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Report offers options but no recommendations for convention center

Monday, April 1, 2019 by Chad Swiatecki

The University of Texas analysis of the city’s options for expanding the Austin Convention Center – including the costs and effects of taking no action – paint the facility as the likely hub in a variety of development plans going on throughout downtown Austin. The options for significantly expanding the center westward to San Jacinto Street would see the city spend anywhere from $450 million up to a phased approach of more than $1 billion, with varying levels of private development offsetting portions of those amounts.

City Council voted to commission the report in September 2017 and it was initially expected to arrive late last year. In the intervening year-plus, various interests have debated the need and justification for expanding the convention center, which was most recently expanded in 2002.

The Council vote came amid a push from hotel and tourism interests to expand the center as a way to generate more business for nearby hotels. Mayor Steve Adler made the expansion the centerpiece of his long-paused “downtown puzzle” policy agenda that would use it to unlock portions of the city’s Hotel Occupancy Tax and other taxing mechanisms to address homelessness and other needs in the downtown area.

Council members received the 295-page report on Friday, four days ahead of a special Council meeting where the future of the convention center and surrounding area will be the only agenda item.

Completed by the Center for Sustainable Development at UT’s architecture school after Council authorized $250,000 for it in December 2017, the report studies the history of the convention center’s 1992 creation and the many municipal development efforts underway around it. Those include the Waller Creek parks project, the South Shore Waterfront district (which would be connected to the convention center area via a pedestrian/transit bridge across Town Lake) and the Second Street District that would extend from Shoal Creek to Waller Creek, except for its interruption by the convention center that currently occupies six city blocks.

While also looking at the effect on surrounding areas – particularly further blocking off of Second Street and possibly Trinity Street – the report’s possible options include an eventual demolition and replacement of the original four-block convention center, positioning office or residential towers on portions of the expanded center, or offering public park space on the roof of one of the expansion scenarios.

The expansion scenarios include:

  • Adding more than 360,000 square feet of exhibition space at a cost of $535 million, with private development potential of around $230 million.
  • A two-phase expansion – $450 million initially, with an optional $500 million second phase – adding more than 400,000 square feet of event space. Projected private development would contribute $570 million.
  • Another two-phase expansion – $725 million initially, with a $390 million second phase – to add more than 1 million square feet of event space. Private development totals estimated at $485 million.

The report forecasts that the three blocks west of the convention center, if left alone, would attract around $1 billion in private investment in the near future, with the city netting about $4 million extra annually in property tax on top of the tax currently generated there. The city would lose property taxes on those parcels in all expansion scenarios, with any increased revenue from Hotel Occupancy Tax being one possible offset, though state law limits how those dollars can be spent.

Tourism proponents, including executives from Visit Austin, have argued for years that the convention center loses out on a significant amount of conference and meeting business each year because of a lack of space. The facility’s capital debt is currently being paid off by a 2 percentage-point portion of the city’s HOT revenue, with its current debt load set to be paid off by 2029. At that point, those 2 percentage points would disappear from the current 15 percent tax paid by hotel guests – unless voters reauthorize it.

Photo by John Tornow from Dallas, TX [CC BY 2.0], via Wikimedia Commons.

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