City of Austin Intitiates Consultations over Special Events Deficit
The notice from Brett Barnes, chair of the Austin Arts Commission, circulated today to cultural contractors only six hours before a consultative meeting could almost have been crafted to spread panic among Austin artists and institutions. It seemed to warn of an impending threat to existing arrangements for the City's distribution of revenue from the Hotel and Occupancy Tax (HOT). It certainly ensured a good turnout for this evening's first consultation over the City Council resolution instructing staff to submit a proposal by August 7 to deal with the rapidly widening gap between fees and revenue for special events in Austin.
The City's news service and its Special Events website ('hub') had published a notice of today's meeting a week earlier, on June 10, but few or none of us in the arts community were subscribers to their feed, so the last-minute notice via the Arts Commission and the Cultural Arts Division intensified our discomfort. To be noted is the fact that the Austin Creative Alliance had not advised its membership either. (ACA Executive Director Marcy Hoen responds, "
The ACA has been in contact with the involved City departments beginning before this resolution was proposed to explore funding for these events. We are deeply involved in the conversation and we continue to be in contact with the City in regard to this matter. We would like to assure your readers that we are working for the best interests of all involved.") The City's Special Events hub is at
http://www.austintexas.gov/citystage.
Chair of the consultative meeting was Bill Manno, recently appointed Corporate Special Events Program Manager. He was accompanied by staff members from various city departments. His patient exposition informed the room of the content of the resolution passed by the Council on May 4 (
click to go to full text), gave a few figures confirming the rapid growth of the special event deficit in recent years, suggested topics that tables might discuss, and invited any and all suggestions. Manno acknowledged the short deadline imposed by the Council but noted that for practical reasons more time might be required to consult the matter and come up with suggestions.
Though figures were scarce, I scribbled down some key numbers.
Fee waivers proposed and granted by the City Council have grown rapidly in recent years:
- FY 2010: $346.4 thousand
- FY 2011: $541 thousand (first year of Formula 1 races)
- FY 2012: $ 913.8 thousand (first year of a nine-day SXSW festival)
- FY 2013: $1.096 million
- FY 2014: $1.129 million
Waivers are proposed by individual Council members and voted upon by the full Council. Most of the events that benefit are long established; they include both non-profit activities (e.g., the weekly farmers' markets) and commercial activities (SXSW and Formula 1). A small number are co-sponsored by the City. The Council can waive permitting costs and/or rental charges for the use of public parks and streets. Each member of the Council has a 'courtesy' allotment of up to $6000 in waivers that the other members do not challenge. Not all members use or exhaust that allotment.
Manno's breakdown for FY 2013 showed that special events posed costs to the city of $6.7 million, the largest component of which was for added services by the Austin Police Department ($4.06 million). Fees actually collected for these events totaled $3.6 million. Fee waivers granted by the Council for the period were just over $1 million.
A multi-year summary of fee waivers and collections (years not specified) showed a cost to the City of $24 million and collections of $13 million.
In short, the Council and City staff face an ongoing budget problem, in which waived fees and unrecovered extra costs attributable to special events have grown sharply. The May resolution was an acknowledgment of this and an instruction to the City Manager to try to tell the Council how to fix things.
The HOT. The excitement preceding this first City consultation with stakeholders was caused by the prompt proposal of the relatively new Austin Music Commission to fund the gap from the Hotel Occupancy Tax -- not from the tax as currently administered, but instead by earmarking 20% of the additional collections expected from 2015 from the approximately 1000 additional hotel rooms that will shortly be coming on line.
No one offered any figures for this, but we can do some back-of-the-envelope calculations, keeping in mind that precision is impossible. If you look at the FY 2013 numbers provided by Manno, it appears that the annual funding shortfall for special events is on the order of about $2 million. If the Music Commission's estimate is approximately correct, the thousand additional rooms will be bringing in about $10 million more a year at Austin's already high HOT of 15% of basic room charges. The manager of the Austin Convention and Visitors' Bureau urged the room not even to consider raising the already high rate for the HOT ("That would be front page news in the major newspapers").
Suppose that two million of the increased revenues would go to a new fund; maintaining the current 80/20 split, the Austin Convention and Visitors' Center would get a bump up of $6.4 million and arts contractors could hope/expect to receive an additional $1.6 million (compared to the roughly $7 million distributed currently to the arts by the City -- see FY 2014 figures published by CTXLT.com).
In short, the proposal's not an unreasonable one, unless one is of the opinion that the City is greatly underfunding the arts already.
Contention. The outlines of contention were becoming quickly evident in the initial Q&A period, which extended well beyond the 30 minutes allotted to it. Some questioners strongly emphasized the theme that non-profit arts activities should be treated differently from commercial undertakings such as the Formula One race, SXSW and other profit-making events. One noted that the estimates of 'economic benefit' to the city from special events were numbers suggested by the event organizers; he asked if the City could contract an outsider to verify the claims (Manno: that's not in my budget.) Others inquired into the decision process for granting waivers (Manno acknowledged that he wasn't aware that any Council proposal for a waiver had been voted down). One person insisted on a distinction between 'fixed costs' dealt with before an event (permit fees and rental charges) and 'direct costs' incurred during an event (additional police presence, extra sanitation services, etc.).
It was pretty clear that if they were the kings of the forest, the folks in animated discussion at One Texas Center would stick it to the producers of large money-making events, in hopes of preserving arts grants. (Few seemed to have grasped the prospect that even if the proposal of the Music Commission is eventually accepted, cultural arts grants are likely to increase overall by more than twenty percent).
The Special Events division will post documents from the meeting and subsequent events, and one can sign up for their e-mails at http://www.austintexas.gov/citystage.