Mar. 31, 2004 - The city is one step closer to seeing a downtown convention center hotel with more than 1,000 rooms, local tourism officials said Tuesday, but many roadblocks remain. 

The City Council has selected two financial underwriters to find creative ways to fund the project, including private or public ownership. But choosing a financing option and getting community support could be a challenge, tourism leaders said at a San Antonio Convention and Visitors Commission meeting. 

Some said the community doesn't see the value in the $7.2 billion tourism industry and may wonder why the city needs another downtown hotel. 

With financial underwriters Citigroup and UBS now on the team to develop the $250 million convention hotel, there are three financing options being discussed: private ownership, the use of empowerment zone and city-issued revenue bonds. 

With the use of bonds, the project also would require the city to pledge its 7-cent share of the 16.75-cent hotel occupancy tax at the new hotel. 

Henry Feldman, chairman of the visitors commission and member of the Convention Center Hotel Advisory Board, said it's important to note that pledging the project's hotel occupancy taxes wouldn't dip into the citywide bed tax fund. 

"We didn't want the hotel occupancy taxes to be at risk," Feldman said. "We are just dealing with the incremental tax that the Convention Center hotel would generate." The 2-cent share of the 16.75-cent bed tax used to pay for the expansion of the Convention Center also could be pledged to pay for the hotel. 

Assistant City Manager Chris Brady said that in current economic conditions, private financing has been tougher to get. Even with creative financing, he said, most scenarios require some type of extra revenue pledge from the city to get the project insured, including using the state tax revenue generated by the hotel. 

Houston built its Hilton headquarters hotel project by pledging its bed taxes, and St. Louis utilized empowerment zone bonds to pay for its massive hotel. 

Rivercenter Mall general manger Chris Oviatt questioned whether the hotel could stand on its own financially, especially if the city is going out of its way to make this work. 

Feldman replied that any investment is a risk, and both the city and community need to carefully look at this project, but added the hotel would have a positive long-term economic affect on the city. 

Meanwhile, today is the last day for advertising agencies to submit proposals to win the city's $6 million tourism marketing account. Locally based Bromley Communications has the contract and received a renewal in September 2002. 

A March 9 informational meeting attracted about 30 people with some major advertising players among them, said Steve De La Haya, the bureau's manager of fiscal operations. 

The city's tourism industry fared well in the first three months of this year with a January occupancy increase of 2.8 percent and a 2 percent increase in bed taxes over the last year. In February, San Antonio also had a 17.6 percent increase in hotel room-nights booked compared to the year before. 

The city's convention booking pace is up 3.8 percent over last year. In March 2003, the city was down 15.1 percent with conventions booked. April is expected to produce some record numbers with the estimated 43,000 in attendance for the Final Four. 

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