New convention center? The biggest, most expensive option may be on the table

Austin

AUSTIN (KXAN) — The Austin City Council is scheduled to discuss and possibly vote Thursday on a resolution calling for the preservation of the historic Palm School, which was one of Austin’s first elementary schools. 

The building is currently being used by Travis County as its Health, Human and Veteran Services, but the department will move to a new building next year.

The proposed resolution creates a cultural “Palm District,” and it also directs the City Manager to start the initial design process for the new Convention Center.

“It tells him the council is ready to proceed with the expansion of the Convention Center,” said Mayor Steve Adler.

According to the resolution, the City Manager should base the initial design on Scenario No. 5 presented in the University of Texas at Austin’s report about the future of the Convention Center.

That option is the largest and the most expensive rebuilding option. It demolishes the current event space, and the new center would be west of Trinity and have room for private development. 

City Council Member Kathie Tovo said before seeing this option: “The idea of creating a larger convention center using its existing footprint didn’t seem to me really address the challenges or concerns of the community.”

Adler said, “It really opened up Second Street all the way to Waller Creek, so you didn’t have Second Street kind of dead ending into the Convention Center. It takes the existing Convention Center and turns it into active space — with restaurants, bars, music all happening at the ground level.” 

Tovo said about the entire Palm District, “I’d like to see that area really re-develop in a way that provides more ability for pedestrians to walk safely around there.” 

Who will pay for the expansion? 

Building a bigger Convention Center proposed by Scenario No. 5 would cost more than $1 billion. The resolution suggests raising the Hotel Occupancy Tax by two percent to help pay for it. 

Tovo said, “We have such needs here in the city, and we need to use our limited property tax funding to meet those needs, so we’re in complete agreement that we’re not paying for an expansion out of that funding.”

The Hotel Occupancy Tax is collected when someone books a room to stay in Austin. It can be a hotel room, a short term rental house or a bed and breakfast. In Austin, the total rate visitors pay is 15 percent. Nine percent is for the city and six percent is for the state. 

The revenue, however, can’t be used just anywhere. It can only be used to promote tourism or help the convention and hotel industry grow in Austin. 

“Why don’t we use it? It’s tied to visitor related stuff. Convention Center in particular, venues in particular, why not access it,” Adler said. “Otherwise it’s just sitting there and we can’t access it.”

Adler said that’s why building a new Convention Center is a move with low financial risks. “You don’t put up any of our general fund. We don’t guarantee the debt,” he said.

He said even when bonds are issued to fund the project, the bond holders aren’t looking at how many people will be attending conventions at the new event center “because they’re not paid based on how many people attend or don’t attend the convention center.” Adler explained: “The bond holders are being paid back based on what our hotel tax revenue is, and it’s estimated to grow.”

Tovo said, “I am also eager to make sure that if we proceed with an expansion, we’re designing that space flexibly so that if the demand shifts, if there’s not a demand that our convention staff expect or if conventions in the future look different or are smaller, and they don’t need all that space, we can very easily convert that to purposes that are beyond the Convention Center.”

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