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Council supports reducing HOT funds for convention center, visitors bureau

Friday, September 1, 2017 by Jack Craver

After a lengthy public hearing featuring scores of public speakers on all sides of the issue, City Council unanimously adopted a resolution Thursday night in support of diverting millions of dollars generated by hotel occupancy taxes from the Austin Convention Center and Visit Austin (formerly the Austin Convention & Visitors Bureau) to historic preservation efforts.

The measure, sponsored by Council Member Ellen Troxclair, initially faced opposition from Mayor Steve Adler as well as the hotel industry, which views the diversion of funds as a threat to a potential future expansion of the convention center.

Troxclair’s proposal reallocated more than $11 million of Hotel Occupancy Tax revenue from the convention center and Visit Austin to the Parks and Recreation Department for the purpose of historic preservation. It would leave the convention center with $41.4 million and Visit Austin with $10.3 million, with $11.6 million for cultural arts and the same amount for historic preservation.

Adler voiced repeated concerns that setting aside a large pot of HOT revenue for that use would put in jeopardy the elaborate “downtown puzzle” that he has proposed.

Adler’s downtown puzzle concept is based on allowing enough money for the convention center to expand, both through the existing revenue and an increase in the HOT rate. If that goes forward, large hotels have indicated they will be willing to submit to an additional 2 percent assessment, known as a tourism public improvement district. Unlike HOT revenue, whose use is restricted to a number of tourism-related uses, some of the TPID revenue could be used to fund homelessness services.

The downtown puzzle was largely the product of recommendations made earlier this summer by the Visitor Impact Task Force.

After voting in favor of Troxclair’s measure, Council heard testimony on a separate item that endorsed the concept of the puzzle, asking city staff to explore a number of possible revenue sources, including public improvement districts and the expansion of an existing tax increment financing zone, to fund homelessness services, support for local arts, improvements to the Travis County Exposition Center and the development of the Waller Creek chain of parks.

Adler said that he would seek a vote on that item at Council’s Sept. 28 meeting.

In an attempt to broach a compromise at the beginning of the meeting, Adler offered an amendment that instructed the city manager to develop options to maximize funding for historic preservation and explain how those options might impact competing goals, including funding of the convention center.

To Adler, his measure was a more prudent approach to achieving the goal shared by his opponents.

“We try to get 15 percent for historic preservation and at the same time do it in a way that doesn’t prejudice the puzzle,” he said.

The mayor also accused his colleagues of hypocrisy on budgeting, saying that others on the dais had repeatedly rejected calls to specify spending by resolution outside of the budget process. In no other context, he said, would a measure imposing such a large reduction on a city department – in this case Visit Austin and the convention center – be so quickly embraced.

Troxclair rejected the premise of Adler’s argument, saying that dedicating a certain percentage of HOT revenue to historic preservation would not preclude a convention center expansion. It is what other cities in Texas have done, she pointed out.

Troxclair also pushed back on Adler’s suggestion that she had sprung her motion on Council out of nowhere, noting that she and others on the dais have repeatedly raised concerns about passing up on opportunities to use HOT funds for non-convention projects.

“I haven’t seen the data that tells us that it would prevent us from moving forward with any other plan,” she said.

Council Member Ann Kitchen disputed the notion that money being diverted from the convention center would prevent it from expanding. Adler’s motion, she said, was simply “kicking the can down the road” on dedicating funding to historic preservation.

“I think that pitting historical preservation against homelessness is a false dichotomy,” she said.

A number of speakers supporting the measure argued that Austin has missed a valuable opportunity in allocating 85 percent of the HOT revenue it generates to the convention center and Visit Austin. Many invoked a 2013 study by Visit Austin that found that only 2 percent of the city’s visitors come for conventions.

John Kunz, owner of Waterloo Records, argued that people are attracted to the city by its small businesses and unique local character, not large, generic corporate conventions. He noted that the airport mostly features local businesses. He likened prioritizing the convention center to replacing them with chains.

“You could kick BookPeople out, bring Barnes & Noble in,” he quipped. “Hoover’s? I’d rather have Cracker Barrel.”

Representatives from the hotel industry and the hospitality sector argued against diverting money away from what they said was a key driver of the city’s economy.

After hours of debate and public testimony, Adler withdrew his original amendment and instead offered one that largely aligned with Troxclair’s measure but asked the city manager to conduct analysis on the impact of the reallocation of funds on other priorities. Troxclair accepted the amendment.

An amendment sponsored by Council Member Ora Houston that was unanimously adopted asked the city manager to investigate whether the Travis County Exposition Center could be funded by HOT revenue and deliver a report by Sept. 28 to Council.

Ann Howard, executive director of the Ending Community Homelessness Coalition, praised Council for trying to address homelessness. She recalled meeting with Adler before he was mayor. He asked, “‘If I was the mayor, what could I do to help end homelessness,’” she recalled.

“From the bottom of my heart, I want to thank you for the good work you’ve done today,” she said.

Photo by vxla made available through a Creative Commons license.

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