Eagle Pass International Center for Trade is Financial White Elephant to City
By: Jose G. Landa, Eagle Pass Business Journal, Inc., Copyright 2015
Approximately 10 years ago the City of Eagle Pass, Texas constructed the International Center for Trade (ICT) costing approximately $6,000,000 with the intention of creating a high-tech facility for communications, conferences, skills training and market research, foster trade and economic development, optimize border/international trade opportunities, cultivate higher education partnerships/capacity, with attention to regional issues and development opportunities, and be a revenue generating tool for the City of Eagle Pass.
The Eagle Pass International Center for Trade has not fulfilled its planned mission and has become a financial burden annually to the City of Eagle Pass fiscal year budget because it has not generated sufficient revenues to sustain its operating costs, forcing the City of Eagle Pass to use other city funds to pay for the annual maintenance and operations of it such as the City’s Hotel and Room Occupancy Tax.
The ICT has yet, since its onset, to see a profit or enough rental operational revenues to self-sustain its maintenance and operations costs as originally planned by City Fathers when designed and developed.
On average, the revenues created from the venue rental and catering fees charged for the use of the ICT barely cover the salary and wages costs of its employees. The rest of the funding for the operation of the ICT is subsidized from the 3% of revenues allowed to be taken from the City’s Hotel Room Occupancy Tax funds generated on a yearly basis and other city funding sources.
The Eagle Pass City Council recognized that the ICT is not being used to its full potential and have taken corrective measures to set the proper channels to fix the problem by budgeting a full-time position for the new fiscal year 2015-2016 to promote the center and increase its overall revenues in order to lessen the annual financial burden on the City’s budget.
The ICT administrator position will seek to lure convention type events and other big ticket events in hopes of generating greater revenues and use the ICT for what it was originally intended.
A review of the City Council’s Meeting Departmental monthly reports for 2014-2015 and 2013-2014 show that the revenues generated from venue rental and catering fees account for $169,726, with one month left (September) in this fiscal year.
The revenues generated from the actual usage of the ICT in 2014-2015 was $88,875. In 2013-2014 during this time span, ICT revenues were reported at $80,851. The increase in revenues from one year to the next represent a 9% increase, totaling $8,024.
The actual revenues for the ICT in rentals and other events according to City of Eagle Pass monthly departmental reports from October to August 2014-2015 have had a minimal increase of only 9% in comparison to 2013-2014.
The $88,875 generated in revenues from the operation of the ICT account for only 27 % of the departmental expenditures for the operation of the ICT in 2014-2015, barely covering ICT employee salaries which were at $88,744. The total amount of amended budget for expenditures was $328,358 leaving a void of $239,483 that was subsidized from other financing sources (Room Occupancy Tax Funds).
An example of the funds transferred in to subsidize the operation of the ICT is evident as in the month of July 2015 the ICT revenues from event rental fees were $5,250 and $24,513 were transferred in from Room Tax funds to cover costs of operation.
In 2013-2014, the total actual expenditures for the ICT were reported to be $320,065 and revenues generated from the operation of the ICT were only $80,851, accounting for only 25% of the funding needed to operate it. The deficit was approximately $239,214 for it to become self-sustaining.
In 2013-2014, the City budgeted $596,694 for the ICT . In 2014-2015 it proposed $634,652 to be budgeted under the comprehensive Summary of Funds Availability All Funds from the fiscal year budget.
ICT Revenues generated from use of monies and property in 2010-2011 were at $ 84,029 while in 2011-2012 revenues were only $81,400 including event rental fees and catering fees. In 2013-2014, ICT generated $80,851 in revenues and in 2014-2015 rental and fees revenues were reported at $88,875, totaling $335,155 in actual operational revenues from rentals and fees in a four year span.
Money allocated to the ICT in that same time span from other financing sources (Room Tax) totaled $1,236,774, a shortfall of $901,619.
Other financing sources contributed the majority of the operational funding for the ICT with $273,376 in 2010-2011 and $342,140 in 2011-2012 in transfer in funding from the Room Occupancy Taxes collected.
In 2013-2014 the City of Eagle Pass obtained and transferred $314,964 from the Room Occupancy Tax Fund (ROTF) to be used for the operation of the ICT. In 2014-2015 the City obtained $306,294 from the Room Occupancy Tax Fund.
The City of Eagle Pass total Room Occupancy Tax Funds total revenues for 2013-2014 were $707,696. Total revenues collected from the Room Occupancy Tax Funds were $700,500. In 2015-2016 the City is proposing to obtain $309,627 from the Room Occupancy Tax Fund which is proposed to have revenues of $718,542.
The City under ordinance is allowed to take 3% of the 7% collected from the Room Occupancy Tax to be used for the International Center for Trade. The Room Tax funds can be used for the establishment, improvement or maintenance of a convention center or visitors center.
In 2010-2011 the ICT had total department expenditures of $399,513 and $686,573 in 2011-2012 according to the City of Eagle Pass budgets.
Comprehensive summary expenditures of all funds including revenues, general funds contribution and room tax funds in 2012- 2013 had an expenditure of $558, 098 while in 2013-2014 it was $596, 694, and the proposed expenditures for 2014-2015 was reported to be $632, 652.
The total proposed departmental expenditures dedicated for the operation of the ICT in 2015-2016 is $495,433 according to the new City of Eagle Pass 2015-2016 Budget.
The total expenditures include personnel services, RPRS material and supplies, contracted services, other services and charges, capital outlay and other uses and transfers
Under the City of Eagle Pass Proposed annual budget for fiscal year 2015-2016 it has three positions for the ICT Center, paying $71,888 in salaries.
The positions currently under the ICT personnel are ICT Coordinator ($23,374), Facilities Maintenance Specialist ($28,365) and one custodian ($19,149)..
The ICT is clearly not living up to its intended vision and has yet to be used to its maximum use and potential.
The rest of the funding to continue operating the City of Eagle Pass International Center for Trade building is being taken from revenues generated by the Room Occupancy Tax levied on the use of local hotel rooms and are then to be used for luring tourism into the community (heads in beds) bringing more people to continue renting out those hotel/motels which pay the tax.
The City of Eagle Pass imposes and collects a Motel and Hotel Room Occupancy Tax within its city limits at a rate of 7%. The City has designated, by ordinance, that 3% of these revenues be set aside as restricted funds for the construction debt service costs of the International Center for Trade (ICT). The remaining 4% of the Room Occupancy Tax revenue is designated for eligible and approved expenditures on legally authorized items that are allowed by state law. These funds are administered by a special committee made up by seven members, all of which are appointed by the City Council. Currently, the advertising and tourism promotional activities are carried out through an annual contract with our local Chamber of Commerce (COC).
Under the 3% Room Occupancy Tax- Civic Center (ICT) the City of Eagle Pass has received $368,052 in 2010-2011, in 2011-2012 $347,189, in 2012-2013 it received $347,189, and in 2013-2014 $381,000.
The City’s beautiful ICT remains to fulfill its intended maximum use, becoming a financial burden on the City of Eagle Pass’ annual budgets. One local taxpayer called the ICT as the City’s White Elephant because it has failed to raise sufficient revenues to self-sustain its operating and maintenance expenses. City Council hope that the new ICT position to promote its use and increase its revenues will address the significant financial cost and burden on the City’s annual budget.
The City of Eagle Pass does not have a Visitors and Convention Bureau like other cities with whom it has to compete with in attracting conventions and tourism with. The City Council instead pays the Eagle Pass Chamber of Commerce an approximate amount of $90,000 to assist it promote the City’s tourism and attempt to attract conventions.
