2017 Legislative Report – End of Regular Session

2017 Regular Legislative Session:  

Texas Hotel & Lodging Association End of Session Report

 

June 2017

Contents:

 

Overview

The 2017 Regular Legislative Session was one for the ages.  7,202 bill were filed, the second highest in Texas history. But the percentage of bills that passed was one of the lowest:  only 1,182 bills passed, giving the legislature an overall passage rate of just over 16% of the bills that were filed.  Typically, the passage rate is 25% of the bills that are filed pass into law.  The good news is that THLA’s passage rate at the Texas Legislature remains at 100 percent.  Both of the bills that we offered this session passed into state law.  This included a bill that provides very important and beneficial clarifications on how cities and counties can utilize local hotel tax and venue taxes under state law.  It also includes a bill that THLA offered to provide protections for the proprietary business information of Texas hotel operators.  Both bills were signed recently by the Governor and are covered in more detail in this report. 

 

What was extraordinary about this session were the stark differences in policy priorities between the three highest statewide officials and the number of controversial “social issue” bills considered this session.  Topping out the list of controversial social issues is certainly the transgender “bathroom” bill, but this session also included legislation on sanctuary cities, sweeping anti-abortion laws, a bill that would allow adoption agencies to reject potential parents based on religious grounds, voter ID overhaul, and an attempt to revise school finance.  This legislative session was so contentious that it even ended in a physical altercation between House Democratic and Republican members on the House floor on the final day, May 29th.

 

The battle over social issues and differing agendas garnered most of the media attention during the session.  But, THLA remained steadfast in our work, with a sharp focus on killing very detrimental short term rental legislation, which would have preempted all Texas cities from being able to regulate the location or proliferation of short-term rentals.  If passed, this bill would have created an unlevel regulatory environment for short term versus traditional lodging operators and we were able to defeat this unreasonable legislation. 

 

THLA focused on negotiating changes to a record number of local hotel occupancy tax bills that were filed (54 in total).  Each bill required substantial changes in order to ensure it would provide win/win scenarios for both the local community and the lodging industry.  These bills addressed issues such as convention center hotel incentives, hotel tax funding for sporting related facilities, and a plethora of other local hotel tax issues.  By the end of the session, all of our requested changes were incorporated into the 54 proposed bills. 

 

THLA focused on preventing burdensome state regulations from becoming state law, including opposition to unreasonable labor and other problematic business related mandates.  And we were successful in killing these detrimental mandates.  

Big City CVBs throughout the State took on the role of educating the Texas Legislature on the potential impact of Texas state legislation that would have regulated the use of public restrooms in ways that would have put Texas at risk of losing billions of dollars in conventions, sporting events, tourism and business expansions.  This issue was not resolved during the regular session and will be back as a topic for consideration in the upcoming special legislative session. 

 

Governor Abbott Calls a Special Legislative Session

On June 6th, Governor Abbott held a press conference and announced that he was calling the Legislature into a 30 day special legislative session.  The Governor sets the “call” for the special session, which determines the limited topics that the Legislature can consider during the special session.

 

The special session will begin on July 18th.  The first order of business will be passage of sunset legislation authorizing the Texas Medical Board to continue its operations.  Once this sunset legislation is passed out of the House, the Governor has indicated that he will expand the “call” for the special session to include nineteen issues.  The topics for the special session will include the following:

  1. Sunset legislation for reapproval of the state medical licensing board. 
  2. Teacher pay increases of $1,000 annually
  3. Administrative flexibility in teacher hiring and retention practices
  4. Creation of a School finance reform commission
  5. School choice for special needs students
  6. Property tax reform
  7. Caps on state and local spending
  8. Preventing cities from regulating what property owners do with trees on private land
  9. Preventing local governments from changing rules midway through construction projects
  10. Speeding up local government permitting process
  11. Municipal annexation reform
  12. Texting while driving preemption
  13. Privacy (bathroom related legislation)
  14. Prohibition against taxpayer dollars being used to collect union dues
  15. Prohibition of taxpayer funding for abortion providers
  16. Pro-life related insurance reform
  17. Strengthening abortion reporting requirements when health complications arise
  18. Strengthening patient protections relating to do-not-resuscitate orders
  19. Cracking down on mail-in ballot fraud
  20. Extending the task force on reducing maternal mortality
     

THLA will remain engaged during the special session to ensure that lodging industry priorities are protected.

 

 

Short-Term Rental (STR) Preemption

Early in the legislative session, THLA was notified by HomeAway’s lobbyist that the short term rental industry would be seeking legislation to preempt cities from being able to regulate the location, density, and operation of short-term rentals.  This legislation was the short term rental industry’s response to the City of Austin’s ban on all non-owner occupied short term rentals within residentially zoned areas of the city.  Two state legislators filed bills that would over-ride, reverse, and preempt most meaningful local ordinances that regulate residential STR units:  SB 451 and HB 2551.

 

Austin’s ban on non-owner occupied short term rentals in residentially zoned areas was completely understandable when one considers the facts applicable to Austin.  According to Airbnb testimony, there are over 500,000 Airbnb transactions in Texas annually.  This number is double what the activity was a year ago and quadruple what it was two years ago.  Over one half of this Airbnb activity is in Austin, some 250,000 transactions annually, with the vast majority occurring in residential areas.  It is difficult to imagine how even a big city like Austin could maintain the family environment of residentially zoned areas if they are permitted to include over 250,000 commercial lodging transactions each year in these areas. 

 

THLA joined with neighborhood and condo owner associations and Texas local governments  to oppose SB 451 and HB 2551.  From the standpoint of the lodging industry, the legislation singled out short term rentals for preferential treatment, creating an unlevel business environment for lodging operators.  Neighborhood associations across Texas mobilized in opposition to the legislation due to its terrible impact on the ability of local governments to protect the sanctity of residential neighborhoods.  At each public hearing on the bills, over 30 witnesses testified in opposition.  Most of the witnesses were homeowners telling moving stories of the problems associated with living near an STR property. 

 

The Senate version of the short term rental bill, SB 451 (by Hancock), passed the Senate and was sent over to the House Urban Affairs Committee. The House version of the legislation, HB 2551 (by Parker) also was referred to House Urban Affairs Committee.  Accordingly, it became our collective mission to prevent both bills from being passed out of that committee.  By the deadline for bills to be reported out of House Committees, neither of the short term rental bills was reported out of the House Urban Affairs Committee.

 

Near the end of the Legislative Session, Senator Hancock attempted several times to add STR preemption language to other moving pieces of legislation.  In the last week of the Session, Senator Hancock added a short term rental bill amendment to HB 2445, legislation that was originally filed as a local hotel occupancy tax bill for the City of Denton.  Senator Hancock’s amendment would have prohibited a city from regulating more than 10 percent of its municipality as to the location or proliferation of short term rentals.   This would have allowed an unlimited number of short term rentals within up to 90% of the residential areas of all Texas municipalities.  THLA’s legislative team went into overtime to strip that amendment off of the unrelated bill.  Our efforts paid off, and the conference committee stripped the Hancock amendment from HB 2445.

 

As of the end of the Legislative Session, THLA is very pleased to report that the STR preemption bills did not pass.  During the Special Legislative Session this July, you can count on THLA to vigilantly monitor the proposed bills to advocate against any unreasonable short term rental related legislation that proponents may try to slip into other bills.  Additionally, THLA fully expects and is ready for STR preemption related legislation to re-emerge in future legislative sessions. 

 

Transgender “Bathroom” Bills

Early in the legislative session, the Texas Senate passed its version of a “bathroom bill” in the form of SB 6 (by Kolkhorst), a controversial statewide effort to prohibit individuals from using a restroom in a public building if the restroom did not correspond with the gender designated on the person’s birth certificate.  This proposed legislation closely followed a bill passed in North Carolina that was perceived as discriminatory in nature and led to many boycotts of North Carolina by meeting planners of conventions, conferences and sporting events.  The North Carolina legislation also led to boycotts of that state by performers and by businesses seeking to relocate to or expand operations in North Carolina, resulting in total estimated losses of over $500 million to North Carolina.
 
Texas business groups and Texas convention and visitors bureaus lined up in opposition to Texas’ version of a “bathroom bill” — SB 6 which was titled the “Texas Privacy Act.”  As with North Carolina, large conferences, sporting events, performers, and businesses threatened to boycott Texas if a bathroom bill passed.  Credible economic impact analyses estimated that Texas would stand to lose billions of dollars should such boycotts occur.
 
Filed by Senator Kolkhorst (R-Brenham), SB 6 moved quickly through the Senate, and was passed out of that chamber by mid-March.  However, upon arrival in the Texas House, SB 6 was not been taken up for consideration by a House committee.  Instead of moving SB 6 forward, some House members promoted a different version of a bathroom bill under HB 2899, hoping that bill might draw less opposition than SB 6.  Business groups, however, maintained that HB 2899 would also be perceived as discriminatory, and also opposed this legislation. HB 2899 did receive a public hearing in the Texas House, but it was never offered for a vote in committee, where it died.

 

Near the end of the session, with mounting pressure from the Governor and Lt. Governor, the House amended a public school safety bill, SB 2078, with language that would have required public and charter school districts to provide some type of reasonable bathroom accommodation to individuals who for any reason were not comfortable using the bathroom associated with the birth gender.  This accommodation could include either offering use of single-occupancy bathrooms, lockers rooms and changing facilities or offering the use of multiple occupancy facilities when there are no other individuals using them.  The Senate refused to take up consideration of that amended bill, claiming it did not go far enough to address the Senate’s priorities.

 

This issue will now most likely be resolved in one way or the other in the upcoming special session.  We anticipate the Texas Association of Businesses and the big city CVBs throughout Texas will continue to oppose any form of a bathroom bill that would be perceived as discriminatory toward the LGBT community. 

 

Full Funding for Tourism Promotion

Every legislative session, the hotel and travel industry advocate to protect the 1/12th dedicated portion of the state hotel occupancy tax that is used to promote Texas as a tourism destination.  This 1/12th portion of the state hotel occupancy tax represents over $42 million in state tourism funding annually that is part of the state appropriation bill.
 
The House version of the appropriations bill provided full funding for state tourism (about $40 million annually).  However, the Senate version of the appropriations bill capped that funding at $17 million annually with the remainder of the dedicated funding available through a private sector funding “match” program.  This format followed the recommendation of the State Legislative Budget Board that Texas initiate a funding match program similar to what is in place in the State of Florida for state tourism funding.  At the end of the regular session, the Legislature approved the Senate’s version for tourism funding, providing $17 million annually in base funding and the remainder subject to a “match” requirement.  We are working with the Governor’s Office to determine how such a matching program could be implemented.  THLA will also be working long term with state leaders to ensure that any unexpended or unallocated funds remains dedicated to tourism promotion and can be used in future years for this purpose. 

 

Property Tax Reform

Comprehensive property tax reform remains an open question at the end of the regular legislative session.   The Senate took a more aggressive approach, passing SB 2, a bill that would require cities and counties to automatically get voter approval for local property tax rates if revenues exceed 5 percent more than what the city or county collected the year before.  Meanwhile, the House's version of SB 2 changed that “rollback” election threshold to 8 percent, and an election would be triggered only if the constituents successfully petition for a vote, or if the city proposes it.

 

The bill died due to the failure of the two Chambers to reach a consensus.  However, Governor Abbott has now included the topic of property tax reform within the July special legislative session.  The Governor stated that he wants to see “a bill on his desk” that both provides truth in taxation measures, and a rate rollback provision similar to the Senate’s version of SB 2.  Time will tell what the Legislature will ultimately pass for the Governor’s signature.

 

Franchise Tax Relief

Over the years, THLA and other business groups have worked to reduce the impact of the franchise tax on our industry.  For example, in 2009, we successfully pushed for an increase in the threshold for application of the franchise tax from $300 thousand in gross revenues to the current level of over $1 million.  In the 2015 legislative session, we advocated for and secured a major reduction in the franchise tax rate from 1% to 0.75%. 

 

This session, HB 28 was filed by House Ways & Means Committee Chairman Dennis Bonnen.  This bill proposed to phase out the franchise tax entirely as soon as 2021, by reducing the franchise tax rate each biennium by the amount that is left over in the state budget at the end of each budget cycle.  However, such a cut would have had an $8 billion annual economic impact to the State.  Due to its large fiscal impact, HB 28 passed the House, but did not make it through the Senate.  We anticipate the issue of further reducing or eliminating the franchise tax will return in the 2019 legislative session and should be more positively received when the State is not already facing a budget shortfall.

 

 

Events Trust Fund programs

During the last legislative session, THLA assumed a leadership role in communicating the priorities of a large consortium of Texas communities throughout the state regarding the state events trust fund programs.  These programs include the Major Events Reimbursement Program (formerly the Major Events Trust Fund) and the Events Trust Fund.  These laws allow cities to receive certain state taxes as  reimbursements for many of the city’s up-front investments for hosting certain competitively-bid major tourism events.   There were 7 bills filed on these programs this legislative session.  Most of the proposed bills would have eliminated continuation of this program and THLA opposed all such bills. 

 

SB 105 (by Hall):  to abolish all of the Events Trust Fund programs.  THLA testified on behalf of our 24 city coalition against the legislation that sought to abolish these programs.  Ultimately, the bill was not called for a committee vote.  

 

SB 389, 390,391, and 392 (by Burton):  to abolish the Major Events Reimbursement Program, the Event Trust Fund and the Motor Sports Racing Trust Program.  These bills all failed to receive a hearing. 

 

The only event trust fund bill that passed was HB 3294 that added the NASCAR All-Star Season event to the list of events eligible for reimbursement in the Major Event Reimbursement Program. 

 

Local Hotel Occupancy Tax Bills

This legislative session, over 50 bills were filed that affected the use of local hotel occupancy taxes.  Here is a summary of the hotel occupancy tax bills we worked on.  Note that in the final days of the legislation session, many hotel tax bills that were originally filed as individual bills were consolidated into what became a hotel occupancy tax omnibus bill:  HB 2445.

 

THLA’s Hotel Tax Code Clean-Up Bill:  HB 1896

THLA is pleased to report that our Tax Code Clarification bill, HB 1896, passed and has been signed by the Governor.  HB 1896 adds clarity to certain statutory definitions in the Tax Code and Local Government Code with respect to the use of local hotel occupancy taxes by local governments. 

HB 1896 adds beneficial clarity on the use of local hotel tax in several important areas.

First, regarding venue taxes:  The bill clarifies that hotel tax funded venue projects must be for facilities that fit an eligible venue tax purpose and only have incidental uses for other civic purposes.

Second, the bill provides that hotel tax funded venue project facilities must be both related to the venue project and must be located in the “vicinity” of a convention center.

Third, the bill adds a needed definition for the statutory term “meetings” to ensure that a facility that is funded as a “convention center” project is primarily used for meetings and conventions for which a majority of the participants are tourists.   

Fourth, the bill clarifies that any increases in the local hotel tax would not apply to pre-existing executed hotel contracts that specified the prior existing hotel tax rate. 

Finally, the bill allows use of local hotel tax for qualifying cities for all sports facilities, provided the facility has the required statutory impact on tourism and hotel activity.  Prior law only allowed such funding for certain designated types of sports. 

 

THLA’s Hotel Tax State Website Bill:  SB 1086

THLA is pleased to report that our bill dealing with the availability of proprietary hotel tax data on a state agency website, SB 1086, has been signed by the Governor. 

Until this legislative session, monthly and quarterly room night sales information for individual hotel businesses was posted publicly on the Texas Comptroller’s website.  By comparison, the sales tax receipts data for almost all other individual Texas businesses that is remitted to the State Comptroller’s Office is treated as confidential under state law.  Because the monthly sales data information for individual hotels is posted on the Comptroller’s website, hoteliers are placed at a competitive disadvantage in business scenarios with vendors and colleagues who have unfettered access to that hotels’ proprietary business information.

SB 1086 prohibits state agencies, including the State Comptroller, from posting the monthly room night sales data for individual hotels on state websites that are available to the public.  This information can still be accessed by individuals through an open records request to the involved state agency. 

 

Use of Local Hotel Tax for Sports facilities

Several Texas cities filed legislation to allow that city to use local hotel occupancy tax revenue on a sports facility.  THLA worked closely with these cities to ensure that the sports facility bill contains return-on-investment provisions, to ensure the hotel tax revenue is used in a way that greatly benefits the area hotel industry.  For example, a community can use local hotel tax revenue on a sports facility only if the amount of area hotel revenues from the sports facility equals the hotel tax revenue invested into the facility over a set period of time.  Additionally, THLA has included a provision in most of these bills that provides that the communities using local hotel tax for this purpose may not reduce their local hotel tax funding for advertising and marketing. 

As mentioned previously, many local sports facilities bills that were originally filed as stand alone bills were consolidated into a hotel occupancy tax “omnibus” bill in the final days of the legislative session:  HB 2445.  The following sports facility bills passed in the 2017 Session:

 

●Brownfield:  SB 2056 and HB 2445

●Bryan/College Station:  HB 4187

●Buda:  HB 2445

●Denton:  HB 2445

●Edinburg: SB 1136

●Marshall / Carthage: HB 3484

●Missouri City:  SB 1365

●Queen City: SB 942

●Shenandoah: SB 2166

●South Padre Island:  HB 4029.

 

Use of State and Local Hotel Tax and Other Incentives for Convention Center Hotels

A number of bills were filed to allow the following cities to use state and local hotel tax revenue and other tax proceeds to construct a convention center hotel.  Only the hotel tax revenue generated by the particular convention center hotel can be used to pay for the project.  Additionally, those cities are currently entitled to receive a rebate of state hotel occupancy taxes, state sales taxes, and local alcoholic beverage taxes from the eligible project for the first 10 years after the project opens for occupancy.  THLA requested and received vital language in all of these bills to protect the continued funding of the area CVB at historic levels should a convention center hotel be funded under this authority. 

Additionally, the Legislature required that cities authorized for state rebates for convention center hotel projects this session must enter into an agreement for the development of a convention center hotel before September 1, 2019, and clarified that local governments are required to actually use the local hotel tax generated from such a facility for the purpose provided under the statute.

As mentioned previously, many local hotel tax bills that were originally filed as stand alone bills were consolidated into one hotel occupancy tax “omnibus” bill in the final days of the legislative session:  HB 2445.  The Convention Center hotel bills that were included in HB 2445 included the following communities: 

●Abilene:  HB 2445

●Cedar Hill:  HB 2445

●Grand Prairie:  SB 354

●Laredo:  HB 2445

●League City:  HB 2445

●Lewisville:  HB 2445

●Lubbock*:  HB 2445

●Katy:  HB 2445

●Kemah:  HB 2445

●Port Aransas: HB 2445

●City of Prosper:  HB 2445

●Roanoke:  HB 2445

●Rowlett:  HB 2445

●Sugar Land:  HB 2445

*Lubbock’s authorization to allow the City to obtain a state rebate of hotel tax revenue for a convention center hotel contained an additional qualification at THLA and area hotelier’s request that requires a dedication of additional local hotel tax for sporting related events.  Under Tax Code 351.102(f), if the City of Lubbock receives state hotel tax rebates for a convention center hotel, the City must increase the amount it spends on marketing sports events and sports activity by an additional 3% beyond what the City is spending on that purpose under its 2016 FY budget.

 

Corrective bill for electronic tax collection system:  Originally filed as HB 1300, and passed within HB 2445.

Last legislative session, MuniServices, a local hotel tax collection business, secured legislation that would allow a city to use local hotel tax revenue to cover the costs for using an electronic hotel tax reporting system.  However, due to a staff error at the Capitol, some of the negotiated provisions were not included in the final passed version.  THLA agreed at that time not to seek a veto of the bill if Muniservices agreed to come back the next session and included all of our negotiated provisions.  This bill accomplishes this commitment.  It includes the following protections and enhancements for the lodging industry:  

●Includes a limitation on the amount of hotel tax revenue that may be used for an electronic hotel tax reporting system to no more than the lesser of $75,000 annually or 1% of the annual tax amount.

●If a city uses hotel tax revenue for such a system, the city must allow the hotels to retain 1% of the hotel tax revenue collected to offset the costs of collecting the tax.

●The city may not use the hotel tax revenue permitted under this statute to pay for audits of area hotels.

 

Texans for the Arts Bill to Clarify Usage of Local Hotel Tax by Texas Cities

Texans for the Arts, a statewide arts lobby organization, came to THLA prior to this legislative session and proposed introduction of a statewide bill that would require all Texas cities that impose a local hotel tax to itemize how the city expends the local hotel tax.  THLA worked closely with Texans for the Arts to compose and pass this legislation.  Under SB 1221 (by Watson) cities are required to annually report to the State Comptroller the amount and percentage of local hotel tax that is expended on each of the major permitted uses for local hotel taxes and hotel tax funded venue projects.  That report must include: 1) tax rate, 2) any venue tax rate, 3) amount of revenue collected for the preceding fiscal year, 4) the amount and percentage of funds used on each major category of expenditure.  This information has never before been available on a statewide basis through one source and should be transformative in our ability to determine best practices, trends in the use of local hotel tax, and opportunities for enhanced utilization of these funds. 

 

Arts-Related Uses of Local Hotel Tax by Rockport, Texas

HB 1494 for the City of Rockport will allow that city to annually use up to 30% of its local hotel tax revenue on arts-related expenditures.  Under existing law, the City of Rockport and all other Texas cities other than Houston and Irving are capped at using no more than 15% of its local hotel tax revenue on the arts.  THLA worked with the bill’s author on language that will ensure a return-on-investment requirement for Rockport’s portion of the local hotel tax committed to the arts should it exceed the 15% threshold.  Specifically, the city must show at least a 50 % return on investment in lodging industry revenues from its expenditures on the arts from local hotel tax, should the city exceed 15% of the total hotel taxes annually that are expended on the arts.  The city also was required under the bill to continue to fund its marketing and promotion of hotel activity at historic levels in such scenarios. 

 

Use of Local Hotel Tax for Marfa Texas Airport: SB 440

Marfa is in a unique location, situated hundreds of miles from the nearest airport with scheduled airline service, yet the town caters to a thriving high-end tourism base that often accesses the area by flights into the Marfa airport.  As the number of private jets ferrying tourists and hotel guests has increased, the small county-owned airport has suffered from a lack of repairs to handle private jet aircraft.  THLA worked with the City on legislation that allows use of local hotel tax for this purpose but also ensures important protections for the local lodging industry:  The bill is bracketed only to Marfa and for an airport without commercial air service.  The bill also provides that the city cannot spend more money on the airport improvements than that city will see in returned hotel revenue from increased private air passengers staying at Marfa hotels and there is a sunset on the enabling legislation.

 

Use of Local Hotel Tax for a Rural County Airport:  HB 2445

Filed as HB 2871 and later consolidated into HB 2445, this bill allows county hotel tax revenue for counties with no municipality to be used for a county-owned airport in limited situations.  THLA worked with the bill’s author on wording that allows for use of local hotel tax for this purpose but also ensures important protections for the local lodging industry:  The bill is bracketed only to a county airport without commercial air service, the county cannot spend more money on the airport improvement than that city will see in returned hotel revenue from increased private air passengers staying at county hotels, and there is a sunset on the enabling legislation.

 

Hotel Occupancy Tax Usage by The Woodlands Township Should It Incorporate:  SB 1014

This session, legislation was filed to allow the The Woodlands Township to transform from a special purpose district to a traditional incorporated municipality.  THLA negotiated language for the bill that would ensure that if The Woodlands does incorporate, collected hotel occupancy tax revenues will be dedicated for the same purposes as permitted for hotel tax use for other cities in Texas.

 

Corrective bill for Real County: SB 686

Decades ago, the legislature gave Real County authority to impose a county hotel occupancy tax.  However, there was a technical error in the geographic description of Real County that went unchanged for many years.  SB 686 corrects that error.

 

Corrective bill for El Paso County:  SB 799

El Paso County has had authority to impose a County hotel tax for many years.  This authority is dependent upon the population bracket for the County, and one of the cities within the county is quickly growing in population.  Rather than wait for the 2021 omnibus corrective bill, El Paso County proactively sought an amendment to the County’s description in the Tax Code now.

 

Local Hotel Occupancy Tax Revenue Use bills That Did Not Pass.

 

The following three local hotel occupancy tax expenditure bills were opposed by THLA.  We are pleased to report that none of these three bills passed.

 

Austin:  Increasing the cap on local hotel tax revenue expenditures for the arts.  HB 4173

HB 4173 would have allowed Austin to use up to 19.3% of its hotel tax revenue on arts-related expenditures annually.  Currently, the City of Austin is capped at using no more than 15% of its hotel tax revenue on the arts.  This legislation did not include any mandated return on investment provision and would have mitigated Austin’s ability to use local hotel tax revenue for other purposes.  This bill did not pass.

 

Use of local hotel tax revenue for homeless assistance programs:  HB 3485

HB 3485 would have allowed any Texas city to use local hotel tax revenue for homeless assistance programs.  THLA opposed this legislation, as hotels already remit substantial local taxes (property tax, sales tax, and alcohol taxes) which all can be used for programs for the homeless.  Additionally, this bill would have conflicted with the statewide prohibition against use of local hotel tax for general infrastructure programs of a city. This bill did not pass.

 

Use of Local Hotel Tax for Venue Projects for General Parks and Recreation Projects:  HB 3077

A number of years ago, the Texas Legislature passed legislation that prohibited Texas cities from using local hotel tax for a venue project for general city or county parks and recreation projects.  HB 3077 sought to repeal this limitation and would have allowed Texas cities and Texas counties to use local hotel tax revenue for a venue project for a city or county-owned general park facility.  If passed, this legislation would have set a problematic precedent for cities and counties to use local hotel tax for general city parks, which are traditionally and more appropriately funded through the property tax and other general revenue fund sources that are remitted by all businesses and property owners.  This bill did not pass.

 

Uniform School Start Date

School start laws have a profound impact on the vitality of resort and family based travel throughout the State of Texas.  Current state law prohibits schools from starting earlier than the fourth Monday in August.  However, under special legislation passed in the 2015 Legislative session, school districts were permitted to apply to be considered “districts of innovation” and to opt out of the later school start date mandate. 

This session, the tourism industry sought to enact limits on “districts of innovation” (DOI) school start date waivers.  However, that effort was ultimately unsuccessful, and school districts may continue to begin instruction earlier in August with a wavier.  School districts that are not in the DOI program may start no sooner than the fourth Monday in August, as has been the established law since 2001.  The tourism industry at large expect to revisit the DOI waiver issue in upcoming legislative sessions.

 

 

Food Service Bills

Local fees for food handler certificates.  SB 1089 prohibits a local health jurisdiction, such as a city or county health department, from charging a fee for issuing a local food handler card to a food service worker who provides proof of completion of an accredited food handler training course. 

Deregulation of espresso machines.  HB 3257 exempts espresso machines from regulation and licensure as a “boiler” by the Texas Department of Licensing and Regulation (TDLR).

 

 

Hotel Administration, Operation, and Hotel Development Bills

ADA drive-by lawsuit reform for state court actions.  HB 1463 provides much-needed state court relief for business owners facing legal claims for alleged ADA violations.  This legislation was strongly supported by THLA because it requires a person who files suit against a place of public accommodation in State court to offer the business operator 60 days to cure an alleged violation of the ADA before the lawsuit can commence in a state court.  If the business owner does not correct the ADA violation within that 60 day period, the plaintiff can move forward with the lawsuit.  Note that this new law only affects claims brought in Texas state courts, and not a federal ADA lawsuit.  THLA is partnering with AAHOA and AHLA on a federal bill that will address “ADA Drive-by Lawsuits” in federal court.

 

Allowing off-duty peace officers into public accommodations with their weapons.  HB 873 prohibits a hotel or other place of public accommodation from restricting a sworn peace officer from carrying an officially issued weapon onto the premises, regardless of whether the peace officer is on or off duty, and regardless of any other establishment weapons policy.

 

Local linkage fees for unrelated residential housing programs preempted.  HB 1449 preempts a city or county from assessing a “linkage fee” on new development for an unrelated affordable housing program.  A linkage fee is typically a local fee cities or counties impose on commercial or high-density residential construction to cover the cost of development of city-controlled utilities.  However, the revenue generated from these linkage fees is often used for purposes unrelated to the construction project paying the fee, such as affordable housing programs.  HB 1449 prevents cities and counties from imposing linkage fees if they would be used for unrelated residential housing programs.

 

Regulation of artificial swimming lagoons. HB 1468 extend existing pool health and safety regulations to “artificial swimming lagoons.”  An “artificial swimming lagoon” is defined as an artificial body of water, open to the public, with more than 20,000 sq. ft. (approximately half an acre) of surface area, an artificial liner, and a disinfection system.  We contacted a number of THLA members with very large swimming pools, lazy rivers, and other water features when HB 1468 was filed.  We do not anticipate this legislation will negatively affect hotel and resort pools, since most large swimming pools and water features either already comply with standard pool health and safety regulations, or the definition of an “artificial swimming lagoon” does not apply to their operations.

 

Security patrol vehicle lighting.  HB 2812 limits a security patrol vehicle's lighting equipment to only green, amber, or white lights.  A security patrol vehicle is a vehicle being used to provide security by a licensed security guard or officer.

 

Requesting photo ID on credit or debit card transactions.  SB 1381 provides permissive authority for a merchant to request and verify photo identification from a cardholder when processing a credit card or debit card transaction.  The merchant may refuse to complete the transaction if the individual fails to provide photo ID verifying the individual's identity as the cardholder.  This legislation is an attempt to provide merchants more authority in requesting ID for credit and debit transactions, establishing some flexibility against merchant service agreements and credit card company policies that discourage merchants from verifying a cardholder ID.

 

City imposed fees for tree removal.  SB 744 requires a municipality that imposes a tree mitigation fee to allow the developer to apply for a credit for tree planting to offset the fee.  A developer would be allowed to plant a tree somewhere else in the city on land that they either owned or in a place to which the city agrees instead of paying the fee.  If the city bases mitigation on the size of the tree, then SB 744 requires the amount of the credit to be based on at least 60 percent of the projected size of the planted tree at full maturity.

 

Employment Law Bills

 

Benefits for foster parents.  HB 88 requires private and public employers to provide the same leave benefits and policies to employees who are foster parents as the employer provides to employees with biological or adopted minor children.  HB 88 does not mandate that an employer actually establish any new benefits or policies for parents generally.

 

Further limiting the sales tax exemption applicable to temporary staffing service.  SB 745 deals with the limited exemption for the application of sales tax to temporary staffing services.  SB 745 was filed in response to recent litigation between Allstate Insurance Company and the Texas Comptroller. 

 

Generally, sales tax applies to payments made for temporary staffing services, unless the service being provided by the temporary staff is normally performed by the host employer’s own employees, the host employer provides all necessary supplies equipment, the service is actually temporary, and the temporary employee is under the direct or general supervision of the host employer.

 

SB 745 adds a requirement that a host employer must provide all supplies and equipment necessary to perform the service, other than personal protective equipment provided by the temporary employment service under a federal law or regulation.

 

State agency methods of sending workers’ comp notices.  HB 2112 allows the Division of Workers’ Compensation (DWC) to send workers’ comp notices electronically to all parties, instead of by standard or certified mail.

 

 

Tourism Related Issues and Convention Center Operations Bills

 

Operation of drones over large sports venues.  HB 1424 prohibits a person from operating an unmanned aircraft (aka a “drone”) over a sports venue or other facility with a seating capacity of at least 30,000, without first obtaining the written consent of the owner or manager of the sports venue.

 

Creation of the Texas Music History Trail.  HB 2079 creates a “Texas Music History Trail” program to promote and preserve Texas music history.  As with other Texas “trail” programs, this new Texas Music History Trail program will be administered by the Texas Historical Commission (THC).  The THC may also enter into agreements with other agencies such as Governor’s tourism office, the Texas Commission on the Arts, and TxDOT, to further promote and administer the program.

 

Future funding for the Pacific War Museum.  HB 1492 creates a special fund for the Pacific War Museum in Fredericksburg.  Funding will come from admission sales and donations, and possibly state revenue at a future time.

 

 

Motor Vehicle and Transportation Bills

Allowing ATVs and golf carts on public roadways.  HB 561 allows for certain ATVs, golf carts, and electric vehicles to be issued license plates by the DMV, and allows these vehicles to operate on state highways and public roads.

 

 

Alcoholic Beverages Bills

Increasing the sales threshold for food and drink permits.  HB 2101 increases the alcoholic beverage sales threshold from 50 percent to 60 percent for an establishment to qualify for a food and beverage certificate issued by the TABC.  HB 2101 was offered by the Texas Restaurant Association and supported by THLA. 

 

Prior to this bill, the Texas Alcoholic Beverage Code allowed a restaurant with a mixed beverage permit to obtain a food and beverage certificate only if the restaurant did not have mixed beverage sales greater than 50 percent of its gross receipts.  With the sharp rise in alcohol prices, the total amount of alcohol gross receipts is nearing the 50 percent threshold in many hotel and stand alone restaurants.  Without the legislative change, restaurants with a food and beverage certificate that surpass the 50 percent alcohol threshold would lose their mixed beverage permit and their ability to sell mixed beverages. 

 

HB 2101 increases the alcohol sales threshold to 60 percent of total sales on the premises; adopts uniform language on alcohol vs. non-alcohol sales calculation for all types of food and beverage permits; includes due process language to allow a permittee to submit additional information if a food and beverage certificate is not renewed; and continues to allow concessionaires in public entertainment venues, sports stadiums, and conventions to operate without meeting food and beverage certificate requirements.

 

Allowing license holders to pay a civil penalty to the TABC for certain drug-related offenses occurring on the premises.  HB 1612 allows a TABC permitted establishment to petition the TABC to pay a civil penalty in lieu of a license suspension in the event an offense related to controlled substances or drugs occurs on the licensed premises.

 

Beer manufacturers’ contests.  HB 3003 allows a beer manufacturer to hold certain contests and promotional giveaways, including the limited giveaway of prizes that may include a food, beverages, or activities at a premises that holds a TABC permit (such as prizes that offer a stay at a hotel or resort).  If the event or prize occurs at a licensed premises, the beer manufacturer must pay the licensed premises (such as a hotel or resort) fair market value for use of that facility and may not advertise the name of the licensed facility in the promotions for the sweepstakes.

 

Water parks that transfer alcohol between premises.  SB 1176 applies to water park operators such as Schlitterbahn.  SB 1176 allows the holder of two or more “water park” TABC permits to transfer alcohol between the licensed premises without obtaining a TABC distributor’s license.

 

 

Landlord/Tenant Bills

 

Representation of a landlord by a non-attorney in eviction proceedings.  HB 3879 allows the owner of a multifamily residential property to be represented by an agent who is not an attorney during the appeal for an eviction suit for nonpayment of rent in a county or district court.

 

Prohibition on limiting a tenant’s right to call for emergency services.  HB 1099 prohibits a landlord from limiting a tenant’s right to call for emergency services, including the charging of a monetary penalty to the tenant.

 

 

Local Government Bills

 

Allowing local governments and Other Entities Subject to Open Records to limit high-volume requestors of public information.  HB 3107 is aimed at reducing the burden of local governments for complying with Public Information Act requests from “high volume” requestors.  HB 3107 places a 60-day time limit for a requestor to inspect requested documents, and allows governmental bodies to define a monthly limit on the time their staff spend responding to a subsequent request without recovering labor costs.

 

 

The following bills were considered by the Legislature this session and would have dramatically impacted the hotel and tourism industry, but did not pass:

 

Employment law bills defeated

 

A number of bills were filed this session that would have raised the minimum wage, eliminated the tip credit, and/or allowed a city to set a higher minimum wage or other hourly standards for private sector employees.  In many other states, cities have the authority to set artificially high mandated wage levels for the private sector.  For example, cities in California and Washington have raised their minimum wage to at least $15/hour and other cities around the nation have recently increased their own minimum wage or are preparing to do so.
 
In Texas, over a decade ago, THLA helped pass a statewide bill that preempts a local government such as a city or a county from mandating a higher minimum wage for the private sector or eliminating the tip credit.  Texas Hotel & Lodging Association remains committed to adherence to the federal minimum wage and letting the free market control and area businesses decide when paying over that rate is necessary.  We worked with our industry partners on a broad-based coalition to oppose proposed repeals of this important preemption law.

The following employment law bills did not pass:

●HB 285, HB 475 would have raised the minimum wage to $15 / hour and eliminated the tip credit.

●HB 924, HB 937, SB 229 would have raised the minimum wage to $10.10 per hour, but would have also allowed local governments to set their own minimum wage for the private sector.

●HB 840, HB 954, SB 427, SB 1586 would have allowed local governments to set their own minimum wage rates for the private sector.

●HB 326 would have prohibited employers from retaining credit card processing fees on tips left for the employee.

●HB 252 would have required retail establishments that have more than 500 employees and at least 10 other retail sales establishments in state to notify hourly employees of their schedules at least two weeks in advance.

●HB 3483 would have required businesses that employ more than 50 employees to provide annual paid leave.

 

Burdensome regulatory bills defeated

Restriction on bed heights in ADA guestrooms.  A refiled version of this bill from 2015, HB 468 would have placed minimum and maximum restrictions on bed heights in ADA guestrooms.  This bill would have required the height of the bed to be between 19.5 and 23 inches high, and have at least nine inches of clearance between the bottom of the bed and the floor.  This requirement is not included in federal ADA regulations.  Hoteliers could have faced up to $5,000 per day in fines for failing to comply.

 

Gun Liability. HB 606 would have imposed civil liability on property and business owners who chose not to prohibit guns on their property; in effect, affirmatively requiring business owners to allow guns on their premises in order to be shielded from liability for the wrongful acts of third parties.

 

Construction Defect Claims Requirements.  HB 2343 would have required a property owner asserting a construction defect against a builder to obtain a written report from an independent third-party licensed professional prior to filing a lawsuit. In addition, the bill would have required numerous procedural steps for a claimant to follow before being able to seek legal ramifications.

 

Criminal History Inquiries and Consideration. HB 548 would have prohibited employers from making inquiries into criminal convictions prior to an interview or a conditional job offer and would have prohibited employers from inquiring into convictions that are more than seven years old.

 

Pay History Inquiries. HB 290  would have made it illegal for an employer to inquire into applicant's past or current salary through an interview, application, or by contacting a previous employer.

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