Council to delve into Airport Hilton questions

City Council is preparing to discuss extending a $2.6 million loan to cover overdue bills from the Austin Airport Hilton. The hotel, which is operated by Austin-Bergstrom Landhost Enterprises, or ABLE, lost a considerable amount of revenue over the past year as a result of Covid-19. Although it seems clear that the city is responsible for the debt, some Council members at Tuesday’s work session seemed reluctant to transfer the money without further conversation.

In the language of the agenda, the Aviation Department is requesting that Council amend the department’s operating budget to establish a subordinate obligation fund to fund deficiencies of the ABLE Debt Service Reserve Fund.

Council members Leslie Pool, Greg Casar and Vanessa Fuentes expressed an interest in postponing consideration of the item. Casar said, “I want to make sure we’re achieving the maximum community benefit … I really want to make sure the people who need it most get the best deal they can get.” He added that he had “heard concerns from the union,” but did not elaborate.

Tracy Thompson, Austin-Bergstrom airport’s chief administrative officer, told Council that, while the hotel is breaking even now, it still owes for franchise and attorney fees. She said payment of the fees has “been postponed for 20 months. I don’t think postponing the loan would change things.”

UNITE HERE Local 23, the airport workers’ union, disagrees with that assessment. According to a fact sheet the union sent to Council and shared with the Austin Monitor, the city’s airport hotel has seen declining occupancy and fallen short of financial forecasts for several years. “While ABLE’s net position has plummeted millions of dollars during the pandemic, the hotel operator’s cumulative management fee continues to increase.”

According to ABIA spokesperson Mandy McClendon, Prospera Hospitality oversees the hotel’s day-to-day operations.

According to Local 23’s fact sheet, “In order to maximize financial benefits to taxpayers under this agreement, Austin City Council must exercise its rights under ABLE’s bylaws to ensure the hotel is properly managed and withhold its approval of any operating agreement extension or renewal until a request for procurement is completed and proposals to responsibly manage the hotel are carefully evaluated and approved by Austin City Council.”

Council will likely postpone consideration of a resolution to amend ABLE’s bylaws, designate the number of directors and allow the hiring of a “compensated president,” as well as including a clause stating that the city is entitled to approve any management or franchise agreement.

Thompson told Council that staff would like to have Greg Milligan, who is acting president, named as the permanent president of the corporation. Milligan became vice president of the board in 2014, and in 2016 assumed the role of president and board chair. However, he would not serve in those roles simultaneously when he is being compensated to serve as president. Council Member Kathie Tovo asked Thompson how much Milligan’s salary would be and Thompson said it would be $60,000 a year.

Tovo noted that Milligan would be making considerably less than Jimmy Flannigan, the former Council member who became president of Austin Convention Enterprises for the downtown Austin Hilton in January.

Flannigan’s salary is $140,000 a year. Tovo has expressed disgruntlement about the hiring of Flannigan. She and Pool both serve on the Council Audit & Finance Committee. Pool said she expects a presentation on ABLE at a future committee meeting.

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Posted In: City Council, District 2