach shall maintain a minimum reserve in the Resort Tax Fund (Fund 160) of two
months of total revenue of the 2% resort tax and shall have a goal of maintaining a minimum reserve equal
to three six months of total revenue of the 2% resort tax.
2. Said goal of three six months of total revenue of the 2% resort tax shall be established within the
timeframe of ten years effective as of October 1, 29-1.4 2019.
3. A permanent contingency reserve is hereby established in an amount not less than two months of total
revenue of the 2% resort tax in the Resort Tax Fund to be held for use in a public emergency if and when
an emergency affecting life, health, property, public safety, or a significant economic impact on resort tax
collections, and the expenditure of such funds is authorized by a five- sevenths (5/7) vote of the City
Commission.
4. Said contingency reserve shall be increased or decreased annually, but shall be maintained at a minimum
amount of two months of total revenue of the 2% resort tax of the then existing Resort Tax Fund Budget.
5. As the reserve level increases over time to meet the six month goal, the minimum required 2% Resort Tax
reserve will increase above the initial two months as a moving floor, beginning an attainment of the
remaining target. For example, once the reserve attains the four month target at the end of a fiscal year,
the minimum reserve would increase to three months and so on, until the six month minimum reserve is
achieved.
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REVISED RESORT TAX RESERVE POLICY
Page 3
6. Prior to any expenditures from this reserve, the Mayor and City Commission must declare an emergency
affecting life, health, property, public safety, or a significant economic impact on resort tax collections, and
authorize said expenditures by a five - sevenths (5/7) vote. The Administration is directed to restore the
reserve to its aforementioned level in an amount of not less than five hundred thousand dollars ($500,000)
annually, by an amendment to the Adopted Resort Tax Fund Budget.
Conclusion
The Administration recommends the approval of the resolution accepting the recommendation of the
Finance & Citywide Projects Committee at its November 30, 2018 meeting to revise the existing
Resort Tax Reserve Policy, which addresses concerns from the Mayor's Blue Ribbon Emergency
Response Committee and Budget Advisory Committee. The proposed changes to the reserve
policy for the Resort Tax Fund address the volatility of this key funding source to minimize potential
future negative impacts from unforeseen events. The policy would help ensure continuity of
operations in both the Resort Tax Fund and the General Fund and maintain or improve the City's
credit ratings.
JLM /JW
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