Council member asks for analysis of Austin Tourism Public Improvement District plan, including homelessness aid

The plan for an Austin Tourism Public Improvement District is set for a deep-dive analysis, after City Council Member Vanessa Fuentes requested a briefing on it during a work session Tuesday. 

The draft plan would create an agreement with local hotels that could generate about $7 million a year for the next decade to fund services for people experiencing homelessness. The move for a briefing comes after the Tourism Commission met last week and shared concerns over how quickly the proposal was moving forward. 

During Tuesday’s session, Fuentes stressed that the plan merits substantial time and attention, since it’s been long talked about in Austin, and similar plans have already been enacted in other major Texas cities. That includes Fort Worth, where Fuentes said she recently stayed in a participating hotel. The North Texas city established its own district in August 2017 for a decadelong term. The city’s Dallas neighbors also have a Tourism Public Improvement District, as does San Antonio, which has dedicated most of the funds to increased sales and marketing initiatives.

The plan works by having hotels establish a levy on room rates, with a percentage of that revenue directed toward the city’s General Fund. Like in San Antonio, most of the revenue generated from the Tourism Public Improvement District would go toward marketing and incentives that hotels can use to attract new meeting and convention business. The assistance for Austin’s homeless population comes into play by redirecting money used for “buy downs” to help fund programming at the convention center.

Moves to generate added benefits from tourism come as hotels and other businesses enjoy increased spending after facing a pandemic slump in previous years. In 2022, travelers spent $8.2 billion, tourist bureau Visit Austin notes, and this March was the fifth-busiest month on record at Austin-Bergstrom International Airport.

With forecasts projecting $78 million in potential city revenue through 2033, a key aspect of the plan is deciding what percentage of the revenue should go toward city use. Advocates for the homeless population noted that a new plan directs just 20 percent of buy-down revenue toward city use, compared to the 40 percent proposed in an earlier plan from years before.

“One thing that is clear to me as part of this conversation – the previous Council of 2019-2020 had an intent for this to bid and that included 40 percent dedication towards homelessness services,” Fuentes said. “That is a need that our community has today, if not a greater one.”

But interim City Manager Jesús Garza urged Council members to weigh proposals like the Tourism Public Improvement District with a variety of factors in mind. 

“It is the City Council’s responsibility to determine all your priorities, which are beyond homelessness. It’s about child care. It’s about parks and recreation. It’s about our cultural arts, it’s about our libraries,” Garza said. 

Approving the draft service plan and draft petition language for the Tourism Public Improvement District is on the agenda for Council’s Thursday meeting. But, as Fuentes noted, it would operate in tandem with other funds dedicated to Austin’s unhoused population, including a $20 million contract for homeless encampment cleanup and related services and a contract of up to $9 million to establish a temporary emergency homeless shelter for a year.  

That path to the Tourism Public Improvement District getting an initial OK from Council is just a first step. Following that, the plan will have an official petition seeking support from the hotel owners and operators. Then, the city’s legal department would work with the hotel industry leaders on drafting a formal agreement.

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