A significant portion of the funding for a new downtown convention center will be in the hands of Dallas voters this fall.
The Dallas City Council on Wednesday authorized a special election to be held on Nov. 8 to get voter approval to increase the amount of hotel occupancy taxes collected by 2%. The increase in taxes the city collects on space rentals will raise an estimated $1.5 billion over 30 years, primarily to help fund a new convention center.
A similar financing method was used to build the American Airlines Center.
The council approved a plan in April that also allows six Fair Park venues, like the Cotton Bowl and the Coliseum, to receive up to 20% of that additional revenue, or more than $300 million over three decades.
City officials and consultants are in the midst of planning and construction for the new 2.5 million square foot convention center with a current construction cost of up to $2 billion. Construction is scheduled to begin in 2024 and be completed in 2028.
Both locations each have hundreds of millions in needed repairs and renovations, largely the result of years of city neglect.
Mayor Eric Johnson called the funding plan “a no-brainer” and said the city needs help finding a way for residents to make better use of the convention center and improve the condition of facilities at Fair Park.
“They don’t look like we’re going to take care of them. They look run down in places,” Johnson said. “We need that shot in the arm to snuff the buildings.”
A new convention center is one of the key elements of downtown redevelopment plans, which cover an area from Eddie Bernice Johnson Union Station to the Dallas Farmers Market.
The city council voted in February to demolish the Kay Bailey Hutchison Convention Center and build a new one nearby, with several officials saying it’s Dallas’ best chance to compete with other cities for major events and better amenities for residents and visitors to accomplish. and increase tourism-related revenues.
Demolition of the convention center could open up 29 to 40 acres in the area that city officials say could be converted into a new mixed-use entertainment district connecting downtown with the Cedars neighborhood.
The hotel occupancy tax is the largest source of revenue for the convention center.
More than half of the hotel taxes the city collects goes to the convention center. The rest goes toward funding VisitDallas and the city’s Department of Arts and Culture.
The city received about $40 million in hotel occupancy taxes in 2020 and $39 million in 2021. But the city estimates it will collect $58 million in 2022, $67 million next year, and $75 million in 2024.
The current tax rate for hotel rooms in Dallas is 13%. The state normally gets a cut on all hotel taxes, but state officials last year authorized the city to keep for 30 years all taxes collected from hotels within a 3-mile radius of the convention center.
That could generate an estimated $2.2 billion for downtown redevelopment projects in and around the convention center over the next three decades. This money can only be used by Dallas for projects related to convention centers or arenas.
If voters reject an increase in the tax in November, the city could apply for bonds to top up the $2.2 billion convention center project.
According to city officials earlier this year, the current convention center has between $500 million and $700 million in maintenance needs. This includes a new roof, escalators and the remodeling of other parts of the building to allow for upgrades.
The Fair Park facilities eligible for upgrades if voters approve the tax increase would be the Cotton Bowl, Coliseum, Automobile Building, Centennial Building, Music Hall and the band Shell. The 670-acre South Dallas site is home to more than 35 historic buildings.
If voters approve the proposal in November, the city would be barred from using general fund tax revenue and general commitment bonds for the six venues.
The city most recently planned to use $50 million from its 2017 loan program to renovate 12 Fair Park sites, including the Centennial Building and Music Hall. Since then, only five rehabilitation projects have been completed.
Brian Luallen, CEO of Fair Park First, who heads a nonprofit group that oversees the park’s management, said the six eligible facilities attract the most visitors and bring in the most money each year. The annual Texas-Oklahoma soccer game at the Cotton Bowl is one of the draws.
The six facilities would require $600 million to fully rehabilitate them to a point where they can “deliver the visitor experience that we can all be proud of,” Luallen said.
He and councilman Adam Bazaldua, who represents South Dallas, said alternative sources are being explored to pay for repairs at other Fair Park facilities.