DOWN­TOWN VI­SION WON’T COST TAX­PAY­ERS

Austin American-Statesman Sunday - - INSIGHT -

In the world of pol­i­tics, the win-win deal tends to be more elu­sive than tan­gi­ble.

That is true in Washington and too of­ten in Austin, in which a ma­jor­ity of Austin’s 10-1 City Council fre­quently flat­tens a mi­nor­ity. On Thurs­day, how­ever, the pub­lic might well see a win-win if council mem­bers ap­prove Mayor Steve Adler’s so-called “Down­town Puz­zle” plan.

They should. We of­fer one cau­tion: The Adler pro­posal is more con­cept at this point than de­tail. The de­tails with ac­com­pa­ny­ing doc­u­men­ta­tion should be a con­di­tion of ap­proval to en­sure ac­count­abil­ity as the pro­posal moves from con­cept to blue­print.

Ap­prov­ing Adler’s plan would ad­vance two solid pro­pos­als — Adler’s and an­other by Council Mem­bers Ellen Trox­clair, Kathie Tovo, Ann Kitchen and Les­lie Pool that the council al­ready ap­proved.

Col­lec­tively, they aim to ad­dress long­stand­ing com­mu­nity needs re­gard­ing historic preser­va­tion, cul­tural arts, mu­sic, and hous­ing and other ser­vices for peo­ple who are home­less. There are other po­ten­tial ben­e­fits, such as ex­pan­sion of the Mex­i­can American Cul­tural Cen­ter, a ren­o­va­tion of the Travis County Ex­po­si­tion Cen­ter and the pur­chase or restora­tion of two historic prop­er­ties: the Palm School and Mon­topo­lis Ne­gro School.

Such needs have been de­ferred as the council grap­ples with growth and higher pri­or­i­ties, such as traf­fic con­ges­tion, Austin’s soar­ing cost of liv­ing and bal­loon­ing ex­pen­di­tures for po­lice, fire and emer­gency med­i­cal ser­vices. All of those com­pete for tax­pay­ers’ dol­lars and city rev­enue.

Com­pe­ti­tion for fi­nite re­sources is a key rea­son why Trox­clair’s and Adler’s pro­pos­als are so at­trac­tive: With­out adding a penny to our prop­erty tax bills or sales taxes, they would steer mil­lions of dol­lars an­nu­ally to de­ferred pri­or­i­ties that res­i­dents deeply value.

Money for those pro­pos­als won’t fall from the sky. They will be funded with ho­tel oc­cu­pancy tax rev­enue. As its name im­plies, HOT rev­enue is gen­er­ated by fees charged to vis­i­tors when they stay in ho­tels in the city. That is an im­por­tant dis­tinc­tion in as­sess­ing Trox­clair’s and Adler’s pro­pos­als.

Trox­clair’s ini­tia­tive sets aside $8.6 mil­lion an­nu­ally, of which $7.2 mil­lion would go to historic preser­va­tion projects and $200,000 to lo­cal busi­nesses to pro­mote Austin’s tourism in­dus­try.

The other $1.2 mil­lion would end up in the city’s bud­get, us­ing ac­count­ing mea­sures to stay within state law to pay for pub­lic safety for South by South­west and other fes­ti­vals.

Cur­rently, the con­ven­tion cen­ter and vis­i­tor’s bureau get the lion’s share of the city’s por­tion of the HOT, which is 9 per­cent of the total 15 per­cent ho­tels charge tourists daily. The re­main­ing 6 per­cent goes to the state. Trox­clair’s pro­posal would re­ceive a share of the city’s por­tion.

The $7.2 mil­lion is a sig­nif­i­cant sum for historic preser­va­tion — and un­prece­dented — be­cause it would gen­er­ate mil­lions an­nu­ally for preser­va­tion pur­poses that fit with state law. Projects in the Zilker Botan­i­cal Gar­den, Zilker Park and the Te­jano Walk­ing Trail are among those for which HOT rev­enue legally could be used.

Be­cause Adler’s pro­posal also re­lies on HOT rev­enue, Trox­clair’s ini­tia­tive was thought to wound or even kill Adler’s. For­tu­nately, Austin’s HOT rev­enue can sus­tain both.

Adler’s pro­posal is built on a three-legged stool, us­ing the con­ven­tion cen­ter, the HOT and a Tourism Pub­lic Im­prove­ment Dis­trict to gen­er­ate money. Crit­ics point out that the busi­ness case for ex­pand­ing the con­ven­tion cen­ter is weak be­cause book­ings for events don’t cover op­er­at­ing and other costs.

We must note that the con­ven­tion cen­ter never truly op­er­ates in the red even when book­ings don’t cover ex­penses be­cause the HOT rev­enue it re­ceives is more than enough to cover losses and gen­er­ate a healthy re­serve.

Adler’s plan would use the city’s con­ven­tion cen­ter to lever­age fi­nanc­ing for cul­tural arts and mu­sic, as well as to pur­chase or re­store lo­cal historic trea­sures, and — this is a huge one — cre­ate a re­li­able fund­ing source for permanent hous­ing and other ser­vices for Austin’s grow­ing home­less pop­u­la­tion.

The plan calls for us­ing an ad­di­tional 2 per­cent of the HOT to expand the con­ven­tion cen­ter, rais­ing the city’s por­tion to 9 per­cent. The ex­tra 2 per­cent would fi­nance an en­vi­sioned pub­lic-pri­vate con­ven­tion cen­ter ex­pan­sion es­ti­mated to cost $400 mil­lion.

But the bonding ca­pac­ity for the 2 per­cent is far greater, at about $600 mil­lion, leav­ing $200 mil­lion for historic preser­va­tion, mu­sic, film and cap­i­tal projects that fit with uses un­der state law, in­clud­ing im­prove­ments to the Red River Cul­tural Dis­trict.

Ad­di­tion­ally, Adler’s plan would es­tab­lish a TPID to ad­dress chal­lenges the city faces with its home­less pop­u­la­tion. State law pro­hibits HOT rev­enue from be­ing used for permanent hous­ing for home­less peo­ple, but there are no such re­stric­tions on the TPID levy.

Down­town ho­tel op­er­a­tors have in­di­cated they would use the TPID to tax them­selves, start­ing with 1 per­cent, but ris­ing to 2 per­cent, which would be added to ho­tel bills. Not all would go to home­less ser­vices, but the por­tion that would be is es­ti­mated to be $4 mil­lion to $8 mil­lion an­nu­ally over a 10-year pe­riod.

As we noted, Adler’s puz­zle deal needs to be backed with ex­pert fi­nan­cial data and writ­ten agree­ments bind­ing the con­cept to the fin­ished prod­uct.

When that hap­pens, the city will have two ini­tia­tives — Trox­clair’s and Adler’s — that can bet­ter Austin with­out adding a penny to our tax bills. That is a win-win.

CON­TRIB­UTED BY GENSLER

This artist’s ren­der­ing de­picts an ex­panded Austin Con­ven­tion Cen­ter. Mayor Steve Adler’s plan calls for us­ing an ad­di­tional 2 per­cent of the ho­tel oc­cu­pancy tax to en­large the cen­ter, which is es­ti­mated to cost some $400 mil­lion.

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