Mega Hotel Subsidy Draws Fire From Austin Council

Mega Hotel Subsidy Draws Fire From Austin Council

It seems that having Armbrust & Brown attorney Richard Suttle as the representative of the hotel developers I wrote about Monday may be a little too hot for some council members to handle.

On Tuesday morning, Council Members Bill Spelman, Sheryl Cole and Laura Morrison seemed skeptical that his clients need almost $4 million in city breaks to help to build a hotel downtown.

Students of city politics should note that the power base at city council has now shifted from Mayor Lee Leffingwell, Mayor Pro Tem Mike Martinez and Chris Riley — who are losing defeated incumbent Randi Shade — to the other council members, who are gaining Kathie Tovo next month.

Unless you have been living under a rock, you know that Suttle is also representing the Formula One developers. That team pulled back at the last minute from a request to have the city pay $4 million a year to host the race and instead offered to pay it all themselves.

Morrison went on record Tuesday saying she wants to postpone the hotel deal and Cole indicated the city was cutting the developer a break for no good reason.

Suttle basically told them that they have to “call now, supplies are limited” in order to get their very own hotel.

For his part, Assistant City Manager Rudy Garza — who has also fast-tracked a deal to add water lines to the F1 site — is also the one spearheading the hotel, it seems. Garza justified the spending for a new hotel by telling council that other cities give hotel developers $60 million to $100 million cash.

Cole replied that Austin is not in the same boat as other cities. People want to build here and come here even if we don’t throw money at them.

Some could say that the extra hotel tax along with increases in sales tax and wages/jobs will outweigh the revenue lost  from waived fees and permits.

Sales tax goes to the general fund, just as the fees do. The general fund pays for basic city services, like police, fire and parks. Hotel tax, paid by room per night, is delivered to the convention and visitors bureau , the Convention Center Department and Cultural Arts Fund, under the economic development office, known as “EGRSO.”

Comments

  1. This is the ugliest building I have ever seen. Uglier than the W Bush Motel, uglier than the UT Communication Building. Was this an old 1950′s blueprint that they just dusted off? I don’t mind seeing a new building downtown, but this is just horrendous. Frankly, I think we’re better off with pitched tents at that site. Sign me up with the “evil” no-growthers and neighborhood activists. Instead of a subsidy, the city should be contemplating fines.

  2. avatar txlakeside says:

    Corporate welfare at its best, sleaze and corruption at its worst. They will build hotels without a slush fund …. if they need this break then it is no longer capitalism. Let the “FREE” markets reign supreme.

    • No thanks. Then Time Warner would own my water pipes and I’d only have running water 80% of the time. I’d prefer to occasionally have to wave some building fees rather than have the free market have full reign over our roads, pipes, and electrical.

      • @Tim, well said.

        I do agree with Amy, in part, the risk is low that the hotel won’t get built. It is real risk, though.

        Why assume the risk that it gets built four+ years from now? The economic stimulus this hotel would generate for the [entire] city would be better to have sooner, rather than later.

  3. avatar el_longhorn says:

    This is such a win-win that the details barely matter. The property, sales, and hotel/alcohol taxes generated will be huge. I would waive the fees if we get a better design than the ugly ass thing they had before.

  4. Sales tax funds POOLS, too. Like Shipe and Reed, the two my family goes to. That are in danger of being closed next summer.

    Morrison and Tovo don’t care, of course; they can easily afford country clubs.

    • I’d rather use the sales tax to fund those POOLS instead of a new hotel that no Austin resident will ever use. That hotel will get built with or without city money, so why give it to them? We don’t need to line some corporation from Indiana’s pockets while depriving ourselves. And we’ll still get those hotel tax benefits once it’s built. Also, it’s shady as hell to vote on it less than a week after announcing it without giving people time to debate/discuss.

      • Typical no-growther BS.

        1. Those are fee waivers – we don’t get that money if the hotel doesn’t get built either.
        2. There is no guarantee the hotel will still get built, and still be as big, without those waivers.

      • Sure, the hotel will be built without waivers. But WHEN? If it’s delayed by a few years, what is the differential in tax revenue over that period between just keeping an empty lot and having a huge hotel there? Do the math before you reflexively scream “No!”

        • The hotel company said they wanted to get started before commodity prices started increasing again! That means they will NOT start in a few more years. White Lodging and Hyatt signed an agreement a long time ago to go in on this project together IN FALL 2011, and said nothing about city money until much more recently. I’m not a “no-growther,” I just don’t believe in giving somebody money for absolutely no reason when a) they don’t need it and b) they are going to pocket it and not even create Austin jobs (they are notorious for using H-2B visa workers). So where’s the benefit? Why don’t you do a minor amount of research before reflexively screaming, “Yes!”

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