City Council voted Thursday to approve the proposal that will transform the San Antonio Convention and Visitors Bureau (CVB) from a city agency to a public/private nonprofit. Mayor Ivy Taylor and several council members agreed that as an independent agency, the organization would have greater flexibility with its marketing dollars.
There's no question that the city's combined convention and tourism industries are a powerful economic generator, but some council members were concerned about the organization's transparency, accountability and return on investment. In a separate matter affecting economic development, the Council unanimously approved a one-year, $590,000 service agreement with the San Antonio Economic Development Foundation (SAEDF).
The Council's 8-3 vote sets into motion the creation of a corporation and a non-profit status application with the Internal Revenue Service. This means the CVB must provide the Council with draft governance documents earlier than expected, as council members must approve how the bureau's new board of directors will be composed and govern. Looking at governance details early in the process was part of Councilman Roberto Treviño (D1) motion to have the process start.
Mayor Taylor appointed a task force in May 2015 to transform the CVB. In December, the task force recommended the nonprofit transition, stating that most major U.S. cities work with some type of private convention and visitors organization.
CVB Executive Director Casandra Matej told the Council that other major Texas cities like Austin, Dallas and Houston are spending more money and increasing their share of the state's tourism market. If San Antonio's marketing budget remains the same, the city will eventually lose its regional dominance in business travel.
"We want to be able to enhance our market share," Matej said, adding that the bureau's current structure hinders the City's competitiveness and speed to market.
SeaWorld San Antonio President and task force Chairman Dan Decker said the bureau has done the best it can with present resources.
"(The bureau will) continue to spread its dollars as best as possible," Decker said, adding that the likelihood of the CVB increasing its number of corporate sponsors would be higher if the organization became a private/public nonprofit.
Several business leaders took to the podium to voice support for the bureau's transition to a nonprofit.
"We believe this opportunity will help us to raise more dollars from the private sector, add to the dollars raised from (hotel occupancy) taxes, and take us to another level," said Richard Perez, president/CEO of the Greater San Antonio Chamber of Commerce.
Restaurateur Johnny Hernandez, who serves with the Convention and Visitors Commission, said the CVB is helping to expose emerging sectors of the City's hospitality and tourism industry, including the culinary arts, to a larger audience.
"The bureau has recognized the expansion of our culinary talent and chosen to promote that," Hernandez added.
But Councilman Rey Saldaña (D4) said more discussion and community input are needed on such a major decision. He questioned the level of transparency and accountability that will be in place in a nonprofit CVB.
"In order for me to feel comfortable about this, we need to prove a negative," Saldaña said. He requested a better argument that could demonstrate how San Antonio's competitive market share would drop if the bureau were to remain a purely City function.
The bureau's transformation to a nonprofit is a budget-driven decision, Matej said, adding that a new bureau could create new opportunities for budget growth, and help San Antonio to keep pace with or beat competitor cities.
"When other cities exceed their market share and budget, they exceed their voice," she said.
In response to Saldaña's other concerns over accountability and transparency, Matej said the bureau would follow best practices, and update the Council every two months during the transition.
A transition team, which would include representation from the Council and the private sector, would help manage the early part of the CVB change. The new organization would be overseen by a permanent 17-member board, including two mayoral and Council representatives and a spot for the city manager or her/his designee.
There would also be ex-officio board positions for the City's Convention and Sports Facilities director and the Economic Development Foundation executive director.
"We not only want to be good stewards of hotel occupancy tax funds, but we want to make sure we're transparent during the entire process," said Matej.
Saldana said he was still worried about "unforeseen consequences from undue influence" that the private sector could have on the new bureau.
Councilman Ron Nirenberg (D8) and Councilwoman Shirley Gonzales (D5) also shared their concerns. Nirenberg said he was worried the Council would be unable to solidify the CVB governance structure until the Council considers the management agreement and staff transition plan, scheduled for this summer. He also would like to see more Council representation on the new CVB board.
Gonzales asked about how much hotel occupancy tax revenue will end up allocated to the new CVB, and how exactly the non-profit bureau could spend its funds. Matej said the management agreement will outline the tax allocation, contract procurement procedures, reporting requirements and performance metrics.
Nirenberg motioned for a delay in starting the transition process, a move that only he, Gonzales and Saldana supported in a Council vote. The mayor and other Council members expressed comfort that enough time remains for more public discussion on the proposal and, if needed, a stoppage of the transition. Mayor Taylor echoed Councilman Mike Gallagher's (D10) remark that there should be no delay.
"We as a community should be proactive, rather than wait until we lose more market share," Taylor said. "I certainly feel comfortable with the recommendations that have been made, but I also feel the process will allow us to ask more questions."
Councilman Joe Krier (D9) agreed there is a need to move forward, but he and his colleagues will do their due diligence.
"We've got to realize when we start a corporation, and start contracting with that corporation, it's on," he said. "Our competition is not only global, it is regional." The Council approved Treviño's motion to start the transition process, 8-3, with Nirenberg, Saldana and Gonzales dissenting.
Prior to Thursday's Council meeting, the Rivard Report asked several civic and business leaders how they think the City could market itself more effectively.
Former Mayor Phil Hardberger said the bureau should highlight how San Antonio honors its long history, and is evolving with a diversifying economy and a progressive outlook on culture and the environment.
"We are 300 years old, but we're a young 300," said Hardberger. "This is a beautiful, green, great city to live in, but it's more than just trees and concrete," he added.
Molly Cox, president and CEO of the nonprofit SA2020, posed a bigger question: "Are we interested in attracting more conventions and tourists, or are we interested in bringing in more conventions, tourists and people to live and work here?"
Cox said it is incumbent on the CVB, among other local agencies and advocacy groups, to highlight all of the things that San Antonio has going for it.
Al Arreola, president/CEO of the South San Antonio Chamber of Commerce, said the CVB should emphasize San Antonio's long-established values and emerging business and cultural assets, such as the World Heritage-designated missions.
"But for now signage and gateways around the missions and along the (Riverwalk) Mission Reach, even for locals, is a little lacking. That can be improved," he added.
The Council also approved a consent agenda which included the one-year pact between the City and the SAEDF, which is implementing a long-range economic development strategic plan called Forefront SA. Click here to read more about the strategic plan. The $590,000 includes $90,000 which will be used to operate an Texas/Japan office in Tokyo, and work with Japanese companies interested in doing business in San Antonio.
*Top Image: Photo Courtesy of the Visitor's Convention Bureau.