Tuesday, July 18, 2017 by Chad Swiatecki

Hotel taxes key to ‘downtown puzzle’ to help area homeless

For all the interlinked pieces of the “downtown puzzle”-solving plan that Mayor Steve Adler unveiled Monday morning – and in a 20-minute speech he name-checked just about every relevant downtown Austin presence – the ambitious and far-reaching policy gambit boils down to one key transaction.

That exchange would see hotel guests and their wallets as the solution to a raft of municipal problems and issues that have grown more prominent as the city’s core gets more crowded and developed. Adler said as much as he rolled out the main components of the plan that would use an increase in hotel taxes to fund, among other things, an expansion to the Austin Convention Center and a multimillion-dollar increase to services and housing for the homeless.

“This plan makes tourists pay for our homeless challenge,” he said to a crowd filling most of the atrium of City Hall. “It harnesses the power and popularity of Austin to the benefit of all Austinites.”

The puzzle concept would have City Council approve a 2 percentage-point increase to the Hotel Occupancy Tax – raising it to 17 percent total, which is the maximum allowed under state law – with the new money largely used to fund the roughly $600 million price tag for expanding the convention center.

The hotels would then agree to another 1 percentage-point increase to form a tourism public improvement district that would provide $4 million a year for homeless services until 2021, when retirement of existing debt on the convention center would increase the homeless funding to $8 million a year. Adler said the area hotel industry is on board with the tax increases that would levy 18 percent total on hotel bills because housing and serving the crowds overwhelming the Austin Resource Center for the Homeless will improve downtown guests’ stay.

The HOT increase would also provide more money for tourism and historic preservation efforts, with Adler specifying that $3 million per year would be made available for efforts to grow the city’s commercial music industry.

Other wrinkles in the tax plan, which Adler stressed would result in no new taxes on residents, would provide $50 million that could be directed toward expansion of the Emma S. Barrientos Mexican American Cultural Center and renovation of the Palm School property near the convention center.

A separate downtown tax increment financing district would provide an immediate $30 million for permanent supportive services for the homeless, while extending the timeline for the TIF on the Waller Creek Tunnel project would create $110 million for the string of city core parks planned for the Waller Creek Conservancy.

Travis County had designated shared HOT funds as a way to pay for a slate of community development projects, but if City Council votes to max out that levy for its own purposes the county would have to look for other funding. Adler said it’s likely that those projects couldn’t be paid for by HOT funds anyway, and that the city would work with the county on any bond proposals to make them happen.

The next step in enacting the puzzle scheme comes in August when Council will receive a report from the Visitor Impact Task Force recommending the HOT increase to fund the convention center project. Adler said if Council approves that increase then a resolution would soon follow directing the city manager to begin moving all the related legal and policy pieces forward.

After the announcement community leaders praised the ambition and scope of the plan and the impact it could have.

“It brings pieces of the community together that might not seem related, but there’s alignment,” said Peter Mullan, chief executive officer of the Waller Creek Conservancy. “It’s brilliant to package them together and move them together. Part of our mission is being supportive to find funding for the homeless, and that’s why we’re part of the package as a whole.”

Gavin Garcia, chair of the Austin Music Commission, said the package could provide much-needed funding to reverse a decline in earning power and the professional prospects of musicians in Austin.

“We hope to convene a task force on top of the mayor’s omnibus working group to create central leadership to determine best uses for those funds,” he said. “Two aspects that are vital are venue preservation, and branding and advertising. The dollars are allowed for marketing strategy, and that’s critical for future vitality of the industry.”

Photo by Earl McGhee made available through a Creative Commons license.

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Key Players & Topics In This Article

Central Business District: A zoning designation that describes the business district of downtown Austin.

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.

Mayor Steve Adler: Mayor of the city of Austin, elected in November 2014

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