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Negotiations in the works on convention center expansion

Wednesday, September 16, 2020 by Jo Clifton

Although the Covid-19 pandemic will continue to have serious economic impacts on the Austin Convention Center for several years, people will still want to gather for face-to-face meetings, according to an expert hired to advise City Council on the planned expansion of the convention center. Tom Hazinski of HVS Convention, Sports & Entertainment told Council during Tuesday’s work session there is going to be “a level of uncertainty” about when and how people will return to live events such as conventions. However, just like after 9/11 when every facility had to come up with a security plan, convention centers will have new procedures to facilitate those gatherings, he said.

Hazinski said he expects the convention business to be shuttered through the rest of 2020 and the early part of 2021. Because of the impact of the virus on the convention business, his group did not make any projections about income from conventions until 2024. “It’s fair to assume that while prolonged, it is a temporary phenomenon,” he said, though he believes the country will be “in a recessionary environment” for years.

Hazinski was most concerned about the lack of a new economic stimulus package from the federal government. He told Council he tried to be “very conservative” in his projections in the near term, adding, “We don’t hit full stabilization until 2033.”

Council approved doubling the size of the convention center long before Covid-19. While they have not approved the final plans, Council members have expressed a strong preference for expanding on both the west side and east side of the convention center, which sits at 500 Cesar Chavez between Red River and Trinity streets.

Although they are not scheduled to take any votes on how the expansion should proceed, Council has an action item on Thursday’s agenda to “approve an exclusive negotiating agreement” that includes paying $6.3 million in earnest money to start the ball rolling on acquiring land for expansion on the west side of the convention center. The property proposed for purchase is located between East Second Street on the south and East Fourth Street on the north, between Trinity and San Jacinto Boulevard.

Some of the businesses that occupy Block 16 and Block 32, as they are described on the agenda, include P.F. Chang’s, Fleming’s Prime Steakhouse and Wine Bar, and Café Blue.

As is usual with real estate deals, Council did not discuss the proposed purchase during open session but was scheduled to discuss it in executive session.

Hazinski was very enthusiastic about expansion and told Council that during his survey of event planners he had never found a more popular place than Austin. According to the survey, 83 percent of respondents said they were either “very likely” or “somewhat likely” to use an expanded Austin Convention Center, while only 4 percent of respondents said they were unlikely to do so.

The convention center does not pay for itself through conventions, but that is more than offset by the money generated by the Hotel Occupancy Tax, which is also down considerably because of the pandemic.

The survey, which was conducted before the pandemic, showed that downtown hotel occupancy is 84 percent on convention event days, as compared to 72 percent on days without events. Hotels also charge an average of $37 more for rooms on days when the convention center is hosting an event.

Trisha Tatro, interim director of the Austin Convention Center Department, sent a memo to the mayor and Council in August reiterating previous arguments about expansion. She said the convention center “is at a competitive disadvantage due to a lack of meeting space and adequately sized exhibit hall and ballroom space as compared to its peers.”

Tatro also wrote, “Expansion of the center, in conjunction with the ongoing initiatives like Waterloo Greenway, the Palm District and Project Connect, will transform the southeast corner of Downtown Austin into a community-centric destination as envisioned in the University of Texas at Austin report on convention center expansion.”

Photo made available through a Creative Commons license.

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