Despite pandemic, consultants project Austin will profit from convention center expansion

Austin

A rendering included on the Austin Convention Center Master Plan Update which was presented to Austin City Council September 15, 2020.

AUSTIN (KXAN) — In a presentation during an Austin City Council work session Tuesday, consultants told city leaders that despite the impacts of the COVID-19 pandemic, they still anticipate expanding the Austin Convention Center will bring hundreds of millions of additional dollars to the city each year.

Additionally, the consultants projected that the demand for in-person events and professional meetings after the pandemic will still exist.

A projection from HVS Convention, Sports & Entertainment presented to Austin City Council on September 15, 2020 illustrating projected economic impact of expanding the Austin Convention Center (ACC).

This comes as Austin City Council prepares to vote on several items Thursday which would commit funds toward a convention center expansion and would get the ball rolling in an effort to acquire additional property to make that expansion happen.

A process long in the making

In 2019, Austin’s council unanimously approved the Palm District Master Plan which began the process of expanding the convention center and re-envisioning the surrounding area near the former Palm Elementary School.

Earlier in 2019, a report from UT Austin projected that the option which the council ultimately chose for convention center expansion would cost around $1.2 billion. This option would demolish the current event space west of Trinity Street and create a new space, connected to transit and private development. This plan would be funded through an increase in hotel occupancy taxes.

In August 2019, the city council unanimously voted to raise the hotel occupancy tax (HOT) to the highest rate allowable under state law. This increase is allowed under Texas’ local government code so long as the money is used for a convention center expansion.

At the time, City of Austin staff said the additional HOT dollars would be needed for a convention center expansion and would also allow increased funding to go to the promotion of arts and historic preservation.

Action expected this week

A map included as part of Item 95 on Austin City Council’s agenda this upcoming Thursday. This map shows the property proposed to be added to the Austin Convention Center during the convention center expansion.

At the upcoming Austin City Council meeting on Thursday, council will vote on officially committing funds toward this expansion and securing the additional property needed for the project. Some items before the council would provide funding to consultants and lawyers, who will help with the convention center expansion process and in discussions with landowners.

The council will also vote on the first part of a two-step process in acquiring the additional downtown real estate necessary to complete the vision for an expanded convention center.

Consultants optimistic about prospects for an expanded convention center

A projection from HVS Convention, Sports & Entertainment presented to Austin City Council on September 15, 2020 illustrating projected demand for events and attendance at the Austin Convention Center.

As a result of the council’s actions last year, the city commissioned reports from consultants about expanding the convention center.

The firm HVS Convention, Sports & Entertainment carried out a Convention Center Expansion Study for the city to forecast financial operations for a three-phase expansion of Austin’s convention center. HVS presented their findings on Tuesday.

To carry out the study, HV consultants inspected the Austin Convention Center. They also interviewed people who work at the convention center, are impacted by the convention center, and would potentially use the convention center.

The consultants noted these interviews were done prior to COVID-19, which they said was “probably a good thing” because the consultants are trying to forecast a “more normalized model.’

In the pre-pandemic interviews, 83% of the people who responded said they were “very likely” or “somewhat likely” to use an expanded Austin Convention Center.

Thomas Hazinski, the managing director of HVS, told the council this survey produced “the most positive response I have seen in 25 years” of working on these types of projects.

The big draw for these respondents? The consultants said Austin is appealing as a convention destination “because its popularity draws an elevated level of attendance compared to the attendance of the same events in other cities. “

Based on their findings, the HVS consultants said the current convention center facility was actually a “lagging factor” in drawing in events.

Survey results from HVS Convention, Sports & Entertainment (carried out prior to the COVID-19 pandemic) presented to Austin City Council on September 15, 2020 related to the expansion of the Austin Convention Center (ACC).

Even with the ongoing pandemic, the HVS consultants project that demand for events and attendees at the Austin Convention Center will continue to increase in the coming decade.

The projections assume that the pandemic will have subsided in Austin by 2024 when the first phase of construction of the convention center expansion would begin. HVS projects that an expanded Austin Convention Center would generate 162% more in economic impact to Austin than a non-expanded convention center (more than $300 million more per year than the current convention center).

The consultants also project that an expanded Austin Convention Center would result in 1,772 more jobs per year than the current convention center.

Hazinski told council members Tuesday that he projects “adaptations are likely to be made, but the fundamental demand is not going to change” for conventions after the pandemic.

“What we are seeing now is a change in desire for face-to-face meetings,” he said. “COVID has the ironic effect of emphasizing their importance.”

HVS also suggested that convention center expansion would make Austin a more competitive convention destination among peer cities, projecting that an expanded Austin Convention Center would give Austin some of most “total function” space compared to other major city convention centers.

The consultants also found that increasing convention center occupancy boosts the lodging market in downtown as demand for hotels increase.

Hazinski did express concern about the pandemic’s long-term impacts on Austin’s economy, in particular, due to the “lack of federal stimulus.”

The HVS team noted that the near-term outlook for the convention center market in Austin is “highly uncertain” and while recovery from this economic downturn may mirror past economic recoveries, the rate of economic recovery “remains unknown.”

A rendering of a “halls down” approach to expanding the Austin Convention Center presented by Gensler and Conventional Wisdom to Austin City Council on September 15, 2020.

Another report was presented to the council Tuesday, offering an update on the Austin Convention Center Master Plan. This report was compiled by firms Gensler and Conventional Wisdom.

“There is the fear of the convention center creating a huge wall [downtown], we don’t want that there,” one consultant said. “We want to open up the grid and make it accessible for everyone.”

These consultants explained that the primary design choice ahead in convention center expansion discussions is whether Austin will adopt a “halls up” approach” or a “halls down” approach.”

“The challenge with going ‘halls up’ is you essentially create a 10-story block,” one consultant told the council.

“Our key decision comes down to: one building or two?” he added.

A rendering of a “halls up” approach to expanding the Austin Convention Center presented by Gensler and Conventional Wisdom to Austin City Council on September 15, 2020.

City staff also told the council they have been working with CapMetro to integrate transportation networks within this convention center district. During executive session Tuesday, city staff said it would recommend redeveloping the eastern side of the convention center simultaneuously as the west side is developed

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