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Council voices concerns over Visit Austin spending on alcohol, events

Friday, September 29, 2017 by Jack Craver

A report that the Austin Convention and Visitors Bureau (known as Visit Austin) has spent hundreds of thousands of taxpayer dollars on jewelry, alcohol and meals at fancy restaurants prompted City Council to delay approval of the nonprofit agency’s marketing plan and budget.

Council Member Leslie Pool, citing “significant questions about the spending of taxpayer dollars” revealed in a recent investigation by KXAN, urged her colleagues to postpone the $15.3 million budget so that Council could further scrutinize spending practices and potentially come up with new policies on how funds could be used. She also proposed submitting Visit Austin’s budget to a city audit.

She was particularly skeptical of how the agency paying for tickets for clients to see international acts like Lady Gaga, Elton John and Paul McCartney had much to do with promoting Austin. She also expressed concerns about the use of Hotel Occupancy Tax funds on alcohol. Never in her career as a public employee had she had taxpayers pick up a bar tab.

“If I wanted a margarita or a glass of wine, it had to come out of my pocket,” she said.

Bill Bunch, executive director of the Save Our Springs Alliance, similarly ridiculed the notion that Austin had to wine and dine clients just because other cities did.

“The whole (visitors bureau) industry is corrupt and that’s OK?” he asked. “We’re going to keep giving them our money to throw crazy parties?”

Hotels have no more of a claim over the taxes they collect from guests than restaurants or other local businesses have over the sales taxes they collect from customers, he said.

Visit Austin and representatives of the hotel industry defended the expenses highlighted by KXAN, describing them as standard costs of trying to woo out-of-town clients to hold their conventions in Austin. Much of that money, said Visit Austin Chief Financial Officer Julie Hart, is spent showcasing Austin artists and small businesses in an effort to promote Austin’s reputation as the “Live Music Capital of the World.”

For instance, said Hart, the agency had flown Austin artist Gina Chavez to Australia as part of the city’s bid to host the 2022 Gay Games. It similarly flies other local artists to events around the country, she said.

The spending on jewelry came from the agency’s attempts to promote Kendra Scott, “one of our best success stories.” When on the road, the agency provides credit to clients to make purchases at Kendra Scott stores, with options to upgrade that benefit the SIMS Foundation and the Health Alliance for Austin Musicians.

“We could give them a notebook and a pen, but that doesn’t leave the same lasting impression,” said Hart.

As for the audit, said Hart, the agency has submitted to an annual independent audit but would welcome the further scrutiny by the city.

Delaying approval of the agency’s budget could send a bad message to Visit Austin employees as well as to potential customers, she said, noting that Chicago’s visitors bureau saw clients back out of events several years ago when its funding was briefly put on hold due to a state budget impasse.

Leaders of some of the city’s biggest hotels also bemoaned the prospect of imperiling Visit Austin’s ability to market the city, which they said was absolutely essential to the local hospitality and tourism industry.

“The great success that our city has experienced as a tourism destination doesn’t happen by luck,” said Drew McQuade, general manager of the W Austin, the Second Street hotel where Mayor Steve Adler owns a condo.

Scott Joslove, head of the Texas Hotel & Lodging Association, denounced the criticism of Visit Austin’s spending as disingenuous and unfair. He stated that the agency was using HOT revenue in precisely the way it is intended: to promote the city and lure visitors to its hotels.

“The sales tax and property tax are not dedicated taxes and Bill Bunch knows that,” he said.

The money being spent on events for potential clients, he added, was responsible for $150 million in spending by convention attendees and visitors.

Council Member Jimmy Flannigan echoed those comments, saying that there was a fundamental difference between revenue from property and sales taxes and that from the Hotel Occupancy Tax. He was open to finding new, “innovative” ways to operate the visitors bureau, but doubted that Council would come up with anything groundbreaking in the next few weeks.

“This is not a good way to do policy,” he said. “I don’t think it’s fair to the staff at the visitors bureau.”

Mayor Pro Tem Kathie Tovo, who helped lead a recent effort to reallocate HOT funds from Visit Austin and the Austin Convention Center to historic preservation projects, emphasized that she supported reviewing how Visit Austin spent money as part of an ongoing examination of how HOT revenue is spent.

Council Member Ann Kitchen echoed those comments. She said she was not accusing the agency of “ill intent,” but she thought it was reasonable for Council to discuss what is appropriate spending of taxpayer funds.

Council ultimately approved Pool’s motion to postpone a vote on the Visit Austin budget until Oct. 12. The vote was 7-3, with Flannigan and Council members Pio Renteria and Ora Houston in dissent and Council Member Ellen Troxclair absent.

Photo By Ed Schipul (Flickr: austin convention center, sxsw 2011) [CC BY-SA 2.0], via Wikimedia Commons.

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