Austin Convention Center presents plans to pay for proposed expansion

The Austin Convention Center, proposed for expansion, draws much of its funds from hotel occupancy tax revenue. A task force assembled by Austin City Council is slated to look at how that revenue should be used.

The Austin Convention Center, proposed for expansion, draws much of its funds from hotel occupancy tax revenue. A task force assembled by Austin City Council is slated to look at how that revenue should be used.

The entire Austin Convention Center could fit inside Las Vegas' Venetian hotel.

At least according to Tom Noonan, president and CEO of the Austin Convention Center and Visitor's Bureau, who spoke Tuesday at the Visitor Impact Task Force meeting. The task force was introduced to payment options to fund proposed convention center expansion plans—a plan Noonan and other stakeholders argued to be extremely necessary.

He presented the update to the Visitor Impact Task Force, a group of community members and stakeholders responsible for recommending how best to spend the city's 15-percent hotel occupancy tax, or HOT tax, which is imposed on hotel guests to help fund tourism. The task force was presented Tuesday with two options for funding the proposed expansion.

Austin Convention Center, located at Cesar Chavez and Trinity streets, currently has 247,050 square feet of exhibit space, putting it well below its competitors in comparable cities such as Houston, Denver and Nashville, according to the center's long-range master plan.

Expansion talks have been ongoing for almost three years, and since that time the Austin Convention Center has lost more business because of booking conflicts or lack of space, according to data, resulting in lost business increasing from 34 percent in fiscal year 2013 to 50 percent in fiscal year 2016.

"We're not talking about building something and trying to find the business to fill it up," said Carla Steffen, CFO and deputy director of the Austin Convention Center.

The first funding option asks citizens to vote on whether to redirect HOT tax money currently used to pay down debt from the 2002 expansion. This option would allocate an estimated $397 million for the expansion. The convention center would pay down debt on both expansions at the same time, resulting in a limited debt capacity.

The second option involves raising the HOT tax rate by up to 2 percent—the maximum allowed by the state—to generate an estimated $609 million toward the expansion and other tourism-related projects—such as historic preservation and Austin's cultural arts. If City Council chooses this funding option, council members would decide how much to raise the tax rate.

If the expansion is approved, council members will ultimately vote who decides how to pay for it—the voters or the city.

With either option, there will not be any increases to local property taxes. Steffen said the opposite is actually true: If the convention center expands, she argues taxpayers save about $1,080 per year because the city would make up that difference in the tourism market. She said the expansion would bring more people to Austin who would spend more money on the local economy, thus generating more revenue for the city's general fund that otherwise would be filled through property tax contributions.

"It's not going to be a [tax] increase to the citizens unless they stay in [an Austin] hotel," she said.

Steffen said she expects to present City Council with the finance options and the latest resolutions to council's 14 concerns—raised in November 2015—at its work session next Tuesday.

During the work session, she said she expects council to ask for a staff recommendation. And while not raising the HOT tax rate gets the expansion job done, she said she has another preference on which option to choose.

"If we're trying to meet as many needs as possible, I don't believe option one gets us there," Steffen said.

There is no set timeline for the expansion if it is approved. The expansion plan includes a total of 447,450 square feet of exhibition space, 120,800 square feet of meeting space and 120,600 of ballroom space, according to the long-range master plan.

Steffen said the Visitor Impact Task Force has already hinted at the possibility of requesting an extension on its April deadline, at which point members are expected to give recommendations to City Council for allocating HOT tax money.


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