Mayor suggests hotel occupancy tax hike to tackle Austin homelessness

Austin Mayor Steve Adler introduced a plan online Sunday night that would use hotel occupancy tax revenue to tackle problems with the homeless downtown.

His plan suggests a 1 to 2 percent increase in hotel taxes paid by tourists to fund a Tourism Public Improvement District that would generate between $4 million and $8 million annually to respond to the city’s homeless population.

Much of that money would be directed to improvements at the Austin Resource Center for the Homeless on Seventh Street, the epicenter for the city’s K2 epidemic that is constantly plagued by overcrowding.

“There are growing public safety concerns as predators target our homeless downtown,” Adler said on the city council’s message board Sunday night. “The K2 epidemic claims lives and injures many. Austin residents and visitors to downtown have been aggressively approached by the homeless or those that exploit the homeless and there is a growing hesitancy to visit or return to downtown. People experiencing homelessness require assistance to get back into housing and reconnect to positive communities.”

The public improvement district would create a dedicated funding stream to help solely with homelessness. It would be supported by matching funds, Adler said.

Levying the tax would require the support of the city’s hotel industry.

Adler has suggested including the proposal as part of a package deal to expand the city’s convention center, something Austin’s hotels would likely support.

The Vision Task Force earlier this year suggested a 2 percent HOT tax increase to pay for the $609 million expansion.

The tax would be separate from and in addition to the one Adler suggested to finance the public improvement district.

In exchange, he’s asked that the improved convention center include options for offices, retail, restaurants and affordable housing and that it be designed in a way that conforms with the downtown grid.

“Most of the hard decisions we need to make as a community require trade-offs and balancing interests and priorities, and rarely present options that are clearly only right or only wrong,” Adler said online. “The possibility of a convention center expansion may well present the best opportunity to align our community and build the critical mass of support, political will, and funding streams necessary to deliver community goals too long delayed.”

The two increases together would increase hotel occupancy tax rates from 15 percent to 18 percent.

Additionally, Adler has suggested creating a downtown tax increment finance district, or TIF district, which diverts future property tax revenue increases toward public improvement projects. The move could generate up to $30 million in revenue to improve the ARCH and services to the homeless downtown.

An estimated 650 homeless people are living in the downtown area every day, Adler said.

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