Tusayan council signals support for 2-point TPT increase to back bond financing for Town Hall and sports complex

In an extended budget and bond-financing work session on April 30, the Tusayan Town Council signaled a consensus to pursue a two-percentage-point increase to the town’s transaction privilege tax (TPT) to strengthen the town’s capacity to sell excise tax revenue bonds for major capital projects.

Presenters from the town’s finance team and outside advisors — including Annette Storm of Abdo, Town Bond Attorney Zack Sakas, and Hilltop Securities’ Janelle Gold — outlined three TPT scenarios: no increase, a one-point increase (3% total), and a two-point increase (4% total). Advisors said 3% could plausibly fund a new Town Hall while a 4% scenario would support both a new Town Hall and a phased sports complex, assuming reasonable coverage ratios and careful use of restricted versus unrestricted revenues.

Hilltop Securities and bond counsel described mechanics the Council must consider: the bond market prefers a demonstrated collection history (six to nine months is helpful), the Arizona Department of Revenue (ADOR) requires an onboarding period for businesses to reconfigure point-of-sale systems, and federal tax rules create a practical expectation that bond proceeds be spent within roughly three years. The consultants also recommended matching bond amortization to asset useful life (30 years for buildings; shorter terms for equipment and furnishings).

Council members discussed whether restricted bed-tax revenue could be applied to visitor-serving facilities such as a sports complex, and were advised to treat restricted and unrestricted revenues carefully in the legal pledge. Staff and advisors explained that restricted bed-tax dollars can sometimes be applied if their use complies with the restriction, but pledged debt should rely only on amounts that are demonstrably unrestricted.

Staff presented a sample estimate that assumed roughly $33.2 million of potential 2027 bond proceeds in an illustrative scenario ($17.6 million for Town Hall, $15 million for the Sports Complex, and $600,000 in issuance costs) and estimated principal-and-interest impacts in early years. Council members flagged several accounting questions — including population and TPT line-item sources, and whether collections attributed to large online vendors or entities sharing the Park’s ZIP code are correctly flowing to the town — and asked staff to audit collections and verify assumptions.

Town Manager Clifton reported hearing Chair and member support for adding two percentage points to the town’s base TPT and asked staff to draft resolution language. The Council requested staff provide the proposed resolution as soon as possible, set a Special Budget Meeting for May 29 to resolve open items, and planned further action at the June 9 regular meeting. No formal tax increase resolution or bond authorization was adopted at the April 30 session.

Why it matters: A TPT increase would provide the revenue pledge needed to secure excise tax bonds for multi-million-dollar capital projects but would require clear legal structuring, public notice, ADOR onboarding, and adequate collection history to satisfy rating agencies and investors.