photo: Nan Palermo

Overview

The 2019 Legislative Session produced very important results for the Texas lodging industry. 

We offered and passed omnibus tourism public improvement district (TPID) legislation that will allow all Texas cities to consider the creation of a district, as well as targeted TPID legislation for six Texas cities. 

We advocated for and received a record level of state funding for tourism promotion; passed convention center hotel project legislation that will positively impact 19 additional Texas cities and 37 existing Texas cities; ensured hotel occupancy tax revenue remains dedicated to directly promoting tourism and hotel activity; and successfully opposed and killed legislation that would have preempted cities from being able to regulate short-term rentals.

By session’s end, there were 7,324 bills filed.  Of those, 1,428 bills passed into law. This translates to only about one in every five bills that are filed pass into law. 

This passage rate is within the margin of prior sessions, which experienced the following bill passage rates:  2017 session (18%), 2015 session (21%), and the 2013 session (24%). 

THLA reviewed every one of the 7,324 filed bills for their potential impact on the lodging and tourism industry. Our review showed in excess of 450 bills with a positive or negative impact on the lodging industry. 

Our staff tracked and advocated on these bills to ensure that the final versions fairly addressed the interests and priorities of the Texas lodging industry.

THLA’s legislative advocacy team is proud to report that every legislative item that THLA offered this session passed the legislature, and every item that we opposed was defeated. 

We have noted below a brief summary of the major items that we worked on, followed by more in-depth coverage of the issues addressed within each of these areas.

  • Full funding for state tourism promotion:  Passed, with a record-high amount of state funding ($110 million for the 2020/2021 biennium), an increase of 223% from the 2017 Legislative Session.
  • Tourism public improvement district (TPID) enabling legislation:  Passed, providing new authority for all Texas communities to form a TPID if initiated by over 60% of affected hotel owners.
    • THLA has worked extensively with all of the hotel ownership groups for Texas properties and with the local city councils to secure local approval of all of the four-existing tourism PIDs that were authorized under prior state law.   
  • State tax rebates for convention center hotel projects: Passed, allowing 22 additional Texas cities to partner with hotel developers to receive state tax rebates to facilitate the construction of local convention center hotel projects. The bill also continued the tax rebate provision for the 37 Texas communities that were authorized under prior law to engage in convention center hotel projects.
  • New eligible uses of local hotel occupancy tax:  Passed/Favorably Amended.  When cities or counties propose an expansion of how local hotel tax revenues may be expended, THLA staff talk with the local hotel community and area CVB.  We determine if there is support for the proposal and identify any concerns. THLA then works with the bill proponents to make sure that our priorities and any needed safeguards are put into the proposed law. THLA provided topical amendments to the filed hotel tax bills this session, and in many cases, redrafted the legislation, to create return-on-investment safeguards and expenditure limitations. The individual hotel tax use bills that passed are outlined later in this report.
  • Preserve and expand available state incentives for large tourism events:  Passed.  THLA worked to ensure important state incentives such as the state’s Major Events Reimbursement Program (formerly termed the “Major Events Trust Fund”) remained authorized under state law.  We also supported the addition of several new named events.
  • Short-term rental (STR) preemption legislation:  Did Not Pass.  The bill would have prohibited cities from imposing any location or density requirements against short-term rental properties. If this bill had passed in the form supported by the Texas Realtors, it would have created a completely unleveled playing field for lodging operators:  providing short term rental operators with an unlimited power to locate short term rental properties in residential areas while traditional lodging operators have no such power to locate in the same areas.  During the bill consideration process, THLA was able to work with the bill sponsor to come up with a compromise version of the bill that the lodging industry could have supported.  Unfortunately, this version was opposed by the Texas Realtors who were not willing to compromise on the bill’s provisions.  
  • Oppose burdensome business and employment regulations:  Defeated.  THLA and our business coalition partners successfully opposed efforts to increase the state minimum wage or allow cities to set higher local minimum wages for the private sector, bills to eliminate the tip credit, require workers’ compensation insurance, expand the scope of neutrality agreements, and more.
  • Preserve THLA’s ability to work with Texas cities and counties to promote tourism activity:  Favorably Amended.  THLA worked to ensure our partnership with Texas communities would not be negatively affected by proposed local “government lobbying” prohibitions.
  • Property tax reform:  Passed.  State legislation passed which will cap the property tax revenue growth of school districts at 2.5%, city and county property tax revenue growth at 3.5%, one of the major goals of state leadership.  

Major State Issues

General Appropriations Budget (HB 1) and Supplemental Budget (SB 500)

HB 1 calls for $250.7 billion in state expenditures for the 2020-2021 biennium, which represents an increase in state spending of 16% compared to 2018-2019. 

The 2020-2021 state budget includes:

  • $6.5 billion in new spending for schools

  • $5.5 billion to slow the growth of local school district property taxes; and 

  • $8.4 billion for health and human services programs.  

Of particular import to the hotel and lodging industry, HB 1 provides for $110 million in funding for the State tourism promotion program run by the Office of the Governor, a record-high appropriation for this program.

There was also a record increase of over $10 million in funding for grants from the Texas Commission on the Arts whose annual grant budget went from $5.5 million to $15.5 million for the next biennium.  

The Supplemental Budget for the State provides some other vital state budget allocations:  

  • $1.7 billion in additional spending to meet leftover Medicaid and foster children expenses, 

  • $6.1 billion withdrawal from the state’s Economic Stabilization Fund (the “rainy day” fund) to pay for infrastructure projects and Hurricane Harvey recovery, including $1.7 billion to help local governments implement major infrastructure projects and ease access to federal matching funds. 

SB 2 – Local Property Tax Revenue Caps 

SB 2 will cap the property tax revenue growth of cities and counties at 3.5% over the previous year, at which point voter approval would be required to collect further revenue.     

In addition, impacted taxing units may “bank” unused revenue growth for up to three years and use it in subsequent years without securing voter approval. 

However, more than a thousand smaller taxing units may not have to abide by the 3.5% threshold in the reform bill, due to a provision that lets them raise up to an additional $500,000 a year without automatically having to hold an election.  The allowance intends to help communities with small tax bases make one-time, big-ticket purchases. 

The Legislature provided an additional $5.5 billion more in state funding to school districts to avoid a funding gap for public education.

Legislature Reaches Compromise on School Finance 

In the final days of the legislative session, Gov. Greg Abbott, Lt. Gov. Dan Patrick, and House Speaker Dennis Bonnen held a joint press conference to announce that the Legislature had reached an agreement on HB 3, the plan to reform the school finance system and slow the growth of property taxes.  HB 3 caps the revenue growth of school districts at 2.5% over the previous year, after which point voter approval would be required to collect additional revenue.  

HB 3 also includes full funding for full-day pre-K, a significant increase in the basic per-student allotment, and provisions to increase pay for highly effective teachers.  In total, the bill will add $5.5 billion to the school finance system, reduce recapture by about half (recapture is commonly referred to as “Robin Hood”), and lower local school district property taxes by about 13 cents per $100 valuation by 2021.  By enhancing state funding for public education and the passage of school district revenue caps, it is hoped that there will be a slowing of the growth of school district property taxes against commercial and residential property owners.

Legislature Renews Chapter 312 property tax abatements for new development 

Chapter 312 of the Tax Code allows cities, counties, school districts and other local taxing entities to “abate” up to 100 percent of the increased value of a property that is being developed, incentives that are sometimes accessed by larger hotels and other developers.  The Tax Abatement powers under Chapter 312 scheduled to sunset this year and legislative action was needed to keep this economic development tool.  Renewal of this authority was a priority for the business sector and we are pleased to report that the Legislature continued the authority of local governments to grant property tax abatements. 

Tourism Public Improvement Districts (TPID)

A Tourism Public Improvement District (TPID) allows area hotels to petition a city for the power to create a tourism district to generate supplemental funding for marketing and sales efforts.  The first Tourism Public Improvement District in Texas was established in Dallas and was so successful that it resulted in a subsequent THLA bill that allowed four additional Texas cities to create a tourism PID (Arlington, Fort Worth, San Antonio, and Austin).  

Prior to the 2019 legislation session, a number of other Texas cities approached THLA about obtaining similar legislative authority.  Accordingly, bills were filed for six individual cities to allow the creation of a TPID in their city:  Amarillo, Denton, Frisco, Irving, Waco, and Nacogdoches.

THLA also supported HB 1136 that will allow all Texas cities to petition their city council for the creation of a TPID.  

We are pleased to report that all TPID bills passed the Legislature, now authorizing all Texas cities to consider creation of a TPID if it is supported by at least 60% of affected hotel owners.  

HB 1136 also contains two other very important provisions related to TPIDs:

  1. Limits Permissible Uses of TPID Funds.  HB 1136 specifies that TPIDs may only use TPID revenues for advertising, promotion, and business recruitment.
  2. Establishes Procedure for Adding New Properties into Existing District.  HB 1136 also clarifies that a municipality may add new hotel properties into an existing TPID if the property’s addition would not place the number of signed petitions below the cumulative 60 percent signed petition thresholds for hotels within the District. The law notes that it is not required that the individual added property sign the petition for the property to be added into the District.  

Tourism Bills that Passed

Disclosure of information related to parades, concerts or other events open to the public that are paid for with public funds.  HB 81 requires public entities to disclose certain contract provisions regarding publicly funded expenditures for parades, concerts, or other entertainment events that are open to the public. The disclosure of this type of information cannot be limited by a contractual provision. 

Full funding for state tourism promotion

Every legislative session, THLA advocates to secure full state funding for tourism promotion from the 1/12th dedicated portion of the state hotel occupancy tax.  This 1/12th portion now represents over $51 million in state tourism funding annually and is allocated through the State appropriation bill (HB 1 / SB 1).  

This session, THLA and our travel industry partners lobbied the Legislature intensely on this issue.  We are pleased to announce that the state budget for the 2019-2021 Biennium includes $110 million for tourism promotion.  

This means the Governor’s state tourism promotional program will receive about $55 million annually for 2020 and 2021, an increase of about 223% over the last legislative session.  

Short-term rental preemption

Early in the legislative session, THLA was notified by Senator Hancock that he was again considering legislation that would give special regulatory protections to the short-term rental industry.  However, after conducting several stakeholder meetings involving interested parties such as THLA, HomeAway, Airbnb, the Texas Realtors, and Texas cities, Senator Hancock declined to file STR legislation, and the issue was picked up by House Urban Affairs Committee Chairwoman Angie Chen Button. 

THLA worked closely with Chairwoman Chen Button’s office on the suite of STR bills, offering key language to the STR bill.  The committee substitute version of HB 3778 contained these THLA requested lodging industry priorities:  

  1. City Power to Regulate Density and Location of STRs in Residential Areas:  Cities could continue to regulate the density and location of non-owner occupied STRs in residential areas as long as there was not a complete STR ban; 
  2. City Power to Require Permits for STRS.  Cities could require permits of all STR operators;
  3. Duty to Collect Hotel Tax:  STR owners and platforms would be required to properly collect and remit hotel occupancy taxes; 
  4. Comparable Audit and Transparency:  STR platforms would be subject to the same auditing and transparency regulations as hotels; and 
  5. No Facilitation of Illegal Transactions:  STR listing services would be prohibited from facilitating a booking transaction for a short-term rental unit if the unit provider did not hold a valid city permit for the unit.  

At the committee hearing, THLA testified in favor of the committee substitute version of HB 3778, as did HomeAway.  Texas Municipal League and the City of San Antonio were neutral on the bill.  Airbnb opposed HB 3778, but only registered its position without testifying.  Certain cities such as Austin and Grapevine, along with many residential property owners and neighbors continued to oppose HB 3778, under the premise that cities should retain full powers to completely ban STRs in residential and other areas of the city.

However, the strongest opposition and ultimate cause of death of the STR legislation came from the Texas Association of Realtors.  The Texas Realtors were concerned that any state legislation addressing how cities may regulate STRs would imperil the multiple lawsuits against City STR ordinances that are currently pending and that are supported by the Texas Realtors.  

With the Texas Realtors objecting, further progress of the three STR bills was not feasible, and none of the STR bills passed.  

Below is the list of the filed STR bills, along with a summary of each bill and link to the bill language. 

Three primary STR bills filed:  HB 3773 by Chen Button / HB 3778 by Chen Button / SB 1888 by Fallon. The above three bills represented the primary components of the STR preemption effort.  HB 3773 and SB 1888 are identical companion bills, while HB 3778 was an alternatively filed version that could serve as an “umbrella” bill in the future.  These preemption bills would have limited a city’s ability to adopt and enforce ordinances regulating STRs.  Ultimately, HB 3778 was the only STR bill filed that received a committee hearing.

Two identical STR tax transaction bills filed: HB 3779 by Chen Button and SB 1472 by Powell. The two bills addressed collection of local hotel taxes on STR transactions.  

Property owners’ association STR bill filed: HB 4176 by Chen Button.  HB 4176 was meant to ensure and reaffirm that property owners’ associations may regulate STR activity within their areas.

State and local incentives for convention center hotels:  HB 4347

A number of bills were filed this session to allow additional cities to use state and local hotel tax rebates to help fund the construction of local convention center hotel projects. 

Originally enacted in 2003 for large cities, this legislation has been expanded over the years to allow many cities to participate in the program.  

Under this program, the hotel tax revenue generated by the convention center hotel can be used to pay for the project.  Additionally, participating cities are entitled to receive a rebate of state hotel occupancy taxes, state sales taxes, and local alcoholic beverage taxes from the eligible convention center hotel project for the first 10 years after the project opens for occupancy.  

In 2017, THLA added vital language to the convention center hotel program to protect the continued funding of the CVB or area destination marketing organization (DMO) at historic levels should a convention center hotel project be funded under this authority. 

In addition to making 22 cities eligible for the program, HB 4347 made a number of changes to ensure the continued viability of the convention center hotel project program and to codify Texas Comptroller rules addressing project eligibility.  Those changes include:

  • Removing the September 1, 2019 “sunset” date for the convention center hotel project program.  This was a priority provision, as a number of previously authorized Texas cities are close to finalizing plans to engage in a convention center hotel project.

  • Limits the eligibility of “ancillary facilities” to those located within 1,000 feet of a qualifying convention center facility and requires those facilities to be directly related to the convention center project.

  • Limit cities with a population of less than 175,000 to one convention center hotel project that is eligible for state tax rebates.  

  • Limits the definition of the qualifying “convention center facility.”  Under HB 4347, a qualifying convention center facility must:

  1. Be primarily used for conventions and meetings of tourists.  
  2. Have at least 10,000 square feet of meeting space.  
  3. Be owned by the municipality.
  4. Be located in a separate structure from the convention center hotel.

The local convention center hotel project bills that were originally filed as standalone bills were consolidated into HB 4347.  New eligible cities added by HB 4347 include the following:

  • Alvin
  • Arlington (expansion of existing authority)
  • Baytown
  • Cedar Park 
  • Celina
  • The Colony
  • Commerce 
  • Conroe
  • Fredericksburg (provided a special exception allowing private ownership of project)
  • Hutto
  • Kemah (expansion of existing authority)
  • Kerrville
  • Kyle
  • Missouri City
  • Pearland
  • Presidio
  • Rio Grande City
  • Richmond
  • San Benito
  • Seabrook
  • Weatherford
  • Webster

THLA also successfully opposed a negative bill, HB 1557, that would have changed the convention center hotel project program into a “loan” program, and would have gutted the likely participation of cities and developers in this economic development tool.  

Local hotel occupancy tax bills that passed

This legislative session, about 20 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.   

Use of Local Hotel Tax for Sports facilities

Several Texas cities filed legislation to use local hotel occupancy tax revenue on a sports facility.  THLA worked closely with these cities to ensure that the sports facility bill contained return-on-investment provisions.  Specifically, THLA wording prohibits a city from expending local hotel tax on a sports facility in an amount that will exceed the amount of area hotel revenue that is generated from events held at that sports facility over a set period of time.  The following sports facility bills passed in the 2019 Session:

  • Carizzo Springs:  HB 2199.  Allows Carizzo Springs to use hotel tax revenue for the construction of a sports facility. The City must annually report the room night and economic impact of events held at the facility.  The city may not expend more hotel tax on the facility improvements than will be generated in room night revenue from events held at the facility over a 15-year period, and this must be projected by an independent analyst before hotel taxes are used for this purpose.
  • Cedar Park:  HB 3356.  Allows Cedar Park to use hotel tax revenue for the operation and expansion of the Cedar Park Center, a mixed-use sports venue with substantial impact on the hotel industry in the area.
  • Edinburg:  SB 2137.  Modifies Edinburg’s existing sports facility authority to pay debt service on the sports facility and to pay for related infrastructure located within 2,500 feet of the sports facility.  The sports facility and related infrastructure must generate hotel revenues within a 10-year period that are at least equal to the hotel tax expended on the facility. 
  • Odessa:  HB 4347.  Allows the City of Odessa to enter into a lease of at least 25 years with the University of Texas Permian Basin (UTPB) to construct and maintain sports facilities on land owned by UTPB.  The sports facilities must show the required return-on-investment within seven years of the hotel tax expenditure for that purpose.  The City also may not reduce funding to its CVB/ destination marketing organization during the time that the sports facility receives hotel tax funding.
  • Pearsall:  SB 320.  Allows Pearsall to use hotel tax for the construction of a sports facility. The sports facility must annually report the room night and economic impact of events held at the facility.  The city may not expend more hotel tax on the facility improvements than will be generated in room night revenue from events held at the facility over a 15-year period, and this ROI must be projected by an independent analyst before hotel taxes are used for this purpose.
  • San Benito:  HB 2199.  Allows San Benito to use hotel tax revenue for the construction of a sports facility. The sports facility must annually report the room night and economic impact of events held at the facility.  The city may not expend more hotel tax on the facility improvements than will be generated in room night revenue from events held at the facility over a 15-year period, and this must be projected by an independent analyst before hotel taxes are used for this purpose.
  • Webster:  HB 1634.  Allows Webster to use hotel tax revenue for the construction of a sports coliseum and related infrastructure or a venue related to the promotion of tourism and hotel activity.

County hotel tax bills:

  • Guadalupe County:  HB 1634.  Allows Guadalupe County to impose a county hotel occupancy tax of up to 2% within city limits and up to 7% in areas that are not subject to a municipal hotel occupancy tax.  An amendment was added in the Senate to specifically restrict the Guadalupe County hotel tax from applying to a hotel within the New Braunfels city limits.
  • Orange County:  SB 2208.  Allows Orange County to use existing hotel tax revenue for the construction of a pavilion that is primarily used for events attended by tourists and hotel guests and that has a substantial impact on hotel activity.  SB 2208 also requires that the County not reduce the amount of hotel tax that has been historically spent on advertising and promoting the County as a tourism destination.
  • Jim Hogg County:  HB 2272.  Allows Jim Hogg County to increase the maximum rate of its existing county-wide hotel tax from 4% to 7%.  There are no municipalities within Jim Hogg County, and Jim Hogg County will lose its hotel tax authority if a municipality incorporates within the county.
  • Wilbarger County:  SB 2137.  Allows Wilbarger County to impose a new, county-wide hotel occupancy tax at a maximum rate of 2%.  The filed bill would have allowed up to a 7 percent county hotel tax both within and outside of the cities within Wilbarger County.  
  • Wilson County:  HB 1633.  Allows Wilson County to impose a county hotel occupancy tax of up to 2% within municipalities and up to 7% for hotels that are not subject to a municipal hotel occupancy tax.  The filed bill would have allowed up to a 7 percent county hotel tax both within and outside of the cities within Wilson County.  

Dark skies promotion and preservation for Cities of Blanco, Dripping Springs, Hays City, Johnson City, Mountain City, and Woodcreek

HB 4158 allows Blanco, Dripping Springs, Hays City, Johnson City, Mountain City, and Woodcreek to use up to 25 percent of the city’s annual hotel tax for the promotion and preservation of “dark skies.” These funds can cover the cost of construction and maintenance of related infrastructure and the purchase and installation of hardware that reduces “light pollution” and “sky glow.”  

THLA wording in the bill requires cities that use local hotel tax for this purpose to determine the amount of area hotel revenue attributable to dark skies-related events for five years after the municipality first uses hotel tax for that purpose.  In no case, can the amount spent from local hotel tax to promote dark skies exceed the amount of hotel night revenue that is directly attributable to dark skies-related events and activities. 

Garland sports venue allocation of hotel tax revenue 

SB 1262 allows Garland to improve a qualified city-owned sports facility with associated return-on-investment claw-back provisions.  It also requires Garland to allocate at least 30% of its hotel tax revenue for advertising and promotion of the City as a tourism destination.

Dedication of Portion of State hotel tax for beach preservation and restoration

HB 6 transfers 2% of the 6% state hotel occupancy tax rate collected in coastal counties to a coastal erosion response account maintained by the Texas General Land Office.  This dedicated funding source for beach erosion was supported by THLA to boost vital tourism to our coastal travel destinations.  This transfer of state hotel tax for this purpose does not negatively impact the State’s tourism promotion program funding.  

Constitutional dedication of State Parks Funding to go to voters

The Legislature offered a new Texas Constitutional amendment that will be considered by Texas voters in November.  If approved by the voters, it will provide a constitutionally required dedication of a portion of the state sporting good sales tax to the Texas Parks and Wildlife Department (TPWD) and the Texas Historical Commission (THC).  In 1993, legislation passed allowing up to 94 percent of the sporting goods sales tax to go to parks, with the remaining 6 percent designated for the state’s historical commission, which maintains Texas’s 22 state historic sites.  

However, in the following decades, the Legislature only allocated an average of just 40 percent of the sporting goods sales tax to the parks system and used the rest to balance the state budget. By making the sporting goods sales tax funding allocation part of the Texas Constitution, the Legislature is essentially forcing itself to fully appropriate this funding to the TPWD and THC into the future.

Events Trust Fund Reimbursement Program expansion and preservation passed

THLA is a strong supporter of 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 programs allow cities to receive state taxes as reimbursements for many of the city’s up-front investments for hosting certain competitively bid major tourism events.  The following events trust fund bills passed this session:

  • HB 2402:  Adds certain National Reined Cow Horse Association (NRCHA) events, Big 12 Football Conference Championship games, and World Wrestling Entertainment WrestleMania Events to the list of eligible events under the events reimbursement fund.
  • HB 4174:  This is a non-substantive revision of the event reimbursement programs currently in the law to correct the names of events that have changed since originally codified. 

Employment law bills passed

Age discrimination in on-the-job training programs.  Current law prohibits employers from discriminating against employees between the ages of 40 and 56 on the basis of their age when selecting employees for apprenticeship, on-the-job training, or other training or retraining programs.  HB 1074 expands this age 40 to 56 protection to now prohibit age discrimination against all persons aged 40 years or older.

Paying employees via payroll deposit cards.  HB 2240 allows an employer to choose to pay employees via a payroll deposit card.  However, the employee may opt out and receive paychecks through a paper check or direct deposit.  The employee must be given a full schedule of any fees associated with the payroll deposit card.

Employee protections for jury service.  Under current law, employers may not terminate an employee for service on a jury or for reporting for jury duty.  SB 370 adds that an employer may not “discharge, threaten to discharge, intimidate, or coerce” any employee in connection with jury service.

Hotel operations bills passed

Municipal regulations on swimming pools.  If a municipality decides to enact its own regulations on public swimming pools, HB 2858 requires those municipal regulations mirror the International Swimming Pool and Spa Code.

Handicap parking space signage.  HB 3163 requires handicap accessible parking spaces to portray the international symbol of access and have the words “no parking” painted on access aisles adjacent to the parking space.  Additionally, the handicap parking space sign must display a statement on the fine for illegally parking a vehicle in the space. This requirement applies to all new buildings and to any handicapped spots if there is a parking lot renovation that costs over $50,000. 

Massage licenses – reclassification of student licenses and background checks for new licensees.  HB 1865 repeals the “massage student exemption” from required licensing; requires TDLR to perform criminal background checks for new massage licenses, including renewals; and creates a student permit system.

Massage licenses – human trafficking signage.  HB 2747 requires fingerprinting and a photograph of massage license holders, and mandates human trafficking signage for places of massage therapy.  TDLR will formulate rules and create the required signage.  THLA will distribute the new rules and required signage to members when it becomes available.

Foodservice and alcoholic beverage bills passed

“BBQ scales” regulation.  HB 2223 exempts restaurant scales from state agency registration and inspection requirements if the scale is used exclusively to weigh food sold ready for immediate consumption.  This bill was offered by the Texas Restaurant Association and was supported by THLA.  The bill was in response to the Texas Department of Agriculture’s recent practice of requiring exorbitant scale inspection fees.

Mixed beverage sales tax reporting requirements.  HB 3006 requires mixed beverage sales tax permittees to file their tax return with the Texas Comptroller no later than the 20th day of each month.  This bill is a statutory codification of existing Comptroller rules.

Dogs in outdoor dining areas – municipal preemption.  SB 476 preempts cities from enforcing city ordinances that prohibit dogs from being in outdoor dining areas of restaurants. 

While a city may not prohibit the presence of such dogs, SB 476 allows the restaurant to decide whether it wants to allow dogs in its outdoor areas.  The bill requires restaurants that allow dogs to post a sign to this effect, not allow the dogs inside, have an exterior pathway to the dog-friendly seating, and require the dogs to be leashed.  SB 476 does not affect ADA service dogs that are already permitted in any public area of a restaurant.

Alcoholic beverages – delivery of alcoholic beverages by mixed beverage permittees.  SB 1450 allows the holder of a mixed beverage permit to deliver, or have delivered by a third party, an alcoholic beverage from the permitted premises to an ultimate consumer located off-premises and in an area where the sale of the beverage is legal if:

  1. the holder of the mixed beverage permit holds a food and beverage certificate for the permitted premises;
  2. the delivery of the alcoholic beverage is made as part of the delivery of food prepared at the permitted premises;
  3. the alcoholic beverage is:  beer or wine delivered in an original container sealed by the manufacturer; or an alcoholic beverage other than beer, ale, or wine, delivered in an original, single-serving container sealed by the manufacturer and not larger than 375 milliliters; and
  4. the delivery is not made to a premise that is permitted or licensed under the TABC.

Alcoholic beverages:  Package store deliveries to consumers.  SB 1232 allows the holder of a wine and beer retailer’s permit who is also the holder of a local cartage permit to make deliveries to and collections from ultimate consumers in the same manner as the holder of a package store permit

Alcoholic beverages:  Making false statements to TABC.  HB 2792 clarifies a person must “knowingly” make a false statement or representation to TABC to commit a criminal offense.

Alcoholic beverages:  City or county wet/dry certification.  HB 1443 specifies that counties and cities must certify an applicant’s location is wet for the type of permit sought and no local regulations prohibit applicant from holding the permit or license applied for.  This determination must be made by the City within 30 days after receiving applicant’s request. If the city or county refuses to certify, applicants can request a hearing before the county judge. Under the existing law, there had been no deadline to certify.

Alcoholic beverages:  Convention center parking lots.  SB 2410 expands the definition of  “public entertainment facility” for purposes of ability to serve alcohol under a TABC license to include the entertainment facility’s parking areas adjacent to the facility.  A “public entertainment facility” means an arena, stadium, automobile race track, amphitheater, auditorium, theater, civic center, convention center, or similar facility that is primarily designed and used for live artistic, theatrical, cultural, educational, charitable, musical, sporting, nationally sanctioned automobile racing, or entertainment events.

Property tax assessment bills passed

Legal standard of review for increased property valuations.  HB 1313 raises the standard of review from “substantial evidence” to “clear and convincing evidence” that a chief appraiser must show to justify an increase in the appraised value of property for ad valorem tax purposes.

Temporary exemption from property taxation of property damaged by a declared disaster.  HB 492 provides a temporary tax exemption for a property that is damaged during a declared disaster.  The amount of the exemption is based on a statutory schedule and only applies if the property is damaged between 15 to 100% of its market value.  

Restrictions on the ability of cities to designate property as “historic landmark” passed

HB 2496 mandates a municipality that has established a zoning process to designate places or areas as historical, cultural, or architecturally important may not designate a property as a local historic landmark, unless the property owner consents to the designation, or the designation is approved by a three-fourths vote of the governing body of the municipality, as well as the zoning, planning, or historical commission of the municipality, if such an entity exists.

Landlord-tenant bills passed

Tenant Parking permits.  HB 1002 requires a landlord who issues a parking permit to a tenant to issue the permit for a term that is conterminous with the tenant’s lease term.  The landlord may not terminate or suspend the permit until the date the tenant’s right of possession ends.

Lease termination for family violence.  SB 234 allows a tenant to break a lease without penalty if the tenant provides documentation of being a victim of family violence.

Limitations on late fees.  SB 1414 limits late fees for unpaid rent to no more than 12 percent of the amount of rent for structures with not more than four dwelling units, and no more than 10 percent of the amount of rent for structures that contain more than four dwelling units.

Governmental agency and local government operations bills passed

Texas Windstorm Insurance Association (TWIA) sunset review.  SB 615 extends the life of TWIA until at least 2031.  The bill also changes the composition of the TWIA board of directors and provides for greater geographic representation, reforms the policy renewal process, and directs the agency to reformulate rules regarding claims.

“Openly carried” handguns in publicly owned buildings.  HB 1791 prohibits local governments from enforcing a prohibition against “concealed” or “openly carried” handguns within certain governmental facilities. Previous state law only addressed the issue of local governments regulating “concealed handguns” at governmental facilities.  The new law prohibits such enforcement against “concealed” or “openly carried” weapons through signs or oral notices to guests at governmental facilities.  

Citizen’s right to carry “concealed” or “open” weapon during a declared state or local disaster.  HB 1177 allows a person to carry a “concealed” or “open” weapon during a seven-day period following a declared emergency.  This right to carry weapons during a disaster applies even to lodging properties that generally prohibit concealed and/or open carry of weapons.  

Carrying a weapon on certain premises.  HB 2164 adds a civil penalty of $1,000 against facilities including hotels if they prohibit or otherwise restrict a peace officer or special investigator from carrying their weapon on the premises.  Such peace officers and special investigators are authorized to carry their weapons in a hotel or other facility regardless of whether they are engaged in the actual discharge of official duties. A hotel may require the display of official identification showing the person is a peace officer or special investigator.  

State human trafficking coordinating council.  SB 72 creates a unified central council for combatting human trafficking.  The human trafficking prevention coordinating council will be comprised of representatives of selected state agencies:  The Governor’s office, the Attorney General’s office, Dept. of Family and Protective Services, DPS, Texas Workforce Commission, TABC, Texas Parks and Wildlife, and TDLR.  THLA’s legal staff have a working relationship with the state agencies’ human trafficking prevention divisions, and we anticipate working with the new coordinating council on this issue.

Preservation of the Battleship Texas.  SB 1511 allows the State Historic Commission to enter into an agreement with a nonprofit entity for the restoration and operation of the Battleship Texas.  The Battleship will be temporarily put into dry dock, repaired, and restored.  Continuing operations will be transferred to the Battleship Texas Foundation.  The Battleship Texas may be relocated to another venue such as Galveston after it returns from dry dock restoration, but no definitive plans have been announced.

Price gouging during a declared disaster.  HB 1152 codifies lodging, building materials, and construction tools to the list of “necessities” that if found to be priced “exorbitant or excessive,” an operator can be prosecuted for price gouging, and if found guilty, the operator would be  subject to extreme penalties and other ramifications.  THLA and the Texas Attorney General’s office have always maintained that price gouging laws apply to lodging, HB 1152 codifies that term in statute.  The terms “excessively priced” and “price gouging” are not defined in the bill and are subject to a case by case analysis by the Attorney General’s office. THLA proactively works with the Attorney General’s office on these issues.   

Bills that failed to pass:

State hotel tax bill that failed to pass

Texas Comptroller online travel company tax parity bill:  HB 3579

Since the inception of the state hotel occupancy tax in 1959, state hotel occupancy taxes have been calculated on the price a consumer pays for a hotel room.  For example, lodging brands collect state and local hotel tax on the full retail price paid by a consumer for a hotel room night.  

This concept of paying taxes on the “retail amount” is also the practice for the state and local sales tax:  Consumers pay sales tax calculated on the retail price of the good or service, and not on the amount the merchant pays a wholesaler for the product.  Further, retail merchants do not deduct their expenses or commissions that are paid from the amount of sales taxes due on the retail price paid by the consumer for goods or services.

However, online travel companies currently do not remit full state or local hotel taxes.  Online travel companies such as Expedia, Orbitz, and Travelocity sell the same hotel rooms to consumers, but only collect state and local hotel taxes on the wholesale price of the room, and not on the retail amount paid for the hotel room by the consumer.  

HB 3579 was filed by House Ways and Means Committee Chairman Dustin Burrows at the request of the Texas Comptroller.  The bill sought to require third party travel websites to remit payment of state hotel tax on the retail amount that the consumer pays for each lodging night.  

THLA supported this legislation, and the Comptroller’s team was able to get it through the Texas House.  However, the online travel companies mischaracterized the bill as imposing a “new tax,” an argument that was fatal to the bill in the Senate.

Prepayment Tax Discount. HB 1729 would have decreased the amount of early payment credit that businesses currently receive for payment of their quarterly or monthly sales tax collections.  This bill would have had an estimated two-year net cost of $63,200,000 to Texas businesses that remit sales tax.

Local hotel tax bills that failed to pass

  • Reporting county hotel tax rates to the Texas Comptroller:  SB 1319.  Expanding on a law passed in 2017 applicable to Texas cities, Texans for the Arts worked closely with THLA to pass legislation this session to require all Texas counties that impose a local hotel tax to itemize what county hotel tax they have imposed.  The annual report to the Comptroller must include: 1) the county hotel occupancy tax rate, 2) any applicable county venue tax rate, 3) the amount of revenue collected for the preceding fiscal year from these two taxes at the county level.  This bill passed the Legislature but was vetoed by the Governor.  Although Governor Abbott and the Legislature fully supported this bill, the Governor objected to a last-minute, unrelated amendment that was added to HB 1729 that would have allowed an extension of an existing sales tax for the City of Laredo without sufficient clarity in the proposed ballot provision.  THLA will work with Texans for the Arts next legislative session on this issue.

  • Alpine:  HB 4228.  Alpine filed a local hotel tax bill to amend the special requirements on Alpine’s use of local hotel tax.  Alpine is required under state law to spend at least 50% of its local hotel tax revenue on advertising and promotion.  The bill quickly passed the House but did not reach the finish line in the Senate.  THLA will work with Alpine in the interim and during a future legislative session to help accomplish their goals.  
  • Brewster County:  HB 4152.  Brewster County filed a local hotel tax bill that would have allowed the County to use a very limited amount of the county hotel tax revenue to help keep visitor operations at Big Bend National Park clean and sanitary in the event of another federal government shutdown.  However, there was some opposition to the legislation in the Senate over providing local tax funds toward a federal asset.  THLA visited with the County, and we have found a solution that will work within existing law. 
  • Dripping Springs:  HB 4581. The bill would have allowed that city to use hotel tax for the construction of “paths” and “trails.”  THLA visited with the City regarding the proposal, and the City asked the legislator to withdraw the bill.
  • Houston:  SB 2249 would have allowed local hotel tax revenues to be used for parks, green space, outdoor arenas, pavilions, recreational space, and commercial areas in the George R. Brown district—located between two convention center hotels.  Furthermore, SB 2249 would have allowed voters to approve up to a two percent alcoholic beverage gross receipts tax to pay for a venue project, including a park.  The goal of the authority was to provide funding to lower the major freeways in the downtown area to below grade and cover them with parkland.  THLA objected to this legislation as it would divert hotel tax funds from the George R. Brown Convention Center, and because it contained a mixed beverage sales tax increase.  This bill did not receive a public hearing.
  • Queen City:  SB 1467.  Queen City filed a bill that would have modified its existing authority to pursue a sports facility authority with local hotel tax.  The bill died on the House calendar because it ran out of time for consideration.
  • The Woodlands:  HB 3947.  The Woodlands initially came forward with a proposal to use hotel tax revenue for the construction of a new performing arts center. However, The Woodlands decided such legislation would no longer be necessary, and withdrew the bill.

Uniform School Start Date Bill Made Further Progress But Did not Pass

School start laws have a profound impact on the vitality of family travel throughout the State of Texas. Current state law prohibits schools from starting earlier than the fourth Monday in August.

However, under legislation passed in the 2015 Legislative Session, school districts are permitted to apply to the Texas Education Agency as “Districts of Innovation” and may opt out of the school start date law.

Over two-thirds of Texas local school districts have applied to be Districts of Innovation and have used this authority to opt out of later school start date requirements.

This Session, the tourism industry collectively sought to enact limits on “districts of innovation” (DOI) school start date waivers.   Rep. Matt Krause and the Texas Travel Industry Association (TTIA) is commended for their diligent efforts and leadership in the quest to push HB 233. 

The bill would have made DOIs subject to the fourth Monday in August school start requirement.  However, HB 233 was ultimately voted down on the House floor.  Similar language was also added to the major school finance bill, HB 3.  However, when the House and Senate went into conference committee to resolve the differences between the House and Senate versions of the bill, the school start language was stripped from the bill.

The law on school start remains unchanged from 2015:  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.  Schools that are in the DOI program may start school at any time earlier at their option.

Preemption of city ordinances mandating paid sick leave – Did not pass

Recently, city councils in Austin, San Antonio, and Dallas have passed ordinances requiring all private employers in the city to provide paid sick leave for full and part-time employees. 

The new ordinances mandate that private employers with more than 15 employees must allow their workers to accrue up to 64 hours, or eight days, of paid sick leave per year.  Small businesses with 15 or fewer employees must provide at least 48 hours, or six days, of paid sick leave per year.  Currently, these ordinances are tied up in the courts, and have not gone into effect.

In response to these city ordinances, the Texas chapter of the National Federation of Independent Businesses (NFIB) created a broad coalition of business groups to push state legislation that would preempt local city ordinances from governing how a private employer provides benefits, scheduling, or other aspects of the employer/employee relationship. 

The coalition included large business groups such as the Texas Association of Business, Texas Restaurant Association, Texas Association of Builders, Texas Food and Fuel Association, THLA, TTIA, and others.  

The original bill, SB 15, was a broadly-based preemption bill that would have prevented cities from enforcing ordinances that contain local mandates on paid sick leave, paid vacation and other benefits, and predictive scheduling.  SB 15 also included a provision to ensure that local non-discrimination ordinances (NDOs) would not be affected, as it was not the intent to impact NDOs. 

However, at the request of certain leadership within the Senate, the Senate committee stripped the NDO protection language off the bill before sending it over to the House.  The removal of the NDO protection language caused a vast contingent of entities of both pro-LGBT organizations to join with labor groups to actively oppose the bill.

At the business coalition’s urging, the House added NDO protection language back to the legislation to quell opposition from LGBT groups.  However, Senate leadership would not accept any legislation with NDO protection. 

With the factions warring over the NDO language, the business community’s preemption efforts languished and ultimately did not pass.  Caught in the middle, the Texas business community is now placing hope that the courts continue to invalidate the local ordinances on paid sick leave.  It is also likely the issue will be revisited in the next legislative session.

Problematic employment law bills defeated

A number of bills were filed this session that would have by state law raised the minimum wage, eliminated the tip credit, and/or allowed a city to set a higher minimum wage or other hourly wage/employment standards for private sector employees.  In certain 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 private sector minimum wage rate to at least $15/hour and other cities around the nation have recently increased their own minimum wage or are preparing to do so.

Over a decade ago, THLA helped pass a statewide law that preempts a local government such as a city or a county from mandating a higher minimum wage for the private sector.

Texas Hotel & Lodging Association remains committed to adherence to the federal minimum wage and letting the market and area businesses decide when paying over the federal minimum wage is necessary.  Once again this session, THLA worked with our industry partners on a broad-based coalition to oppose any efforts to provide municipalities or the State the power to set private sector wages.

The following other employment law bills also did not pass:

  • HB 49, HB 2137, HB 3273, HJR 80, SJR 22 would have raised the minimum wage to $15 / hour and eliminated the tip credit.

  • HB 820, HB 1336, HB 3504, HB 3922, HJR 45, and SB 113 would have raised the statewide minimum wage to either $10.10 / hour or $14 / hour (depending on the particular bill) and allowed cities and counties to set their own minimum wage

  • HB 290 and HB 328 would have raised the statewide minimum wage automatically every year and would have allowed local governments to set the minimum wage for the private sector.

  • HB 1751 and SB 160 would have:  

1. Prohibited employment applications from including questions about wage history

2. Created a prohibition against discrimination in wages

3. Created an unlawful employment practice if the employer discriminates against employees on the basis of sex by paying wages to an employee at a rate less than the rate at which the employer pays wages to another employer of the opposite sex for the same or similar work. 

4. Provided exceptions for unionized workplaces.

  • HB 133 would have prevented an employer from deducting credit card processing fees from tips received by tipped employees.

  • HB 393 would have made it unlawful for an employer to inquire as to an applicant’s wage or salary history.

  • HB 399 would have permitted employees to file unpaid wage claims with the TWC for up to a year after the missed payment. The current filing period for wage claims only allows for a 180 day window after the missed payment.

  • HB 640 would have required retail establishments that have more than 500 employees and at least 10 other retail sales establishments in Texas to notify hourly employees of their schedules at least two weeks in advance.

  • HB 750 and SB 163 would have required contractors and subcontractors to carry workers’ comp insurance. Texas does not currently mandate businesses to carry workers comp insurance.  

  • HB 995 would have required all businesses that employ more than 50 employees to provide annual paid leave.  

  • HB 1559 would have required employers to provide 30 days of paid leave for certain family or medical obligations.

  • HB 3410, HB 3728, and SB 1826 would have required private employers to provide paid sick leave at a rate of one hour of leave for every 30 hours worked.

  • HB 1049 would have made a survivor of family violence or sexual assault a protected classification for employment purposes.

  • HB 2278 would have extended the statute of limitations for filing a sexual harassment claim from 180 days to two years.

  • HB 1061 would have prohibited mandatory arbitration agreements in employment unless the employer verbally reviews the agreement with the employee, and both parties sign additional documents demonstrating a clear understanding of the agreement.

  • SB 589 would have prohibited an employer from refusing to hire or from firing an employee or applicant who refuses to sign arbitration agreements and certain nondisclosure agreements.

  • HB 2960 would have invalidated covenants not to compete for employees earning less than $15.01 per hour. 

  • SB 2288 would have caused an employer to lose state operating licenses if the person knowingly employs a person who is found to not be lawfully present in the U.S.

Anti-Economic Development Bills Defeated

Restricting the ability of a city to receive state tax rebates for convention center hotel projects.  THLA strongly opposed HB 1557 that would have prohibited cities from receiving state hotel tax and sales tax rebates for local convention center hotel projects.  This legislation would have transformed the current state tax rebate program into a state loan program and would have created an unworkable paradigm for this very vital and impactful economic development tool.

Requiring public disclosure of contract terms entered into by publicly funded entities.  HB 2189 would have required more public disclosure of contracts entered into by publicly funded entities.  A side-effect of this legislation would have required the terms of many DMO contracts with meeting planners to be released publicly.  In many cases, the release of the terms of such DMO contracts would provide a “roadmap” to competing entities on how to secure the contracted for piece of business in the future, thereby damaging the competitive position of the DMO.  The Senate version of this bill, SB 943, did pass into law, but in a narrowed scope that should not negatively affect DMO contracts.

Abolishing the Music, Film, Television, and Multimedia Office in the office of the governor and abolishing the moving image industry incentive:  HB 432.  Legislators who oppose public/private partnerships to promote economic development supported this legislation, but were not successful.  

Efforts to derail the Texas bullet train (High Speed Rail).

Texas Central Partners (TCP) is the private company constructing a high speed rail line between Dallas and Houston.  TCP has been a valued partner of THLA and of the local hotel associations in Dallas and Houston.  We have long recognized the economic development value to our State and to the future of Texas travel of this privately funded transportation project.  

However, multiple bills were filed this session that would have prohibited or frustrated Texas Central Partners (TCP) from continuing their progress on the construction of the bullet train between Dallas and Houston. 

These bills were motivated by local landowners and local officials in rural areas who opposed the potential onset of high speed rail through their areas.  In response to these rural constituents, some state legislators offered bills to slow down or stop the rail project by proposing the elimination of TCP’s eminent domain authority, limiting the ability of a passenger rail company to issue private bonds, or by prohibiting TxDOT from coordinating with TCP.  

The entire high speed rail project is projected to be accomplished without the use of any state or local government monetary resources.  Further, in most cases, TCP is acquiring rights-of-way through areas of rural Texas by private purchase of needed properties.  But in some cases, it necessitates the use of eminent domain authority.  

THLA supported TCP’s efforts to oppose measures that would frustrate or make impossible their progress, and we are pleased to report the anti-high-speed rail project legislation did not pass.  

Hotel operations and facilities requirements that did not pass.

Diaper stations.  HB 952 would have required all public restrooms provide diaper change stations.  

Requiring rental of hotel rooms to members of military regardless of age:  SB 1260 would have required hotels to rent rooms to members of the military regardless of the guest’s age and regardless of whether the guest was traveling on official business or under military orders.  

Immediate re-keying of locks upon tenant vacancies.  HB 1859 would have required landlords to re-key locks before a tenant turnover.  Current law allows landlords to wait up to seven days after a tenant takes possession to accomplish a lock change.

Requiring a landlord to provide written notice before entering a tenant’s dwelling.  HB 1860 would have required a landlord to provide at least 48 hours’ written notice before entering a tenant’s property, regardless of any lease or occupancy agreement provisions.

Require prominent display of the phrase, “In God We Trust,” in public buildings.  HB 2216 / SB 679 would have required all publicly owned buildings, including convention centers and municipally owned convention center hotels, to publicly and prominently display the phrase “In God We Trust” at the building entrance

Negative Property Tax Appraisal Bill Defeated.

Mandatory sales price disclosure of real estate transactions.  HB 1036 would have required mandatory sales price disclosures of private property real estate transactions.  If passed, this law would have enabled local appraisal districts throughout the State to “chase” recent sales and inappropriately increase your commercial and residential property values.  

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