In 1998, when Austin voters approved $135 million in bonds to expand the convention center, we were told the center would pay for itself and fill up hotel rooms. The community, including environmental and neighborhood leaders, supported the bonds. But projections fell short and operating losses piled up. The convention center lost more than $25 million last year.
However, Austin’s hotel occupancy tax (HOT) collections have thrived, up from $36 million in 2007 to more than $90 million this year. This phenomenal success in Austin’s tourism has almost nothing to do with the convention center. Only a tiny fraction of visitors — roughly 2 percent — come to the convention center. And almost one-third of convention center attendees come for a single event: South by Southwest. Yet our convention center consumes about 85 percent of our city’s HOT revenues.
The real drivers of Austin tourism — the people, places and activities that we love — are left to fight each other over that last 15 percent. Many of the people and places that visitors and residents love the most are suffering or disappearing: live music venues; locally owned, Austin-only businesses; art spaces; historic sites; and our lakes, springs, parks and pools.
Some of our cultural treasures are hurting or disappearing due in part to our city’s history of racism. The historic Victory Grill, the Montopolis Negro School, old Anderson High School, Decker Lake Park and our historic park pools could all be revived and become tourist destinations with HOT revenue.
But Mayor Steve Adler and others would increase this mismatch between HOT generation and HOT investments by committing to a $600 million expansion to the convention center. Even if wildly successful, an expanded convention center would hardly move the needle on Austin visitor counts.
Continued and growing convention center losses are more likely. According to convention industry expert Heywood Sanders of the University of Texas-San Antonio, the convention center industry has only grown a total of 3 percent over the last 15 years, while convention center space has grown by 40 percent. This glut of too much space chasing too few conventions results in our and other convention centers giving away their space for free or nearly free — hence the $25 million operating loss last year. The race for a new convention center is a race to the bottom.
CONTINUING COVERAGE: Tug of war intensifies over hotel taxes going to convention center.
The $600 million expansion price tag — a guess at best — leaves out a few things: the cost of buying two to three more blocks of prime downtown real estate; lost future tax revenues on that land, which has been estimated at more than $50 million per year in 2031; and a larger annual operating loss for a larger facility, possibly more than $50 million per year.
Despite the missing business case for expansion, it’s the opportunity costs that really break the bank and the heart.
Imagine if we flipped the 85/15 split and dedicated tens of millions more each year to supporting live music, museums and theaters, artists, musicians, filmmakers, pools and preservation. We could spread the money around geographically instead of sinking it all downtown — and, perhaps, make some amends for our decades of neglect of our natural and cultural treasures.
If expanding the convention center made sense on its own terms, we doubt the mayor would be selling it as a way to address homelessness. We will have far more community resources to address homelessness if we first invest our HOT funds wisely and equitably with an eye towards meeting our most urgent tourism-related needs.
Many cities know that preserving and investing in their own unique arts, culture and history is the best way to thrive, economically and socially. Visitors to our city deserve more than just the opportunity to patronize fine restaurants and bars; they should also leave our city with an enhanced appreciation of Austin’s unique history and culture.
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In 1998, there was a business case for convention center expansion. Today, we know there are better and more urgent investments for our tourism dollars. Yet, our mayor would do the same thing again, only with a tenfold increase in price — and this time without voter approval.
It is time to look at the facts and match our spending with our priorities, right now, in this year’s city budget.
McGhee is an Austin archeologist and historian. Ingle is president of the Austin Neighborhoods Council. Bunch is executive director of Save Our Springs Alliance.