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Downtown Commission wants private developer proposals for convention center expansion

Monday, April 25, 2022 by Chad Swiatecki

The Downtown Commission wants the city to solicit proposals from private developers to pay for a portion of the expansion and reconstruction of the Austin Convention Center.

At last week’s meeting, the commission approved a recommendation asking City Council to direct staff to conduct a request for proposals; specifically the residential or office spaces for the upper floors of the site that is currently eyed for an ambitious overhaul costing more than $1 billion from Hotel Occupancy Tax revenues. The amended recommendation also asks for a report from city staff examining the state of convention center business around the country, with forecasts on how attendance at events is expected to recover after the Covid-19 pandemic.

The commission has a working group that has been studying the convention center expansion for months, taking special interest in the findings of professor of public administration at the University of Texas-San Antonio Heywood Sanders showing most projections of future convention industry business are overly aggressive and inflated.

Commissioner Mike Lavigne said it’s possible private developers could shoulder a significant portion of the expansion cost in exchange for the opportunity to create attractive residential or commercial real estate in the heart of downtown.

“I’m hooked on the idea of a public-private partnership and it’s unbelievable to me that we haven’t explored that further. I’ve talked to some major developers in town about this specifically … and they all tell me unequivocally that it would be an amazing opportunity to put 40 floors of housing above the five floors of the convention center,” he said. “Most cities put convention centers in places where they’re trying to spur development or regrowth and we have the unique opportunity to be putting a convention center (expansion) in a place that’s already a boomtown. It’s important that we go back and ask staff to look at a new approach.”

In 2018, Council gave the go-ahead for staff and tourist industry stakeholders to move forward with the most aggressive reconstruction of the convention center, including plans to open up some of the east-west streets that are currently blocked off by the facility. Opponents of the expansion mounted a petition drive that sought to limit how much hotel tax money could be used for convention center capital expenses – such as an expansion – and would have required a public vote to move forward with such projects. That initiative was defeated, clearing the way for the city and convention center leaders to move ahead with plans for the expansion.

A proposed westward expansion of the facility was recently abandoned because of the high cost of property acquisition, leaving vertical expansion the only option to add capacity to the convention center and include other uses as a way to bring in additional revenue beyond event bookings and hotel taxes.

Commissioner Joel Sher attempted to have the resolution tabled to allow the commission to hear from convention center advocates. Before his motion failed to be seconded, he reminded the commission of the approval from voters and clarified it would be the project’s bondholders instead of the city that would be liable for any financial failings related to the convention center.

“It’s not an obligation of the city and if there’s not enough money for that (expansion) to be done, then it is the bondholders’ problem. The bondholders are not going to be spending a half-billion or a billion dollars on something unless they think they’re going to get paid back.”

Commissioner David Gomez said the resolution should help to clarify the contrasting data presented in recent years from those on both sides of the expansion issue.

“I see this resolution as an attempt to get to truth and transparency … in any business we take on, a lot of what we base our decisions on is the data that is given to us and we trust that they’re telling us the truth. But we have two entities that are telling us different truths and they don’t mix, they don’t match.”

Photo made available through a Creative Commons license. This story has been changed since publication to clarify the 2018 vote on the Convention Center expansion.

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