Consultant Janis Barlow, of Barlow & Associates, told Lakeway City Council members Oct. 23 that an 800-seat performing arts center is a viable opportunity for the city and fills a gap in the area’s theater community.

However, the City Council approved additional studies—totaling $70,000 to $100,000—that will help members determine if they should proceed with the proposed 48,000-square-foot project that may cost, according to Barlow, $25 million without the land purchase.

Although the proposed performing arts center will be funded in part through the city’s hotel occupancy tax, or HOT tax, Barlow said $12.5 million of the initial building cost would need to come from private-sector donations.

Council members including Ron Massa said they were concerned as to how the city could raise $12.5 million from its constituency.

“You have the option of moving forward and doing a feasibility study,” Barlow said.

She said she consulted industry friends in Austin as well as other professionals at the Paramount Theater and Long Center for the Performing Arts who concluded that an 800-seat theater and its programming could be attractive to all of Austin.

“Austin hasn’t invested in theaters,” she said. “Their school districts have invested in school auditoria, but they really haven’t invested in public professional theaters.”

Council Member Bridge Bertram said she was concerned the theater would take away from school theaters that depend on programs in their venues for funding.

Barlow said the school districts may not see a change in funding due to the construction of another event facility but may see additional performances interested in school facilities that cannot afford the new center or are not big enough to fill its venue.

“There is no way this would take any business away [from the school auditoriums],” she said. “[School facility events] are very different.”

Barlow said the area lacks good public or touring venues and suggested the proposed theater could accommodate musical artists such as Joan Baez and Keb Mo, whose fans would drive an hour or two to see their concerts. Additionally, she said the center would be successful for a high-end performance series for young audiences, children’s theater and family events.

“As far as a small venue, you’d be it,” she said. “This is the perfect [fill for the] venue gap in the Austin area.”

Barlow said accommodating 140 to 200 events per year would be ideal for the center, with additional events having the possibility of wearing out staff and costing more in overtime fees.

“You want to find the right balance of what your market can sustain and [its] economic viability,” she said.

Additionally, a continued annual subsidy of $250,000 to $500,000 may be needed to maintain the center’s operations, Barlow said.

Lakeway Mayor Joe Bain said the city will have two more hotels online in the next year and a half, bringing in an estimated $2 million to $2.5 million a year in HOT tax revenue.

Massa said he was concerned the project may deplete the city’s HOT  tax funds “at a pretty good rate.” He said funding for the first six years of the project—until it becomes more viable—must come out of the HOT tax. He said his constituents have told him they like the project but need convincing they will not be obligated to pay for it through municipal taxes.

“If we have to subsidize this at $250,000 or $500,000 per year, that’s insignificant,” Bain said. “The law says [HOT tax funds] have to be spent to put heads in beds. We have to come up with a way to use it or we have to stop collecting it. The hotels we’ve got are running at 100 percent filled right now. If we put in a couple [of] more hotels, that just raises the amount of money we will bring in.”

City Manager Steve Jones said the purchase for the center’s land may cost between $2 million and $3 million, plus additional fees for parking construction, bringing the total of the project to roughly $30 million.

The city has an option to purchase land at the Oaks at Lakeway that will expire in January, Deputy City Manager Chessie Zimmerman said.

Staff will provide an updated projection of HOT tax funds at a later date, Jones said.