Update on COA Cultural Contract Guidelines/HOT Tax

The past week, there has been a great deal of activity on the City of Austin’s Cultural Contracts process See Jeanne Clare van Ryzin’s blog entry, managed by the Economic Growth and Redevelopment Services Office. These contracts are funded by a statewide Hotel Occupancy Tax (HOT tax). The issue is a complex one that affects many aspects of our creative ecosystem. The short result is that the Cultural Contracts process will not be substantially changed this year. But, we will all need to work together to find out the best solution(s) for supporting and growing both tourism and the creative sector in the coming months.

We just received the following letter from Kevin Johns, Director of Economic Growth and Redevelopment Services Office about this issue, and wanted to share it with you.

City of Austin
Economic Growth and Redevelopment Services Office
March 26, 2010
Austin Cultural Arts Contractors
Dear Art Leaders:
Thank you for a very articulate response to the arts funding process through the Hotel Occupancy Tax dollars question. I think that your response, and that of everyone speaking out on both sides, illustrates the high level of thinking that is needed to have a productive discussion of allocation of the arts funding.

The reason for this letter is to let you know that despite the poor administrative launch of these deliberations under my direction, the purpose and intent remains the same: to enhance the Austin creative industry cluster, locally and globally. I would like to formally apologize to those of you in the arts community who were reasonably disturbed by the untimely action of my office and team, as a result of the legal findings. I have also apologized to the Mayor and Council, who were embarrassed by the follow up. After hearing all of your concerns and the concerns of the City Council, we will be moving forward as follows:

* The proposed new language in the application has been deleted
* The Law Department will be consulting with additional legal experts on the interpretation
of the code; and,
* I will be convening a stakeholder group including representatives of the arts,
the Arts Commission and hotel industry representatives to assist in refining the

I think the real message we were trying to deliver was not communicated well. The revision of the existing funding process that was rolled out had three (3) purposes. First and foremost to begin to educate all Arts and Culture organizations on legal requirements so they would not be challenged. The second purpose of the initiative was to use 2010 as a “test” year to gather data on which organizations were not reporting tourism, or reported zero tourism. By doing a close examination of this group, we are in a position to provide help. Our plan is to provide business workshops and outside professional marketeering assistance to those who seek help. The third purpose is pure economic development. Tourism is down by an estimated 9%. We need creative marketing in order to generate more Austin tourism. We need more direct and indirect spending in our small business commercial areas, and the arts community is in a position to regenerate that lost productivity. This self help strategy is mutually beneficial. More tourism and local spending means more HOT dollars to distribute. The information distributed earlier to arts organizations as a prelude to the new application cycle was not intended as a death sentence. We recognize that the continued attraction of creative industries to Austin is largely dependent on our national leadership in this arena. Arts and cultural organizations have built Austin into an economic powerhouse and our intention is to shore up their funding by insuring the Hotel Tax source of dollars is legally applied.

Our message was unfortunately horrible. As we go forward I invite further discussion on how we can amp up validation on the use of Hotel Taxes. I plan to assemble arts and hotel representatives to further discuss outcomes. It is clear we need measurable data. We have a reasonable picture emerging on the magnitude of the issue, and we want the culture and arts organizations to generate more and more tourism tax dollars on self help basis. Lawyers with multiple perspectives will be convening to reach consensus on the interpretation of the code. However that compliance is ultimately defined, any groups that fall outside the tourism dollar portfolio we will work to develop a safety net and suggest appropriate funding.

Again the purpose of this letter is to clarify the information that was originally conveyed, and to specifically respond to those organizations that e-mailed the Mayor and Council. Elected officials were unfortunately barraged with legitimate questions about the unintended consequences of the proposed process, and not briefed on the administrative recommendations from my office.

Thank you for taking the time from your valuable schedule to weigh in on this important economic issue.

Kevin Johns AICP

We are so grateful that you all that have been able to be part of this for getting to this point. We will continue to update you as the issue develops.