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Tovo attempts to change how city hands out fee waivers for events

Friday, February 14, 2014 by Michael Kanin

Council Member Kathie Tovo took a stab Thursday at shifting the way that the City of Austin pays for fee waivers it awards to major events. Though she was ultimately unsuccessful in changing the current policy, Tovo laid the groundwork for what could be a change in the city’s approach in the future to what has become a regular – and more recently, controversial – practice.


“I certainly agree that (SXSW) has a very positive impact on our community, on lots of the small businesses that benefit from South by Southwest,” said Tovo just before she began to explore the notion of reimbursing the city for SXSW fee waivers with Economic Development funds.


Such a move would theoretically open the door for other, like reimbursements.


Council members have, for years, approved requests from major events promoters for waivers of routine fees for such items as the cost of road closures. South by Southwest officials requested nearly $800,000 in fee waivers and approved payments for the 2014 edition of their event.


Under current practice, fee waivers count more or less as unrealized income for the city’s general fund. The practice has come with an increasing level of pain for Council members. Tovo’s proposal would have reimbursed the general fund using dollars drawn from the Economic Development department’s reserve fund.


Tovo’s pitch kicked off a back-and-forth between herself and Economic Development Director Kevin Johns. Though Johns insisted that the use of his department’s reserve fund was inappropriate for fee waiver reimbursement – thanks to the fact that it isn’t tied directly to job creation – Tovo continued to probe for a way to do just that.


Among other items, Johns raised the point that the department’s funds had been committed until 2024. Still, Tovo suggested that she and her colleagues could draw from the fund, effectively pushing either the need for additional dollars or ability to pay for other projects down the road.


She eventually turned to the use of Economic Development funds to pay for a British Airways advertising campaign – a move that she and her colleagues signed-off on as part of their consent agenda. “The funding came from the aviation department and the economic development department’s economic incentives reserve fund,” she said. “Which just doesn’t fit the pattern you’ve described of being for jobs.”


Johns’ deputy, Rodney Gonzalez, told Tovo that there was indeed a jobs impact associated with that campaign. “We actually have an economic impact analysis that was performed for that international flight…there is direct job creation and there is direct business investment from British Airways,” he said.


In the end, Tovo backed off. But not before she called for more context about what it is that impact fee waivers bring to the city.


Staff told Council members that they are preparing a study. In a written response to a formal Tovo question on the matter, staff said that they have “requested information about special events costs, revenues and waivers for the last five years, from all city departments and from event promoters.”


They’ll be back with the results by March 1, just days before the beginning of SXSW 2014. As a preview, staff offered Council members a few figures that had already been collected.


“The Finance Department provided the data on waivers which total $3,485,200 for Fiscal Years 2009 through 2013. Of that total, SXSW received $1,829,700 in waivers,” reads staff’s response. “During that time, the city spent $24 million in expenses for special events and collected $13 million in revenue, also from special events. The majority of the expenses and revenue generated by special events were for police services, with $15,798,600 in expenses and $7,779,300 in revenue.”


Expect a thorough vetting of any report that comes back.

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