Possible solution to downtown puzzle

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Steve Adler
Posts: 393
Joined: Fri Jan 16, 2015 2:12 pm

Possible solution to downtown puzzle

Post by Steve Adler » Thu Dec 22, 2016 4:44 pm

Colleagues:

Have a great and safe holiday. I wanted to share some initial, preliminary, high-level ideas that I’ve exchanged with some of our colleagues including Ann, and this posting is intended to spark a conversation.

I look forward to the Council workshop on January 11 and 12, 2017, when we’ll talk about strategic priorities. My personal focus will continue to prioritize mobility and affordability, which I see as inextricably linked. I’m proud of the work we did on mobility this year and next year we can continue to move forward and to make even more progress on affordability so we can preserve the spirit and soul of Austin.

Of course, there will be many other issues that we’ll deal with. This note touches on homelessness, a key priority item for most if not all of us, and other interconnected economic, cultural, and safety aspects that relate to the ARCH, the Waller Creek linear park, the Innovation Zone (Medical School), the MACC, the local music industry, safety downtown, a possible convention center expansion, and 6th Street between Congress and I-35, and more.

Just FYI and because several of you asked that I try to share on the bulletin board what I’m discussing with others on the Council and what I’m thinking, I want to layout the thought that we might best tackle the issues, listed above, by considering them all together. This note presents a comprehensive, integrated vision of one possible way to approach the future of a part of the downtown core and how it might serve as a major engine for preservation and progress. We’ve been considering these various issues separately for some time, but like a puzzle, maybe the pieces make the most sense when you see how they all could fit together.

Please let me know if we could work together to explore or develop all or any part of this perspective on issues on which we’ve all been involved for some time. If nothing else, maybe this note will encourage community discussion. Maybe the Task Force on the HOT Tax would want to consider a broader view or context for its work.

There is a way that these various issues might fit together:

1. Waller Creek Linear Park.

The Waller Creek Park would be an incredible addition to our city. It’s an exciting vision. To realize that vision, I support expanding the time period for the Waller Creek TIF (currently in place to fund the tunnel and other flood water conveyances) to provide $100 million in bonding for the construction of the actual park and facilities. I would expect and would be extremely appreciative of the philanthropic community pitching in another $50 million to match the public commitment. And in order for the maintenance and operation (M&O) of the park to be handled without general fund expenditure, it would seem appropriate for there to be a matching contribution from the surrounding property owners who will most directly benefit from the public expenditure for the park. This could take many forms, such as including more properties in the existing downtown PID, expanding that PID to include residential uses, expanding the PID to include the Rainey St. neighborhood, or even creating a new PID for the Waller Creek area. Perhaps Travis County would also consider expanding the time period for its 50% participation in the current Waller Creek TIF, especially if the County’s tax increment collected going forward were used to fund the purchase for public use of the Palm School the County is considering putting to a different use, and this might be the best way for the County to ensure its public use. Perhaps an agreement with the Waller Creek Conservancy could provide for restaurants or other revenue producing venues in the park to help pay for park M&O, providing an additional means for ensuring that the park did not require future general fund expenditures.

The philanthropic participation that would help enable the linear park would also help to ensure a better future for a larger part of downtown through the realization of other elements, discussed below, and for this the Austin community would be thankful. And as part of the inducement for such philanthropy, the City could also commit to addressing the downtown homelessness challenge, as generally set out below, because such would, in turn, help with the operation of the linear park. (Again, the pieces all fit together.)

2. Downtown Homeless and the ARCH.

Many of been looking for a big, comprehensive answer and funding stream to address homelessness in downtown Austin and the ARCH. My understanding is that best practices indicate a continuing need for the ARCH to be the downtown shelter. Rightsizing the ARCH and housing the homeless is also just the right thing to do for some of the most vulnerable among us.
This could also result in a very different presence for the ARCH -- one that better promotes downtown safety and is more compatible with surrounding uses.

It could be that a downtown TIF, in an area outside of the current Waller Creek TIF, might provide a source of the needed funding stream. I believe there would be support for such an effort because addressing homelessness is important to Austin. Funding it this way makes sense since focusing the mission of the ARCH should increase surrounding land values that might otherwise not be achieved.

Support for addressing homelessness could come from the Waller Creek constituency as well as from the businesses and property owners on 6th Street east of Congress and west of I-35 who would directly benefit from addressing downtown homelessness. Support from this latter constituency might also be amplified if, as part of an overall plan, the public would commit some of the increment (or other funds as identified below) to realize the vision for turning 6th Street into a historic entertainment area. The associated increase in area commercial draw might serve as inducement to redirect the uses along 6th Street towards more restaurant and entertainment venues and away from the heavy reliance on alcohol consumption that many believe is creating the growing perception that this area is not safe.

And the hoteliers would also benefit greatly from a public commitment to address the challenges of downtown homelessness and the ARCH. It could be that this could induce the hotel industry’s greater participation in enabling funding streams to support a possible expansion of the convention center.

3. Possible Convention Center Expansion.
Several months ago, the Council set out more than a dozen questions that need answers before we could support expanding the convention center. There needs to be a demonstration of the beneficial economic impact on the city to justify such a project. Also, financing a convention center expansion would commit the current HOT tax venue revenues results into the 2040s. Some on the Council have said that they would need a much shorter amortization period to support expanding the convention center. This would require a greater dedicated revenue stream.

State law allows the city to levy up to an additional 2% above the current 15% HOT tax to fund venues such as a convention center. Realizing all or part of such an increase would provide new revenue, paid by visitors and tourists and not residents, that could shorten a construction bond amortization period. There is, understandably, some resistance among hoteliers to levy all or part of such a 2% increase because of its possible impact on competitiveness. However, it could be that this industry would support a HOT tax increase if that were instrumental in delivering the convention center expansion that the industry supports.

The hoteliers have also indicated a desire for the city to enable a TPID (Tourism Public Improvement District). Such a TPID could be up to an additional and separate 2% increase in the HOT tax that would be controlled by the industry for marketing and attracting tourism from which the local hoteliers (and the community) profit. A TPID has to be supported by a certain percentage of the hotel room owners and must be authorized by the City. If a convention center expansion were to be approved, I would support authorizing all or part of such a TPID assessment so long as part of it were to be spent on items that relieve the City of certain general fund obligations that benefit the hotels. For example, I understand that TPID money can pay for the overtime police protection needed downtown during SXSW, saving Austin taxpayers at least $1.5 million every year. Perhaps part of the TPID could be spent on downtown historical preservation, to address homelessness, to support the local music industry and the Red River District, or other similar items that help us accomplish what we want as city and that also boost local tourism.

And, as described above, a comprehensive approach to these issues could also provide for addressing downtown homelessness, safety, and the ARCH, and collectively these might provide additional incentive for the hoteliers to participate as described above.

4. Additional Community Benefits.
In addition to the Waller Creek park, addressing downtown homelessness, and a possible convention center expansion, there are also some additional community benefits that could be funded through a comprehensive approach to this part of downtown Austin.

A. Mexican American Cultural Center (MACC). The Council just authorized a $300,000 masterplan for the MACC, but we do not have earmarked funding to implement and build the masterplan. Perhaps the downtown TIF, discussed above in the context of addressing the homeless, could provide an income stream. Or perhaps some funding could be found in the expansion of or creation of a new downtown PID (as discussed above in the context of the Waller Creek linear park M&O), or an additional funding stream identified below.

B. Music and Creative Industries. The Council passed a Music and Creative Omnibus Resolution earlier this year which set out many areas in which funding might help preserve and grow the music industry and other creative artists and venues. Perhaps the downtown TIF, discussed above in the context of addressing the homeless, could provide an income stream. Or perhaps some funding could be found in the expansion of or creation of a new downtown PID (as discussed above in the context of the Waller Creek linear park M&O), or an additional funding stream identified below.

C. Innovation Zone (Dell Medical School). There are capital improvements that are needed to realign streets and to provide for additional improvements that would enhance the Innovation Zone in and around the new Dell Medical School. There has been some discussion about the need for a TIF to help finance such expenses since they would seem to create a significant increment in property tax revenue. It could be that such a TIF would be located adjacent to or even made a part of the TIF discussed above in the context of the homelessness effort. This issue could be discussed as part of a comprehensive approach.

D. I-35. Another possible use of TIF funds would be, if needed, to support the Governor, TxDOT, and Sen. Watson’s I-35 congestion project (which hopefully will lower the main lanes to below grade as it goes through this part of downtown Austin), or the capping of the lowered lanes to provide a new downtown park or some other use. It could be that such a TIF would be located adjacent to or even made a part of the TIF discussed above in the context of the homelessness effort and the Innovation Zone. This issue could be discussed as part of a comprehensive approach.

E. Downtown Mobility and the Downtown Plan.
Other community benefits that could be discussed could include downtown mobility, including but not limited to enhancing the transit station and its operation, providing mobility choices, and executing further the Downtown Plan.
5. Airbnb Fee Collection.
Another possible funding source for the public benefits, identified above, would be to take up Airbnb on its offer to collect fees/taxes associated with short term rental agreements that follow from its platform. I understand that other Texas cities may be providing for such collections in the next few months.
6. Cultural Arts Funding.
Because there would appear that a comprehensive approach to this part of downtown could provide funding streams for other public benefits, I would advocate for not changing the current HOT tax allocation for cultural arts funding. There is a significant community benefit in allowing investment in cultural arts infrastructure, organizations and artists, as well as in our City’s diversity, to grow as our city grows.
Mayor

Michael Searle
Posts: 12
Joined: Thu May 28, 2015 3:48 pm

Re: Possible solution to downtown puzzle

Post by Michael Searle » Tue Jan 10, 2017 7:43 am

Mayor,

Thank you for this important and thought-provoking post.

Councilmember Troxclair would be very interested in having a seat at the table to discuss these important issues to Downtown, many of which have been of real interest to her throughout her time in office. I would be curious to hear from staff whether or not some (or all) of those issues you raise might fit under the scope of work for the Visitor Task Force, the issues certainly impact tourism in this City. As you pointed out, they all seem to be interconnected.

We look forward to working with your office on these issues.

Michael Searle
Chief of Staff
Office of Council Member Ellen Troxclair, District 8

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