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Eckhardt sends Adler a HOT letter

Wednesday, July 5, 2017 by Caleb Pritchard

Travis County Judge Sarah Eckhardt has put Mayor Steve Adler and Interim City Manager Elaine Hart on notice that the county is still keeping alive its interest in levying a tax on tourists.

In a letter sent to both city officials on Friday, Eckhardt recounted the Commissioners Court’s recent vote to study the impacts of imposing a 2 percent tax on hotel stays.

The court on Tuesday unanimously approved spending $18,000 to fund the study, which will be conducted by the financial consulting firm PFM.

“With the PFM analysis we will both have good information regarding the revenue yield of a countywide venue tax and how it might be applied to correct inequities that exist within the city and extend beyond the city’s limits,” Eckhardt wrote. “The Commissioners Court believes the PFM analysis is crucial to developing a shared list of viable projects that we might pursue together by pooling our venue tax capabilities.”

The vote and the letter are the latest salvo in the county’s attempt to pressure the city to reconsider a proposal to ratchet up its own Hotel Occupancy Tax by 2 percent in order to cover the costs of enlarging the Austin Convention Center.

That path would max out the legally allowed HOT rate and deprive the county of the opportunity to cash in on the local tourism trade to fund projects that benefit residents as well as visitors.

The court approved a three-part mission for PFM: estimate the revenue possibilities if the county imposed a 2 percent hotel tax; forecast the county’s financing options for projects based on that revenue; and look into the market considerations of structuring debt based on the HOT.

Before the vote, Commissioner Gerald Daugherty suggested that the city is likely to consume the remaining HOT capacity in order to cover the convention center expansion.

“We know we’re usually the ones that sort of are playing second fiddle, you know,” Daugherty said.

Obstacles still remain even if the county can convince the city to join a collaborative effort to share the remaining HOT capacity. The court would have to seek voter approval for both raising the tax as well as specific projects it would fund.

Council is expected to take up the issues Eckhardt raised in her letter after members return from their annual July break.

Photo by Daderot, Public Domain.

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