Travis County is authorized to levy a venue tax not to exceed 2 percent. The revenue may be used to finance specific tourism related projects that have been approved through a voter referendum. If the city of Austin chooses to impose this venue tax, it could eliminate the county’s ability to pursue this revenue source in the future. The proposed 2 percent venue tax would generate between $15 million-$20 million in revenue annually.
Diana Ramirez, director for Economic Development & Strategic Investments for the Planning and Budget Office, said she and her team have been working the last few weeks with the Transportation and Natural Resources office, the Intergovernmental Relations Office, and the County Attorney’s office to identify projects that would be eligible to receive venue tax funding.
How Hotel Occupancy Tax rates are structured
According to Heather Ashline, senior planner for Economic & Strategic Planning at the county Planning and Budget Office, since 1959 all hotels and motels across the state of Texas have been required to collect a state Hotel Occupancy Tax, or HOT tax, of 6 percent. The Texas Legislature later authorized certain municipalities and counties to administer two types of HOT taxes at the local level.
- The local HOT tax, which is used to finance projects related to direct tourism spending such as the construction or expansion of a convention center, cannot exceed 7 percent unless the municipality qualifies as an eligible central municipality, such as Austin, San Antonio and Fort Worth. Travis County is not authorized to exceed that 7 percent mark.
- The venue tax, which is limited to finance a specific venue project, is an optional addition that cannot exceed 2 percent. The revenue is eligible to finance an arena, coliseum, convention center, sports center or any related infrastructure such as concessions, onsite hotels, parking facilities, area transportation, roads, and water or sewer facilities. The venue tax can only be administered after the project has been approved by the Attorney General, Comptroller and through a voter referendum.
“Travis County is eligible to administer a maximum 2 percent venue tax, assuming that the adoption of the tax would not cause the combined state, county and local HOT rates to exceed 17 percent for any jurisdiction within the county,” Ashline said.
City of Austin HOT tax rates
State HOT tax: 6 percent
Local HOT tax: 7 percent
Venue tax: 2 percent
= 15 percent
The Austin Convention Center Long-Range Master Plan developed in 2014 recommended an expansion to the convention center and suggested a potential financing structure that included increasing the local HOT tax rate to 9 percent. The city is considering increasing the local HOT rate to 9 percent and imposing an additional 2 percent venue tax for more extensive projects like the Travis County Expo Center. The debt would be set to retire in 2021.
“If the city chooses to pursue [an increase in the local HOT rate], the combined HOT and venue tax levied by the city would max out the 17 percent cap allowable by state law, and Travis County would be unable to levy its own venue tax,” Ashline said.
Input from the community
Save Our Springs Alliance Executive Director Bill Bunch told commissioners Tuesday morning that using the money to fund the convention center expansion is unjustified and should be used to fund other projects that provide benefit to the community. He said the convention center is used by 2 percent of visitors but receives 75 percent of HOT tax funds.
“What should be the priorities for this revenue stream are projects that benefit tourism and the community,” Bunch said. “It should fund the people, places and things that make Austin exciting to visitors and residents, and that’s not the convention center.”
The next step
Commissioners discussed a few projects they would prefer to see completed using the HOT tax money. Precinct 1 Commissioner Jeff Travillion said he would like to see an investment in core facilities that provide stability for kids and families in the area such as sports facilities.
“We’d like to bring in community partners and work with citizens in helping us identify projects they would like to see that will fit within statutory authority,” Ashline said.
Other projects proposed:
- Travis County Expo Center
- Circuit of The Americas
- Austin Convention Center
- Waller Creek venue
“This suggested list is just to get the imagination going and is not intended to be an exclusive or complete list,” County Judge Sarah Eckhardt said.
The county will send the letter out to city officials as soon as possible that will outline the next steps the county would like to take, including identifying a project list, conducting a financial and equity analysis, forming partnerships with city counterparts as well as interested private and public organizations, and engaging with the public to receive input and provide information about the venue tax process.
