Austin leaders signal support for $985M resort project at Circuit of the Americas

Ahead of their vote for the plan April 23, Austin officials appear supportive of a proposed city incentive for a hotel and convention center project at Circuit of the Americas that could pour hundreds of millions of dollars into the local economy.

"As you can see from the community, they want to see what will be a first-of-its kind and meaningful city investment. This potential partnership brings a major economic hub that the Del Valle community needs," said council member Vanessa Fuentes, who represents Southeast Austin including the COTA site.

The big picture

The potential 30-year economic incentive deal between Austin and RIDA Development would support an estimated $985 million resort project at COTA.

RIDA plans to build a 1,000-room hotel and 170,000-square-foot conference center. The hotel will include dining and bar areas, a golf course and driving range, and a lazy river similar to the Texas-shaped feature at RIDA's Marriott Marquis Houston.

“This is a transformative project to Del Valle creating a long-awaited economic anchor for Del Valle and the Eastern Crescent," said lobbyist Michael Whellan, representing RIDA.

City Council's consideration of the economic development agreement this spring comes after officials previously supported RIDA's project with a land acquisition and tourism tax deal last summer.

The approach

The proposed performance-based incentive wouldn't affect the city's general fund budget or require any upfront public payment. Austin would instead reimburse 8.25% of the room night revenue eventually generated by the hotel after it's in operation and contributing hotel occupancy tax, or HOT, revenue to the city.

The outlined tax repayments represent a favorable share of the deal compared to RIDA's nearly $1 billion investment, Assistant City Manager Eric Johnson reported, with a roughly 89% private to 11% public value breakdown.

“When you look at ratios in the world of economic development, that is a really good number," he told City Council. "Anything 15% or below is considered a good use of public dollars.”

The RIDA conference center is 3.5 times smaller than the new Austin Convention Center that's now being built. The COTA facility won't compete with the city due to a target market of self-contained events with 50-1,000 attendees, city staff reported, versus the major exhibitions that can draw tens of thousands of people downtown.

"The project is designed to serve mid-size event formats that prioritize on-site lodging, multi-day programming, and a campus-style guest experience - a segment of tourism demand that is not well-aligned with the large urban convention center model," staff wrote.

By the numbers

An economic impact report prepared by Austin Economic Development shows the project could result in more than $318 million in net benefits to the city over the multidecade deal, including more than $200 million in tax revenue.

“This is going to allow us to do more as a city, and that is really important," council member Ryan Alter said.

Property taxes collected by Austin and other entities including Del Valle ISD, Austin Community College, Travis County and the Central Health hospital district are projected to exceed $560 million.

City staff reported that the project will result in secondary business and tourism impacts associated with COTA's growing destination status, and serve as an economic catalyst in the Del Valle and East Austin areas that historically have seen underinvestment.

Other benefits anticipated by the city include:

• The addition of about 3,800 temporary construction jobs
• The creation of about 900 permanent full-time hospitality, food service, maintenance and management jobs
• A $1.5 million payment to Austin's affordable housing fund
• The dedication of two public park areas
• Ecological restoration around the COTA property

Fuentes also said the deal could ensure Del Valle residents enjoy 10% discounts at the hotel property once it's open.

What they're saying

The city incentive plan won early support from elected officials and several community groups.

RIDA has reached a labor peace agreement with Unite Here Local 23, and political director Rachel Melendes said the project has strong support from that local hospitality union.

“This is a huge opportunity for working people in Del Valle," Melendes said. "We’ve been able to really increase wages and benefits for working people in the city of Austin, and we’re very excited about this project.”

The nonprofit Del Valle Community Coalition is also in favor of the proposed agreement, and project manager Juan Rodriguez said the development represents an economic opportunity the east side area hasn't previously had.

"People in Del Valle deserve to have a place to work where they live without having to commute an hour and a half," he said. "This kind of scale of projects does not occur very often, and our community wants and deserves more opportunities without having to go across the city to find them.”

The proposal also drew positive reception from elected officials from California to Florida, who previously partnered with RIDA on major projects in their areas.

Also of note

Alongside the economic agreement, COTA's civic development plans are also set to be updated April 23.

COTA's original city-approved planned unit development, or PUD, included nearly 12 acres of park space with public soccer fields. However, RIDA recently sought to amend the PUD to allow for either off-site land dedication or fee payments to the city for future park development instead.

Whellan previously said the fee option was necessary for the hotel project to move forward, while the option was criticized by residents who reviewed the plans during city commission meetings earlier this year.

Leading up to City Council's consideration of the resort incentive deal this spring, RIDA has recommitted to offering public park space on the COTA property. Plans for a single park location previously proposed off Circuit of the Americas Boulevard have been replaced with two separate open spaces:

• A 6.3-acre site on the property's southeast corner, which could potentially house a future city recreation center
• A 5.6-acre site on the property's northeast corner for two public soccer fields valued at $2 million

Other future updates will include a practice racetrack on the property's north end, ecological restoration around the site and new parkland. Those projects are all moving ahead as the COTALAND theme park nears its official opening later this year.