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Tourism industry feels pinch from arena tax
Source: Express-News Business
Writers Nearly three years of taxing tourists a little more has raised $40 million toward paying off Bexar County's $148.8 million contribution to the SBC Center arena, which opens Friday. But while county officials say the money is coming in nearly as quickly as expected, tourism industry insiders still are rankled over the way the money was raised. In November 1999, Bexar County voters approved a 1.75 percentage-point increase in hotel-occupancy taxes (to a total of 16.75 percent) and an increase in the car-rental tax from 10 percent to 15 percent to pay for the county's share of the arena project. An original plan called for a city sales tax and would have put the arena downtown. But the Spurs backed the county's plan to tax tourists instead of voters. The Spurs' well-financed plan passed over the objections of more thinly funded tourism advocates. From January 2000 through this August, the additional hotel tax has raised $24.3 million. The increased car-rental tax raised another $15.5 million. Hotel tax collections don't seem to have suffered much, except for a slight downturn after the terrorist attacks on the United States last fall, but tourism officials still are worried. "In marketing our city, we offset any client concern regarding the tax rate - which is the third highest in the country - by stressing the overall value of San Antonio," said Sally Forrest of the San Antonio Convention & Visitors Bureau. "It has been our experience that the increased rate has challenged our marketing efforts, especially these days in a soft economy, where competition is fierce and clients are looking more closely at the bottom line." Bill Lyons, owner of Casa Rio and Schilo's downtown restaurants and an outspoken critic of the arena-financing package, said families can choose cheaper hotels near the airport, but meeting groups that need to be downtown are concerned about what taxes add to the total price. "If they don't feel the venue offered in San Antonio will bring a lot of (attendees), they will go somewhere else," Lyons said. Henry Feldman, president of La Mansion del Rio and the local hotel association, says he believes a new arena was needed. But he said the location outside downtown did not help the tourism industry, which is footing the bill. For 2003, he said, "bookings are way down and we hear complaints from hotel sales executives throughout the city." County officials originally estimated it would cost the county $260 million over 18 years to pay off the $148.8 million arena bonds. It is now expected that payments should not exceed $210 million over 13 years. The average interest on the bonds was set at 5.84 percent, compared with a 6.3 percent rate officials had anticipated. But what's in it for the county? The county is promised 20 percent of naming rights revenues above $1.875 million a year. The naming rights went to SBC Communications Inc. for about $40 million over 20 years. The agreement also would give the county 20 percent of the profits from arena events other than Spurs games and rodeo ticket sales. That revenue-sharing agreement would kick in after reaching a threshold of $4.75 million. County coffers are not likely to benefit from that arrangement right away. David Marquez of the Bexar County Arena Development Office said the projections show the county will start making about $36,000 a year from the naming rights after the 11th year. "These profit-sharing agreements are long term and not expected to generate gobs of money," Marquez said. The county has the right to do a full audit
of the arena finances if there is a question of the county's cut of the
profits in future years. |
