In the world of politics, the win-win deal tends to be more elusive than tangible.
That is true in Washington and too often in Austin, in which a majority of Austin’s 10-1 City Council frequently flattens a minority. On Thursday, however, the public might well see a win-win if council members approve Mayor Steve Adler’s so-called “Downtown Puzzle” plan.
They should. We offer one caution: The Adler proposal is more concept at this point than detail. The details with accompanying documentation should be a condition of approval to ensure accountability as the proposal moves from concept to blueprint.
Approving Adler’s plan would advance two solid proposals – Adler’s and another by Council Members Ellen Troxclair, Kathie Tovo, Ann Kitchen and Leslie Pool that the council already approved.
Collectively, they aim to address longstanding community needs regarding historic preservation, cultural arts, music, and housing and other services for people who are homeless. There are other potential benefits, such as expansion of the Mexican American Cultural Center, a renovation of the Travis County Exposition Center and the purchase or restoration of two historic properties: the Palm School and Montopolis Negro School.
Such needs have been deferred as the council grapples with growth and higher priorities, such as traffic congestion, Austin’s soaring cost of living and ballooning expenditures for police, fire and emergency medical services. All of those compete for taxpayers’ dollars and city revenue.
Competition for finite resources is a key reason why Troxclair’s and Adler’s proposals are so attractive: Without adding a penny to our property tax bills or sales taxes, they would steer millions of dollars annually to deferred priorities that residents deeply value.
Money for those proposals won’t fall from the sky. They will be funded with hotel occupancy tax (HOT) revenue. As its name implies, HOT revenue is generated by fees charged to visitors when they stay in hotels in the city. That is an important distinction in assessing Troxclair’s and Adler’s proposals.
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Troxclair’s initiative sets aside $8.6 million annually, of which $7.2 million would go to historic preservation projects and $200,000 to local businesses to promote Austin’s tourism industry.
The other $1.2 million would end up in the city’s budget, using accounting measures to stay within state law to pay for public safety for South by Southwest and other festivals.
Currently, the convention center and visitor’s bureau get the lion’s share of the city’s portion of the HOT, which is 9 percent of the total 15 percent hotels charge tourists daily. The remaining 6 percent goes to the state. Troxclair’s proposal would receive a share of the city’s portion.
The $7.2 million is a significant sum for historic preservation — and unprecedented — because it would generate millions annually for preservation purposes that fit with state law. Projects in the Zilker Botanical Garden, Zilker Park and the Tejano Walking Trail are among projects for which HOT revenue legally could be used.
Because Adler’s proposal also relies on HOT revenue, Troxclair’s initiative was thought to wound or even kill Adler’s. Fortunately, Austin’s HOT revenue can sustain both.
Adler’s proposal is built on a three-legged stool, using the convention center, the HOT and a Tourism Public Improvement District (TPID) to generate money. Critics point out that the business case for expanding the convention center is weak because bookings for events don’t cover operating and other costs.
We must note that the convention center never truly operates in the red even when bookings don’t cover expenses because the HOT revenue it receives is more than enough to cover losses and generate a healthy reserve.
Adler’s plan would use the city’s convention center to leverage financing for cultural arts and music, as well as to purchase or restore local historic treasures, and — this is a huge one — create a reliable funding source for permanent housing and other services for Austin’s growing homeless population.
The plan calls for using an additional 2 percent of the HOT to expand the convention center, raising the city’s portion to 9 percent. The extra 2 percent would finance an envisioned public-private convention center expansion estimated to cost $400 million.
But the bonding capacity for the 2 percent is far greater, at about $600 million, leaving $200 million for historic preservation, music, film and capital projects that fit with uses under state law, including improvements to the Red River Cultural District.
Additionally, Adler’s plan would establish a TPID to address challenges the city faces with its homeless population. State law prohibits HOT revenue from being used for permanent housing for homeless people, but there are no such restrictions on the TPID levy.
Downtown hotel operators have indicated they would use the TPID to tax themselves, starting with 1 percent, but rising to 2 percent, which would be added to hotel bills. Not all would go to homeless services, but the portion that would be is estimated to be $4 million to $8 million annually over a 10-year period.
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As we noted, Adler’s puzzle deal needs to be backed with expert financial data and written agreements binding the concept to the finished product.
When that happens, the city will have two initiatives — Troxclair’s and Adler’s — that can better Austin without adding a penny to our tax bills. That is a win-win.