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Thursday, December 21, 2017 by Chad Swiatecki

Memo outlines ‘downtown puzzle’ progress headed into 2018

Work on Mayor Steve Adler’s “downtown puzzle” policies package will be almost certainly put on hold until the spring when newly hired city manager Spencer Cronk will be able to study and work on how to execute the proposal.

That was the word from Adler on Wednesday, following a Friday memo from Assistant City Manager Mark Washington that gave an update on the six biggest components of the puzzle agenda.

In September, City Council gave Dec. 15 as the deadline for a report on how to carry out the proposal, which centers around the possible expansion of the Austin Convention Center and using funds from an assortment of related taxing mechanisms to address homelessness and pay for a series of public works and cultural projects.

Washington’s memo states, “This is an update and not a final report,” before breaking down the status of the convention center project, possible acquisition of the nearby Palm School property, potential use of Hotel Occupancy Tax or government bonds to pay for improvements throughout East Austin, the options for providing services and housing for homeless residents, the funding options for expansion of the Emma S. Barrientos Mexican American Cultural Center, and the string of parks proposed for the Waller Creek area.

On Dec. 14, Council approved an agreement with the University of Texas’ Center for Sustainable Development to study the business and development scenarios for the convention center’s expansion. The memo said staff research found that an expansion, rather than a renovation, is the action required to initiate a 2 percentage-point increase in the city’s Hotel Occupancy Tax that would fund the proposed $600 million in work.

The memo said the Palm School property’s historic value makes it likely that Travis County would prefer a competitive request-for-proposal process for its redevelopment to ensure as much preservation as possible, or go through with a deed-restricted sale.

On the effort to improve sites in East Austin, staff found that the proposed redevelopment of the Travis County Exposition Center likely would not qualify for the use of HOT funds because it doesn’t meet at least three of the criteria in the state law governing the use of hotel taxes.

That means other funding sources, such as a public bond vote, are options the city supports in its ongoing discussions with county officials about that project.

The homelessness component of the puzzle was updated in a Nov. 28 memo from Interim Assistant City Manager Sarah Hensley, and a proposed 1 percent self-imposed tax on hotels – known as a tourism public improvement district – would provide some money for homeless relief as well as toward the convention center.

Staff found that the second phase of a proposed expansion of the MACC would likely qualify for HOT funds, with the first phase eligible for municipal general obligation bonds. Stakeholders of that facility are currently working on a new master plan, which will help determine the scope and cost of its expansion.

Interim Chief Financial Officer Greg Canally is studying the impacts of a possible expansion of the tax increment financing mechanism currently being used for the Waller Creek Tunnel project to pay for the system of parks proposed for construction along the waterway.

Adler said he was pleased with the information and progress staff has made on the puzzle proposal, and said individual actions like the UT study of the convention center will help sustain momentum.

“It’s forward movement, and while there are a whole lot of questions with respect to the puzzle, we need to start moving where we can and I’m glad Council approved having the folks at UT looking at the design for the convention center,” he said. “I expect the Waller Creek portion could be in a position to move forward the soonest, though we’re still answering questions on funding streams.”

The staff memo said a complete report will go to Council in February, but Adler said it will be longer than that before Cronk is able to get a handle on the puzzle’s many policy components. He added that some puzzle items will be included in budget forecasts that are being prepared for Council work sessions in April.

Council Member Jimmy Flannigan said the puzzle will be one of the bigger agenda items for Cronk once he starts the job, though his start date is not yet known.

“The new manager has got to have a substantial role because (the puzzle) crosses so many departments and parts of the city,” he said. “I remember that was one thing we discussed with him, was the need to cross cut through different silos and make sure the right hand knows what the left hand is doing.”

Flannigan said he’s had some of his concerns about the puzzle addressed – specifically taking tax-generating property near the convention center off the city tax rolls – but he remains opposed to the idea of expanding the Waller TIF.

“I have lots of hesitation on using the TIF as a funding tool because those are taxes that are needed to pay the cost of police and fire (departments),” he said. “It’s not a just a matter of ‘Will the park be pretty?’ because lately we’ve had lots of items come in front of Council, like the fire department or the aquatics task force, where they just don’t have the numbers behind it.”

Photo by Jason Adam van Beeman made available through a Creative Commons license.

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Key Players & Topics In This Article

Austin Convention Center: This city department operates the downtown convention center and associated events.

city manager: The city manager oversees the administrative segment of the City of Austin and is one of four Council direct reports.

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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