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Council debates best use of HOT dollars

Thursday, August 24, 2017 by Jack Craver

Some City Council members are clearly more convinced of the role that the Austin Convention Center plays in driving the city’s tourism industry and economy than others.

The day after several Council members signaled support for a proposal by Council Member Ellen Troxclair that would slightly reduce the amount of Hotel Occupancy Tax revenue dedicated to the convention center and Visit Austin (formerly the Austin Convention and Visitors Bureau), Mayor Steve Adler reiterated his belief that the publicly funded conference and events venue is a key driver of the city’s economy.

“We have the convention center in this city because it drives jobs,” he said at Wednesday’s budget work session. “It enables restaurants and hotels to fill up during the week.”

Elaborating, Adler described downtown Austin as the “boiler room” that fuels economic activity and produces tax revenue that the rest of the city benefits from. He made a point of highlighting its effect on parks, the primary beneficiary of Troxclair’s proposal.

“We feed in the coal here (the downtown “boiler room”) and we end up with pocket parks all over the city,” he said.

Troxclair’s proposal earmarks 15 percent of the city’s HOT revenue – or $11.85 million – for “parks and preservation.” It reduces the convention center’s allocation from $45.2 million to $44.2 million and cuts Visit Austin’s from $14.6 million to $11 million.

Troxclair and others have argued that Council could use more HOT revenue to cover parks-related expenses that are now being covered by the General Fund. The challenge, however, is state law, which specifies that HOT revenue can only be used on certain activities that are considered relevant to tourism, including historic preservation.

“I wish we could spend HOT revenue on our parks,” said Adler. “We’re playing on a field with rules we did not write.”

Mayor Pro Tem Kathie Tovo, a co-sponsor of the Troxclair proposal, emphasized that the measure was not attempting to divert HOT funds to general parks spending, but rather to “cultural facilities” run by the Parks and Recreation Department.

Cities are allowed to use up to 15 percent of HOT revenue on “cultural arts” projects and up to 15 percent on historic preservation. The city has already maxed out its cultural arts allocation, but it could still spend millions more to preserve historic structures.

Other Council members expressed general skepticism of the convention center’s value, pushing back on the argument that the city is missing out on economic opportunities by not expanding the existing center so that it can attract and accommodate bigger events.

“Being the place where all of the biggest conventions are isn’t necessarily a plus for our city, particularly downtown, where things are so darned congested,” said Council Member Leslie Pool.

Convention Center Director Mark Tester responded that convention guests generally don’t cause lots of traffic issues because they mainly stay in the area after arriving from the airport. He also insisted that the city is not trying to compete for the largest conferences in the country but instead to focus on mid-range events.

Both the convention representatives and Adler downplayed the significance of a 2013 study that estimated that only 2 percent of all city visitors are in town for conventions.

“I don’t believe that’s the number,” said Tester. “It’s definitely not 2 percent. It’s higher than that.”

Whatever the percentage is, he added, it does not account for the many other people who are not attending a convention but still come to town and spend money as the result of one, including family members of attendees and those hired to set up or staff the conference.

Council Member Ann Kitchen emphasized that the discussion surrounding convention center funding was “a matter of degree,” rather than an “either/or.”

“I’m not so stuck on the 2 percent but it does make sense to me that not all of our tourism is driven by the convention center,” she said.

Troxclair seconded Kitchen’s “eloquent” comments and emphasized her own appreciation for the convention center.

But it only makes sense, said Troxclair, to have a “thorough conversation” about how to make the best use of the tens of millions of dollars of increased revenue that the convention center brought in over the last several years.

In an email to the Austin Monitor, mayoral aide Jim Wick said that there remain legal questions surrounding Troxclair’s proposal but that the mayor’s principal objection is that it might undermine his goal to address a variety of issues, dubbed the “downtown puzzle.”

Reallocating funding “in a drastic way,” said Wick, may prevent Council from putting in place a tourism public improvement district, which would collect an additional 2 percent levy from hotels to fund efforts to market the city as a tourism and convention destination. It may also jeopardize the potential expansion of the convention center and result in a drop in sales and property tax revenue, he added.

Tovo disagreed, telling the Monitor that she could “not emphasize enough” that the proposal would not prevent the convention center from expanding.

Non-dropframe at English Wikipedia [CC BY 3.0], via Wikimedia Commons.

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