Billions of dollars in projects are coming to the southeast corner of downtown Fort Worth over the next decade. For now, the only physical signs of progress are a couple of excavators and construction fencing near the convention center’s southeast entrance.
The $701 million convention center renovation will start with mostly back of house renovations, said Mike Crum, director of the public events department for the city of Fort Worth. That includes renovating the kitchens, loading docks and straightening Commerce Street. The second phase of the project will tear down the convention center’s ‘flying saucer’ arena then expand and modernize the building.
The convention center expansion is a “catalyst” for several other nearby projects, Crum said. Over the next decade, the nearby Omni Hotel will nearly double its number of rooms, Texas A&M will construct three new buildings to reimagine its Fort Worth campus, and the city expects a new hotel serving the convention center to pop up along Commerce Street.
“It’s exciting to see all these things in motion,” Crum said.
The funding for the first phase of construction is secured through a combination of $52 million in federal pandemic-era stimulus money and $43 million in debt to be paid back through revenues to the city’s culture and tourism fund.
That leaves a price tag of $606 million for phase 2 of construction, plus another $53 million for incentives related to the Omni Hotel’s planned expansion. The city wants to use revenue from the city’s hotel occupancy tax to help pay for $659 in construction.
Hotel occupancy tax is the tax visitors to the city pay when they book hotel rooms. That tax is the primary source of revenue to the cultural and tourism fund. Fort Worth City Council approved a resolution Tuesday that will allow the city to raise the hotel occupancy tax 2% if voters approve the increase on election day May 4.
A 2% increase will amount to a 17% hotel occupancy tax and put the city at the upper limit of what is allowed by state law, Crum told council members. Houston and Austin both have 17% hotel occupancy tax rates, Dallas’ rate is 15%.
Crum thinks the increase will not have a measurable impact on the city’s tourism business.
The increase could allow the city to put $9.5 million annually toward paying the debt for the convention center expansion. It would also set the city up to pay for future tourism-related projects, including incentivizing a new hotel on Commerce Street and funding improvements to the Will Rogers Memorial Center.
How do cities take on debt?
Cities can take on different kinds of debt depending on its purpose, according to the Texas comptroller. Some require voter approval, such as bond debt. Other types of debt, such as certificates of obligation, allow the city to issue debt quickly without voter approval. Both types of debt allow cities to pay for capital projects in the long term.
Cities often use debt to fund major construction projects through bond elections — voters approved a $560 million bond in May 2022. And the city paid for its portion of Dickies Arena’s cost through Special Tax Revenue Bonds — a type of debt voters approved in November 2014.
Even without an increase to the hotel occupancy tax rate, Crum expects revenues to the city’s culture and tourism fund to grow as the tourism industry continues to recover from pandemic losses. The city expects about $300 million in annual revenue to the culture and tourism fund by 2054, nearly triple what it is today.
Through expanding the convention center, Crum said the city expects to double its convention business. Phase 1 is supposed to be completed by the first quarter of 2026. Phase 2 is expected to take three additional years.
“An expanded and modernized convention center will give Fort Worth the opportunity to level up,” Crum said.
Expanding the convention center is critical to supporting Fort Worth’s economy, Bob Jameson, president and CEO of Visit Fort Worth, said in a statement. Visit Fort Worth, which promotes the city’s tourism industry, is financed through the culture and tourism fund.
“I appreciate the city’s leadership exploring ways to keep Fort Worth competitive, and Visit Fort Worth is ready to support their direction,” Jameson said.
Conventions held while construction on the center is underway will be made aware of possible impacts well ahead of time, Crum said. For now, construction is moving along smoothly and cost estimates remain consistent.
“We’re on budget, we’re on schedule,” Crum said.
Disclosure: Mitch Whitten, chief operating officer for Visit Fort Worth, is a board member of the Fort Worth Report. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
Rachel Behrndt is a government accountability reporter for the Fort Worth Report. Contact her at rachel.behrndt@fortworthreport.org or via X.