Questions abound with future of convention center up in the air

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Wednesday, April 21, 2021 by Chad Swiatecki

Being the only viable direction in which to significantly expand the Austin Convention Center, the deal structure and timeline for such a project seems to have become much more complicated.

Former city councilman Jimmy Flannigan is now president of Austin Convention Enterprises, a utility company created to manage the city-owned Hilton Austin hotel adjacent to the convention center. Flannigan said news this week that the city is dropping a westward expansion of the facility means going vertical on the existing footprint. This would mean a prolonged reduction in available convention space, with hotel taxes paid by neighboring convention-dependent hotels also decreasing.

Neither city officials nor those at the convention center have released any plans for what happens next.

“The direction to go is up, and that’s always been on the options list for this particular footprint that belongs to the city and isn’t constrained by the view corridors (of the Capitol), so you have the option to go vertical,” Flannigan said. . “The challenge of staying on the existing footprint is that the construction time will reduce the convention space available. It also makes for a very different assessment of who bears the construction risk, and the opportunity for (public-private partnerships) has not gone away, but is different.

Flannigan said the drastic reduction in hotel taxes caused by the Covid-19 pandemic likely impacted the budget to acquire the three-and-a-half blocks west of the center, which were intended to include more space convention on lower floors with a mix of privately developed space to make the proposed $1.2 billion expansion more financially feasible.

Once the western properties were expanded, the council-approved plan would have seen the existing convention center space significantly redone to improve its public use and make it more suitable for east-west pedestrian traffic. .

Flannigan said the city should still aim to make the site more pedestrian-friendly, but that would mean fewer opportunities for public-private partnerships with developers to shoulder some of the financial burden.

“Even without the westward expansion, the opportunity is there to rebuild and reinvent the pedestrian landscape,” he said. “What you lose by not going west is increased risk, a period where hotels that were betting on a certain amount of convention space will now have a period where that (business) is smaller because you have to tear down a piece of it when you build something new… it’s like when TxDOT builds a highway while people are still driving on it, it makes the project more complicated and it will take longer.

John Riedie, a member of the Tourism Commission who led an unsuccessful ballot proposal effort that would have required a public vote to agree to financially ambitious capital projects for the center, said the city must seek new market research of the convention industry before designing a new extension project. He said most industry watchers agree the facility needs major work to stay competitive and that an upward expansion might be a better long-term option.

“It was a strange precedent to set for trying to get four prime city blocks off the tax rolls. By going back to the drawing board, we can address the needs of the community and not just how the hospitality industry is leading the charge on the convention center,” he said. “Nobody disputes that the current center needs a technological upgrade and an overhaul. If we can go vertical, it’s the best use of some of the most valuable real estate in the country.

As part of the expansion proposal, hotel executives had previously signed on to self-impose a 1% revenue tax that would be used to provide resources to help the city’s homeless population. . The process of creating this public tourism improvement district has stalled with the onset of the pandemic, but Riedie said hoteliers should start contributing to it before any expansion plans are discussed.

“We also need to tell the hospitality industry that they need to create the TPID to start providing resources to homeless Austinites, and then we’ll talk about the convention center expansion,” he said. “Once they’ve created this TPID and put the resources where they said they would, that’s when we can have a conversation about a project that really benefits the community and not just the government. hospitality industry.”

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