Item 60, 8/31 HOT Allocation and the Downtown Puzzle
Posted: Tue Aug 22, 2017 4:37 pm
Colleagues:
I have concerns about Item 60 and its impact on the work of the Visitor Task Force and the Downtown Puzzle proposal. I am being asked for my thoughts on this item and hope this posting is the best forum to present them.
If I understand correctly, not all of the co-sponsors of Item 60 were focused on any aspect of the item other than the continued effort to see if there is HOT revenue allocated to the Convention Center and, separately, to Visit Austin (Austin Convention and Visitors Bureau) that could be re-allocated. I believe there are both opportunities and limitations in this regard and I think we can all work together on this element.
However, Item 60 goes far beyond that simple inquiry and includes unrealistic and uncertain assumptions. I believe it would preclude the opportunity to implement the Downtown Puzzle and, as a consequence, poses significant threats and missed opportunities:
-- Item 60 does not create new funding for long awaited local priorities and instead merely re-allocates existing funding (except for STR funding not otherwise available).
-- The Downtown Puzzle brings more than $180 Million of new, non-property tax revenue to be deployed for community needs.
-- Item 60 realistically takes the following possibilities off the board for now, including:
o Creating no money for homelessness. Zero new dollars. No dedicated funding stream for the homeless. There’s no mention of the Downtown Puzzle’s $30 Million capital expenditure for housing for the homelessness.
o We lose the most direct path to fund the purchase of the Palm School, an important part of our Latino community’s heritage in Austin.
o Once again, we are leaving the MACC plans on the drawing board while waiting for some other “future” funding idea.
o Item 60 has no new revenue for historic preservation for 6th Street, the Red River Cultural District, and other long-standing needs throughout our community.
o There’s no dedicated revenue stream for the local music industry, without which Austin may no longer be the Live Music Capital of the World.
-- Item 60 doesn’t work because there would be no convention center expansion, and thus no TPID. With no TPID, there is no dedicated funding stream for the homeless.
-- There is no recognized available STR HOT funding stream at this point that is sufficient to impact this budget preparation, since it does not conform to existing STR policy.
-- Item 60 seems also to be dependent on Council’s willingness to approve budget line items from offset general fund spending that really should be handled as part of the budget process.
Item 60 closes off the opportunity to have tourists fund so many local needs, including creating new dedicated funding streams for the homeless and historic preservation, boosting the local music industry, preserving the Palm School, and building out the MACC, among others. As bad as that is, it might not be the worst possible consequence of Item 60.
Item 60 threatens our tourism industry, which currently generates enough sales tax revenue to offset about $1,000 in taxes for everyone in town. As I said above, I believe there are efficiencies and re-allocations of the Visit Austin budget that could be put to other community benefits. However, it is my understanding that the $3.3M in revenue for the Convention Center, taken away by Item 60, is pledged and not available to be re-allocated. Excessive cuts to convention center funding would harm our ability to host conventions even at our current scale, which threatens existing service and hospitality industry jobs downtown. And I question whether it is appropriate to re-allocate $6.3M of Visit Austin monies ($4.3M directly and $2M through dedication).
Item 60 risks millions in sales tax general fund revenue and, because it threatens our local hotel business, we would also be risking millions in existing property tax revenue as well. Any downward change to this existing tax revenue would place a greater burden on the tax burdens of Austin homeowners. Finally, cuts to Visit Austin that are too deep not only endanger existing tourism promotion efforts but also the existing funding for the arts and historic preservation as well, since they are funded through HOT revenue.
After careful review of Item 60 and Exhibit A, I have 16 questions for the Council to consider on this proposal:
1. How much is the unremitted STR revenue? What is the source of that amount? What STRs have not remitted tax? Are we ready to make the allowances or exceptions necessary to collect those monies?
2. What is the “other revenue” for music funding?
3. What is the SXSW marketing item? Has SXSW indicated they desire these marketing funds? Are they willing to accept the responsibility for public safety in exchange?
4. Has the hotel industry agreed to this TPID and its use of funds?
5. What is the impact of the cuts to the convention center budget? How many and what kind of city jobs will be impacted?
6. Does this remove obligated revenue from existing Convention Center bonds?
7. Does this impact payback schedule on existing venue and Convention Center bonds as compared to the Visitor Task Force proposal?
8. What is the impact of the cuts to the Visit Austin budget?
9. Does this pay for any new historic preservation projects?
10. Did the Visitor Impact Task Force review these reallocations?
11. What stakeholder groups impacted by current HOT usage and potential HOT usage have reviewed this proposal?
12. Has the city budget office reviewed this proposal?
13. How large is the budget cut to both the convention center and Visit Austin if unremitted STR revenue is not collected? (I’ve estimated this amount in my comments, above.)
14. Does this plan allocate revenue before revenue is realized?
15. Under what state statute can HOT revenue be used for park spending?
16. Has city legal signed off on this reallocation?
We’ll be filing an Addendum to put our Downtown Puzzle resolution on the agenda next week, though not because we think it should be heard at that time, but in case Item 60 is advanced despite these concerns, so our alternative can be discussed at the same time. We still think the ideal time for our resolution to come before the Council would be the end of September, but are prepared to bring it up earlier as part of the Item 60 conversation if that is the will of the Council.
s
I have concerns about Item 60 and its impact on the work of the Visitor Task Force and the Downtown Puzzle proposal. I am being asked for my thoughts on this item and hope this posting is the best forum to present them.
If I understand correctly, not all of the co-sponsors of Item 60 were focused on any aspect of the item other than the continued effort to see if there is HOT revenue allocated to the Convention Center and, separately, to Visit Austin (Austin Convention and Visitors Bureau) that could be re-allocated. I believe there are both opportunities and limitations in this regard and I think we can all work together on this element.
However, Item 60 goes far beyond that simple inquiry and includes unrealistic and uncertain assumptions. I believe it would preclude the opportunity to implement the Downtown Puzzle and, as a consequence, poses significant threats and missed opportunities:
-- Item 60 does not create new funding for long awaited local priorities and instead merely re-allocates existing funding (except for STR funding not otherwise available).
-- The Downtown Puzzle brings more than $180 Million of new, non-property tax revenue to be deployed for community needs.
-- Item 60 realistically takes the following possibilities off the board for now, including:
o Creating no money for homelessness. Zero new dollars. No dedicated funding stream for the homeless. There’s no mention of the Downtown Puzzle’s $30 Million capital expenditure for housing for the homelessness.
o We lose the most direct path to fund the purchase of the Palm School, an important part of our Latino community’s heritage in Austin.
o Once again, we are leaving the MACC plans on the drawing board while waiting for some other “future” funding idea.
o Item 60 has no new revenue for historic preservation for 6th Street, the Red River Cultural District, and other long-standing needs throughout our community.
o There’s no dedicated revenue stream for the local music industry, without which Austin may no longer be the Live Music Capital of the World.
-- Item 60 doesn’t work because there would be no convention center expansion, and thus no TPID. With no TPID, there is no dedicated funding stream for the homeless.
-- There is no recognized available STR HOT funding stream at this point that is sufficient to impact this budget preparation, since it does not conform to existing STR policy.
-- Item 60 seems also to be dependent on Council’s willingness to approve budget line items from offset general fund spending that really should be handled as part of the budget process.
Item 60 closes off the opportunity to have tourists fund so many local needs, including creating new dedicated funding streams for the homeless and historic preservation, boosting the local music industry, preserving the Palm School, and building out the MACC, among others. As bad as that is, it might not be the worst possible consequence of Item 60.
Item 60 threatens our tourism industry, which currently generates enough sales tax revenue to offset about $1,000 in taxes for everyone in town. As I said above, I believe there are efficiencies and re-allocations of the Visit Austin budget that could be put to other community benefits. However, it is my understanding that the $3.3M in revenue for the Convention Center, taken away by Item 60, is pledged and not available to be re-allocated. Excessive cuts to convention center funding would harm our ability to host conventions even at our current scale, which threatens existing service and hospitality industry jobs downtown. And I question whether it is appropriate to re-allocate $6.3M of Visit Austin monies ($4.3M directly and $2M through dedication).
Item 60 risks millions in sales tax general fund revenue and, because it threatens our local hotel business, we would also be risking millions in existing property tax revenue as well. Any downward change to this existing tax revenue would place a greater burden on the tax burdens of Austin homeowners. Finally, cuts to Visit Austin that are too deep not only endanger existing tourism promotion efforts but also the existing funding for the arts and historic preservation as well, since they are funded through HOT revenue.
After careful review of Item 60 and Exhibit A, I have 16 questions for the Council to consider on this proposal:
1. How much is the unremitted STR revenue? What is the source of that amount? What STRs have not remitted tax? Are we ready to make the allowances or exceptions necessary to collect those monies?
2. What is the “other revenue” for music funding?
3. What is the SXSW marketing item? Has SXSW indicated they desire these marketing funds? Are they willing to accept the responsibility for public safety in exchange?
4. Has the hotel industry agreed to this TPID and its use of funds?
5. What is the impact of the cuts to the convention center budget? How many and what kind of city jobs will be impacted?
6. Does this remove obligated revenue from existing Convention Center bonds?
7. Does this impact payback schedule on existing venue and Convention Center bonds as compared to the Visitor Task Force proposal?
8. What is the impact of the cuts to the Visit Austin budget?
9. Does this pay for any new historic preservation projects?
10. Did the Visitor Impact Task Force review these reallocations?
11. What stakeholder groups impacted by current HOT usage and potential HOT usage have reviewed this proposal?
12. Has the city budget office reviewed this proposal?
13. How large is the budget cut to both the convention center and Visit Austin if unremitted STR revenue is not collected? (I’ve estimated this amount in my comments, above.)
14. Does this plan allocate revenue before revenue is realized?
15. Under what state statute can HOT revenue be used for park spending?
16. Has city legal signed off on this reallocation?
We’ll be filing an Addendum to put our Downtown Puzzle resolution on the agenda next week, though not because we think it should be heard at that time, but in case Item 60 is advanced despite these concerns, so our alternative can be discussed at the same time. We still think the ideal time for our resolution to come before the Council would be the end of September, but are prepared to bring it up earlier as part of the Item 60 conversation if that is the will of the Council.
s