Austin OKs bonds for convention center project targeted by voter petition

Austin Convention Center

The Austin City Council approved up to $650 million of bonds for a convention center on Thursday despite the recent filing of a petition seeking to subject the project to voter approval or a delay.

The initial debt for the $1.6 billion project to build a bigger convention center will consist of up to $525 million of senior lien special tax revenue bonds and up to $125 million of junior lien bonds, according to a city staff memo.

About $1.2 billion of the project's cost will be financed with bonds backed with revenue from the city's hotel occupancy taxes and incremental state tax revenue generated within a project finance zone the city established in 2024, the memo added. 

In April, the city began demolition of the existing convention center, which opened in 1992, to make way for a substantially larger facility.

Austin United PAC announced last week that it submitted a petition with more than 20,000 signatures of registered voters to the city clerk to put an ordinance on the May ballot to stop the demolition and reconstruction of the convention center for seven years or until the project is approved by voters and prioritize city funding for local live music, arts, cultural, and outdoor tourism. 

Petition supporters asked the city council to hold off on the bonds, while members of Austin's downtown business community warned of devastating economic consequences if the project were to be stopped.

"To delay this or cancel this project, in my opinion, the economic drop for downtown would be second only to what happened during Covid, and it'd be permanent," said Tom Noonan, president and CEO of Visit Austin, the city's marketing arm. "The timing of this petition is a challenge because it leaves us without a convention center at all." 

The council also approved an up to $46.175 million hotel occupancy tax revenue bond issue to refund outstanding bonds sold in 2008 and 2012 for the convention center that is being demolished. This deal will be issued prior to or concurrently with the new convention center bonds to enable a 4.5% HOT helping to pay off the existing bonds to be pledged for the new bonds, a city staff memo said.

"The refunding is being executed to better delineate the pledge of Hotel Occupancy Tax (HOT) revenues that will be used to secure and repay the expansion bonds being issued, as well as to accelerate the payoff of prior venue bonds, generating cashflow savings," the memo said, adding with the refunding, only the 2% venue HOT will be legally pledged to and used to repay the outstanding bonds.

Both convention center-related issues will be priced by an underwriting team led by Bank of America, with co-senior manager Mesirow and co-managers Hilltop Securities and Loop Capital Markets. PFM Financial Advisors is the municipal advisor and Norton Rose Fulbright is bond counsel.

Other debt approved by the city council included up to $475 million of electric utility system revenue refunding bonds. The deal, which will refinance up to $225 million of tax-exempt commercial paper and certain Series 2015A bond maturities, will be led by Morgan Stanley, with co-senior manager RBC Capital Markets and co-managers Estrada Hinojosa and Rice Financial Products Company, according to a staff memo.