Battle Lines Drawn on Convention Center Expansion
Arguments continue to escalate over how to spend hotel occupancy tax revenue
By Mike Clark-Madison, Fri., June 14, 2019
Both friends and foes of an expanded Austin Convention Center sought to escalate the conflict this week, prompted by the unexpected unanimous City Council vote on May 23 to move forward with an upgrade of the center that could cost more than $1 billion. Unconventional Austin, a political action committee formed by leaders of the Austin Independent Business Alliance, Save our Springs Alliance, and others, is gathering petition signatures to force a public vote on the expansion plan, along with other changes to how the city uses hotel occupancy tax (HOT) revenue – changes that city and industry leaders as well as expansion supporters say are not possible under state law, regardless of the outcome of any future vote.
Taking point on that side has been Council Member Jimmy Flannigan, who on his personal/campaign site last week took aim at opponents' claims in a post entitled "A Dragon in Petition's Clothing." Unconventional Austin responded – and mercifully did not continue the Game of Thrones cosplay – on its own site, highlighting the great distance between the two sides' versions of the merits of expansion, the alternatives Austin could pursue, and the data that informs the debate.
At its core, the case goes like this: Unconventional Austin notes that of the more than 27 million visitors to Austin each year and the more than 10 million hotel room nights booked, only a small fraction are linked to Convention Center events (several of which – including what's by far the largest, South by Southwest – also attract thousands of local residents). Yet of the $96 million the city receives from those visitors in annual HOT revenue, the Convention Center – along with its marketing arm, Visit Austin – consumes about 75% to support its operations and pay back the debt issued to build the center in 1992 and expand it in 1998. This mismatch means that cultural arts and historic preservation programs that are also funded by HOT revenue are getting short shrift, as are promoting local businesses (AIBA's raison d'être) and investing in other Austin tourism assets (such as Barton Springs, hence SOS's involvement).
Expansion advocates – who at this point include City Hall itself along with Visit Austin, the hotel industry, and other stakeholders – feel this analysis underplays the Convention Center's importance to Austin's tourist trade, but many are more invested in the plan's promise of wider community benefits. The Council vote for expansion was part of a large omnibus resolution that also addresses Palm School, Rainey Street, the Mexican American Cultural Center, Capital Metro's Downtown Station, Brush Square, Waller Creek, urban design and walkability, job creation, and homelessness services. The last of these would gain $4 million to $8 million in new revenue from a special assessment (via a public improvement district, à la the Downtown Austin Alliance) on hotel bills.
The hotel industry agreed to this "tourism PID" in return for the city's commitment to expansion, and to hiking the HOT itself to the state-allowed maximum, which proponents say also means more money for cultural arts and historic preservation – each of which gets 15% of HOT revenue, also set in state law. The state HOT statutes are very messy, with patches and exceptions for one-off situations all around Texas, and the lawyers among the Unconventional Austin team say the city is overly and unduly conservative in its reading of how it can spend its HOT revenue.
Both sides are on social media and in the streets with campaigns whose funding and backing sources should become clearer after the next PAC reporting deadline on June 30. Expansion backers claim signature wranglers are misinforming voters by pitching the drive's goal as "more money for the arts" while they aim for the 20,000 signatures needed to put an initiative on the ballot. As with other recent drives, city leaders remain unconvinced that the expansion plan, since it doesn't involve any local property or sales tax revenue, can legally go on the ballot at all.
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