Effective July 1, 2011, the City entered into an Interlocal Agreement and Lease Agreement relating to the consolidation of the City’s Convention and Entertainment Facilities Department (“CEFD”) and the Houston Convention Center Hotel Corporation (now Houston First Corporation or “HFC”). Pursuant to the Interlocal Agreement, the City Council is asked to review HFC’s annual budget for the upcoming year.  As such, attached hereto is HFC’s proposed budget for calendar year 2019.

 

Under the Lease Agreement, HFC is responsible for maintaining and operating various properties leased from the City, including the George R. Brown Convention Center, Wortham Theater Center, Jones Hall, Miller Outdoor Theatre, Talento Bilingüe de Houston, Theater District Parking Garage, and various parks and outdoor spaces (collectively, the “Leased Properties”).  HFC’s budget ensures that the Leased Properties continue to be managed at the highest levels for calendar year 2019.  In compliance with CEFD’s bond requirements, pledged revenues, which include certain Hotel Occupancy Taxes (“HOT”) and parking revenues, as well as debt-related expenses, will continue to be recorded on the City’s books prior to a transfer to HFC of the remaining “Net Available Pledged Revenues”, as prescribed in the Interlocal Agreement. For calendar year 2019, HFC has projected $91.5 million for current HOT revenue, of which 19.3% (pursuant to Sec. 351.103 (c) of TX Tax Code) is paid quarterly to the City to fund the City’s arts-related contracts.  Additionally, the calendar year 2019 budget includes a lease payment to the City of $1.5 million as well as payment of $1.159 million to the City for protocol services, promotion of business travel, and traffic control services within and around the Avenida Houston. Finally, the calendar year 2019 budget includes payment by HFC, on the City’s behalf, of $1.238 million to Discovery Green and $1.1 million to the Hobby Center for the Performing Arts.

 

As was the case in CY 18, HFC will continue to manage the recovery and repair of facilities it manages on behalf of the City that were damaged by Hurricane Harvey.  To date, HFC has spent $91 million of the total projected budget of $150 million for Theater District recovery. Work in CY 19 will focus on completing repairs in the basement level of the Wortham Theater Center and the restoration of the Theater District parking facilities to pre-Harvey condition. Additionally, CY 19 will include the finalization of mitigation plans for the Theater District facilities under HFC’s care, as well as collaboration with Tetratech and the Finance Department to finalize submissions to FEMA.  

 

This item was presented at the December 11, 2018 meeting of the Budget & Fiscal Affairs Committee.

 

The Convention and Entertainment Facilities Department recommends approval of HFC’s calendar year 2019 budget.