Michael James, a Wake County staff presenter, reviewed the county’s hospitality‑tax framework and upcoming decisions during the board’s April 14 work session.

Lede: James told commissioners that the tax program — established under state enabling acts and governed by an interlocal agreement with the City of Raleigh — funds arts, culture and major facilities and that the next competitive funding round will take place in late 2025 with a stakeholder review following by mid‑2026.

Nut graf: Hospitality taxes (the 6% occupancy tax and the 1% prepared food and beverage tax) flow through an interlocal agreement (ILA) and are distributed first to statutorily required recipients and debt service; after those mandatory distributions, remaining funds are split (the presentation cited an 85% share for the Raleigh convention center complex and 15% to a competitive/section‑3 fund). County staff said occupancy receipts are outperforming the projections used in the most recent ILA amendment while prepared food and beverage collections are running below those projections by roughly $400,000.

What staff told commissioners

- Legal and governance background: James reviewed the 1991 and 1995 state enabling legislation that authorized occupancy and prepared food taxes, required an interlocal agreement between Raleigh and Wake County, and established early funding distributions. The ILA has been amended multiple times; recent amendments set allocations and added projects such as the Lenovo Center renovation and convention center expansion.

- Revenue performance and modeling: James said occupancy receipts rebounded strongly after the pandemic and are outpacing the revenue projections used in the last major ILA amendment; prepared food and beverage tax receipts are weaker than projected (by about $400,000 in 2024 and by $400,000–$600,000 in updated short‑term forecasts). Staff told commissioners they are monitoring both lines closely because food prices and consumer confidence could affect receipts.

- How the money flows: Using the current adopted budget as an example, James showed total hospitality revenues and required Section‑1 distributions (statutory allocations and debt service). After those required draws, approximately 85% of remaining funds support the Raleigh convention‑center complex (including debt service on the expansion) while roughly 15% supports competitive projects and smaller awards to municipalities.

Indoor sports facility and Cary award

James reviewed an indoor sports facility allocation included in the prior amendment. Cary was the only applicant in the earlier competitive process and was selected to receive a funding allocation structured to support about $75 million of financing capacity; Wake County has appropriated about $4.7 million to date for that project and another small allocation was scheduled for 2026, leaving most of the planned capacity to be drawn in later years.

James said Cary informed county staff that the town’s November 2024 referendum on general obligation financing failed and Cary has told the county the project is not viable in its prior form. Cary has sent a letter requesting the funds be reallocated (for example, to WakeMed’s soccer park upgrades), but James said any reallocation would require an ILA amendment approved by both Wake County and Raleigh and that no staff recommendation on reallocation was being made at the April 14 meeting.

Competitive funding timeline and capacity

James summarized the history of the county’s competitive awards (a multi‑step RFP and staff review process dating back to 2013) and said the 2025 round must be run to meet timelines set in the last ILA amendment. Staff will work with Raleigh to develop the process and return to both councils with a recommended approach later this year; RFPs would be released afterward and awards would be made once applications are reviewed. James said the ILA added about $15.5 million of competitive project capacity and the county has roughly four years of $2 million per year small‑projects funds available; combined, those elements give approximately $23.5 million of competitive funding to plan for across the multi‑year period.

Why this matters: competitive project dollars have funded fields, parks and cultural projects across Wake County and are intended to distribute hospitality‑tax‑funded investments more widely than the convention center complex alone. James said applicants are generally expected to bring substantial matching funds (historically applicants brought roughly 55% of project funding), and county staff will propose application requirements to the board before RFP release.

Ending: Staff said they will present a draft process and timeline later this summer, issue RFPs after that, and that the next stakeholder review of the ILA and countywide hospitality‑tax funding is scheduled for early 2026.