San Antonio Taps State Hotel Tax for Spurs Arena District

The San Antonio City Council approved a major step toward funding the proposed downtown arena for the Spurs, tapping a state mechanism that could funnel billions into a broader sports and entertainment district.

The council dissolved a previous Project Finance Zone and established a new one that allows the city to reap up to $2 billion in state hotel tax revenue over 30 years, the San Antonio Business Journal reported.

The old finance zone excluded a new arena and required near-term work on the convention center and Alamodome. But the revised zone gives the city more flexibility, requiring only one of the three core projects to start construction within five years.

City officials say the reworked plan is essential to advance “Project Marvel,” the multibillion-dollar proposal that includes a downtown arena for the Spurs, a convention center expansion, upgrades to the Alamodome and more than 50 acres of mixed-use development across the Hemisfair area. Early designs also envision a 1,000-key hotel, a land bridge across Interstate 37, a 5,000-seat live entertainment venue and a cultural venue at the John Wood Courthouse.

The city will still need additional funding sources to realize the full district, the city’s chief financial officer Ben Gorzell said.

The plan got a boost last month when a judge dismissed a preservationist lawsuit aiming to stop the demolition of the former Institute of Texan Cultures pavilion, a key parcel tied to the arena site. The University of Texas San Antonio, which controls the property, has already begun site prep and partial deconstruction.

The Spurs, Bexar County and the City of San Antonio signed a non-binding agreement in early April to relocate the NBA team from the Frost Bank Center to the new arena. Total costs for the overall redevelopment could range from $3 billion to $4 billion depending on financing structure and private-sector participation.

— Judah Duke