Thursday, May 25, 2017 by Caleb Pritchard

Task force endorses plan to expand convention center

After nearly six months of toil, a visibly exhausted Visitor Impact Task Force granted its imprimatur to a proposal to fund the expansion of the Austin Convention Center, albeit with a number of attached recommendations.

Tuesday’s vote came at the end of a nearly five-hour meeting held on the 17th floor of the Hyatt Regency hotel, not coincidentally one of the several tourism-related businesses that would likely benefit from a larger convention center.

The members nearly unanimously supported a funding scenario that would raise the Hotel Occupancy Tax by an extra 2 percent to pay for the expansion. The scenario endorsed by the task force has an estimated cost of $609 million, though several of the extra suggestions included in the final resolution could bring that total down.

For example, the resolution recommends that the city not purchase any new land for the expansion. Instead, the task force offered the idea of working with the private sector to lease land and build a mixed-use project that would feature lower-level convention facilities topped by commercial or residential structures.

“This should both lower the city’s share of the costs by sharing across more users as well as create a more active street life in downtown’s southeast quadrant even when no conventions are in town,” task force member Dan Keshet told the Austin Monitor. “More people will have the opportunity to live or work in one of the most walkable neighborhoods in Austin.”

The task force also discouraged any permanent street closures such as have been envisioned should the convention center spread to its west across Trinity Street. That scenario could result in a new superstructure that occupies nearly nine entire city blocks, as opposed to the current six.

Considerations were also given for Austin’s music industry and historic sites, both components vital to the city’s culture and by extension the local tourism industry. The increased hotel tax would pay for bonds issued by the city. During economically healthy years, those bonds could offer higher returns than expected, money that the task force recommended be split up to support local music endeavors as well as historic preservation efforts at locations such as Palm School.

The task force also encouraged City Council to give extra weight to initiatives that promote social and racial equity along with sustainability programs.

Furthermore, it also backed the creation of a tourism public improvement district in which hotels would collect an extra assessment from guests and pass along that money to the city to be used for tourism-related expenditures. The task force specifically suggested using that money to cover the costs of increased public safety measures during special events.

The notion of the tourism public improvement district was not entirely welcomed by Tom Noonan, a task force member and president of Visit Austin, formerly the Austin Convention and Visitors Bureau. Noonan suggested that hoteliers would not be eager to increase costs for their guests. Rather than recommending a specific tourism public improvement district assessment, the task force ended up backing the maximum rate allowed by the hotel industry.

The task force began its work in January after being commissioned by Council last year. Once the recommendation is organized into a final draft, it will head to City Hall for Council’s deliberation.

Opposition to the plan is already heated. On Tuesday afternoon, attorney Bill Bunch, who is suing Visit Austin, delivered blistering remarks, accusing proponents of deploying “Trump world alternative facts.” He argued that spending such a huge sum of tourist-derived taxes on the convention center is lopsided since, according to him, only two percent of tourists in Austin visit the building.

“This is really a choice between saving the soul of Austin and making a billion-dollar boondoggle mistake,” Bunch declared.

Another wrinkle in the plan is provided by Travis County. Under state law, the highest tax on any hotel room can only be 17 percent. Coupled with the existing state and city hotel occupancy taxes, as well as the 2 percent venue tax the city is assessing to pay off previous convention center bonds, an extra 2 percent to pay for a future expansion would max out that limit. That would deprive the county of enacting its own venue tax that could be used to, among other things, enhance the Travis County Expo Center.

Last week, the Travis County Commissioners Court sent a letter to Council requesting the start of a conversation about using any new hotel taxes to fund both city and county projects.

On Wednesday, Noonan praised the work of the task force. “The City Council put together a diverse group of stakeholders to determine the future of the hospitality and tourism industry in Austin and the best uses of the hotel occupancy tax going forward,” he told the Monitor. “This was a long, thoughtful conversation and an important process.”

Clarification: Noonan’s ambivalence during the TPID discussion was rooted in a suggestion that the assessment could be as high as two percent in addition to the collective 17 percent HOT endorsed by the task force. He indicated his support for the general idea of a TPID but pointed out that a 19-percent surcharge on each hotel room would be the highest in the state. He successfully argued for avoiding any mention of a specific TPID assessment recommendation in lieu of further negotiations between hotel interests and the city.

Photo courtesy of the Austin Convention Center.

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Key Players & Topics In This Article

Austin Convention & Visitors Bureau

Austin Convention Center: This city department operates the downtown convention center and associated events.

Hotel Occupancy Tax: A tax on the rental of a room in a hotel or other rental properties (including apartments) that cost 6 percent of the cost of a room.

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