Residents to Vote for Hotel Occupancy Tax Allocation, Soccer

County, city grapple for hotel dollars

Rodeo Austin is one of the major events at the Travis County Expo Center. (Photo by David Brendan Hall)

On Monday, Aug. 19, the Travis County Commissioners Court voted unanimously to place on the Nov. 5 ballot a proposition to give the county authority to levy a 2-cent tax on hotel stays, with new revenues put toward redevelopment of the Travis County Exposition Center in East Austin. This escalates the conflict between county and city leaders over who will reap the benefits from levying the state-allowed maximum Hotel Occupancy Tax rate within the Austin city limits. Currently, the city is using HOT to service bonds issued for the 2002 expansion of the Neal Kocurek Memorial Austin Convention Center, but staff projects that debt could be retired as soon as 2021, eight years ahead of schedule.

Once the debt is paid off, Travis County could capture that 2% HOT rate increment, hence the countywide ballot proposition. If voters approve, the county could begin collecting its HOT from hotels outside the city, and then the greater revenue generated by in-town (and especially Downtown) hotels once the 2002 debt is gone. Monday's special called meeting gave the Commissioners Court another opportunity to force the city's hand toward committing to a 2021 repayment date and freeing up the money. The county ballot language directly references the Expo Center project, so if voters support it – especially if they do so by a wide margin – Austin's leaders would presumably find it more difficult to hold on to the HOT funds that Travis County needs for a major investment in the long-neglected and much discussed Eastern Crescent, a priority for both city and county.

Council’s recent Palm District resolution – including a new Conven­tion Center expansion project – could be interpreted as leaving the door open to the city keeping that HOT revenue to itself for another 30 years.

As tensions have escalated in recent weeks, County Judge Sarah Eckhardt has pointed out that Council's vote in May on its Palm District resolution – including a new Convention Center expansion project – could be interpreted as leaving the door open to the city keeping that HOT revenue to itself for another 30 years. The November ballot already contains a separate proposition that would reallocate the city's HOT revenue and force any future Convention Center expansion to go before the voters for approval. At its Aug. 8 meeting, when Coun­cil voted unanimously to lock in the maximum HOT rate to fund a potential Conven­tion Center project – they also set the ballot language for Proposition B on the Novem­ber ballot, the ordinance brought forward by Unconventional Austin's petition drive.

On Aug. 13, local NAACP President Nelson Linder filed a lawsuit against the city on behalf of Unconventional Austin, taking issue with that ballot language. In a press release, Linder faulted the city's language for not specifying that denying HOT revenues for Convention Center expansion could allow for more funding for "cultural, arts and other authorized tourism-related programs." Although UA's lawsuit was rejected by the Texas Supreme Court on Aug. 15, Linder quickly refiled it with the 3rd Court of Appeals in Austin. The Travis County Clerk's Office will begin printing ballots on Sept. 5, so the final language must be submitted before then.

While the HOT battle continues to heat up, the fight over the other citizen initiative on the ballot (Proposition A, also approved on Aug. 8) has cooled down significantly. On Monday, Fair Play Austin – the political action committee that took up the fight against the planned Major League Soccer stadium set to break ground in September at McKalla Place near the Domain – announced it would not campaign in support of the proposition. Chris Lippincott, a spokesperson for the group, emailed a brief statement to reporters that said, "In its current condition, passing Proposition A would do more harm than the good intended when we initially supported it. Given how far the ballot language has drifted from its original intent to give voters a say on whether the City should give away valuable land and waive property taxes, Fair Play Austin PAC will not undertake any effort to support the passage of Proposition A." Those two sentences could bring a hurried end to a political battle that has stretched over two years.

Curiously, the Fair Play statement does not assert how the Council-approved language deviates from the "original intent" of the petition drive, which originated with the now-defunct IndyAustin PAC before ending up with Fair Play, which is backed almost entirely by Austin Bold FC owner and Circuit of the Americas Chairman Bobby Epstein. Adding to the challenge for Prop A supporters, the opposition Austin United PAC, formed in July by MLS in Austin advocate Derek Ensign, commissioned attorney James Cousar of Thompson & Knight to analyze potential impacts if voters approved Prop A. The Cousar memo, reviewed by the Chronicle, offers a devastating assessment of both Prop A's legality and its impact on city venues and events far from McKalla Place.

Under Prop A, the "sale, lease, conveyance, mortgage, or alienation" of any city-owned land for use in a sports or entertainment capacity would require supermajority approval by Council and approval by Austin voters. Moreover, the proposed ordinance would require potential owners or lessees of city land to meet other criteria the memo deems "onerous," such as agreeing to forfeit tax-exempt status; making public "all agreements, documents, files, communications, and records" relating to the deal; and taking financial responsibility for "all off-site infrastructure costs and municipal services costs" stemming from the construction of the facility.

Though focused on the particulars of the deal involving Austin FC, the ordinance could apply to deals the city has already struck (excluding the Trail of Lights and Austin City Limits Music Festival, which are explicitly named as exceptions in the proposed ordinance). The memo concludes succinctly: "The result could be loss of entertainment and sports facilities that the citizens of Austin now use and enjoy or could enjoy, in the future."

Still, the pro-stadium side is preparing for a fight. Mark Littlefield, a local political consultant who worked to bring the MLS deal to Council, pointed out that the Fair Play PAC has not been dissolved. "We don't believe they're done," Littlefield told us, "and we're prepared to spend big money just in case."

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