City Council postpones budget approval for Convention and Visitors Bureau


AUSTIN (KXAN) — Austin City Council postponed for two more weeks approval of the Austin Convention and Visitors Bureau’s budget and marketing plan Thursday, amid controversy over the largely tax-dollar funded organization’s spending on food, alcohol and entertainment over the past two years.

As the resolution is written, the bureau, which is officially called Visit Austin, would receive $14.79 million in fiscal year 2017-2018, according to the resolution. City Council will revisit the item on Oct. 12. Council Member Leslie Pool said she is exploring a city audit of Visit Austin’s spending, as well.

Visit Austin CFO Julie Hart said they’ve tried to be good partners with the city and welcome feedback.

“We want to create jobs.  We want to bring tax dollars into this city and we want to create economic impact and if we need to do a better job of partnering with you to do that, we’re very, very open to that,” she said. “We will welcome a city audit. We are doing our absolute best to be transparent. If there are things we can do differently, we will welcome that direction.”

The budget discussion comes days after a KXAN investigation uncovered nearly $500,000 the nonprofit spent on nationwide concert tickets, jewelry, gift cards, steak and lobster dinners and a bar tab exceeding $6,000.

“There are significant questions about spending of tax dollars by the Visitors Bureau, that’s the reference to the investigative reports that are being aired this week on KXAN,” Council Member Leslie Pool said.

Pool and Council Member Ann Kitchen said they wanted to postpone until mid-October to get a better understanding of Visit Austin’s spending. Pool said even though the use of tax dollars appears legal, it does not make such use appropriate.

“I would suggest in this situation, since the visitors bureau brings in private dollars, that they manage their books and raise sufficient funds so that if they want to spend, well, almost $2,000 on sangria and Pearl Snap and mojitos that it come out of the private sector, not the public sector,” Pool said.

Council Members Jimmy Flannigan and Pio Renteria worried about the effects a budget delay could have on the nonprofit and its staff. They, along with Council Member Ora Houston, voted against the motion to postpone a budget decision. Council Member Ellen Troxclair was out of town for the meeting.

“This is a fee that the tourism industry charges on hotel rooms. The intent under state law is that it go to the tourism industry,” Flannigan said. “Delaying a budget two days before it expires, and dipping into reserves … this is not a good way to do policy.”

Kitchen, Pool and Mayor Pro Tem Kathie Tovo expressed concern with the spending in KXAN’s report and a desire to look deeper into the organization’s finances.

“We want to see more than just expenses. We want to actually see what that breakdown is,” Tovo said.

Flannigan reminded the council that, “everyone in every major city does it this way, it even says it in the article,” referencing KXAN’s story.

“I understand the argument that’s what the industry does. But that’s not really the question from my perspective. From my perspective it’s — for the city of Austin, what do we think is appropriate for the use of those public dollars?” Kitchen later responded.

KXAN discovered Visit Austin spent $18,000 on 75 tickets to see Lady Gaga concerts in Boston, San Francisco and Flushing, New York. In addition, the nonprofit also paid for junkets to see performances by Beyonce, Elton John, Paul McCartney, Dixie Chicks and Adele.

In one visit to Antone’s nightclub in March 2016, Visit Austin charged $6,317 for about 500 alcohol beverages. You can read the full investigation below.

JW Marriott General Manager Scott Blalock was among the Austin hotel leaders who showed up to speak to council Thursday, saying what Visit Austin does is vital to the city’s economy.

“If we don’t market and sell our city, the hotel taxes are going to decline. It’s just the way it is. It’s very, very, competitive out there. These big conventions don’t just show up,” Blalock said.

Tom Noonan, president and CEO of Visit Austin, described his organization’s spending as “investments.” The expenditures have “returned extraordinary benefits,” including $150 million in economic impact to the city, he said in a prepared statement sent to City Council following KXAN’s initial reporting.

“Visit Austin spends hotel tax prudently, legitimately, and legally,” Noonan said in the statement. “It also raises additional revenues that more than offset the cost of events.”

Noonan defended the concerts and trips to other states, saying, “We go to where the customers are located.” He said the party at Antone’s showcased local musicians and food, and Visit Austin’s expenditures fall in line with other visitor bureaus in Texas and throughout the country.

Several other representatives of the hotel industry spoke out in support of Visit Austin, including the general manager of the downtown Hilton.

But critics have questioned if the organization is transparent enough and what Austin is getting in return for such spending.

Visit Austin receives about 85 percent of its revenue from hotel occupancy taxes. In an interview with KXAN, Visit Austin’s chief financial officer confirmed the $500,000 noted in the investigation was paid with that public tax money, which is levied on tourist hotel bills.

“I do know that as I look at visitor centers and bureaus all across the country, they all seem to operate in a really similar way. And similar to the way that the operation exists in Austin,” Mayor Steve Adler told KXAN. “I think that our visitor center needs to be more transparent about what it does. So that anybody in the community can really see it and if their conduct and their practices are normal and what is expected within the industry, then there shouldn’t be any problem with putting that all out front so it’s really easy for everybody to be able to see.”

KXAN asked if there’s any particular steps he’d like to see Visit Austin take to improve transparency.

“Yeah, I think that their accounting and their budgets to a greater line level would be important for the community to be able to see so that we can see how much is being spent on entertaining perspective visitors who could bring large conventions to the city. I know we are competing for those and I want our city to be able to compete well. But I think it’s important for the community to be able to very easily see where the money is being spent,” he responded.

Glenn Smith, a consultant to Visit Austin said he welcomes an audit because all council members are going find is “good news.”

“This money’s not spent on us. It’s spent on people out there to bring them to Austin and bring their money here. So all that money comes to the benefit of everybody that lives in Austin,” he said.

Visit Austin has been pushing for a $600 million expansion to the Austin Convention Center, as part of the so-called “Downtown Puzzle.” The puzzle would include the creation of a downtown tax increment finance zone (TIF) that would dedicate $30 million for homes for homeless people. The existing Waller Creek TIF would be expanded to dedicate $100 million for parks, and a “Tourism Public Improvement District” would be created to raise $4 million to $8 million a year for homeless programs, historic preservation and Mexican-American Cultural Center renovations.

Some say the downtown improvements should not be tied to the Austin Convention Center expansion.

Council Member Ellen Troxclair pushed to reduce Visit Austin’s budget by $2 million, according to an amendment to the budget approval resolution. The amendment also states Visit Austin will provide one-time allocation of $1.2 million for security at spring festivals. In addition, $250,000 will be provided from hotel occupancy taxes for historic preservation.

“To the extent that we can just be open and transparent with each other and allow them the opportunity to say here is what we are spending and here is why, then it allows the council to make an informed decision about whether that level of funding is appropriate,” Troxclair said.

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