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HOT talk at Commissioners Court

Thursday, May 18, 2017 by Caleb Pritchard

The proposal to expand the Austin Convention Center could not only gobble up several downtown blocks, it could also swallow whole an untapped revenue stream worth millions of dollars each year for Travis County.

On Tuesday, the Commissioners Court took action to open up talks with City Council aimed at finding a mutually beneficial solution.

“What we’ve got to hope for is to be able to sit down with the city and say, ‘You can’t just act like that we don’t exist,’” said Commissioner Gerald Daugherty.

The unanimous vote came after a briefing from the Planning and Budget Office on the possibility of the convention center expansion maxing out the legally allowed hotel occupancy tax in the county.

There exist two distinct forms of hotel occupancy taxes under state law: a general HOT and a venue tax. Revenues from the former can be collected by the state and city, which can then invest them in broadly tourist-related projects. The venue tax, which can also be collected by the county, can only be used for specific, predetermined venues that draw tourists.

The statute also mandates that the combined state, local and county taxes on a hotel room cannot exceed 17 percent of its nightly price. Currently, the state charges 6 percent while the city collects 9 percent, 2 percent of which is a venue tax to service bond debt on the convention center. Once that debt is paid off in 2021, the venue tax expires.

Meanwhile, the county has not exercised its right to collect a venue tax. However, one proposal to finance the convention center’s expansion calls for the city to raise its combined HOT to 11 percent, which would bring the total local sum to its maximum value.

The city’s Visitor Impact Task Force has discussed recommending that scenario to Council and is expected to take a vote on it at its final scheduled meeting next Tuesday.

Unlike the general HOT, which Council could raise with a simple vote, the county would have to first identify worthy projects and then ask for voter approval via popular referendum.

According to staff, if the county loses its option to collect its own 2 percent venue tax, it would forfeit as much as $15 million to $20 million each year.

“We believe this is the county’s time to speak now or forever hold your peace on this issue,” Diana Ramirez, county director of economic development and strategic investments, told the court. “And we believe that the $200 million, more or less, of non-property tax revenue that we could gain over 20 years using the venue tax is worth ruffling some feathers.”

Senior planner Heather Ashline told the court that state law allows the city and the county to team up with a mutual venue tax to finance specific projects in special venue districts, which is ultimately the notion the court endorsed.

The final vote authorized County Judge Sarah Eckhardt to send a letter to Mayor Steve Adler and Council seeking to open up discussions on the partnership and potential projects.

Among the possibilities entertained by the court, Commissioner Jeff Travillion suggested a rehabilitation of the former Anderson High School campus in East Austin.

“It has a significant cultural value. It was the epicenter of African-American education, and which was closed only because of hate,” Travillion said.

Other ideas bandied about for venues with surrounding infrastructure that could benefit from the venue tax included the Travis County Expo Center, Palm School, the Heman Marion Sweatt Courthouse and the Circuit of the Americas.

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