Below is a summary of some of the most important legislation THLA is working on during the 2019 Texas Legislative Session. We encourage hotel operators, hotel owners, and tourism industry professionals to review this list of legislation to become familiar with how the legislation would affect you if enacted. We are providing our staff summaries of what the legislation would do if passed, and we are also noting which Texas communities would be impacted (if applicable).
If you have questions or concerns about any of the below legislation, THLA needs to hear from you. Please contact us by phone at 512-474-2996, or by email at email@example.com.
We have organized the important legislation into the following categories:
- Short-term rentals.
- Local hotel occupancy tax proposals: New uses of tax revenue, and new county hotel tax proposals.
- Tourism public improvement districts.
- Convention center hotels.
- Tourism funding.
- School start date.
Multiple bills were filed in the Legislature that address short-term rentals (STRs) in multiple ways. THLA, along with the national hotel brands, is actively working with the bill authors and the STR proponents on areas of potential compromise on STR preemption, while ensuring that crucial bright-line issues that are important to our industry are addressed before agreeing to any legislation.
Most importantly for industry, it is important to ensure: STR owners and platforms properly collect and remit hotel occupancy taxes; STR platforms are subject to the same auditing and transparency regulations as hotels; cities retain the ability to enforce permit restrictions on non-owner occupied STR properties in residential areas; and STR platforms remove listings that are not in compliance with local or state regulations.
Below is the list of the STR bills that were filed, along with a summary of the bill and link to the bill language. However, please understand that each bill is a work in progress, and much is occurring behind the scenes as we negotiate on this legislation. Therefore, do not expect the filed version of any STR bill to be the version of STR legislation that ultimately passes.
The above three bills represent the primary component of the STR preemption issue. 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 bills are preemption bills that limit a city’s ability to adopt and enforce ordinances regulating STRs.
The above two bills are meant to address collection of local hotel taxes on STR transactions. We anticipate the language in these bills will change substantially from what was filed.
Property owners’ association STR bill was filed: HB 4176 by Chen Button.
HB 4176 is meant to ensure that property owners’ associations may regulate STR activity within their areas.
Local Hotel Occupancy Tax Bills
All cities, dark skies: HB 4158 by Zwiener. Allows all cities to use hotel occupancy tax revenue for the preservation of dark skies through construction and maintenance of infrastructure that reduces light pollution and sky glow. THLA is negotiating with Rep. Zwiener on this bill.
Alpine, Texas: HB 4228 by Nevarez. Repeals a section of the Tax Code unique to the City of Alpine requiring that city to spend at least 50% of its hotel tax revenue on advertising. THLA and local hotel operators met with the City prior to filing this legislation, and this bill has the support of the local hotel industry.
Brewster County: HB 4152 by Nevarez. Requested by local hoteliers, this bill allows the County to use a limited amount of hotel occupancy tax revenue to fund basic sanitary operations of Big Bend National Park in the event of a federal government closure. This bill is tightly worded by THLA to ensure only specific events trigger the qualification and return-on-investment metrics remain in place.
Cedar Park: HB 3356 by Bucy. Allows Cedar Park to use hotel occupancy tax revenue for the expansion and operation of the Cedar Park Center. THLA worked with the City to ensure the Center meets minimum tourist usage requirements.
Cotulla: HB 2199 by Tracy King. Allows Cotulla to use hotel tax revenue for the construction of a sports facility, similar to Pecos, Jourdanton, and several other cities. The sporting facility must have the requisite amount of hotel impact before it is funded, and 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.
Dripping Springs: HB 4581 by Zwiener. Allows Dripping Springs to use hotel tax revenue for the construction and maintenance of “paths” and “trails.” THLA is working with the bill sponsor to amend this bill to limit the use of revenue to a purpose acceptable to our industry.
Edinburg: HB 4203 by Canales / SB 2137 by Hinojosa. Modifies Edinburg’s existing authority to use hotel tax funds for sports facility. This modification will allow Edinburg to pay the debt on the facility as was originally intended in 2017.
Garland: SB 1262 by Nathan Johnson / HB 1197 by Chen Button. 1. Allows Garland to use municipal hotel occupancy tax revenue to pay for costs associated with sporting events in which the majority of participants are tourists and in which there is substantial economic activity at area hotels. This would bring Garland into line with hotel tax authority given to most other cities. 2. Allows Garland to use hotel municipal hotel tax revenue to fund the improvement of a municipally-owned sports facility, with the associated claw-back of Section 351.1076 applicable to such a sports facility. 3. Requires Garland to spend at least 30% of its hotel tax revenue on advertising and conducting solicitations to attract tourists and hotel guests to the community.
Guadalupe County (including Seguin and Schertz): HB 1634 by Kuempel. Allows Guadalupe County to impose up to a 7% county-wide hotel occupancy tax. This would allow tax rates to rise to as high as 17% in the cities in the County. THLA is working with the local hoteliers and the bill author.
Houston: SB 2249 by Miles. Allows use of hotel tax revenue for parks, green space, outdoor arenas, pavilions, recreational space, and commercial areas in the George R. Brown district located between two convention center hotels. Also allows for the voters to approve up to a two percent additional alcoholic beverage gross receipts tax to pay for a venue project, including a park.
Jim Hogg County: HB 2272 by Guillen. Allows Jim Hogg County to increase its current county-wide hotel tax rate from 4% to 7%. There are no cities within Jim Hogg County.
Odessa: HB 3197 by Landgraf / SB 1393 by Seliger. Requested by Odessa hoteliers, this bill allows Odessa to enter into a long-term lease with UT Permian Basin for sports fields located on land owned by the University. Drafted by THLA, this bill contains an return-on-investment component, as well as CVB funding protection.
Orange County: HB 4305 by Phelan / SB 2208 by Nichols. Allows Orange County to use limited hotel tax funds for a pavillion that is primarily used by hotel guests. Drafted by THLA, this bill contains important limitations on how these funds are used, and an return-on-investment component.
Pearsall: HB 1195 by Tracy King / SB 320 by Flores. Allows Pearsall to use hotel tax revenue for the construction of a sports facility, similar to Pecos, Jourdanton, and several other cities. The sporting facility must have the requisite amount of hotel impact before it is funded, and 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.
Queen City: SB 1467 by Hughes. Modifies Queen City, Texas’s existing authority to use hotel tax revenue for a sports facility authority by removing the requirement that the facility be used at least 10 times in the preceding year for state, regional, or national championship activity. Retains claw-back / ROI provision.
The Woodlands: HB 3947 by Toth / HB 4377 by Toth. Proposal from The Woodlands to use hotel tax revenue to pay for construction of a performing arts center. THLA drafted language for this bill in coordination with the local hoteliers to ensure the center is properly qualified and a claw-back is in place.
Wilbarger County (including Vernon): HB 2959 by Springer. Allows Wilbarger County to impose up to a 7% county-wide hotel occupancy tax. This would allow tax rates to rise to as high as 17% in the cities in the County. THLA is working with the local hoteliers and the bill author.
Wilson County (including Floresville): HB 1633 by Kuempel. Allows Wilson County to impose up to a 7% county-wide hotel occupancy tax. This would allow tax rates to rise to as high as 17% in the cities in the County. THLA is working with the local hoteliers and the bill author.
Tourism Public Improvement Districts (TPID)
A TPID is a mechanism for hotels in a city to generate revenue specifically for the use of promotion and marketing for the area hotel and tourism industry. The TPID is generally controlled by a board of directors which is composed of local hoteliers whose hotels participate in a fee assessment. The funding for tourism districts is from a Tourism PID fee that is charged on each room night folio. In other words, the charge is accomplished through a pass-through fee to the guest, with no out of pocket cost to the hotel. The revenue generated from a TPID can be used for promotion and marketing on events that directly impact the hotel and tourism industry within the local area.
This legislative session, Representative Four Price offered a bill, HB 1136, that would allow all cities in Texas to petition their city council for the creation of a TPID.
In addition, bills were filed by six individual cities to allow the creation of a TPID in their city. Passage of these TPID bills is a priority for the Texas hotel industry, and THLA will remain vigilant on creation of a TPID’s to ensure that the use of revenue remains dedicated to promotion and marketing of the hotel and tourism industry.
Below is a list of individual cities that filed a TPID bill, and a link to the bill text language.
All cities: HB 1136, by Four Price.
Amarillo, Texas: HB 1135, by Four Price.
Nacogdoches, Texas: HB 1417, by Clardy.
Local Convention Center Hotel Bills
Multiple bills were filed this session to allow additional Texas cities to qualify for rebates of state hotel tax revenue for convention center hotels. These cities are entitled to receive a rebate of state hotel occupancy taxes, state sales taxes, and local alcoholic beverage taxes from the eligible hotel project for the first 10 years after the project opens for occupancy.
THLA works with the hotel community where each project is proposed to determine local support for the legislation. Below is a list of bills that were filed, a summary of each, and a link to the bill text.
All cities: HB 1557, by Springer. This is a negative bill because it impairs a city’s ability to get a meaningful rebate of state revenue for a convention center, or hotel related infrastructure.
Omnibus convention center hotel bill: HB 4347, by Anchia and SB 2210, by West. These bills allow the city to construct a convention center as long as it is in conjunction with a qualified hotel project.
Cedar Park, Texas: HB 3355, by Bucy. Allows Cedar Park to obtain state hotel tax rebates for a convention center hotel.
Commerce, Texas: HB 2665, by Flynn. Allows Commerce to obtain state hotel tax rebates for a convention center hotel.
Conroe, Texas: HB 3497, by Bell. Allows Conroe to obtain state hotel tax rebates for a convention center hotel.
Richmond, Texas: HB 533, by Stephenson. Allows Richmond to obtain state hotel tax rebates for a convention center hotel.
Hutto, Texas: HB 3113, by Talarico, allows Hutto to obtain state hotel tax rebates for a convention center hotel.
Missouri City, Texas: HB 1813, by Thompson. Allows Missouri City to obtain state hotel tax rebates for a convention center hotel.
Pearland, Texas: HB 457, by Thompson. Allows Pearland to obtain state hotel tax rebates for a convention center hotel.
Maintain Funding for Tourism Promotion in the State Budget
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 travel destination as part of the state appropriations bill.
The full 1/12th of the state hotel occupancy tax revenue remains dedicated to promoting tourism under state law and cannot be spent for any other purpose. This means the dedicated state hotel tax dollars must be spent promoting Texas as a tourism destination, which increases the State’s return-on-investment.
Texas needs tourism activity. According to data maintained by the Office of the Governor, tourism spending in Texas is over $74.7 billion annually. Tourism directly supports over 677,500 Texas jobs. This number nearly doubles if indirect employment is included.
As Texas continues to rebuild after Hurricane Harvey, it is more important than ever to continue promoting Texas as a tourism and travel destination.
Currently, the state budget bill allocates the full 1/12th dedicated portion of the state hotel tax in the state budget for tourism promotion. We are asking members of the Legislature to keep this full funding in place as the budget bill moves towards passage.
Restoring the uniform school start date for Texas school districts
State law has traditionally required School districts required to begin classes no earlier than the fourth Monday in August. This ensures a full summer travel period for families, allows students the opportunity to have seasonal summer jobs, attend summer camps, and allows teachers the opportunity to take summer coursework or have a seasonal job.
However, beginning with the 2018/2019 school year, a state statutory exemption from the uniform school start date requirement through the Districts of Innovation (DOI) program has led to more than two-thirds of Texas school districts opting for their own unique start dates.
This has caused a significant detrimental economic impact to travel and tourism, all without any documented benefit on education outcomes for students. THLA is partnering with the Texas Travel Industry Association (TTIA) to advocate for the elimination of the school start date exemption in the DOI program to restore the uniform school start date that benefits both families and the Texas economy. No matter where you reside in Texas, each of the above items have a direct impact on the success of your business.