Orange County, Florida, faced with almost four lost months of hotel bed tax collections, used a cash reserve account to bolster the sinking fund that pays debt service on bonds issued for the Orange County Convention Center.
Tourist development tax collections, also known as resort, hotel, or bed taxes, were $2,629,400 in June, a 89.2% decrease from a year earlier, said Orange County Comptroller Phil Diamond. It was the fourth month in a row
The county’s
About $5 million of the $17 million went to the debt service sinking fund to bridge the downturn in TDT collections, a move that’s been occurring since around April and which allows the county to avoid dipping into the bond reserve, which remains fully funded, said Chief Deputy Comptroller Eric Gassman.
Orange County has issued about $890 million of outstanding bonds secured by TDT revenues for the convention center's expansion and improvements. Annual debt service is $76 million.
Although TDT collections remained at historically low levels in June, they were up compared to May collections, Diamond said.
"That increase is at least partially attributable to the re-openings of Universal, SeaWorld, and other attractions in June, although at limited capacities, he said."
In May, TDT collections were $1,144,300, a 95% decrease from the same month in 2019. In April, collections were $765,900, a 97% year-over-year decrease. In March, when cases of the novel coronavirus that causes COVID-19 began to ramp up across Florida, TDT revenue collections were $13,633,600, or 56.5% below in March 2019.
Before March, monthly collections were rising year-over-year as tourism flourished.
Diamond said the county is "fortunate to have healthy reserves" that can be used over the short-term to meet funding obligations. He has also added a “TDT Cash Reserve Summary” to his monthly reports to monitor trends and reserve levels.
In June, the reserve category called "renewal and replacement reserve, other authorized uses" decreased by $17.01 million, which left a balance of $161.01 million as of June 30.
The bond reserve, a restricted account equal to the maximum annual debt service payment, remained fully funded at $80.23 million. The renewal and replacement reserve account also remained fully funded at $60.9 million.
Diamond said he believes there will be a pickup in July TDT collections because Disney World reopened its parks, albeit with capacity limits, and it began hosting the National Basketball Association and Major League Soccer on site.
The Orange County Convention Center, the second-largest facility of its kind in the country, also hosted the Amateur Athletics Union's 2020 Junior National Volleyball Championship.
"These positive developments, however, must be tempered with the reality that the number of new Central Florida COVID-19 cases in June and July were spiking at high levels, along with the announcements that one major theme park was reducing its workforce and another major theme park was delaying the opening of several of its hotels and resorts," Diamond said. "Clearly, the pandemic continues to heavily weigh on the tourism industry."
The county's convention center debt is rated AA by Fitch Ratings, Aa2 by Moody's Investors Service, and AA-minus by S&P Global Ratings.
Fitch placed all of its rated U.S. local government debt backed by hotel and tourism-related tax revenues on Rating Watch Negative in April. S&P assigned a negative outlook in April to the entire sector, including the Orange County bonds. Moody's outlook remains stable.
Diamond said the July TDT collections report will be released in early September before Orange County’s public budget hearings.
Correction: The headline and first paragraph were changed to clarify that a cash tax collection reserve that was used to bolster the sinking fund is outside the bond finance structure.
