Venue Tax Backing Waco Projects Improving After Worrisome Slump – Waco Tribune-Herald

Hotels were bulging back in 2018, when McLennan County issued $35 million in bonds to create a new venue near 42nd Street, Lake Air Drive and Bosque Boulevard. The county would get a new multipurpose center, now built and dubbed the Base, while Waco’s school district would see a new track complex and the community at large would get new Lake Air Little League fields.

Waco, the county and the Waco Independent School District would engage in land swaps and deal sweeteners until the cows came home to the nearby Heart O’ Texas Fairgrounds, or the Extraco Events Center. But success more than anything hinged on Central Texas’ booming tourism industry. A 2% levy on hotel rooms and a 5% charge on car rentals would retire those bonds.

Then COVID-19 reared its ugly, deadly head, and sun screen was not the solution. Tourism tanked. Hotel rooms went vacant. Waco’s signature convention hotels, the Waco Hilton and Courtyard by Marriott, closed entirely in March 2020 with no set date to reopen. The American Hotel & Lodging Association reported then the industry was losing $1.4 billion in room revenues weekly.

The wolf was not growling at McLennan County’s door, county officials routinely taking a conservative approach to spending and allocating. But perhaps a clearing of the throat could be heard. In fiscal year 2019, which began Oct. 1, combined tax revenue on lodging and car rentals exceeded $200,000 in seven of 12 months, totaling $2.2 million, according to figures provided by the McLennan County Auditor’s Office.

The county was allocating about $156,000 of that monthly for debt service on the revenue bonds, meaning early results showed a surplus in the making.

But in fiscal 2020, the landscape changed. Only twice did monthly levies on lodging and car rentals exceed $200,000, and in June that year, they plummeted to $71,468. The yearly total stood at $1.7 million, a decline of about $500,000 from the previous fiscal year, county records show.

Led by Magnolia Market at the Silos, Waco had become a popular tourist destination. Its monthly hotel occupancy rates were regularly among the highest among metropolitan areas of the state. But the pandemic took its toll in that regard. For example, the occupancy rate of local hotels hit 82% and 80% in March and June, respectively, of 2019, according to STR, an industry leader in lodging-related market research.

In March 2020, the occupancy rate had slumped to 48%. In April, it fell to 29.5%. In October, it stood at 57%, according to STR findings.

Aggravating this decline, at least appearance-wise, was the hotel building boom Greater Waco was enjoying. Progress was being made on new properties as existing hotels were laying off staffers and shutting doors.

The tide began to turn in 2021, the occupancy rate hitting close to 80% in March, April and October, STR reported.

“Waco’s hotel occupancy is 71.6% for year to date, January through December 2021,” said Carla Pendergraft, who markets the Waco Convention Center. “Last year, occupancy during the pandemic was 51% for the calendar year 2020. This is an improvement of 40.4%.”

These new numbers place Waco third in the state, behind El Paso’s 77.5% and McAllen’s 73.7% for the calendar year, Pendergraft said.

“Waco’s hotel occupancy is higher than Austin, Dallas, Amarillo, Fort Worth-Arlington, San Antonio, Lubbock, Bryan-College Station, Beaumont, Corpus Christi, and Abilene, which are the cities we track,” Pendergraft said. “The State of Texas as a whole is running at 59.3% occupancy on average.”

Slowly but surely, recovery began to take hold in fiscal 2021, with venue tax revenues topping $200,000 in five of the last six months, totaling $2.15 million for the year. Scheduled monthly debt service payments remain $156,000, according to McLennan County Auditor Frances Bartlett.

So far in fiscal 2022, revenues totaled $277,514 in October, $325,747 in November and $213,356 in December, Bartlett reported.

“The total revenue that has been collected for these two taxes has been sufficient to cover each month’s portion of the annual debt service payments for the last year due to improvements we have seen in the economy and travel industry for our area,” Bartlett said.

The debt payment schedule has the last principal payment on the debt slated for fiscal year 2058, she said.

McLennan County Administrator Dustin Chapman said the county has made commitments totaling $2.4 million to Waco Independent School District for the Paul Tyson project, and another $3.6 million to the city of Waco for a new Lake Air Little League and Challenger Little League complex.

Tom Balk, Waco’s park development program manager, said the city has set Feb. 8 as the date for accepting bids on the Lake Air Little League and Challenger project. Work includes constructing eight ballfields, fencing and underground utilities, installing sport and non-sport lighting, removing and reinstalling bleachers, plaques and a memorial site. An Associated General Contractors newsletter places the estimated cost at $5.4 million.

“The city envisions a nine-month construction time frame, so it should be ready for the 2023 season,” Balk said.

Work is well underway on the estimated $9.5 million Paul Tyson Field replacement on North 42nd Street that includes a new track-and-field facility with a 2,000-seat grandstand and a 3,000-square-foot building for concessions, ticket sales and restrooms. Plans also include expanded baseball and softball facilities off North 44th Street. The Paul Tyson bleachers, competition-ready track, artificial turf and the new building are all in place.

Meanwhile, new hotel construction is picking up steam. Site work has begun on a new 182-room AC Hotel by Marriott at Sixth Street and Mary Avenue.

A 105-room Element Hotel by Westin is nearing completion on Waco’s traffic circle, where Valley Mills Drive, La Salle Avenue and U.S. Highway 77 converge. A 128-room EVEN Hotel and a 132-room Cambria Suites are being finished near Bridge Street and Martin Luther King Jr. Boulevard in East Waco. A 101-room Holiday Inn Express is going up near Franklin Avenue and Martin Luther King Jr. Boulevard, though Pendergraft had no completion date.

Then there is the much anticipated Hotel 1928, Chip and Joanna Gaines’ 33-room property in the former Grand Karem Shrine building downtown, being developed with Adventurous Journeys Capital Partners.

Its projected opening date is in 2023, Pendergraft said.