Mueller’s stake in a citywide choice over hotel taxes

Mueller residents pay attention when the city moves tourism money. Hotel Occupancy Tax dollars help fund arts and heritage grants that support events and programs used across neighborhoods. Those same dollars now anchor a $1.6 billion plan to rebuild Austin’s downtown convention center, a decision that could shape arts funding and park programming that Mueller families rely on.

Almost a year after the Austin City Council voted to demolish the existing center and build a larger replacement, demolition is underway. Whether to keep going at full speed or pause for voters may land on the May 2026 ballot, according to the reporting in the Austin Free Press (dossier provided to the writer).

The choice: a larger convention center or broader cultural investment

Backers, led by Mayor Kirk Watson, say the project will be paid primarily with Hotel Occupancy Tax (HOT) revenue collected from visitors and will not draw from local property taxes. Opponents organized under the “Save the Soul of Austin” banner, with Austin United PAC, are gathering signatures to place a measure on the 2026 ballot. The petition would delay reconstruction until voters approve it, or for seven years, and direct city support toward live music, arts, cultural and outdoor tourism, according to the reporting in the Austin Free Press (dossier provided to the writer).

Organizer Bill Bunch said volunteers are racing a mid-October validation deadline and need 20,000 valid signatures. “We’re still in the field,” Bunch said, adding the group wants a “safety margin” because some signatures come from outside city limits, according to the reporting in the Austin Free Press (dossier provided to the writer).

The dollars and the law behind HOT

Austin collected $133.3 million in HOT revenue in 2024. City allocations directed $79.6 million to the convention center, $22.7 million to tourism advertising, and $15.6 million each to arts and historic preservation, according to the reporting in the Austin Free Press (dossier provided to the writer).

State law says HOT must promote “tourism and the convention and hotel industry.” A 2003 advisory opinion by then–Attorney General Greg Abbott gives cities broad latitude so long as they determine the use promotes tourism and hotels. The law lists nine eligible categories, including parks and tourist transit, though Austin currently funds five: the convention center, convention center administration, advertising, arts and heritage, according to the reporting in the Austin Free Press (dossier provided to the writer). The dossier also notes Cameron County’s use of HOT for the South Texas EcoTourism Center as an example of allowed cultural tourism spending.

What supporters and critics say

Watson argues the city needs a larger venue to capture events now going elsewhere. “We’re the country’s 13th largest city, and a top visitors’ destination, but our convention center ranks No. 61 in size,” he wrote. “Our staff routinely turn down major events because we don’t have the space. Those marquee events go to other cities that reap the economic benefit,” Watson said in a commentary cited in the Austin Free Press (dossier provided to the writer).

University of Texas architecture professor David Heymann offers a different plan for the six downtown blocks: an art museum, performing arts center, experimental theater and media-arts center. “Though demolition has begun, the site’s future is not decided,” Heymann wrote, arguing that peer Texas cities have built cultural districts that draw visitors and serve residents, according to the reporting in the Austin Free Press (dossier provided to the writer).

Financial risk and the track record

The $1.6 billion construction budget does not include an estimated $80 million in annual operating costs, plus up to $26 million a year for Visit Austin, the city’s marketing office, according to the reporting in the Austin Free Press (dossier provided to the writer). Consultant HVS estimates the facility would cost $5.6 billion over 30 years and generate $1.6 billion in direct revenue, requiring roughly $4 billion in public subsidies and consuming about 80% of HOT revenue across three decades, the dossier states. Those are projections.

Heywood Sanders, a University of Texas at San Antonio professor emeritus who studies convention centers, warns against optimistic forecasts. “A reasonable rule-of-thumb conclusion is that you’ll get about half of what the consultant forecasts,” Sanders said in an Austin Free Press documentary cited in the dossier, noting that projections after Austin’s 2000 expansion overshot actual business by a similar margin.

Tourism can drive jobs and spending, but outcomes for any single project vary, according to AP News. To limit risk, budget analysts and some advocates suggest independent audits of the project’s revenue models, conservative scenarios that assume lower bookings, and public disclosure of assumptions, performance milestones and potential subsidy needs. Those steps would test whether HOT can sustain both the facility and ongoing arts and heritage grants without squeezes in down cycles, according to the reporting in the Austin Free Press (dossier provided to the writer).

A second convention site at COTA

The city is also involved in a privately financed convention facility near the Circuit of the Americas that would include a 1,000-room hotel and about 460,000 square feet of convention space on city-owned land. That structure would exceed the size of the 370,000-square-foot center being demolished downtown, according to the reporting in the Austin Free Press (dossier provided to the writer). “Because of the new Austin Convention Center’s size, as well as central downtown location, we don’t anticipate there being much competition between the two different spaces,” Visit Austin CEO Tom Noonan said, as cited in the dossier.

That regional buildout could split event demand or create complementary niches. Demand planning for downtown space will need to factor in the COTA site and the city’s capacity to market two venues.

Why Mueller should watch the HOT debate

  • HOT is collected at hotels across the city, including those serving Mueller. City Council sets how those dollars flow among eligible uses.
  • Arts and heritage allocations fund citywide grants that support events, venues and festivals that Mueller residents attend.
  • Advocates for the ballot measure say redirecting a larger share of HOT to cultural tourism and parks could support neighborhood programming while still promoting overnight stays, according to the reporting in the Austin Free Press (dossier provided to the writer).

City growth adds pressure. The Austin metro area led big U.S. regions in population gains from 2020 to 2024, according to Axios. The city counted 961,855 residents in 2020, data from Wikipedia show. Those trends inform debates over where to add venues, how to manage visitor flows, and how to spread benefits across neighborhoods.

Politics and timing

Watson notes that voters rejected an effort to derail the project in 2019 and says it is “time to move forward,” according to the reporting in the Austin Free Press (dossier provided to the writer). The dossier also recounts a 2019 rift with Travis County over a separate 2% HOT increase for the Exposition Center, where county officials argued that East Austin facilities serve a broad population. Commissioner Jeff Travillion criticized concentrating more than $1 billion downtown when the Expo Center serves “more than half a million people,” the dossier states.

For now, downtown work continues. A Sept. 3 city update announced start of foundation work while demolition proceeds, according to the reporting in the Austin Free Press (dossier provided to the writer). Petition organizers face a mid-October validation deadline to qualify the May 2026 vote.

For Mueller, the outcome directs how tourism money flows for years. A larger convention center would claim a large share of HOT. A cultural-first plan would expand funding for arts, heritage and potential park uses if the council deems them tourism-related. Voters may decide which path to take.

Reporter’s note: City budget staff and Visit Austin were not directly quoted in the dossier; updated operating and booking projections would add context.

Read the press release on austinfreepress.org.