Featured Photo (above): HVS, a consulting company, is leading a financial and market analysis of Austin’s proposed expansion of the Austin Convention Center. Image: Google Streets
By Edmond Ortiz
Austin (Travis County)–The city has hired HVS, a noted hospitality consulting organization, to do a financial analysis on plans to expand the Austin Convention Center.
Late in 2019, City Council directed City Manager Spencer Cronk to launch an analysis of the long-planned project. New York state-based HVS has provided financial and valuation consulting services totaling more than 35,000 assignments to hoteliers, developers, lenders, investors, management companies and public agencies worldwide.
VBX previously reported on how the council voted last August to raise the city’s Hotel Occupancy Tax (HOT) rate by 2% to help fund expansion of the 28-year-old facility, which was last enhanced and enlarged in 2002.
Assistant City Manager Rodney Gonzales and Carla Steffen, the convention center’s deputy director, wrote a memo Dec. 18 to Mayor Steve Adler and the council with an update on the analysis.
Convention center department staff have been working with the city’s strategic advisors, convention industry consultants and others to produce an analysis that will reflect current conditions in the convention facility market, including demand.
According to the memo, the scope of market and economic analysis will specifically outline historical operations at the convention center, comparable and competitive facilities, building program recommendations, financial projections and fiscal impact, and demand and attendance projects. A draft report will follow sometime this spring.
“The financing model, including cash flows, will be updated to include the current market and economic conditions reported by HVS,” the memo stated. “The team will continue to work with the city’s financial advisors to update the financing model throughout the planning effort.
The HVS team toured the convention center property in November and met with various stakeholders, including representatives from Visit Austin, local chambers of commerce, the city’s tourism commission, Downtown Austin Alliance, Waterloo Greenway and hoteliers.
Informal discussion about expanding the 881,400-square-foot complex has included the possibility of demolishing an older part of the venue and building westward. But developer Manifold’s proposal for construction of a 42-story office building at Trinity and East Second streets would stand in the way of such an expansion.
The planned expansion takes into account and is intended to be part of the Palm District master plan, which directs long-term development of the former Palm Elementary School, a historic property, and other landmarks in the adjacent Rainey Street Historic District, a scene ripe with new construction.
“There have been no changes in the financing model since the last update, except, as explained in the memo to the mayor and council regarding Palm School dated Nov. 18, 2019, it is not feasible for the convention center’s outstanding debt to be retired in 2021,” Gonzales and Steffen wrote in their memo.
The memo continues: “Since the financial analysis will be influenced by the final site assembly and co-development or public private partnership determination, once those elements are more informed, the team will update the financial feasibility analysis accordingly.”