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Council to consider changes to fees for hotel drop-off zones

Wednesday, June 26, 2013 by Michael Kanin

On Thursday, Council members will debate a potential structural change in city fees that would address what item sponsors call a double charge for properties that pay right-of-way fees associated with both drop off zones and valet parking. According to city staff, the change would affect only two known properties: The W Hotel at Second and Lavaca Streets, and the future JW Marriott Hotel at Third Street and Congress Avenue.


If approved, the change would allow property owners to deduct what they pay in valet fees from those associated with their drop-off zones. The W currently pays the city roughly $14,000 in valet fees and $40,000 for the drop-off zone privilege.


However, with recent changes to the city’s calculation of valet fees, the W’s valet bill would escalate to about $40,000 in five years. This prompted a question from Council Member Laura Morrison.


“It sounds like within a few years, (the valet fee) would essentially negate completely the drop-off (fees),” she offered. Morrison followed with a quip.


“If it goes greater than (the drop-off fee), are we going to pay them?”


Council Member Chris Riley brought the measure forward. He told his colleagues during Tuesday’s work session that the difference would be the removal of an extra charge. “This item is prompted by the appearance that the W is being charged twice for the same physical area,” he said. “There is one fee that is a relatively large fee – a licensing agreement – covering the drop off zone, and then there’s…a separate fee being charged for the use of part of the same area for valet. The appearance is that that is essentially double charging for their use of the same area.”


Council Member Bill Spelman suggested that one fee would not negate the other. “What I think this is supposed to do … would be for (the W) to continue paying the $40,000, but that $40,000 to be split between $14,000 to our valet program and the remainder of $26,000 to our licensing program,” Spelman said. “It would not be to reduce the total amount that would be paid by the W from ($40,000) to ($26,000), it would stay at ($40,000), but it would be split differently.”


Thus, the distinction would be somewhat bureaucratic. However, the valet fees – which escalate based on cost per space – and the drop off zone fees – which increase based on property value – will not increase at the same rate. And, with one negating the other, it is possible for the valet fees to override collection of drop-off zone fees.


Those dollars go to separate city funds. Another bureaucratic distinction, but one that could make a difference down the line.


Council Member Kathie Tovo tacked toward that notion. “This will impact your revenue,” she said. “Where do you make up the difference?”


Austin Transportation Director Rob Spillar told Tovo and her colleagues that he was not immediately sure how the loss of $14,000 would specifically impact his office’s budget. “We do calculate the capability of (the fund that the $14,000 was headed for) based on all of the revenue resources so if one falls short, I would assume that would mean it would put pressure on other parts of that revenue stream,” he said.

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