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City Council voted 10-1 Thursday to create a new fee for hotel guests in San Antonio. Councilman Rey Saldaña (D4), who cast the lone vote against the measure, proposed delaying the decision in order to give Council time to consider allocating a percentage of the fee to mitigate homelessness.
A vote in favor of the fee is not a vote against helping the homeless population, Councilman Manny Pelaez (D8) said. “That’s a false binary choice.”
Each Council member pledged to participate in broader discussions about how to find long-term, sustainable revenue sources to fight homelessness – as did tourism industry representatives.
On Jan. 1, the Tourism Public Improvement District (TPID) will start collecting a 1.25 percent fee per night from guests staying in hotels with 100 or more rooms. The eight-year agreement is expected to raise more than $10 million annually, which will largely be used for marketing and advertising that supports the tourism industry.
It’s a badly needed boost to Visit San Antonio’s budget, according to nearly a dozen hospitality leaders that testified before Council on Thursday, to stay competitive with other cities.
The budget for Visit San Antonio, the former city department charged with promoting tourism that became a private nonprofit in 2016, is roughly $25 million, while Houston’s is $35 million, Dallas’ $37 million, and Austin’s $20 million. The bulk of those funds come from the 16.75 percent hotel occupancy tax (HOT).
More than 100 of the 163 eligible hotel owners signed on in support of the tax, representing nearly 75 percent of hotel property tax value, said City Clerk Leticia Vacek, who officially verified the hotelier signatures Thursday.
Hoteliers are taking a “calculated risk by imposing a fee on our guests,” said Kevin Latone, chairman of the San Antonio Hotel and Lodging Association (SAHLA), which led the effort to establish the TPID alongside Visit San Antonio. SAHLA estimates a seven-to-one return on investment for hoteliers.
The economic impact of the city’s tourism and hospitality sector – the third-largest industry in San Antonio – in 2017 was $15.3 billion, according to a recent study, an increase of $1.6 billion over 2015.
One reason Council did not support the seemingly “last-minute” suggestion by Saldaña to divert funds to Haven for Hope or other homelessness initiatives, was because the TPID is more than two years in the making and Council already gave preliminary approval for the plan as-is in June.
“My mistake was not really learning about the scope of the TPID until after we [approved it on] June 21,” Saldaña said, explaining that it was not his intention to take resources away from the tourism industry, but to help grow it and help solve homelessness at the same time. “I thought we could thread the needle and do two things at once.”
Most Council members and Mayor Ron Nirenberg said they appreciated that Saldaña brought attention to the issue of homelessness in the process. It is possible to have both a competitive tourism industry and a sustainable plan for homelessness, Nirenberg said.
Homelessness is directly linked to tourism, Councilwoman Ana Sandoval (D7) said, adding that it is not “unheard of” for Council to modify proposals the day they are approved.
“It’s pretty rare that this kind of opportunity comes forward” to directly fund homelessness with tourist dollars, she said. HOT revenue comes with strict spending guidelines from state statute – supporting nonprofits or initiatives that tackle homelessness is not a legal use of those funds. “[But] it’s a very valid point that our timing was not ideal,” Sandoval said.
This week, Nirenberg called for City staff to work with the tourism industry and other sectors to identify possible revenue streams to support initiatives aimed at tackling homelessness.
Saldaña, whose last term on Council concludes in about six months, said he hopes effective action comes of that work.
“We have to be more intentional than just talking about the solutions,” he said, adding that organizations need money and resources. “We know what the solutions are … we don’t need to recreate the wheel.”