The Dallas City Council approved a plan Wednesday that would allow six Fair Park venues, including the Cotton Bowl and Coliseum, to use hotel tax dollars to pay for upgrades — if voters approve an increase to the hotel tax rate.
Dallas officials are seeking to raise the amount of taxes it charges on room rentals by two percent, primarily to help pay for a new downtown convention center. But a new state law that went into effect last year would allow the city to also devote some of the extra money to some Fair Park buildings.
The city estimates the tax increase would bring $1.5 billion over 30 years for the convention center. Fair Park could get up to 20% of that, or more than $300 million. The earliest opportunity to ask voters to approve the increase would be an election proposition in November.
The council also decided Wednesday that it would move forward with considering to approve a ballot proposition but didn’t set a date on when that would happen.
The Fair Park facilities covered would be the Cotton Bowl, the Coliseum, the automotive building, centennial building, the music hall and the band shell. If voters approve the proposition in November, the city would be banned from using general fund tax revenues and general obligation bonds for the six venues.
Council member Adam Bazaldua called the deal to tie Fair Park venue improvements with plans to build a Kay Bailey Hutchison Convention Center replacement a “once in a lifetime” chance for the city to invest south of Interstate 30.
“To be able to leverage an opportunity like this with growth in the south is extremely innovative and well past due,” said Bazaldua, who represents South Dallas and the Fair Park area and advocated for the new law.
Dallas has invested around $289 million in Fair Park since it was built in 1936, he said, with most of it going toward the Cotton Bowl stadium.
He noted the history of the 277-acre park, how the city used eminent domain to acquire 200 acres of the land to build parking lots for the annual State Fair of Texas, displacing thousands of Black residents who lived there. He said the use of hotel tax money for upgrades along with other ongoing initiatives, such as a plan to turn Fair Park’s largest lot into a community park, could help heal longtime wounds.
Council member Cara Mendelsohn was the lone elected official to vote against the plan. She cited a series of concerns about the convention center project including whether a new venue would be able to get enough money to pay for its own maintenance, if a new convention center should be a priority among all the other issues facing the city, and if it will actually spur as much economic development as projected.
“As a scheme to fund Fair Park, this doesn’t work,” said Mendelsohn, who represents Far North Dallas. “We need hundreds of millions of dollars for it and it should be restored. But we need a sustainable way to do that and tearing down this building and replacing it to achieve that goal without any real financials or broad resident support is not something I can support.”
The convention center and Fair Park facilities are in need of maintenance and repairs. According to city officials earlier this year, the convention center has $500 million to $700 million in maintenance needs, largely due to neglect. It needs include a new roof, escalators and reconstruction of other parts of the building to allow for upgrades. City officials say Fair Park has hundreds of millions in facility maintenance needs.
The City Council voted in February to tear down the Kay Bailey Hutchison Convention Center and build a new one nearby with several officials saying it was the best chance for Dallas to compete with other cities for major events, spark better amenities for residents and visitors, and increase tourism-related revenue.
City staff and consultants are in the midst of design and engineering work for the new 2.5 million-square-foot convention center with a current construction price tag of up to $2 billion. Construction is currently slated to begin in 2024 and be complete in 2028.
City officials plan to pay for the convention center and surrounding redevelopment with money generated from hotel taxes. The city estimates two financing plans could bring in almost $4 billion over 30 years.
Hotel occupancy tax is the convention center’s largest revenue source.
The current tax rate for Dallas hotel rooms is 13%. The state normally gets a cut of all hotel taxes, but state officials last year approved allowing the city to keep all of the taxes collected from hotels within three miles of the convention center area for 30 years.
That could raise an estimated $2.2 billion for downtown redevelopment projects in and around the convention center over the next three decades. The money can only be used by Dallas for convention center or arena-related projects.
To get the other $1.5 billion over 30 years, the city would need voters to approve increasing the overall hotel tax rate to 15%.
Under the new state law, a city can spend up to 20% of the money from the tax rate increase on costs related to only an amphitheater, arena, exhibit hall, music hall, or stadium located within a municipally owned park.
State Rep. Rafael Anchia and former Sen. Kay Bailey Hutchison were among supporters of linking the Fair Park projects to the convention center. Kimberly Shaw, president of the Regional Black Contractors Association, urged council members to use all 20% of the revenue on Fair Park.
She said it would meet the city’s goal of making the venue a year-round destination.
“This is an investment in equity and will create impactful opportunities for South Dallas,” said Shaw, who is also a board member of Fair Park First, a nonprofit group overseeing the management of the park. “This investment will greatly accelerate the revitalization of the campus.”
Rosa Fleming, Dallas’ director for convention and event services, told council members that the intent is to use all 20% and that it would be written into the resolution city officials adopt.
“We’re going to use the words ‘shall make our best efforts,’” Fleming said. “That’s the strongest legal language that we can apply.”