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Funding sources identified for American Bank Center expansion and hotel

American Bank Center
Posted at 7:10 AM, Jun 28, 2023
and last updated 2023-06-28 08:10:56-04

CORPUS CHRISTI, Texas — The project to expand American Bank Center (ABC) and add a headquarters hotel has taken another step forward on Tuesday.

To this point, a feasibility and economic impact study was done on the project and presented to Corpus Christi City Council. City council members even traveled to Oklahoma City to see how a similar project changed the city. Now, city staff have presented what they said is a sufficient way to be able to fund the project.

“We have a wonderful opportunity here to change the landscape of Corpus Christi,” Councilman Everett Roy said.

Five revenue sources have been identified that would not cost taxpayers any more money and would not take from the city’s general fund.

“That will entail the scope, which would include the arena, the convention center, the Selena Auditorium, the entertainment district, and the new headquarters hotel,” said Heather Hurlbert, assistant city manager.

In February city council put their support behind legislation that could help with funding. Thanks to the passage of House Bill 5012, Corpus Christi can use the state’s portion of hotel sales tax, hotel occupancy tax, and mixed beverage tax for 30 years for this project.

“Looking at this incremental growth, this will be within a three-mile radius of the project,” said Hurlbert.

The second source is the combined 2 percent venue tax from hotels and the 7 percent hotel occupancy tax the city already collects.

A third source is the Tax Increment Reinvestment Zone (TIRZ) #3. TIRZ sets up boundaries around a specific area; in this case, it's downtown Corpus Christi. It then designates a portion of taxes in this zone to be used for economic development and, more specifically the project to expand ABC and add a hotel.

The fourth source would be the city’s Type B Fund. That is .125 percent of sales tax that has already been designated for economic development.

Lastly, Type A Funds are on the board. What this provides is 1/8 cent of sales tax has been put towards maintenance and repaying the debt of the Seawall. Another 1/8 cent collected goes towards maintenance and paying the debt of building the ABC. Debts have to be paid off before these funds are available. The ABC is expected to be paid off in 2025, and the seawall in 2026. That money could then be reallocated to other projects that promote business and job growth.

Hurlbert estimated the combined 1/4 cent brings in $16 million annually and is growing by the year.

“With the way the Type A works is once the commitment is met, so as of the date of that last payment, that revenue is available to be captured or utilized in another way. But it does have to go to the voters for repurposing,” she said.

What Hurlbert and staff proposed was putting a proposition on the November ballot that would put 75 percent of that Type A money towards the Convention Center Complex. It was suggested the remaining 25 percent be put towards industrial parks and industrial or commercial roads.

If voters passed this proposition, Hurlbert advised the city council to create a special purpose group that can manage the different funding for the Convention Center Complex. The group would answer to the city council.

Something to keep in mind is that the revenues brought in from these sources should increase over the years as more sales occur and more hotels go up in the downtown area. Once the headquarters hotel is built, that revenue would factor in, as well.

Council members want to be sure this is effective before making a decision. Council member Michael Hunter cited the ABC was built in 2000, not that long ago, and renovations are already needed.

“If we’re going to build this convention center and it doesn’t receive all the funding it needs, is it just going to need to be rebuilt in 18 years?" he said.

Hurlbert said down the line, revenue from ABC can be included in the funding.

As staff prepares a timeline for the project, the city council will weigh the proposal and make the final decision on funding the project later this summer or early fall.

You can view the city council meeting here.

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