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DATE News (chronologically)
02/15/11
f1
Austin to tax hotel travelers to pay for F1 track  Travis County officials are considering a new approach to paying for road and drainage improvements near a planned Formula One racetrack: a 2 percent hotel-motel tax. County staffers estimate that improvements will cost $6 million, and so far organizers of the project, which is expected to draw more than 100,000 racing fans to southeastern Travis County annually starting in 2012, have not indicated whether they will pay for the work.

Some commissioners have said the F1 organizers should pay for widening a narrow county road that leads to the site. If not, a hotel tax would largely shift the burden from local taxpayers. It would be in addition to state and city hotel taxes, making occupancy taxes at Austin's hotels among the highest in the nation.

Commissioners are expected to hear a legal briefing on the idea in closed session today.

Commissioner Sarah Eckhardt said a hotel-motel tax is a good idea and a "very appropriate" alternative for paying for F1-related transportation improvements. The tax "would not rob our current tax base to pay for something largely utilized by visitors," she said.

Voters would need to approve how revenue from the tax would be spent. The earliest the county could call an election would be 2012, county officials said.

Currently, the City of Austin levies a 9 percent hotel-motel tax, and the state levies a 6 percent tax. The most a Texas county can tax on hotel and motel rooms is 2 percent. With an additional 2 percent county hotel tax, Austin would be tied with Houston and Indianapolis for the highest combined lodging taxes in the country — 17 percent — among the top 50 U.S. destinations, according to a July 2010 study by the Global Business Travel Association .

The county issued a permit last month that allows developers to move dirt on the site of the track, and work is under way. But before construction of the track and related buildings begins, organizers must obtain approvals from the county and the City of Austin. In addition, the county has asked organizers to respond to its request to pay an estimated $6 million in transportation and traffic improvements, including widening Elroy Road from two to four lanes and replacing and widening the bridge on Elroy.

County Judge Sam Biscoe said he's open to the hotel tax idea. "This is planning more than anything else," he said. "If there's a way to shift the cost of road and drainage improvements caused by Formula One to patrons of the facility, then it seems to me to be fair to county residents and local taxpayers to do it."

But Scott Joslove , head of the Texas Hotel & Lodging Association , said state law does not allow use of revenue from a hotel tax for general infrastructure, such as roads.

Biscoe, however, said the law requires that the tax revenue be used for improvements benefiting a specific venue and that hotel tax revenue has been used for infrastructure improvements elsewhere. Voters would have to approve how the tax revenue is spent; if the county wants to use the money for other improvements or a new project tied to a specific venue, the issue would again go before voters, Biscoe said.

F1 representative Richard Suttle Jr. did not return calls for comment.

Local hotel representatives, meanwhile, have raised concerns about the idea.

"Everyone who we've talked to from the hotel community that would be subject to this tax has grave concerns about raising the hotel tax to that level," Joslove said. "It would affect our competitiveness for group business and would result in concerns from our larger customers who would have to absorb an increase in cost."

"Generally, we're not in favor," said Gene McMenamin , the Omni Austin Hotel general manager and an Austin Hotel & Lodging Association board member.

"You want to always be mindful of where you are competitively when it comes to hotel taxes," said Roy Benear , senior vice president of the Austin Convention & Visitors Bureau . "Anything to jeopardize our competitiveness in the marketplace is always a concern."

In 2009, there were more than 21,200 hotel rooms in Austin and 885 rooms in the rest of the county, according to county staffers.

Most urban counties have a hotel tax, officials said. Voters in Bexar County initially approved using money from a county hotel-motel tax to pay off debt for constructing the AT&T Center . Later, Bexar County voters approved using the tax money for additional projects.

Harris County's 2 percent hotel-motel tax in part pays the county's debt on the Reliant Astrodome and Reliant complex. The sports authority has its own 2 percent hotel-motel occupancy tax for Minute Maid Park , Toyota Center and Reliant Stadium.  The Statesman

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