The Fort Worth convention center expansion has had its fair share of failures.

City officials began discussing the project over a decade ago. Initial plans call for the first phase of the expanded Fort Worth Convention Center to be completed this year. But then COVID-19 came along, and the Fort Worth Cultural and Tourism Foundation — the source of funding for the project — was hit hard. Tourism revenue has declined 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 bill designed to help the country recover from the pandemic. The injection of federal funds will cover more than half of the first phase of construction.

Mike Crum, Director of Fort Worth Community Events, began working in Fort Worth on February 3, 2020—about a month before the start of the pandemic in the US. His first meeting was with the convention center expansion advisory committee.

“We had one meeting,” Crum said. “Then we had to put it all on hold.”

The delay and other factors, such as the planned redevelopment of Commerce Street and inflation, have increased the project’s estimated cost by $324 million, almost double the 2019 estimate.

The Fort Worth Convention Center currently struggles to compete with other cities in hosting regional and national conventions. The city will demolish the arena adjacent to the convention center in a second phase and expand exhibition halls, ballrooms and meeting spaces to make the city more competitive.

With federal dollars immediately available for the project, the city is preparing to complete its plan to fund the rest of the project with debt.

“In May of this year, we will sell $43 million in debt to flesh out the budget and that will allow us to move forward,” Cram said.

The role of hotel taxes

Cities often use leveraged funds to finance major construction projects through bond elections — in May 2022, voters approved a $560 million bond. And the city paid its share of the cost of Dickies Arena through special tax bonds, a type of debt approved by voters in November 2014. .

However, in both cases, voters had the opportunity to vote to approve the debt. This does not apply to the conference center, at least in the first part of the project.

The Hotel Occupancy Tax is the largest source of income for the culture and tourism fund along with revenues generated from the Dallas-Fort Worth airport, hotel taxes paid in the Cultural District and stockyards, and finally taxes on venues such as like tickets and parking, which are the same income approved by voters in 2014 to fund the construction of Dickies Arena.

All of these taxes do not require voter approval, Crum said, unless they need to be increased. That may be the case for the second part of the project, which the City expects to cost $606 million.

“We didn’t make any decisions or make any recommendations, but, you know, we could raise the tax on accommodation (of hotels) by another two percentage points,” Crum said.

The City will discuss any tax increases to pay for the second phase of the project in October. Project leaders are constantly working on cost estimates for the second part of the project, according to a presentation to the Fort Worth City Council in January.

The hotel occupancy tax is a tax that visitors to the city pay when they book hotel rooms. The tax is the main source of income for the Culture and Tourism Foundation, which funds visits to Fort Worth and partially funds Dickies Arena and the Will Rogers Memorial Center, Jameson said.

The city could also sell the naming rights to the convention center, Cram said, a new trend such as Dallas’ Dickies Arena and American Airlines Center that has become more profitable in the past decade.

The city will make a presentation on the $43 million debt they plan to take on this month and are set to formally sell the debt in May.

The city also has an estimate of the income of the cultural and tourism funds for the next three years – funds that the city will use to pay off the debt it plans to take on for the project. The city is expected to earn about $272.2 million by 2026, with projected revenue increasing by about $3 million a year.

About $3.9 million of these funds will be used to pay off the convention center’s first phase debt each year for 30 years.

Dallas is also upgrading its convention center.

Fort Worth isn’t the only convention center undergoing renovations to cope with rising building costs. Dallas recently unveiled the master plan for its new Kay Bailey Hutchison Convention Center, with a new estimated cost of $3 billion.

Voters in Dallas approved a 2% increase in the city’s hotel occupancy tax in November to fund a convention center project and renovations at Fair Park.

While Fort Worth’s expansion won’t match the full redevelopment that Dallas is planning, Crum said, it will allow the city to be more competitive in the race to attract regional meetups and compete for conventions at the national level.

Texas A&M University Center Expansion Opens Redesign Opportunities

While the pandemic has receded in Fort Worth for now, the project received a dose of synergy in 2021 from Texas A&M University’s planned downtown campus.

The Project Advisory Committee made adjustments to the project plan based on the planned development of Texas A&M. The city will restore the southeast entrance to the Fort Worth Convention Center, adding about $10 million to the first phase budget in response to Texas A&M’s downtown investment, Crum said.

“From the very beginning, the city and district authorities spoke to us about two projects that complement each other. We see it that way too,” said Leylan Kopelin, spokesman for Texas A&M University.

The downtown campus will face the convention center, water gardens, and the new convention center hotel. Urban designers are already working on designing common spaces such as roads, sidewalks and public spaces.

“All of these parts need to be considered together, and it’s very important in every conversation I’ve had,” said Andy Taft, president of Downtown Fort Worth Inc.

Texas A&M will also be bringing large groups to Fort Worth for academic meetings, Taft said. This will increase the number of nights in hotels surrounding the campus and convention center.

“There’s no doubt these 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. Tourist activity is expected to double as a result of the expansion of the convention center.

Visitors to the city spend more on food and drink than on hotel rooms, Jameson said, and all of that sales tax revenue goes into the city’s general fund to offset the cost of city services to residents.

“This is a powerful segment of the Fort Worth economy and has the potential to grow and contribute more,” Jameson said.

Disclaimer: Visit Fort Worth COO Mitch Whitten is on the Board of Directors of Fort Worth Report. At Fort Worth Report, news decisions are made independently of board members and financial backers. Read more about our editorial independence policy here.

Rachel Berndt is a reporter for the Fort Worth Report responsible for government reporting. Contact her at [email protected] or via Twitter. At Fort Worth Report, news decisions are made independently of board members and financial backers. Read more about our editorial independence policy here.