AUSTIN (KXAN) — Monday morning, Mayor Steve Adler announced a proposed plan to make tourists pay to house the city’s homeless. KXAN broke the story Sunday night and now, we’ve learned the details of this massive development program meant to also beef up local tourism and bring in millions of dollars.
It relies on a downtown tax increment finance zone or “TIF” that could fund homes for about a quarter of Austin’s homeless, an expanded Waller Creek TIF and the creation of a Tourism Public Improvement District. A bulk of the money would come from increasing the Hotel Occupancy Tax by two percent.
“There is one thing that almost everyone said when we were talking about working on the ‘Downtown Puzzle.’ And that was to meet the challenge of homelessness in the city of Austin. About everyone said, ‘house the homeless,'” Adler said during Monday’s news conference.
It’s a common thread connecting downtown stakeholders with different priorities. Homeless advocates are pushing for more permanent housing, the tourism and hotel industry want an expanded convention center and the Red River and 6th Street districts are looking for financial support, to name a few. But Adler says in order for the pieces to come together, one big thing needs to happen: an expansion of the Austin Convention Center.
“We create this new funding stream by doing the convention center. But it ripples down because the pieces are connected. This is how we make the pie bigger,” Adler said, calling it a tool to drive the community benefits Austin wants to achieve.
Vision for an Expanded Austin Convention Center
Businesses on the ground floor, an expanded convention center above that, and then two towers of office and residential space with some affordable housing for the city to reap new tax benefits. Without that expansion, industry leaders say they’re actually missing out on a lot of money because the center is too small. Last year alone, the convention center says 130 groups declined to hold their events in Austin because of a lack of room or availability at the venue.
“The biggest question that the council needs to address is whether or not we want to spend $600 million on a new convention center. If the answer to that is yes, then, of course, we should look at what we can do to maximize that investment and the biggest return as possible for the city,” said Council Member Ellen Troxclair. “If the answer is no, there are still many ways and a lot of funding available for the city to address homelessness and continue to invest in parks, preservation and music and all of the other things that make Austin a great place to visit.”
Troxclair says the city can do that by looking at ways to use the hotel occupancy tax outside of a convention center expansion. A KXAN investigation in May pointed out the bulk of the city’s hotel occupancy tax, about 85 percent, goes to the Austin Convention Center.
In a post to the city council message board, Adler explained a Tourism Public Improvement District (TPID) could annually provide $4-8 million that the city could use to address homelessness, through a combination of direct and matching funding. A 1-2 percent increase in the hotel tax (separate from the taxes used for a convention center expansion) could create that new pool of funding.
Adler’s post states the hotel industry would be open to backing the proposal, “if it were part of a package that also included the expansion of the convention center.”
Troxclair pointed out that homelessness is an issue that needs to be addressed now. “The reality is that the hotel occupancy tax revenue has increased almost $50 million in four years. So if the city council wants to make the decision to put more resources towards homelessness, we can do it now without waiting for a massive new convention center.”
The Visitor Impact Task Force plans to present recommendations on the hotel occupancy tax to council when members return from a break next month.