Fort Worth’s convention center expansion has had its share of setbacks.
City leaders began discussing the project over a decade ago. Under the original plans, phase one of the expanded Fort Worth Convention Center should be nearing completion this year. But then COVID-19 came and Fort Worth’s culture and tourism fund — the source of the project’s funding – took a big hit. Tourism revenue decreased by about $11 million between 2019 and 2020.
About $52 million in federal funds restarted the project. The money comes from the American Rescue Plan Act, a $1.9 trillion law designed to help the country recover from the pandemic. The infusion of federal funds will pay for over half of the first part of construction.
Mike Crum, director of Fort Worth’s public events department, started working for Fort Worth Feb. 3, 2020 – about a month before the pandemic began to emerge in the U.S.. His first meeting was with the advisory committee for the convention center expansion.
“We had one meeting,” Crum said. “Then we had to shelve the whole thing.”
The delay and other factors, such as the planned realignment of Commerce Street and inflation, ballooned the estimated cost of the project by $324 million, almost double the estimate in 2019.
The city is moving forward, though, because Fort Worth is in desperate need of a better convention center and expanded hotel options downtown, according to Bob Jameson, president and CEO of Visit Fort Worth.
The Fort Worth Convention Center currently struggles to compete with other cities for regional and national conferences. The city in phase two will demolish the arena attached to the convention center and expand exhibit halls, ballrooms and meeting spaces to make the city more competitive.
With federal dollars immediately available to the project, the city is preparing to finalize its plan to finance the rest of the project through debt.
“We would sell $43 million in debt this May to flesh out the budget and that’ll permit us to move forward,” Crum said.
How do cities take on debt?
Cities can take on different kinds of debt depending on its purpose, according to the Texas Comptroller. Some require voter approval, such as bond debt. Other types of debt such as certificates of obligation allow the city to issue debt quickly without voter approval. Both types of debt allow cities to pay for capital projects in the long term.
The role of hotel occupancy taxes
Cities often use debt to fund major construction projects through bond elections — voters approved a $560 million bond in May 2022. And the city paid for its portion of Dickies Arena’s cost through Special Tax Revenue Bonds — a type of debt voters approved in Nov. 2014.
However, in both of those cases voters had the opportunity to vote on whether to approve the debt. That’s not the case for the convention center, at least in the first part of the project.
Hotel occupancy tax is the biggest contributor to the culture and tourism fund along with revenue collected from Dallas-Fort Worth Airport, hotel taxes paid around the Cultural District and Stockyards and, finally, venue taxes – such as for tickets and parking — which is the same revenue approved by voters in 2014 to fund construction of Dickies Arena.
All of those taxes don’t need voter approval unless they have to be increased, Crum said. That could be the case for the second part of the project, which the city expects will cost $606 million.
“We’ve not made any decisions or any recommendations, but, you know, we could bump the (hotel) occupancy tax another two percentage points,” Crum said.
City leaders will discuss any tax increases to pay for phase two of the project in October. Project leaders are continuously working on cost estimates for the second part of the project of the project, according to a presentation to Fort Worth’s City Council in January.
Hotel occupancy tax is the tax visitors to the city pay when they book hotel rooms. That tax is the primary source of revenue to the cultural and tourism fund, which finances Visit Fort Worth and partially finances Dickies Arena and Will Rogers Memorial Center, Jameson said.
The city also could sell the naming rights to the convention center, an emerging trend – such as Dickies Arena and the American Airlines Center in Dallas – that has become more lucrative in the past decade, Crum said.
City staff will give a presentation about the $43 million in debt it plans to take on this month, and is set to officially sell the debt in May.
The city also has revenue estimates for the culture and tourism funds for the next three years — funds the city will use to chip away at the debt it plans to take on for the project. The city expects to earn about $272.2 million by 2026, with revenue estimates increasing at a pace of about $3 million per year.
About $3.9 million of these funds will be used to pay down the debt for the first phase of the convention center every year for 30 years.
Dallas is also giving its convention center a makeover
Fort Worth isn’t the only convention center being redesigned that is coping with rising construction costs. Dallas recently unveiled a master plan for its new Kay Bailey Hutchison Convention Center with a new estimated price tag of $3 billion.
Voters in Dallas approved a 2% increase in the city’s hotel occupancy tax in November to fund the convention center project and renovations in Fair Park.
While Fort Worth’s expansion won’t match the total rebuild Dallas is planning, it will allow the city to be more competitive in the race to attract regional meetings and compete for conventions on the national level, Crum said.
Texas A&M University’s downtown expansion presents opportunity for redesign
Despite Fort Worth’s pandemic set backs thus far, in 2021 the project received a dose of synergy from Texas A&M University’s planned downtown campus.
The project’s advisory committee made adjustments to the project’s plan based on Texas A&M’s planned development. The city will rebuild the southeast entrance to the Fort Worth Convention Center, adding about $10 million to the phase 1 budget, in response to Texas A&M’s investment in downtown, Crum said.
“From the beginning, city and county officials have talked to us about the two projects complementing one another. We see it that way, too,” Laylan Copelin, a spokesperson for Texas A&M University, said in a statement.
The downtown campus will face the convention center, the water gardens and a new convention center hotel. Urban designers are already at work planning the design of shared spaces such as roads, sidewalks and public spaces.
“All of these pieces need to be thought of together and that is very top of mind in every conversation I’ve been a part of,” Andy Taft, president of Downtown Fort Worth Inc. , said.
Texas A&M also will invite large groups to Fort Worth for academic meetings, Taft said. That will create more room nights in the hotels surrounding the campus and convention center.
“There’s no question, those are two great synergies,” Taft said.
The convention center will have an economic impact on Fort Worth beyond the hotel rooms it will help fill, Jameson said. Tourism activity is expected to double as a result of the convention center’s expansion.
Visitors to the city spend more on food and beverage than they do on hotel rooms, all of that sales tax revenue flows into the city’s general fund to offset the costs of city services for residents, Jameson said.
“It’s a powerful segment of the Fort Worth economy and there’s an opportunity for it to grow and contribute more,” Jameson said.
Disclaimer: Visit Fort Worth COO Mitch Whitten sits on the Board of Directors of the Fort Worth Report. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
Rachel Behrndt is a government accountability reporter for the Fort Worth Report. Contact her at firstname.lastname@example.org or via Twitter. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.