Austin Raises Hotel Tax To Expand Convention Center. But Development Is Up To Voters.

Aug 9, 2019

The city's effort to expand the Austin Convention Center will be on the ballot in November. The effort to derail the Austin City Council's roughly $1.2-billion plan was spurred by a citizen-driven petition that was certified late last month.

The Austin City Council, which unanimously approved the expansion in May, voted early Friday morning to raise the hotel occupancy tax by 2% to pay for the expansion. It argues the development will help preserve the historic Palm School and allow the city to collect more hotel occupancy taxes under state law.

The political action committee that started that petition, Unconventional Austin, argues the city could do a better job of allocating tax revenue generated by hotel stays.

The proposed ordinance would trigger a public vote on any expansion of the convention center over $20 million within a four-year period.

Supporters of the petition, which was largely funded and helmed by Save Our Springs Alliance's Bill Bunch, say the city's current tax revenue structure doesn't allow for investment in cultural attractions that boost tourism in Austin – think: restaurants, local business and the city's musicians and artists – but rather focuses too squarely upon the center itself.

Jim Wick, a former city staffer, formed a counter-PAC and launched a campaign Thursday against Unconventional Austin, claiming the group is misrepresenting state law and that the city can expand hotel tax revenue only if it expands the center.

The vote comes as the city and Travis County debate their uses of tax money generated from hotel stays. Under state law, the city is allowed to charge a tax as high as 9% on hotel stays. Currently, it's charging 7%, but city staff put forth a resolution that would allow the city to raise the levied hotel tax to the 9% cap to fund the center.

Travis County Commissioners previously had expressed interest in using that money to expand the Travis County Expo Center. Both the city and the county are entitled to the 2% of revenue under state law, but the county would have to put that to voters in November. Austin needs only a City Council vote to do so.

State law puts a cap at 17% total tax on hotel stays, and the state claims 6% already. So, the dueling proposals for using hotel tax revenue has put city and county lawmakers at odds.

Travis County Judge Sarah Eckhardt balked at the city's plan to use the money for the convention center expansion and showed up at City Hall on Thursday to question council members, along with Travis County Commissioners Margaret Gómez, Brigid Shea and Jeff Travillion.

Hours later, the county announced the state comptroller approved its plan to use hotel tax money to redevelop the Expo Center. That would require voter approval in November.

As for the city, it's already moved ahead with its convention center expansion plan. Last week, the city manager's office outlined a timeline to develop the area around the Palm School, which the city hopes to buy from the county, and it's expected to nail down financing for the project by the end of the year.

The City Council also sent another petition-driven item to voters. The proposed ordinance could limit the city's ability to lease public land for major stadiums. That petition was a response to the city's decision to lease some of its land at McKalla Place near the Domain for a new soccer stadium.

Council could have adopted both ordinances proposed in the petitions Tuesday, forestalling the special election, but members rejected them, which required them to approve what language would appear on the ballot in November.