As council moves toward Convention Center expansion, new petition seeks to put it to a vote

Austin

AUSTIN (KXAN) — Not even two weeks after Austin City Council unanimously voted to begin the process of expanding the Austin Convention Center, a new petition has emerged, seeking to put the possibility of expansion up for a public vote. 

If the petitioners gather the required 20,000 signatures, they would place an item before city of Austin voters about whether voter approval should be required for any expansions or remodeling of Austin Convention Center costing more than $20 million. The petition would also establish other requirements for Austin’s use of Hotel Occupancy Tax revenue, asking that more of those dollars be used for things other than the convention center. (The Hotel Occupancy Tax (HOT) in Austin is 15% — 9% of which is paid to the City of Austin and of that amount 7% goes to hotel taxes and 2% goes to a venue tax.  6% is paid to the State of Texas. The revenue is used to promote tourism and the convention hotel industry in Austin.)

The petition 

The petition would limit the Convention Center to receiving 34% of the total annual Hotel Occupancy Tax Revenue. It also would require that 15% or more of that HOT revenue go to a historic preservation fund, and 15% or more go to the cultural arts fund, with the remaining dollars going to enhance  Austin’s “cultural tourism industry.”

The petition was launched by the newly-formed Unconventional Austin PAC, which initially filed documents with the city just two days before the council vote for expansion. The PAC lists Sylvia Pedley as its treasurer and the city of Austin says there haven’t been any financial filings for Unconventional Austin yet. Unconventional Austin told KXAN in an email that the first PAC financial reporting requirement is on July 15. The PAC didn’t give specifics about their financial supporters but said they include, “many individuals and businesses who agree that Austin should invest more into those things that make Austin unique and less into one industry in one area of downtown.”

Unconventional Austin said they are actively working with paid petitioners to get their effort out. They believe “the downtown hotels, Convention Center Department, Visit Austin, and some construction companies” are already lobbying the council to invest in expansion. 

This petition outreach has received strong opposition from both Austin Mayor Steve Adler and City Council Member Jimmy Flannigan, both of whom suggested that this petition is deceptive and raised questions about where the money behind it is coming from. 

Prior to the petition

Council’s vote to support convention center expansion is part of the larger master plan for the Palm District and Waller Creek District in downtown Austin. Currently, Austin City Council has charged the city manager’s office with creating a program to make these district master plans happen. Council is asking the city manager to return to them with a plan no later than August 1 so that it can be included in the 2020 budget. City leaders suggest the plan would be paid for through increasing local hotel occupancy taxes from the 7% rate to a 9% rate, an increase that is allowed in Texas if the funds go toward a convention center expansion. This change would bring the total hotel occupancy tax rate in Austin up to 17% — that would include the 9% local hotel tax, the existing 2% venue tax, plus the 6% state tax. 

This plan aims to harness tourism dollars while working alongside community stakeholders across Austin — from homelessness outreach, to music, to tourism, to business groups. It also seeks to preserve the Mexican-American cultural heritage in the area near the Convention Center and Rainey Street while also creating a tourism public improvement district there.

City Council commissioned UT Austin to perform an in-depth study on several scenarios for possible expansion. Their analysis found that the leisure and hospitality industry contributes 15 percent of Austin’s total economy — up from 11 percent in 2000 and more than the state average of 13 percent. They determined that convention centers make “important contributions” to this sector and that hotel taxes make those convention centers possible. Council is directing the city manager’s office to work with Scenario 5 from the suggestions in the UT study, which would be the largest and most expensive rebuilding option. It would likely call for demolishing the current event space, and placing a new center west of Trinity and have room for private development. 

A rendering of Scenario 5 of the Austin Convention Center expansion. Excerpt from Frameworks for Placemaking: Alternative Futures for the Austin Convention District. Courtesy of the UT Austin Center for Sustainable Development.

“They are telling people things that are not true” 

Several voices have already emerged suggesting the way this petition wants to shift hotel tax dollars isn’t possible under current state rules. 

Scott Joslove President and CEO of the Texas Hotel Lodging Association (as well as a member of Austin’s Tourism Commission) said that under state tax code, Austin cannot increase the percentage of local hotel tax dollars going to the arts or historical restoration any further than it already has. 

“Austin has already reached its statutory cap on how much it can expend from the local, 7%, hotel tax on the arts and for how much it can expend on historical restoration and preservation from the local hotel tax,” Joslove said. “Even if it does not expand the convention center, there is no additional local hotel tax from the 7% that can be spent on cultural or heritage tourism, which is what makes the petition so misleading.”

Joslove, actually reached out to the Texas Municipal League for clarification on this. On May 13, Texas Municipal League sent him an email advising him that under state law, most Texas cities with more than 200,000 people are capped at 15% of local hotel tax dollars going to the arts and 15 % going to historic preservation. They advised that a city can’t use alternative categories to work around the 15% limits. 

However, the municipal league noted, a city like Austin can raise the local hotel tax rate from 7% to 9% for the purposes of expanding its convention center, which would then allow the city could spend up to 15% of the total amount generated at that higher rate for the arts and 15% at that higher rate for historical preservation. 

“That makes the pie bigger, that makes my art piece of the pie bigger and my historic preservation piece of the pie bigger even though [the rates] stay 15 %, they are 15% of a larger number,” explained Austin Mayor Steve Adler, using a baking analogy to put this hotel tax rate in perspective. 

Adler noted that those dollars are paid for by tourists, not Austinites. He said that rate increase would give Austin access to $300 million dollars over 10 years for civic projects, the arts, historic preservation, the music industry, as well as having a dedicated stream of funding to address homelessness downtown. 

“So I don’t understand why people wouldn’t want us to have access to that funding,” Adler said. “The only way we can access that under state law is with the convention center expansion.”

Adler said he is perplexed by the petition effort, especially in light of the unanimous vote by the council in favor of exploring convention center expansion. 

“I just don’t understand where opposition would be coming from and I don’t know who is paying for this petition,” Adler said, “but I do know that they are telling people things that are not true.”

Adler insisted the city couldn’t spend the money on something other than a convention center even if they wanted to because of current state laws.

In a personal, blog post on Sunday, Austin City Council Member Jimmy Flannigan used a “Game of Thrones” theme to document what he calls “A Dragon in Petition’s Clothing.” In the post, Flannigan countered statements from Rebecca Melançon, executive director of the Austin Independent Business Alliance (AIBA), who has come out in support of the petition effort.

Melançon cited statistics from Unconventional Austin about the Convention Center, and Flannigan challenged those, citing things like the state report on tourism and a presentation given to the Tourism Commission comparing Austin’s hotel tax distribution to other cities. He noted that in these reports Austin’s percent allocation of local HOT dollars to the convention center was actually less than the average amount in other similar cities allocated to their convention centers. 

Flannigan drew parallels between this petition effort and the efforts behind failed 2018 Propositions J and K,  even suggesting that “some of the same dark money players are involved.”

“Really?” Melançon said in response to Flannigan’s post. “We have a difference of opinion and he feels the need to call me a dragon on Facebook?”  

“I was surprised at the name-calling and the exaggerating,”  Melançon said. 

She said she was bothered by the final line of the post which compared AIBA and others involved in petition efforts to Game of Thrones character Daenerys Targaryen and her dragon. 

Using an extended GOT metaphor, Flannigan wondered in his post about this petition effort as a whole, “why do they want to burn down the city?”

Melançon explained that AIBA got involved with Austin’s Tourism Task Force in recent years, looking to receive some Hotel Occupancy Tax dollars that were being reallocated to local businesses.

“Unfortunately, we weren’t successful,” she said. 

Flannigan’s post pointed that council did allocate those HOT dollars to local business, but the money went to another applicant who scored higher. 

Melançon acknowledged that was true, but said that the money awarded was a one-time grant of $200,000 while what her organization was looking to do with the money was more of an ongoing effort. 

Support for the petition 

Melançon explained to KXAN that she is personally opposed to Convention Center expansion. She added that last year a survey showed 87% of AIBA’s members were opposed to expansion, as well. She clarified that AIBA is not taking a position on convention center expansion out of respect to those members who don’t feel the same way that she does. However, she noted, AIBA does support the petition effort.

Melançon said she first learned of this petition from Bill Bunch, an Austin Tourism Commissioner and executive director of the Save Our Springs Alliance. While many community members gave feedback to the council on May 23 ahead of the convention center vote, Bunch was one of the only people there who voiced opposition to convention center expansion. 

Melançon says she understands the state has some say in how HOT dollars are allocated, but she thinks the public should have some choices in the matter because “this is an enormous amount of money and it is all part of our community resources.”

She explained she is not part of the Unconventional Austin PAC. 

Another supporter of this petition is Austin Tourism Commissioner John Riedie. 

In video post on the Unconventional Austin website, he described the Convention Center expansion as “poor return on investment” adding that he doesn’t believe Austin needs more investment in the convention industry. 

“Austin’s tourism industry has been growing so quickly not because of the Convention Center, but because the rest of the world has discovered that Austin is a great place to be, because of our live music, because of our beautiful natural setting, because of our arts scene,” Riedie is quoted saying on the website. “We are redistributing wealth from those things that people actually come to Austin to do and see to the convention industry, which, as we’ve seen, generates a tiny portion of overall tourism business.” 

On May 13, the Tourism Commission voted to recommend that Austin City Council adopt certain guidelines for the expansion of the Austin Convention Center and the allocation of Hotel Occupancy Taxes. All voting members present then, including Riedie, voted in favor of this, though one commissioner was absent and another abstained. 

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