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Council approves hotel tax increase

Friday, August 9, 2019 by Jo Clifton

Despite requests from Travis County Judge Sarah Eckhardt and commissioners Margaret Gómez, Brigid Shea and Jeff Travillion, Austin City Council voted early Friday to approve a 2 percent increase in the city’s Hotel Occupancy Tax, which will allow the city to move forward with its plan to demolish and rebuild the convention center.

That brings the city’s hotel tax to 17 percent, the maximum allowable under state law.

Council approved the change at 2 a.m. in a unanimous vote.

The ordinance Council adopted was effective immediately, with any funds collected to be set aside and placed in a fund specifically designated for expansion, construction or debt service payments for debt issued to rebuild the convention center.

Commissioners had hoped to use a 2 percent HOT increase, under a different portion of state law, to fund redevelopment of the Travis County Expo Center. Eckhardt had placed an item on next Tuesday’s agenda that would have sent the tax question to voters in November.

The city is not required to ask voters for approval to charge the additional 2 percent because it is under a different section of state law. Opponents of the expansion are seeking voter approval of a charter amendment that would require voters to approve any future convention center expansions. That question will be on the November ballot.

Mayor Steve Adler has pushed for the convention center expansion as a lever to increase the hotel tax, with an additional 1 percent voluntary tax from hotels creating funds for homelessness relief programs. Hoteliers have been particularly enthusiastic about expanding the convention center. Council Member Kathie Tovo, whose district includes downtown, has joined Adler as an enthusiastic supporter with the rest of Council going along with the plan. The expansion also won support from the city’s tourism commission.

Attorney Bill Aleshire, a former county judge, told the Austin Monitor, “The reckless, rushed action by the City Council today is exactly why we can’t trust them to make good decisions in use of the hotel tax. … They are demonstrating exactly the behavior that demonstrates why we need the petition ordinance adopted so that voters can check them when they go crazy.”

Eckhardt’s office sent out a media advisory about the commissioners’ attendance at Thursday’s Council meeting, stating, “This (Hotel Occupancy Tax) item was posted as an emergency item after the Travis County Commissioners Court voted last week to utilize the remaining 2 percent Hotel Occupancy Tax on proposed economic development in the eastern parts of the county. Their emergency item, which will ultimately block the county from using the remaining 2 percent, came without warning or communication from the Austin City Council and short notice from city leaders.”

Under state law, the Hotel Occupancy Tax is limited to 17 percent on the price of a hotel room night. The maximum rate includes the 6 percent tax collected by the state of Texas.

The city is currently paying off the debt associated with an earlier expansion of the Austin Convention Center. Austin voters authorized that expansion and the accompanying hotel tax in 1998. The city is currently scheduled to pay off that debt in 2029.

Eckhardt and her colleagues were hoping to get voter approval to authorize the county to impose the tax again once the city’s debt is paid off.

In her statement to Council Thursday morning, Eckhardt concluded, “For Travis County to use the 2 percent HOT under the (Local Government Code), whether the city stops using it in 2021, 2029 or 2059, Travis County must ask permission of the voters, just as the city did back in the ’90s. So, we have begun the process necessary to even consider putting a referendum on the ballot for November 2019. Although discussion with city representatives over the years has been encouraging, recent actions by the city indicate an intention to expand and extend the use of all HOT for these downtown blocks for 30 more years. I ask you instead to commit on the record today to pay down the 2 percent HOT under the (Local Government Code) by 2021 so that the county can invest it in the Eastern Crescent for the redevelopment of the Exposition Center.”

Bill Bunch, an attorney and member of the commission that studied expansion of the convention center and who opposes that plan, said the item on Thursday’s agenda was not an emergency.

Somewhat ironically, Travis County received notification Thursday that “the Office of Texas Comptroller Glenn Hegar had approved Travis County’s resolution providing for the planning, acquisition, establishment, development, renovation, and construction of a multipurpose arena and adjacent sports facilities and related infrastructure. The Comptroller’s office notes that using the remaining two percent Hotel Occupancy Tax will require voter approval.”

Update: Mayor Steve Adler released a statement about the vote on Friday: “The Council took immediate action yesterday to start collecting and reserving the nearly $60,000 in tourist dollars being lost every day that the Council failed to act. Dozens of Austin’s music, arts, homeless advocates and preservationists gathered at yesterday’s press conference to reflect the widespread community demand that those dollars start being collected ASAP for local use. The Council’s action was merely the next logical step along a transparent three-year path, vetted and approved by several commissions, boards, task forces and city council prior votes. No governmental entity raised any concerns with this path over the last several years. The Travis County leaders asked the Council to pay off early the Chapter 334 debt so the county might be a position to access HOT funding, too, should that prove to be the correct path forward. The Council’s action yesterday kept that door wide open and even made such a scenario more feasible by accumulated those funds. The City will do a better job providing Travis County more prompt and conclusive discussions on the several issues on which we overlap on behalf of mostly the same constituents.”

This story has been amended.

Photo by stealingsand made available through a Creative Commons license.

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