Supporters of a $1.2 billion plan to expand the Austin Convention Center have formed a political action committee to oppose petitioners who consider the expansion a waste of money and want voters to decide its fate.
The city council last month voted unanimously to issue bonds to pay for the project. The bonds would be backed by a higher hotel tax; the city expects to make enough in additional tax income to pay for the project.
Opponents of the convention center project then formed the PAC called Unconventional Austin. Organizers, including attorneys Fred Lewis and Bill Bunch, executive director of the Save Our Springs Alliance, say the expansion would siphon funds from other areas of tourism that benefit Austin taxpayers and not just convention-goers and hoteliers.
“Corporate welfare in a town with 2.6 percent unemployment is inane,” Lewis told The Texas Monitor. “The public isn’t asking for a top-down program to benefit the hotel industry. This city council is completely out of touch with what the people really want.”
Backers of the project, including Mayor Steve Adler, contend the referendum is unneeded because the new convention center will be paid for entirely through the increase in the city’s share of hotel taxes. Adler’s former campaign manager, Jim Wick, is heading the pro-expansion PAC.
Adler told The Texas Monitor that, considering Austin’s recent history of deciding important policy and spending issues by a citywide vote, he expects enough people will sign the Unconventional Austin petitions to put the convention center project on the ballot in November.
But unlike with the controversial light rail vote that failed five years ago, or a $925 million bond package approved easily last November, local taxpayers will not be paying for the expansion of the convention center, the mayor said.
He said the new pro-expansion PAC will explain to voters how the convention center project will be funded and why it’s needed. The PAC can also explain that the city may be able to use revenue from the increased hotel tax for other purposes as well.
The expanded convention center is the centerpiece of a potential new tourism district that Adler proposed in 2017. The plan he calls the Downtown Puzzle would aim to solve various problems and provide the revenue to do so.
“There are voices that we’ve seen growing for doing nothing in this city,” Adler said. “There is a lot of misinformation already out there. Unconventional Austin is way out in left field on this.”
Neither side is particularly confident that the voting public will understand the funding issue because hotel tax laws are complex.
Texas cities have had authority since the 1970s to levy local hotel occupancy taxes to promote tourism in general and the hotel and convention industry in particular. In 1997 the Texas Legislature expanded that authority to allow cities and counties to impose an additional tax on hotels specifically to pay for building or improving sports complexes and convention centers.
As a result, Austin uses more than 70 percent of its hotel tax revenue on the convention center; Dallas, more than 65 percent; San Antonio, 35 percent, and Houston, roughly a third, according to their current budgets.
Unconventional Austin is asking in its petition that voters support capping the convention center allocation at 34 percent, to allow spending more of the hotel tax revenue on things such as promoting tourism, the arts, transportation and historic preservation and restoration.
“It’s time for the city council to stop digging deeper into the same old hole, and to start funding what we all, visitors and residents alike, love about Austin — live music, vibrant arts, unique local businesses, our beautiful parks, waterways, and historic sites,” Bunch said in a media release earlier this week.
Adler believes the city should go in the other direction, to use a bigger, newer convention center to increase tax revenue that would support not only the center but also increases in arts spending. The city is also allowed to raise its share of the occupancy tax to nine percent from seven, but only if that extra two percent is used to fund an expansion, Adler said.
At the city’s request, the University of Texas’ Center for Sustainable Development produced a study, which leans favorably toward an expansion but also outlines alternatives.
That didn’t end the debate, of course. The council used the most optimistic predictions from the study in its approach; Unconventional Austin leaders say the extra income will never cover the costs. The current convention center has been losing $20 million to more than $40 million a year.
“You would think they would want to get their management problem straightened out before plunging ahead with a new center,” Lewis said.
Adler says those “losses” are covered by visitors, via the hotel tax, and not local taxpayers. “We have one of the most successful operations in the country,” he said.
Lewis said he hopes voters will recognize that corporate hotel interests behind the mayor and the council are driving the convention center expansion.
“The council lined up perfectly with the chamber of commerce, which loves its corporate welfare,” he said. “We have too many better things in this town to use our money on.”
Mark Lisheron can be reached at [email protected].