Special Series: "When Pigs Fly" This is a collection of articles on the facts, problems and issues other communities are having with their current or planned Conference/Convention Centers.

Hotels fight tax to build arenas

By Helen Bond - Copyright 1997 Advanstar Communications Inc. - April 7, 1997

AUSTIN, TEXAS - Hotel industry officials in Texas are stepping up their battle against legislation that would allow cities to increase hotel and car rental taxes to pay for sports arenas.

Backed by several bills weaving their way through the legislative process, Dallas, Houston, San Antonio and Arlington are considering ways to keep or attract sports franchises with new facilities that would involve some public funding.

It is a debate sweeping the country as cities with sports franchises increasingly see travelers and tourists as the ticket to building new arenas for teams.

The most talked about bill, sponsored by Arlington, Texas, state Rep. Kim Brimer, would allow cities to raise hotel and motel taxes 2 percent, car rentals 5 percent and raise taxes on parking and event tickets. Voters would have to approve the taxes before they could be levied.

This infuriates hoteliers who don't see the connection between their business and the development of sports arenas. Don Hansen, executive vice president of the Texas Hotel & Motel Assn., called the Brimer measure the most dangerous bill he has seen in his 14 years representing the Texas hotel industry.

"We believe stadiums ought to be built with a referendum from the local people," Hansen said. "We don't think hotel and rental car taxes should be part of that because that is taxation without representation."

A host of business and city leaders, including the mayors of Houston, Arlington and Dallas, support a local sales-tax increase to help pay for sports arenas or stadiums. They view such facilities - often packaged with plans to revitalize an area with other commercial development - as an economic boon to an area.

A report from the comptroller's office, based on an additional $ 5-a-night tax on hotel guests, found Texas could lose more than $ 5 million annually in revenue from hotel and motel taxes.

Higher overall prices would discourage guest spending and drive some travelers to choose less expensive rooms, on which less tax is collected.

Tourism is Texas' third-largest industry, with annual revenue of $ 25.4 billion. Taxes in Texan cities, which range on average from 13 percent to 15 percent, are already some of the highest in the nation, Hansen said.

In Senate and House committee testimony on the issue, Mark Rosentraub, director of the Center for Urban Policy and the Environment at Indiana University, and an expert on sports finance, said there is no evidence that sports facilities help the economy.

He urged lawmakers to insist on part ownership for the public if they help to pay for new sports facilities.

Rosentraub, author of Major League Losers: The Real Cost of Sports and Who's Paying For It, supports a locker-room usage fee that would tap into athletes' salaries and taxes on event parking, tickets and broadcast rights.

Hotel guests are also sounding off. In feedback from a Texas Hotel & Motel Assn. questionnaire sent to hotels statewide, more than 8,000 guests who responded mostly opposed any tax hike.

"Not only do they not want hotel taxes to pay for stadiums, 30 percent [of the respondents] say, 'let the rich sports owners and athletes pay for their own stadiums,'" Hansen said. "There is a great deal of hostility about the amount of money these guys are making and then coming to the public trough so they can have a nice playpen."

The hotel and rental-car industries are not the only ones who oppose such subsidies.

Even Texas Lt. Gov. Bob Bullock has made headlines for blasting wealthy team owners, such as Dallas Maverick's basketball owner Ross Perot Jr. - son of billionaire and former presidential candidate Ross Perot - for seeking taxpayer help for their projects.

Texas Gov. George W. Bush also opposes any effort to let cities boost local sales taxes beyond the current cap of 2 percent to pay for arenas.

Brimer wants to expand his bill to include money to pay for such projects as museums and convention centers or other community improvements.

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