“We need two things for the redevelopment: sufficient managerial control, whether that’s flat-out ownership or a longer-term lease, and we need an appropriate revenue stream, and [hotel occupancy tax] is what the legislature provides for these sorts of ventures,” County Judge Sarah Eckhardt said on Jan. 7.
In a Jan. 8 statement, Austin Mayor Steve Adler said, “I remain a strong supporter of improving the Expo Center. The City effectively donates the land for this purpose now. I support continuing and extending donating the land in the current or a different form and without seeking any compensation or trade from Travis County.”
While he added that the city manager is working to identify viable funding options to pay for the redevelopment, those options are not yet available—and likely won’t include hotel occupancy tax, which county commissioners have said is critical to the project.
On Nov. 5, more than 62% of Travis County voters supported the proposition to use hotel occupancy tax revenue to “energize the expo,” as the campaign slogan promised, by levying a 2% venue project tax on hotel guests.
Currently, the state and the city of Austin levy the maximum hotel occupancy tax rate allowed in Texas—17%—which includes a 2% venue project tax issued by the city to pay off its 2002 expansion of the Neil K. Kocurek Austin Convention Center downtown.
Before the election, city officials suggested the city would pay off this debt by 2021, eight years before it officially expires in 2029, and in August council members directed City Manager Spencer Cronk to work with the county to find mutually beneficial strategies for the expo center expansion.
However, in a Nov. 19 memo to Austin City Council, Assistant City Manager Rodney Gonzales wrote that that estimate was “not feasible” without an updated financial analysis for a second, $1.3 billion convention center expansion.
Then, in a Dec. 16 letter to Eckhardt, Cronk wrote that access to the venue project tax revenue by 2021 “cannot be achieved.” He also rejected a series of alternative proposals from Eckhardt, including a property swap that would have seen the county take over the expo center but cede ownership of the Palm School to the city.
Additional revenue and control of the property itself would help the county retain its anchor tenant—Rodeo Austin—which has said it will seek to relocate unless the county can make material improvements to the property.
But without access to hotel occupancy tax revenue, Eckhardt said the county has to consider divesting itself from the expo center in the next five years.
“Although there has been considerable press lately about Travis County’s divestiture in the exposition center, that is not a possibility that we want,” Eckhardt said at the Jan. 7 meeting. “That is a possibility that we seek to avoid.”
The county is also concerned with a new 3.5% property tax revenue cap, which will take effect in October and curtail how much property tax revenue the county is able to bring in. The current cap is 8%.
County commissioners have repeatedly stressed that the new cap will force budget cuts and hard discussions about which services to continue.
Eckhardt told Community Impact Newspaper on Jan. 6 that, because the expo center mainly benefits visitors rather than county residents, it makes sense for it to be funded by a hotel occupancy tax, rather than by property taxes, as is the case currently.
“The argument of using property taxes has never been a good one,” Eckhardt said. “But now with the 3.5% revenue cap it’s become even more difficult to put those property tax dollars towards an exposition center when we have other, more dire need.”
Serving the community
Rather than divest, county commissioners are keen to pursue the expansion project, which would address Rodeo Austin’s concerns and likely include private partners to redevelop the tract to include more community resources and programming.
“The expo center provides a really important space to do a whole lot of programming,” Commissioner Jeff Travillion said. His precinct, which includes the expo center, includes many residents who have been forced to move further east because of rapid gentrification in central Austin.
“It's not the expo center by itself. It is the area that the expo center serves. It is the fact that most of those people have been displaced from a city that they cannot afford, from a place with public transit, from a place with libraries or a place with community centers, to a place with none of those things. So it is important that we bring the economic investment and that economic investment starts with public investment,” Travillion said. “We understand the discussion about convention center. But nobody can argue that downtown is underdeveloped.”
Despite roadblocks to funding, commissioners remain optimistic that the expo center can be expanded.
Travillion met with Austin Mayor Steve Adler on Jan. 2 to discuss the expo center and said Adler “understands the need to invest and develop the area,” even though the hotel occupancy tax revenue impasse remains.
The steering committee, commissioners hope, will help support their goals.
“By establishing this committee I think it shows that our preference is to avoid that possibility and to move forward positively, engaging with both private sector leaders... but also engaging with our community leaders in the city limits of Austin in order to move this project forward in a really positive way,” she said on Jan. 7.