continuing the way forward · •sxsw •darpa tour •site selector’s guild •world travel...

CONTINUING THE WAY FORWARD

ITAC, OCTOBER 26, 2016

PRESENTATION OVERVIEW

1. Way Forward Strategy Update

• Progress to-date• Notable upcoming initiatives

2. FY16 Key Department Outcomes

3. FY17 Budget Request

• Incentive Fund• TOT Reinstatement

GOAL:Reduce office vacancy by half and diversify the Arlington economy over the next 60 months

0%

5%

10%

15%

20%

25%

0 12 24 36 48 60 72

% Vacant

21.7%4Q14

20.1%4Q15

Months

GOAL

$4.5 M

Local tax

revenue

for a

100%

occupied

building

$3.3 M

Local tax

revenue

for a 75%

occupied

building

$2.5 M

Local tax

revenue

for a

50%

occupied

building

$1.1 M

Local tax

revenue for

a 0%

occupied

building

Note: Assumes 100% occupancy = 400,000 SF of RBA in a building in the Crystal City submarket. Based on private sector for-profit tenancy.

Each 1% of Office Occupancy

is Worth $3.4 million in Local Taxes

Director’s Office

$582K

Business Investment

$3.1M

Real Estate Development

$440K

Convention & Visitors Services

$753K

Strategic Partnerships

$1.1M

Cultural Affairs$2.5M

Administration

$743KCommunications

AED FY16 BUDGET BY DIVISION

3 FTE

4 FTE

12 FTE 16.9 FTE4 FTE5 FTE3 FTE

Budget Included inBusiness Investment2

1. FY 16 Budget shown does not include Artisphere ($2.72m expense)2. Communications budget is shown under Business Investment to illustrate those funds as primarily an extension of resources for BIG.

5.8 FTE

TOTAL EXPENSE BUDGET 1:

$9.2M53.7 FTE

KEY INVESTMENTS - FY16 BUDGET

• Five new FTEs for business development

• $300,000 in ongoing funding for marketing

• $200,000 in one-time funds for tourism

• Added support for partner organizations

IMPLEMENTATION: LEAD GENERATION

• Startup Arlington

• Fast Four

• Dong Sheng Startup CompetitionPromotions

• Arlington Premiere

• Executive Luncheon

• Troker VIP Reception

Business Engagement

• CES

• SxSW

• DARPA Tour

• Site Selector’s Guild

• World Travel Market

• Robotics Conf.

Marketing Missions

• Inc. Magazine

• Tech Cocktail

• DC Inno

• Wall St. Journal

• Globe St.

• Area Development

Media Exposure

150+ Applicants10 Media Articles

261,000 Impressions

125 New Businesses30 Arlington Executives

130 VIPs

6 Cities Visited5 Panels Hosted

3 Site Selector Meetings600+ Leads Generated

550 News Clips558M Impressions

$18M in ad equivalency

42CLOSED and Announced Deals

1,840,000SQ FT of Real Estate9,300

JOBS Newor Retained

34 Deals with BIG Assist

8,400 Jobs with BIG Assist 1,610,000 SQ FT with BIG Assist

Source: AED, CoStarFiscal Year 2016 YTD (July 1, 2015 - Feb. 22, 2016)

3 of 34Received INCENTIVES

FY16 OUTCOMES

SELECTED ANNOUNCEMENTS

Source: CoStar, AED.Estimate based on $3.4 million in local taxes recovered for each 1.0% in vacancy rate improvement

10%

15%

20%

25%

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

12.6%

21.7%

20.1%

VACANCY RATE: 2012 - 2015

12.6%

ESTIMATED LOCAL TAXES RECOUPED:

$ 5.4 M

= 1.6%

NOW WHAT?

SELECTED CY16 MARKETING – U.S. & INTL.

• CES – January (TECH)

• Peru – February (TOURISM)

• SXSW* – March (TECH)

• China – April (TOURISM)

• ICSC –May (RETAIL)

• Canada – June (TOURISM & FDI)

• Select USA* – June (TECH & FDI)

• China – August (TECH & FDI)

• World Travel Market* – November (TOURISM)

*Second engagement

SELECTED MARKETING HIGHLIGHTS

SELECTED CY16 PROGRAMS - LOCAL

• Arlington Mill Pop Up Gallery – Ongoing (CULTURAL AFFAIRS & SPI)

• Global Phonic Series – Feb.-March (CULTURAL AFFAIRS)

• Small Business Networking – March (BIZLAUNCH)

• Green Business Showcase – April (BIG)

• Small Business Awards – May (BIZLAUNCH)

• Small Business Summit – May (BIZLAUNCH & REDG)

• Arlington Hotel Summit – September (ACVS)

• Arlington Hospitality College – Jan., Apr., Jul., Nov. (ACVS)

• Education Forum – Fall (BIG & SPI)

SELECTED LOCAL PROGRAM HIGHLIGHTS

SMALL BUSINESS FY16 OUTCOMES

Assisted 2,500 business people including:

• 1,900 workshop participants;• 550 individual counseling sessions; and• Among these, 800 conducted in Spanish

Specialized programming including:

• 44 technical assistance workshops• Arlington Small Business Summit • Art on the ART Bus • Lawn Chair Talk Series

In addition the BizTeam helped 50 businesses navigate

regulatory issues

CULTURAL & COMMUNITY DEVELOPMENT FY16

• 442 public performances, exhibits, events, workshops and temporary installations

• 4,600 Lee Arts Center Studio Visitors

• 357 Artists and Arts Organizations supported

• $3.6 million in leveraged funding

• 50 Creative Economy events drawing a total of 1,000 attendees at locations across Arlington.

Assisted the Crystal City, Rosslyn and Ballston BIDs with pedestrian safety, traffic, lighting, street beautification, signage and events projects.

BALLSTON QUARTER REDEVELOPMENT

INVESTMENT

• $55M in planned public investments representing Arlington’s largest ever public-private partnership, and first ever use of a Community Development Authority (CDA) public financing tool

OUTCOME

• $150M in net incremental taxes to County over 30 years

• Letter of Intent: Nov 2015

• Development Agreement & CDA Formation: April-May 2016

• Construction Begins: May-June 2016

• Project Delivery: Spring 2018

$325M transformative redevelopment of

cornerstone project

• 45,000+ group room-night leads

• 22,000+ group room-nights booked, worth $3.6+ million

• 55,000+ StayArlington website visits

• 13,400+ visitors and residents served in-person

• 200+ Arlington-related articles with 60M impressions worth $8M

• 9 major travel trade events with 250+ one-on-one appointments and Arlington exposure to 60,000+ attendees

• 2015 Arlington hotel occupancy: 76.9% (up 1.3% over 2014)

• 2015 Arlington hotel average daily rate: $158.85 (up 4.7% over 2014)

• 2014 Arlington visitor spending: $2.97 billion (up 4.9% over 2013)

• 2014 Arlington tax revenue: $80.7 million (up 3.0% over 2013)

• 2014 State tax revenue of $107.8 million (up 13.8% over 2013)

TOURISM FY16 OUTCOMES

BUDGET COMPARISON FY16 TO FY17

FY16 TOTAL EXPENSE BUDGET:

$9.2M53.7 FTE

NO INCENTIVE FUND

NO TOT REINSTATEMENT

FY17 TOTAL EXPENSE BUDGET:

$9.1M53.7 FTE

$1.5M INCENTIVE FUND

$1.25M TOT REINSTATEMENT

INCENTIVE FUND REQUEST OVERVIEW

• A $1.5 million incentive fund to provide upfront cash grants to early stage tech and tech catalyst companies and proof of concept projects.

Startup Companies

High ReturnAccelerators & Incubators

Rapid Growth

Initial outcomes of 600 jobs and 75,000 s.f. of office occupancy

COMPETITIVE ENVIRONMENT

Jurisdiction Tool Impact

Washington D.C.Qualified High Tech Company

(QHTC)& Council Legislation

Multi-million $ packages (ex. Advisory Board Corp. $60

million)

Prince George’s County

Economic Development Fund $50 million fund

Alexandria Tax Abatements$23 million for NSF and other federal

project packages

Loudoun County Economic Development Fund $1.0 million fund

Prince William County Economic Development Fund$1.6 million fund

($3 million additional proposed FY17)

HEADWINDS

1. National Science Foundation Relocation

• Scheduled to move to Alexandria 2017• Vacancy of 665,000 s.f. in Ballston

2. Federal Lease Expirations & Uncertainties

• Transportation Security Administration 550,000 s.f.in Pentagon City (on limited-term lease extension)

• Drug Enforcement Agency 500,000 s.f. in Pentagon City (lease expiration 2018)

Personnel

• Addition of two Limited Term FTEs (second Destination Sales Manager and new Content Manager) to expand sales and marketing reach

Non-Personnel

• Industry research and two-year strategic plan

• Content resources: photography, web, video, editorial, etc.

• Advertising, events, missions (media and sales), and online marketing

• 70% focus on domestic audiences: meeting/group planners, couples, families, friends, LGBT, seniors, journalists

• 30% focus on international audiences: tour/receptive operators and journalists (UK, Germany, France, China, Brazil, Canada, Mexico, Peru, Argentina, Chile)

TOURISM FY17 ADDED FUNDS

$0.0

$0.5

$1.0

$1.5

$2.0

TOT sur.

One-time

General Fund

ACVS TOTAL BUDGET HISTORICAL CONTEXT

FTE 10.8 10.8 10.8 4.8 4.8 4.8 4.8 5.0 7.0

mill

ions

TOT Rev. $21.9 $22.9 $21.8 $22.3 $20.8 $23.3 $22.8 $25.0 $25.0