Posting Language
Title
Approve an ordinance designating a geographic area of the City as Project Financing Zone Number One, City of Austin, Texas, allowing the City to use certain incremental hotel-associated tax revenue, including certain hotel occupancy taxes, sales taxes, and mixed beverage taxes, to finance qualified projects, requesting that the Texas Comptroller of Public Accounts deposit the State’s incremental hotel-associated tax revenue from the zone into a suspense account held in trust for the City’s financing of qualified project activities in the zone, and providing a zone expiration date of 30 years from the date of designation of the zone. Funding: This item may result in increased revenue for eligible City projects from certain State hotel-associated tax revenues.
De
Lead Department
Convention Center.
Fiscal Note
The PFZ is projected to result in an additional revenue of $1.3 million for eligible Qualified Project costs in Fiscal Year 2024-2025. Revenue is expected to increase in future years.
Prior Council Action:
October 19, 2023 - Council approved two contracts related to design and engineering services and preconstruction and construction services with LMN | Page and JE Dunn/Turner, respectively.
June 10, 2021 - Council approved Resolution No. 20210610-005 on an 11-0 vote and Resolution No. 20210610-096 as amended on an 11-0 vote, approving the Construction Manager at Risk methodology for Convention Center redevelopment and expansion.
For More Information:
Trisha Tatro, Director, Austin Convention Center Department, 512-404-4218.
Additional Backup Information:
During the 88th Texas Legislative session, Austin was added to a list of cities eligible to utilize a new funding stream for qualified projects. H.B. 5012, passed on June 13, 2023, and effective on September 1, 2023, allows the City to designate a Project Financing Zone (PFZ or Zone).
A PFZ allows an eligible city to create a three-mile zone centered around a qualified project in which the increment - or growth - in the State’s hotel-associated tax revenues from all hotels within the PFZ’s boundaries can be captured and used by a city for a 30-year period for investment in qualified projects. Hotel-associated tax revenues include the State’s hotel occupancy tax, sales tax, mixed beverage sales tax, and mixed beverage gross receipts tax collected from hotels and businesses located within hotels. State law defines what constitutes a qualified project and provides guidance on eligible expenditures from the proceeds of the Zone. Multiple qualified projects are eligible within the zone.
Staff’s recommendation is to establish the Austin Convention Center, as the primary qualified project for the Zone, with the Palmer Event Center, and the Long Center for Performing Arts as secondary eligible projects. Staff’s professional recommendation is to establish the Austin Convention Center expansion project as the primary qualified project for the Project Financing Zone, and to utilize the proceeds of the Zone to 1) fund the ground-level, public-facing elements of the expansion project, including retail buildout, specialized meeting rooms for community use, and/or enhanced landscaping and pedestrian access across the site, and 2) pledging those revenues to pay bonds or other obligations issued or incurred to acquire, lease, construct, improve, enlarge, and qualified projects that are located in the zone. If the three expansion projects are designated as the qualified projects, the boundaries of the PFZ will be the three-mile radius formed from the centers of each of the sites. Exhibit A to the ordinance shows the boundaries of the proposed PFZ.
Creation of the zone this calendar year would allow the City to establish 2024 as the base year for the PFZ. As a result, for a period of 30 years, any growth in the State’s hotel-associated revenue above the base year would be held in a suspense account by the Texas Comptroller of Public Accounts (Comptroller) and released to the City when the qualified project has commenced. The qualified project must commence within five years of the first deposit or the funds will be forfeited to the State’s General Fund. If the Zone is not created this calendar year, the City will not be able to set the base year as 2024 and will lose out on a year of growth in revenues.
Within 30 days of Council approval, City staff will notify the Comptroller that the PFZ has been created and the Expansion Project has commenced. Staff will update Council regularly on PFZ revenues and planned expenditures in the Zone.