What happened to the new Convention Center housing the homeless?

This is an excerpt from the July 2 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

Way back in 2019, City Council unanimously approved a resolution in favor of expanding the Convention Center. But the expansion, which the hotel industry has been pushing for years, was only part of what Council endorsed.

The resolution, authored by CM Kathie Tovo, described the new Convention Center as part of a broader framework –– the Palm District Master Plan –– that would revitalize the southeastern quadrant of downtown and yield a number of community benefits. One of the big selling points: increased funding for homelessness services.

It was the culmination of a two-year campaign by Mayor Steve Adler to frame the Convention Center expansion as the key to “solving the downtown puzzle.”

The idea hinged on the creation of a Tourism Public Improvement District (TPID). The deal was supposed to be that if the city approved a hotel tax increase to fund a new Convention Center, the downtown hotels would voluntarily create a TPID that would levy an additional 1-2% tax on hotel guests. The understanding was that 40% of the revenue from the TPID would be used to fund homelessness services.

The deal that the mayor and the hotel association talked about was a 1% TPID assessment that would initially generate about $4 million a year for homelessness. After five years the plan was to increase the assessment to 2%, generating at least $8 million a year for homelessness.

(PIDs are not unusual. The Downtown Austin Alliance, which pays for downtown cleanup and other services, is funded by a PID that was created by a vote of a majority of downtown property owners)

The opportunity to generate more money for homelessness was one of the key arguments used by supporters of the Convention Center to beat back a referendum in November 2019 that would have capped the percentage of hotel tax dollars that could be used for the CC.

Originally the idea was that the TPID funds would create a dedicated funding stream that would directly support city homelessness services. Except at the same time that the Texas Hotel & Lodging Association was selling that idea to City Council, it was at the Legislature crafting a bill that would prohibit TPIDs from using money on anything except tourism marketing.

It wasn’t until months later, in October, that some City Council members discovered that the law had been changed, even though the city’s legislative staff, which is responsible for keeping Council apprised of state bills that affect the city, had been aware all along.

“As soon as I found out about it, I was extraordinarily unhappy and asked (City Manager Spencer Cronk) why we weren’t notified,” Tovo tells me. “I was told that it had been reviewed by staff and it was determined to have no impact. That was a decision made by the manager.”

When I interviewed Scott Joslove, head of the hotel association, in October of 2019, he told me that the mayor had been aware of the bill as well and had called Joslove to ask whether it would jeopardize the homelessness plan. Joslove said that he assured the mayor it wouldn’t.

The plan all along, Joslove said, was for the TPID to send the money to the Convention Center to cover tourism promotion services that are currently being covered by CC dollars. That would free up money in the CC’s budget to dedicate to homelessness services.

And yet, here we are two years later, the homelessness issue is sucking up more of the city’s money and attention than ever and yet everybody seems to have forgotten about the TPID thing. The city is dedicating $88 million in federal relief funds to homelessness and is putting pressure on the county to make a similar commitment. A recent “Homelessness Summit” organized by city and nonprofit leaders called for $240M a year investment from public and private entities but made no mention of the new Convention Center funding homelessness services.

All of this would be understandable if Council had ditched the idea of expanding the Convention Center. That would certainly seem like the prudent thing to do: the expansion that was initially envisioned won’t work due to the city’s failure to reach an agreement with neighboring property owners. Also, the convention industry was stagnant even before the pandemic and it’s not hard to imagine that some conventions will never return to their pre-pandemic levels.

What’s changed?

Council was scheduled to authorize the TPID in December but at the last minute the hotel association asked that the item be delayed, saying it needed more time to engage with member hotels on the issue. In an email, Joslove leaves the door open:

“Hotels have not petitioned to create an Austin TPID yet. With the COVID pandemic, hotels went into survival mode and are just coming out of it now. Accordingly, there is no collection of TPID funds as of yet. I do not know when efforts to initiate the TPID process will recommence.”

Tovo says it’s still a “possibility” and that there “is still interest from the hotel industry,” but that the change in state law introduced uncertainty about whether it could really be a reliable funding stream for homelessness.

In a statement, the mayor said he believes the TPID plan will go forward.

“The Tourism Public Improvement District remains a part of the City of Austin’s strategy and its dedicated source of revenue is expected to provide much-needed and ongoing funding to address homelessness over time,” he said. “The hotel industry was one of the first sectors to come forward with a proposed solution for funding to address one of our community’s biggest issues. Currently, we are working with a wide range of private businesses who also see great value in supporting the community goal of providing housing for 3,000 people experiencing homelessness over the next three years.”

That’s good to hear. But it’s still curious how conspicuously absent the subject has been from the ongoing conversations about homelessness funding.

In recent years, critics of the Convention Center have dismissed the TPID/homelessness arrangement as a slick ploy by the hotel lobby to win support for an otherwise dubious commitment of public funds. I was repeatedly assured by opponents of the expansion that the hotels and/or Convention Center staff would find a way to get out of the arrangement.

Let’s hope the critics aren’t proven right.

This is an excerpt from the July 2 edition of the Austin Politics Newsletter. To get daily breaking news and analysis on city politics, click here to subscribe. 

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