By: Molly Smith | From: San Antonio Express News
A chunk of state hotel taxes could help pay for a new Spurs arena that’s expected to cost as much as $1.5 billion — a financing mechanism that city officials initially pledged solely to use on expanding the Convention Center and renovating the Alamodome.
The mayor and City Council voted 9-0 Thursday to create a new taxing zone that will replace one they approved in December 2023. Council Members Phyllis Viagran and Manny Pelaez were absent for the vote.
The new “project financing zone” could also be used to fund construction of a 20,000-seat arena for the Spurs, which is the cornerstone of the planned downtown sports and entertainment district known as Project Marvel.
Starting in 2026, San Antonio will begin collecting a portion of the state hotel tax revenue generated within three miles of the Convention Center over a 30-year period. It can spend the money on a sports arena, the Alamodome and the Convention Center.
The Texas Comptroller’s Office has said the arrangement could bring in nearly $2.5 billion for the city, though City Manager Erik Walsh said the city anticipates collecting closer to $2 billion over the next three decades.
“We’re looking at (the project finance zone) as one of five potential elements of a funding framework” for the arena, “but none of it is a done deal,” Walsh told reporters earlier in the week.
The zone is a new source of revenue for the city, which petitioned the Texas Legislature in 2023 to give it the green light to create one. The legislation allowed the money to be used for an arena, but Walsh said at the time that the city would only tap it to pay for upgrades to two aging city-owned facilities: the 57-year-old Convention Center and the 30-year-old Alamodome.
Spurs Sports & Entertainment executives, however, have pushed the city to tap state hotel taxes for a downtown arena, which would be built at the site of the former Institute of Texan Cultures at Hemisfair.
That would lessen the amount the NBA franchise would have to foot for the facility — and it’s a revenue source that does not require voter approval.
Walsh said the Spurs played no role in the city’s decision to add the arena as a potential project to fund through the zone. The decision was made to allow for more “flexibility” in financing options for the three facilities, he said.
In addition to state hotel tax revenue and a contribution from the franchise, the arena could be paid for using property tax revenue captured within city taxing zones, Bexar County’s venue tax on hotel rooms and rental cars, and revenue from arena lease agreements and ticket sales.
The venue tax is the only source that must go to a public vote, potentially as soon as the November election. It could yield up to $449 million to help pay for the arena, but County Judge Peter Sakai has said the county would use that pot of money on a range of community projects — not just a new home court for the Spurs.
It’s still unknown how much state hotel tax revenue the city will dedicate to an arena.
A Spurs facility and a Convention Center expansion that could cost as much as $900 million are two of the city’s priorities for Project Marvel.
City staff said earlier this year that a major upgrade to the 30-year-old Alamodome likely wouldn’t happen until at least 2035 because of the expense. The projected cost of the improvements exceeds $1 billion.
Construction of any of the state taxing zone’s three projects must begin within the first five years of its creation.
The Convention Center expansion will likely begin first, but the timeline has not been finalized, Walsh said.