Nearly seven months after South by Southwest was canceled and music venues throughout the city were forced to close, City Council has approved $15 million in relief earmarked specifically for a narrow group of businesses, including bars and venues.
Coming in response to the SAVES (Save Austin’s Vulnerable Economic Sectors) resolution adopted by Council on Sept. 17, the $15 million will be split three ways: one-third exclusively available to music venues (Austin Music Venue Preservation Fund), one-third for childcare centers (Austin Childcare Provider Relief Grant), and the final $5 million for “iconic” venues, restaurants, and arts organizations (Austin Legacy Business Relief Grant). Music venues will effectively have access to $10 millon of the funding, as unlike the other businesses targeted for relief, they have been unable to operate at almost any capacity since closing in March.
But many restaurant owners told Council that even if they have been able to shift to a takeout or limited-capacity operation, it has not been enough to keep them afloat. Leslie Martin, who owns South Austin’s Bouldin Creek Cafe, said she has had to reduce her staff from 80 to 25 to keep up with declining revenues. Without more help, she doesn’t expect to stay open beyond the next six months.
“Item 52 is insufficient and I know we can do better,” Martin told Council, referring to the SAVES spending plan’s agenda number. “This money will not make a dent in the help needed … if Item 52 is the best you can do, then you have just failed Austin.”
A proposed amendment by CM Leslie Pool, which failed to pass, would have directed staff to “re-balance the funds” in a way that would help certain businesses – like restaurants – that do not qualify for two buckets of funding. But Mayor Steve Adler argued that the SAVES spending plan was designed to target businesses that face imminent closure and that could not be easily replaced if closed – namely, bars and music venues, which cannot open without having a restaurant component on-site.
Adler also continued to remind viewers that the city, on its own, simply does not have enough resources to help all of Austin’s struggling businesses. Restaurant stakeholders, Adler said, have pegged their need somewhere between $50 million and $100 million; Pool herself has put the number at $75 million. “I understand the desire to spread resources in a way that helps more people,” Adler said in explaining his vote against Pool’s amendment, “but I think the SAVES resolution was [structured] in a way that recognized we couldn’t help everybody.”
More than half of the SAVES funding was expected to come from right-of-way fees generated by the Austin Transportation Department, which would need to offset by an increase in the transportation user fee paid on utility bills, and from funding set aside in previous budgets for the Pay for Success program for homelessness services. After concern from some CMs – and stakeholders who could receive SAVES funding – about those funding sources, an amendment by Adler directed staff instead to allocate $8.5 million in sales tax revenues to the SAVES funds.
“Item 52 is insufficient and I know we can do better,” Bouldin Creek Cafe owner Leslie Martin told Council, referring to the SAVES spending plan’s agenda number. “This money will not make a dent in the help needed … if Item 52 is the best you can do, then you have just failed Austin.”
National reporting suggests that Congressional and White House leaders may be approaching a deal on a second multi-trillion dollar stimulus package, but city staff will continue looking for more local funds. Some CMs offered direction to staff on where to look – such as funding set aside in the Fiscal Year 2021 budget (in effect as of Oct. 1) for Convention Center expansion.
Other CMs have been hesitant to consider using Convention Center funding for short-term relief. The city believes that center expansion will play a critical role in bringing prosperity back to Downtown post-pandemic, and city attorneys have consistently argued that state law places tight restrictions on how Hotel Occupancy Tax revenue now dedicated to the Convention Center can be used. An amendment from Pool, approved unanimously, directs staff to conduct an analysis of other (non-HOT) Convention Center revenues that could be used for SAVES funding.
But an amendment from CM Kathie Tovo failed that would have tasked staff to identify $10 million in Convention Center reserves for use on SAVES priorities. CM Pio Renteria, who voted against the amendment, said he didn’t want to set “false expectations” in the community that more funding, specifically from these reserves, was coming. Other amendments from Tovo that did pass directed staff to explore how RoW, encroachment, and alley vacation fees could be rounded up and used to establish a Business Preservation Fund.
Another failed amendment from Tovo sought to look at funding now tied up in incentive deals made with large corporations like Visa, Samsung, and Apple. Tovo, whose District 9 includes much of Downtown, suggested staff analyze the impact of reducing these incentives by 50% or 75% and creating new incentives – likely in the form of property tax abatements – for landlords of buildings that house struggling businesses.
Adler pushed back on conducting that analysis, saying that “unilaterally renegotiating” the already-agreed deals would send the wrong message to the business community. The Chapter 380 agreement program was already modified in 2018 to favor small, local businesses over multinational corporations, but that did not impact these legacy deals. In 2019, some CMs supported a move away from the incentive program altogether, as a way of blunting the impact of tightened property tax revenue caps imposed by the Texas Legislature.
Despite concerns from Pool and music venue stakeholders, the Austin Better Business Bureau will be tasked with processing applications and distributing funds, while applying an equity framework developed by the city’s Equity Office. But distribution of future relief funds could be handled by the Austin Economic Development Corporation, which was approved along with the SAVES spending plan. The AEDC will be operated by up to 21 board members; in the interim, it will be staffed by city employees or people they nominate.