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Austin: Hotel Tax Hike Approved to Support Convention Center Expansion

Featured Photo (above): The city of Austin is eyeing another round of expansion of the Austin Convention Center. This is a view looking northeast from Cesar Chavez Street. Image: Google Streets

Posted 8-9-19

by Edmond Ortiz

Austin (Travis County)–City Council voted early Aug. 9 to raise the local Hotel Occupancy Tax (HOT) rate by 2% to help fund, among other things, a planned expansion of the Austin Convention Center.

But how hotel tax money is spent going forward, and future major convention center projects, could be affected by the outcome of a November election spurred by a citizen petition.

Also, the council action is forcing Travis County to find another way to finance redevelopment of the Travis County Exposition Center.

The council vote increases the city hotel tax from 7% to 9%. This is in addition to another 6% that the state collects in HOT taxes, and a 2% venue tax that the city levies. As a result, Austin has arrived at the state-mandated 17% total HOT rate limit.

City officials said the new rate will produce an estimated $20 million each year. The new money will be dedicated to a $1.2 billion convention center expansion, and for increased promotion of local arts and preservation of historic landmarks.

The last time the city enlarged the convention center was in 2002, four years after voters approved the aforementioned venue tax to pay for that expansion.
The center currently covers 881,400 gross square feet over six blocks.

The council voted this spring to proceed with a new expansion that would involve adding onto the western side of the complex, as well as reconstruction of some of the existing structure.

The planned convention center expansion is part of development of the Palm District Master Plan, which addresses future development of the historic former Palm Elementary School and other landmarks in the Rainey Street Historic District.

Earlier in the council meeting, Travis County Judge Sarah Eckhardt and three county commissioners pleaded with the council to not increase the hotel tax for the sake of expanding the convention center.

Travis County Judge Sarah Eckhardt, flanked by Commissioners Margaret Gomez ((left) and Brigid Shea, addresses Austin City Council on Aug. 8 about the proposed hotel tax hike. Image: City of Austin

State law allows for counties to collect a 2% hotel tax. But cities, not counties, typically levy hotel taxes.

Travis County had been considering asking voter approval to levy a 2% hotel tax and capitalize on events and increasing tourism outside of Austin, in popular venues such as the Circuit of the Americas.

But according to previous Commissioner Court discussions, the county hoped the city could finish up paying off debt from the last convention center expansion in order for the county to start collecting on that tax. The city is scheduled to complete paying down that debt in 2029.

County leaders have said the HOT revenues would help to support enhancement for the expo center and other initiatives allowed by state law to improve economic development in areas such as East Travis County.

But commissioners feared the city maxing out the HOT rate would give the county no flexibility.

“I don’t think we’ll be well served if you rush into this,” Commissioner Brigid Shea told the council.

Before the council meeting, the agenda for the Aug. 13 commissioners court contained an item where they would mull calling a November election by the state deadline of Aug. 19. That item no longer appears in the agenda.

City Council also voted to place a proposition on the Nov. 5 ballot. Voters will be asked to amend the city charter to permit elections to approve any future significant convention center redevelopment or renovation, and on how HOT revenues are spent.

This November’s vote will not affect the current expansion initiative.

This proposition was driven by a petition from the Unconventional Austin, a grassroots group that collected more than 30,000 petition signatures. The city confirmed in July it had verified 24,000 of the signatures.

Unconventional Austin says too high a percentage of hotel tax revenue – currently more than 70% – is allocated to the convention center, and that the percentage should be cut to 34% so that more of the money could go toward promoting local arts, historic preservation and cultural tourism.

The PAC also said voters should have a say on convention center projects costing $20 million or more.

City and business leaders supporting a convention center expansion argued the citizens initiative is unnecessary since hotel tax revenue, not property tax or general budget fund revenue, would be used to fund the expansion.

Looking southeast over the Austin Convention Center. The city of Austin looks to add onto the facility’s western portion and rebuild other parts. Image: Google Streets

——————————————————————————————————————————————————————————————–edmond@virtualbx.com

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By |2019-08-12T16:04:40-05:00August 9th, 2019|Construction Preview, Feature Story|

About the Author:

Edmond Ortiz is a lifelong San Antonian and a 20-plus-year veteran in local journalism, He previously worked full-time at the San Antonio Express-News, and has been freelancing for outlets such as the Rivard Report.

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