Austin Tourism Public Improvement District plan to partially fund homeless services heads to vote

City Council will vote next week on the long-coming agreement with local hotels that could generate roughly $7 million a year for the next decade to fund services to aid people experiencing homelessness.

The Austin Tourism Public Improvement District (ATPID) has been a bargaining chip in local political circles since 2016, with former Mayor Steve Adler and local hoteliers proposing that hotels impose a 1 percent levy on room rates, with up to 40 percent of that revenue directed toward the city’s General Fund.

That has changed to a 2 percent levy and a 20 percent soft cap toward the General Fund, with forecasts projecting $78 million in potential city revenue through 2033.

The draft plan, which was just finalized by local hoteliers last week, would need to get an initial OK from Council before it could be circulated for official petition support from the hotel owners and operators. The plan would affect hotels with more than 100 rooms. It also would need to receive support from hotels representing 60 percent of the total revenue of all eligible hotels, as well as either 60 percent of the estimated 150 eligible hotels or 60 percent of the total square footage of all eligible hotels.

If those thresholds are met, the city’s legal department would work with the hotel industry leaders on drafting a formal agreement.

The revised plan was discussed at Wednesday’s meeting of the Tourism Commission, which failed to pass a resolution endorsing the plan and also failed to pass a resolution asking Council to wait a month before making a decision on draft language.

Tom Noonan, president and CEO of Visit Austin, said local hotel leaders were motivated to move forward with the 2 percent levy because doing so now will allow for the collection of more ATPID revenue. That money can be used to shore up marketing and business development efforts to enhance business during the closure of the Austin Convention Center starting in 2025 and lasting until late 2028 at the earliest.

Most of the revenue generated from the ATPID will go toward marketing and incentives that hotels can use to attract new meeting and convention business, with the city’s homeless services funds coming from redirecting money used for “buy downs” to help fund programming at the convention center.

There was some objection among advocates for the homeless population that the new 2 percent plan only directs 20 percent of buy-down revenue toward city use, compared to the 40 percent proposed in the earlier plan circulated around 2020.

Noonan said the new plan still will generate $10 million in additional General Fund revenue over 10 years.

“I recognize that the last City Council and the mayor wanted to use it for homeless services, and we’re good with that,” Noonan said. “That’s the City Council’s job to determine how they’re going to use those dollars … but the reality is this is $78 million in new General Fund revenue that wouldn’t exist without the (ATPID).”

Commission members debated the propriety of moving forward with a proposal that had little time for analysis or bargaining, while admitting it’s unlikely another month of discussion would result in any substantial changes to the proposal crafted by hotel leaders.

“We received this plan less than three business days ago, and quite frankly, it’s a lot to discuss in a very small amount of time. I know that actual Council members have had a hard time getting this document from the city manager’s office to essentially know what it is they’re voting for,” Chair Daniel Ronan said.

He added, “We should believe in this process of bringing people to the table, and frankly, I have not seen that on behalf of those currently working on this plan to engage the former parties that have been involved, in particular the housing advocacy community, where housing and homelessness are such large and important issues here in town.”

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