Voters are headed to the polls this November to weigh in on the future of Bexar County’s venue tax — money the county collects off hotel and rental car fees, which are expected to generate hundreds of millions of dollars over the next 30 years.

The venue tax is a tool created by Texas law to allow cities and counties to finance an array of projects through taxes that fall primarily on visitors instead of residents.

Its uses are limited — but not as limited as some local leaders have been suggesting.

“It is specifically prescribed for sports venues and other types of venues, and it can’t be just used for anything,” said state Rep. Barbara Gervin Hawkins (D-San Antonio), at an Oct. 1 town hall on the East Side.

In fact, state law offers a long list of projects that could qualify as a potential “venue:” Arenas, coliseums, stadiums, convention centers, municipal parks and recreation systems, watershed protection and preservation projects.

If it’s within the vicinity of a convention center, the possible project uses are even greater, including theaters, music halls, opera houses, aquariums and zoos.

For any qualifying project, venue tax money can be used for surrounding infrastructure as well, including stores, restaurants, on-site hotels, parking facilities, streets, sewer facilities and environmental remediation, according to state statute.

But since venue taxes hit the hotel and tourism industry specifically, municipalities are supposed to use money on projects that will draw in more visitors, according to the Texas Municipal League.

The Texas Comptroller regulates whether a project qualifies, but local voters get the final say over how they want to spend the money.

In the past it’s been used for Riverwalk extensions, amateur sports facilities like the Mission Concepcion Sports Park on the South Side, and a Northside ISD swim center.

All of the county’s existing venue tax projects have been completed, and incoming dollars are now being used to pay them down, with about $334 million in principal and $138 million in interest still owed.

The next round of projects

In the case of Props A and B, the idea to designate a new set of projects originated with the San Antonio Spurs, which wanted to build a downtown arena and approached the county about using venue tax dollars to help fund it.

First the county ran the numbers on what the venue tax will generate over the next 30 years — beyond what’s needed to pay off existing projects — from the existing 5% rental car taxes, plus a maxed-out tax on hotel rooms, which county leaders want to increase from 1.75% to 2%.

Then Bexar County Commissioners ordered a study of what it would take to renovate the Spurs’ existing East Side home into something new, and subtracted that amount from available pool of venue tax dollars.

“Since [the day] we learned that the Spurs wanted to relocate downtown, I’ve been consistent that the county will only entertain a plan that features substantial investment and redevelopment in the East Side,” Bexar County Judge Peter Sakai said of those decisions at the Eastside town hall.

Once the county had a vision for what that East Side reboot could look like and how much it would cost, he continued, “We said, ‘[With] what is left, we’ll see what we can do for the Spurs.’”

Those calculations came out at about $198.2 million needed for the East Side, with about $311 million remaining in venue tax capacity.

The county then got permission from the state to put propositions on the Nov. 4 ballot asking voters to designate renovations to county-owned East Side facilities and the proposed $1.3 billion Spurs arena as an “approved venue projects.”

“I’ve heard [people ask], ‘Why can’t [this money] be used for sidewalks, for housing?’” Sakai said. “Because this is a county venue tax, it can only be used for venues.”

Public funding structure

Props A and B only authorize the Spurs arena and Eastside facilities to receive venue tax funding — they don’t assign dollar amounts to their respective projects.

The reboot of the East Side facilities, authorized by Proposition A, would be fully funded from venue tax dollars if it passes on the Nov. 4 ballot.

While Proposition B would designate the Spurs arena as a venue tax-eligible project, Bexar County’s agreement with the team says the county won’t contribute more than $311 million of the total $1.3 billion price tag — while the city and team’s owners are supposed to make up the rest.

The city doesn’t need voters’ permission to spend its $469 million arena investment, and made its own agreement with the Spurs contingent on the passage of the county’s Proposition B.

Ads from a Spurs PAC stress the venue tax’s burden on visitors versus locals, but several other public funding sources will also be used.

Part of the city’s money comes from a Tax Increment Reinvestment Zone — which allows a city to collect the growth in property taxes from a specific area to be reinvested in projects within that zone — in this case the arena.

Another part of its arena contribution comes from a state-sanctioned Project Finance Zone (PFZ), which allows the city to use state sales tax money from new hotels and hotel business to fund a major sports venue or convention center.

A do-over if it fails?

If voters don’t agree to designate the Spurs arena or the East Side renovations as venue tax projects, the county can keep spending money generated by the existing fees to pay down debt on previously approved projects.

County leaders can also come back to voters with different venue tax proposals at a later date, so long as those ideas also win the comptroller’s approval.

COPS/Metro Alliance leader Mike Phillips said that’s the bigger goal for his group, which launched a PAC to try to defeat Prop B on the Nov. 4 ballot.

“We want to be at the bargaining table [when the county revisits that spending],” Phillips said.

While the county pursued a venue tax election in 2008, county leaders formed a citizens advisory committee to collect feedback on the community’s needs, and ultimately included projects like Riverwalk extensions, the Alameda Theatre, youth sports complexes, the Tobin Center for the Performing Arts and the Frost Bank Center, then known as the AT&T Center.

This time around, Bexar County leaders say they’re in a different position because the Spurs intend to leave the Frost Bank Center, where they have a lease through 2032, so the county will be on the hook for expensive maintenance currently funded by the team.

Prop A would pay for the next round of repairs at the Frost Bank Center and Freeman Coliseum, while retrofitting them for more year-round events to help the venues be self-sustaining in the future.

“That’s what these referendums are all about,” Sakai said. “We have been diligently planning for the future of county facilities …. because we have a fiduciary responsibility to protect and enhance these public assets.”