County Judge: Contract With Sports Commission Was ‘Bad Decision’

County Judge Veronica Escobar said public money meant for events that create tourism may be going to the wrong place.

The Hotel Occupancy Tax, often called the “HOT” tax comes from a fee that people staying in El Paso hotels pay.

As a result of a standing contract signed by Commissioners in 2003, currently nearly 90% of the HOT tax goes to the El Paso Sports Commission, which manages the County Coliseum.

Escobar said Monday the County may be getting a bad deal with the Sports Commission because the County gives the Sports Commission about $2.5 million in HOT tax money, while the Sports Commission only shares about $750,000 in revenue with the County. The contract also stipulates the County must increase the amount they give to the Sports Commission every year based on the Consumer Price Index. Escobar fears that because of that, soon the county will have to use all of the HOT tax funds on the Sports Commission — leaving other organizations and events like the Amigo Airsho and tournament bids without any County funds.

“We are living through the consequences of an incredibly bad decision by a previous court”, Escobar said.

Escobar said the sports commission bid for the contract in 2003 but hasn’t since. Instead, the contract has been extended. “That’s fundamentally unfair, it’s fundamentally flawed”, said Escobar.

“Either we do something to amend it (the contract) and generate new revenue or we wait until 2018 and continue to lose money and not meet our spending obligations “, said Commissioner Sergio Lewis.

Sports Commission President Bryan Kennedy said the contract is not a bad deal because of all of the organizations that receive hot tax money – they’re the only ones who actually put money back into the county’s general fund. He said the sports commission has put $4.8 million to the county’s general fund in the last 8 years.

In April, Commissioner Sergio Lewis volunteered to try to reach a deal with the Sports Commission. They did. Under Lewis’ and the Sports Commission’s proposal, the county would cap the Sports Commission’s HOT tax receipts to 83% of the fund and would require the commission to find a title sponsor. The county would receive 30% of the sponsorship and the rest would pay for improvement at the coliseum. Lewis expects his proposal to save the county about $2.5 million in HOT funds by 2018, the year the current contract expires.

Also in the proposal, the Sports Commission would include a Consumer Price Index adjustment to the revenue that the County receives from them. The commission wants an extension of the contract.

Escobar said the County may have to wait until the contract expires in 2018 but she is opposed to renewing it.

Kennedy likened the agreement between the county and the sports commission to that between the City of El Paso and the Convention and Visitors Bureau (CVB), saying the city allocated about the same percentage of its HOT tax funds to the CVB. According to Bryan Crowe, the Assistant General Manager for the CVB, for fiscal year 2010/2011, the CVB will receive $2.9 million, or 35% of the city’s HOT tax funds.

Lewis said compromise with the commission is necessary. “There’s no such thing as a free lunch, so if we’re asking for the Sports Commission to loosen up some money for the County so we can meet our obligations on spending HOT recipients, then of course what they’re asking is an extension of the contract.”

Escobar said the problem stems from another court.

“That’s the consequence that we have to live with from a 2003 bad decision led by a former commissioner who is admittedly corrupt, who has said ‘I am guilty of bribery and other things”, Escobar said, referring to former County Commissioner Betti Flores, who pleaded guilty to federal public corruption charges unrelated to the current debate between the County and the Sports Commission.