The city of Shenandoah now has the option of paying for its proposed special events center with hotel occupancy tax revenue following the passage of Senate Bill 2166 during the 85th Texas legislative session.
Shenandoah city officials have been discussing the possibility of building a multiuse special events center within city limits since 2011. If built, city officials want to pay for the $20 million-$40 million center with hotel occupancy tax revenue as the local industry continues to boom.
“This area has been discussing this type of facility for many, many years,” City Administrator Greg Smith said. “I think there is an appetite for a facility that can be used for multiple purposes and we have a very good relationship with the sports industry so this just gives us another mechanism to bring visitors to Shenandoah and have a positive impact on our hotels.”
However, prior to the 85th state legislative session the city was unable to use hotel tax to fund the project due to the sports component of the facility. Therefore, the city submitted proposed special legislation in late 2016 for review at the state level with hopes of amending that prohibition.
“[Those sporting events are] a huge economic boost to the whole area,” said Rep. Mark Keough, R-The Woodlands, who authored the House bill. “As the city wants to continue to [host sporting events], they want to build an athletic center, but rather than put it on the backs of the people, they’ve got some resources available right now in hotel occupancy tax revenue. It would be nothing but a huge opportunity for this entire area to be able to do that.”
Now that the legislation has passed, Smith said the next steps for the city involve getting a cost estimate on the center and conducting both a feasibility study and an economic effects study to evaluate whether the center would be a good financial decision for the city.
“The deciding factor on this facility actually getting built is based on the hotel occupancy tax revenue that comes into the city,” Smith said. “So if we don’t get any of the proposed hotels that have been approved—today we don’t have enough money to pay the debt service for this facility—so we would not build it. So we do need more hotels to be built in Shenandoah to build the special events center.”
Three new city council members took office in Shenandoah following the May 6 city election—Byron Bevers, Charlie Bradt and Ted Fletcher. During a candidate forum on April 20, all three stated they were not in favor of incurring $30 million in debt to build a special events center, however, that did not mean they were against the project altogether.
“If this council decides to not proceed with consideration of the special events center, then the project will die,” Smith said. “But the legislation is still passed so it could come up again at a future time with a future council. At this point we’ve done about as much work as we can do without engaging some more consultants to help us take the next steps.”
City officials said they hope to have a plan for the special events center in place by 2019.
“This project will support our hotels,” City Finance Director Jennifer Calvert said. “We absolutely want to take care of our residents, but we also want to take care of our business owners so we want to help them fill their hotels and have successful businesses. When visitors come the eat and drink at our restaurants and shop at our stores so it helps all of our businesses—that’s our primary goal.”
Additional reporting by Marie Leonard.