Taxpayer money likely needed to subsidize ballpark debt until 2023
City officials estimate taxpayer money will be needed for at least five or six more years to subsidize debt payments for Southwest University Park. During the past four years, the city has paid $2.2 million in general fund subsidies.
The ballpark is generating money through hotel and sales taxes, ticket revenues, rent charged to MountainStar Sports and parking at the convention center during games. But it’s not enough to completely cover the debt payments. At least not yet.
In 2016, the city had to pay $4.3 million in ballpark debt. But the ballpark only made the city $3.8 million. The city paid a $479,705 subsidy using money from the general fund.
In 2017, the city had to pay $4.2 million in ballpark debt. The ballpark made the city $3.8 million. City officials paid a subsidy of $486,319 to cover the shortfall.
“There has always been a built-in subsidy into the debt modeling, so it’s always been known that the general fund was going to have to contribute some dollars toward paying related to the ballpark,” said Robert Cortinas, the director of management and budget for the city of El Paso. “So, right now the debt modeling shows hopefully 2022 or 2023 that subsidy should zero out and the ballpark will actually be able to be generating enough revenue through the HOT tax and the sales tax that’s being collected, to generate enough revenue to cover the debt payment.”
The city’s hotel occupancy tax (HOT) is 17.5 percent. It is the highest in the state, and one of the highest in the country.
In 2012, voters approved a 2 percent increase in the HOT for the purpose of financing the ballpark.
Gabriel Ayub, the president of the El Paso Hotel and Lodging Association, said having such a high HOT is having an impact on the number of hotel rooms being rented citywide.
“Our growth was approximately year to date through November was 1.4 percent which if you compare it to the past, it’s lower. And it’s not something to really brag about because in rate we saw a decrease of about .5 percent. So that’s where it affects those, if the rooms are just being rented, we don’t have occupancy and the dollars aren’t coming in,” Ayub said.
Ayub hopes the construction boom happening in Downtown El Paso will make a positive impact on this industry.
“We are seeing new hotels that are coming up in the downtown area. They will obviously help hopefully attract more conventions. And the more conventions we have the more people we have staying in the downtown area and throughout the city. So that will help increase HOT tax collections,” Ayub said.
Additionally, the city has started doing audits to ensure hotels are in compliance with reporting the city taxed owed regarding the HOT tax.
At Tuesday’s City Council meeting, Mayor Dee Margo talked about representatives voting to move forward with a lawsuit to collect back taxes from three hotels.
“We have a million plus in hotel motel taxes due and we are protecting the city’s interest in that by filing suit to be able to obtain those tax dollars that are owed us,” Margo said.
“We’ve seen the HOT perform very well in the last few years. So, if we continue to see that, hopefully project about a 2 to 3 percent increase over the next few years. And so as that continues to perform well, we’ll see that general fund subsidy decrease quicker,” Cortinas said.
