The 2021 Legislative Session produced very important results for the Texas lodging industry. THLA offered and passed tourism public improvement district (TPID) legislation that provided much needed clarity on how Texas cities with a TPID can add new hotels to their existing districts. Without this legislation, there was not a clear and accepted methodology for adding newly built hotels into an existing Tourism District, leaving the District unable to grow and provide direct services to these hotels.
THLA successfully advocated for full state funding for tourism promotion (approximately $140 million for the biennium including unexpended balances from prior sessions). We also secured passage of convention center hotel project legislation that will allow four additional Texas cities to pursue convention center hotel projects for their areas. Further, THLA negotiated and advocated on every hotel occupancy tax bill that was filed to ensure that hotel occupancy tax revenue remains dedicated to directly promoting tourism and hotel activity. As we have done every session. THLA successfully opposed and killed the proposed bills that would have placed costly or burdensome regulations on hotel operations.
By the session’s end, legislators filed 6,927 bills. Of those, 1,070 bills passed the Legislature and were sent to the Governor. This translates to 15.4% of the filed bills passing the Legislature. This passage rate is lower than the typical passage rate of prior sessions, which saw the following passage rates: 2019 session (19.5%), 2017 session (18%), 2015 session (21%), and the 2013 session (24%).
THLA reviewed every one of the 6,927 filed bills for their potential impact on the lodging and tourism industry. Our review showed 387 bills with a significantly positive or negative impact on the lodging industry if passed. Our staff tracked and advocated on these bills to ensure that the final versions positively and fairly addressed the interests and priorities of the Texas lodging industry.
THLA’s legislative advocacy team is proud to report that once again every legislative item that THLA offered this session passed the Legislature, and every item that we opposed was defeated. We note below a summary of the major items that we worked on, followed by a more in-depth coverage of the issues addressed within each of these areas.
Passed Full Funding for State Tourism Promotion: THLA works with partners such as the Texas Travel Alliance (TTA) to ensure Texas’s state tourism program is fully funded. The State Budget passed with a full appropriation of $69.5 million for the biennium ($33.9 million for 2022, $35.6 million for 2023). With the inclusion of a rider that allows access to prior unexpended balances, there is a total of about $140 million that is available over the next two years for promotion of Texas as a tourism destination. This full appropriation, which represents about a $10 million increase over the prior biennium was achieved despite a significant drop in hotel tax collections in 2020 and 2021.
Passed THLA Tourism Public Improvement District (TPID) Clarifying Legislation: There have been some questions on how to calculate the required “over 60 percent approval threshold” for adding new hotel properties into an existing Tourism PID. SB 804 clarifies that new hotel properties can be added into an existing Tourism PID if the property owner signs a consent form for their property to be added. Additionally, the bill outlines how to calculate the “over 60 percent approval threshold” for adding new hotels into an existing tourism district. Specifically, the community would:
Positively count all the hotel properties that had signed the original petition for the creation of the district;
Positively count consent forms from owners of newly built hotels that ask that their properties be added into the existing District; and
Negatively count against the “over 60 percent threshold” any existing or newly built hotels in the District that did not sign either the original petition at the time of the creation of the District or a consent form to be added to the existing District.
The bill further clarifies that the District would use the current appraised value, current property list reflected on the assessment roll, and current square footage for making the various calculations that require approval by owners of over 60 percent of the appraised value, over 60 percent of the surface area and/over 60 percent of the total number of hotel properties within the District.
Retained State Tax Rebates for Convention Center Hotel Projects and Passed Legislation that Allows Four Additional Cities to Participate in the Program: THLA successfully advocated for preservation and continued use of this vital program that allows state tax rebates for eligible local convention center projects (e.g.; convention center hotel) that are located within 1,000 feet of a convention center. The applicable bill this session, HB 4103, enabled three additional Texas cities to partner with hotel developers to receive state tax rebates to facilitate the construction of local convention center hotel projects.
Passed/Killed, or Favorably Amended All Bills Providing New Eligible Uses of Local Hotel Occupancy Tax or Increases to the Area Hotel Tax Rate: When cities or counties propose an expansion of how local hotel occupancy tax revenues may be expended or an increase to a local hotel tax rate, THLA staff contact the area hoteliers and the affected Destination Marketing Organization. We determine what support there is for the proposal and identify any concerns regarding setting a local or state-wide precedent for the requested authority. THLA then works with the bill proponents to make sure that the industry priorities and all needed safeguards are put into the proposed law. THLA advocated on and/or provided topical amendments to every filed hotel tax bill this session, and in many cases, redrafted the legislation, to create return-on-investment safeguards, lowered or eliminated increases to local hotel tax rates, and added other reasonable hotel tax expenditure limitations. The individual hotel tax use bills that were considered and those that passed are outlined later in this report.
Passed an Exemption of Federal PPP Loan Proceeds from State franchise Taxes: HB 1195 passed the Legislature and was signed by the Governor. This important legislation prevents federal PPP loan proceeds that were forgiven under the PPP program from being subject to state franchise taxes.
Preserved and Expanded State Tax Rebates under the Major Events Reimbursement Program for Large Tourism Events: 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 successfully supported the addition of several new named events to the MERP program. The specific new authorizations are covered later in this report.
Passed Pandemic Tort Claims Protection for the Private Sector: THLA and our business coalition partners successfully worked to pass SB 6, which limits the ability to file a pandemic-related lawsuit against a business or employer only for cases in which that business or employer engaged in egregious or reckless behavior.
Successfully Opposed Burdensome Business and Employment Regulations: THLA and our business coalition partners successfully opposed efforts to mandate an increase of the state minimum wage or to allow cities to set higher local minimum wages for the private sector. We also successfully opposed bills that would have eliminated the tip credit, required workers’ compensation insurance, or would have expanded the scope of union neutrality agreements, and more.
Since early in 2021, it has been no secret that Governor Abbott would likely call the Texas Legislature back into session later this year for at least one special legislative session. Because the release of the 2020 federal census data was delayed due to the pandemic and federal lawsuits, the Texas Legislature was unable to complete the task of redistricting during the regular legislative session. As a result, Governor Abbott will call the Legislature back into session, likely in October, to handle the redistricting issue.
What remains unknown is what other topics Governor Abbott will add to the “call” for the upcoming special session. Only the Governor has the authority to call one or more 30-day special sessions, and it is also up to the Governor to decide what to put into the call of topics that are to be considered by the Legislature.
We are reasonably certain that in addition to redistricting, the call will include appropriation of the nearly $16 billion in federal economic stimulus funds. Some of these funds are earmarked for the hospitality and tourism sector, and THLA will be advocating with our industry partners for funding of programs that provide much needed monetary assistance to the hotel, hospitality, and tourism industry.
In the final few days of the 2021 Regular Session, there was a partisan and cross-chamber meltdown over the hot-button issues of voting restrictions (SB 7), “taxpayer funded lobbying” (SB 10), and a bill mandating which sports teams a transgender child can join (SB 29). The voting restrictions bill failed due to a walk-out by House Democrats on May 30th, depriving the House Chamber of the quorum needed to pass the legislation. In the process, many other bills were killed on the House calendar, and ultimately the Senate calendar, including several local hotel occupancy tax bills on which THLA had secured amendments, as well as the business community effort to preempt local governments from placing certain workplace mandates on the private sector.
In response, Governor Abbott pledged to put the voting restriction issue onto the call for a special session. Clearly, the story of the 2021 Regular Session will continue into the upcoming special legislative session/s.
SB 1 calls for $248 billion in state expenditures for the 2022-2023 biennium, which represents a decrease in state spending of about 1% compared to the 2020-2021 state budget.
Due to increased future revenue projections, the State did not have to tap into the state’s rainy-day fund to keep the budget deficit neutral. The final budget did not appropriate the nearly $16 billion in federal funds available under the stimulus packages, leaving that task to the Legislature for the special session to be scheduled later this fall. The state budget maintains Texas’s strong commitment to public education with $8.6 billion allocated to higher education alone, building on commitments made in HB 3 last session. Additional support for public education is expected in the special session, as the federal stimulus money is distributed.
The 2022-2023 state budget includes:
- $3.1 billion to fund enrollment growth for public education;
- $1.1 billion in additional state aid related to property tax compression in the 2022-23 biennium;
- $50 million to preserve, maintain, and restore the Alamo and its surrounding complex;
- Over $30 billion to address the state’s transportation needs, including $26.5 billion dedicated for highway planning, design, construction, and maintenance;
- $36 million for Capitol repairs and renovations, including the Texas Capitol, Capitol Extension, Capitol Visitors Center, and Texas State History Museum; and
- $39 million to fortify security at the Texas Capitol, including additional troopers and enhanced safety measures.
Of particular importance to the hotel and lodging industry, SB 1 provides a full appropriation of $69.5 million for the biennium ($33.9 million for 2022, $35.6 million for 2023) for the tourism promotion program managed by the Governor’s Office on Economic Development and Tourism. As noted earlier, with unexpended prior balances added in, the Legislature provided for a total of about $140 million in funding for promotion of Texas as a tourism destination. This full appropriation was achieved despite a significant drop in hotel tax collections in 2020 and 2021.
Hotels and other businesses are struggling to find available workers. THLA, in partnership with a broad business coalition, successfully lobbied the Governor to end the additional $300 weekly federal unemployment benefit. The additional benefits, which seemed to dissuade many employees from returning to work, will end during the last week of June.
When it became apparent that under existing Texas law forgiven PPP loan proceeds would be subject to the state franchise tax, THLA immediately acted. THLA and our business coalition partners advanced legislation to prevent forgiven PPP loan proceeds from being subject to state franchise taxes. We are pleased to report that HB 1195 passed the Legislature and was signed by the Governor.
THLA and our business coalition partners also successfully worked to pass SB 6, which limits a pandemic-related lawsuit against a business or employer unless that business or employer was engaging in egregious or reckless behavior. THLA believes the passage of this important legislation will head off “drive-by” style lawsuits, such as those we have seen related to the Americans with Disabilities Act.
Statewide human trafficking prevention training bill passes; posting of human trafficking signs in public areas of hotels does not pass.
Various state hotel associations have been working to pass state legislation requiring human trafficking prevention training for hotels and modeling those state training requirements on the training provided by the large hotel companies and prominent anti-trafficking NGOs.
THLA is pleased to report that we worked with Rep. Senfronia Thompson (D-Houston) to pass HB 390 into law, requiring all hotel employees to receive annual training on the prevention of human trafficking activity. THLA negotiated with the bill’s proponents and worked closely with Rep. Thompson’s office to ensure the legislation would hold hotels responsible for ensuring training is provided to direct hotel employees, but not to independent contractors, as was initially proposed. We secured a modification to the legislation to require new hotel employees be trained within 90 days of hiring, instead of 30 days, given the high turnover our industry often experiences. We also worked to ensure that the signage required by HB 390 would continue to be back-of-house signage.
THLA will work with the Texas Attorney General’s Office on developing the rules for the training requirement and on getting approval of the training programs that are commonly used by the major hotel brands. HB 390 has been signed by the Governor, and the training requirements will take effect starting January 1, 2022.
With the passage of HB 390, a bill that would have required hotels to post human trafficking awareness signage in public areas of the hotel was forestalled. Specifically, HB 3712 by Rep. Parker (R-Flower Mound) would have required hotels to post signage in public areas as determined by rules of the Attorney General’s Office. When that bill did not make it onto the House calendar, SB 1831 was amended to include the public signage requirement. Because back-of-house signage is already required by HB 390, we advocated for the removal of the front-of-house signage requirement from SB 1831, and the language was removed.
Pandemic response bills attempting to limit local orders, limit the governor’s orders, prohibit mask mandates, and prohibit vaccine passports.
Prohibiting “vaccine passports” in Texas passes: SB 968 by Senator Kolkhorst (R-Brenham) prohibits a business entity from requiring a customer to provide any documentation certifying the customer’s COVID-19 vaccination status or past illness recovery status to gain entry to the business or to access the business’s services. The bill does not affect an employer’s ability to require employees to be vaccinated.
Attempts to place legislative limits on the Governor’s power largely do not pass: The Legislature filed about 100 bills that would have:
- limited the emergency powers of local government officials,
- limited the authority of the governor to issue emergency orders,
- limited the ability of any governmental executive to order masks, and
- required the Governor to call a special session in the event of a future pandemic.
Most of these bills did not pass, largely due to disagreements between the House and Senate on specific language.
State and local incentives for convention center hotels: Adding new cities; near-passage of project extensions due to the pandemic.
Several 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 certain mid-sized and smaller cities to participate in the program.
Under the convention center hotel project program, the hotel tax revenue generated by a convention center hotel can be used to mitigate the costs of developing 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 area CVB or destination marketing organization (DMO). The THLA provision requires that cities that pursue a convention center hotel project may not lower the percentage of hotel tax that is committed to “marketing” below the prior three-year average percentage of hotel tax that has been used for marketing. This language remains in effect.
This Session, bills authorizing new convention center hotel projects were ultimately combined into HB 4103, resulting in three additional cities becoming eligible for the program: Victoria, Leander, and Missouri City. Additionally, HB 4103 allows Lubbock to have a larger zone-type project. HB 4103 passed and awaits the Governor’s signature.
Additionally, THLA worked on legislation that would have allowed hotel projects that were open and receiving rebates throughout the pandemic to qualify for an additional two years of rebates to mitigate the impact on rebates in 2020 and 2021 due to the pandemic. This change was added as an amendment to SB 828, and it would have provided rebate extensions for the convention center hotel projects in Dallas, Houston, Irving, Arlington, Odessa, Amarillo, El Paso, and Nacogdoches. However, when the House broke quorum on May 30th to prevent the passage of the voting restrictions bill, SB 828 was one of the many bills that died on the calendar. THLA will explore pursing this legislation in the special session.
In 2019, the City of Austin largely repealed its ban on people “camping” in public areas, which included areas under highway overpasses, along rights-of-way, and on parcels of city-owned property. Immediately after repealing the camping ban, Austin experienced a sudden influx of new homeless individuals and homeless tent encampments in downtown and throughout the city.
Responding to the exponential growth in homeless tent encampments throughout the city, a group organized under the name “Save Austin Now” gathered sufficient signatures to put the camping ban issue as a ballot item for Austin voters. In May of 2021, the ballot proposition requiring enforcement of the prior camping ban passed overwhelmingly, forcing the City of Austin to reinstate both the public camping ban and the City’s prohibition against sitting or lying on a public sidewalk in the downtown area.
The homeless camping situation in Austin quickly caught the attention of state lawmakers. In response, Rep. Capriglione (R-Keller) filed HB 1925, statewide legislation that prohibits “camping” in public places that are not approved as recreational camping areas. If a city or county designates areas to be used as lawful homeless camping areas, HB 1925 requires that city or county get the local government’s camping area designation approved by a state agency.
Additionally, an amendment was added to HB 1925 to not allow the approval of a city or county’s plan for homeless camping areas if the plan proposes to include public parks for this purpose.
Finally, HB 1925 contains state enforcement mechanisms if a local government does not comply with the new state law. Specifically, the Texas Attorney General is empowered by HB 1925 to seek injunctive relief compelling a city or county to both comply with HB 1915 and to enforce the statewide camping ban. Furthermore, the State may withhold State grant funds from the city or county if the local government is not complying with or enforcing the statewide camping ban.
HB 1925 is expected to be signed by the Governor and will take effect on September 1, 2021.
Permit-less carrying: The Legislature took up firearms legislation and the Governor, Lt. Governor, and Speaker of the House made passing pro-gun bills a top priority. For example, the Legislature removed the state law requirement for an individual to obtain a license to carry a handgun in public. Often referred to as “Constitutional Carry” by firearm proponents, similar measures have been proposed in Texas for well over a decade. This Session, the efforts gained new traction when Speaker Phelan expressed support for the measure. HB 1927 passed the Legislature, and Governor Abbott indicated he will sign the bill.
Hotel firearms policy bill: Passage of Senate Bill 20 by Senator Donna Campbell (R-San Antonio) was a top priority item for Lt. Governor Dan Patrick this session. The legislation requires that a hotel with more than ten rooms must allow a hotel guest to:
- Carry or store a firearm or ammunition in the guest’s hotel room;
- Carry a firearm or ammunition directly en route to the guest’s hotel room;
- Carry a firearm or ammunition directly en route between the guest’s vehicle and the guest’s hotel room; or
- Store a firearm or ammunition in the guest’s vehicle located on the hotel property.
Originally, SB 20 only applied to handguns. However, a last-minute floor amendment added in the House of Representatives broadened the scope of this bill to apply to any lawful firearm.
Hotels may continue to require guests to “conceal” the firearm in a case or a bag. Hotels may also continue to prohibit guests from carrying firearms in public areas of the hotel such as lobbies, restaurants, bars, meeting space, pool areas, fitness rooms, etc. However, guests may traverse such areas with their lawful firearm if they are directly en route between their hotel room and their car. Any gun policy adopted by a hotel cannot conflict with these statutory allowances and the policy should be posted on the hotel’s website.
SB 20 does not affect a hotel’s ability to enforce policies prohibiting hotel employees from carrying firearms on the property.
SB 20 will take effect on September 1, 2021.
In the wake of the deadly February winter storm, the Texas Legislature took up overhauling the Texas power grid.
SB 3: Winterizing of Electricity Generating Facilities. Under SB 3, electricity generating facilities and electricity transmission line operators will be required to make improvements to their equipment and “winterize” in preparation for future winter storms. Additionally, under SB 3, Texas residents will be notified via an emergency alert system if the state experiences similar power outages. The passed version of SB 3 does not require renewable energy companies to cover the cost of purchasing reserve power for the grid, an idea that was proposed by the Senate but opposed by the House.
SB 2: ERCOT Board of Directors and Accountability: SB 2 reforms ERCOT’s board of directors, bylaws, and provides new accountability measures for the Legislature and PUC to oversee the entity’s actions.
HB 4492: State Loan to ERCOT. HB 4492 provides ERCOT with an $800 million loan to help that entity pay off debts accrued when many small electricity providers were unable to pay for electricity during the disaster. However, HB 4492 does not provide relief for utility customers, and it will not affect the large bills many consumers saw from the storm. In fact, consumers’ utility bills may increase in the future to pay for both the ERCOT loan, and the costs of utility winterization required by SB 3.
Alcohol to-go Authorization Passes. After the temporarily allowance for alcoholic beverages “to-go” by food establishments during the pandemic, an effort was undertaken at the Legislature to make alcohol to-go a permanent fixture. HB 1024 by Rep. Geren (R-Fort Worth) allows establishments that hold a food permit to sell mixed beverages, beer, or wine to-go with a food order. The alcoholic beverages must be in a sealed container or tamper-proof container and appropriately labeled, and the customer must also order food items at the same time.
Under HB 1024, hotels, similar to a standalone restaurant, are also permitted to sell alcohol to-go (i.e., for off-premises consumption) if the hotel has an MB permit from the TABC, and the hotel also has a food establishment endorsement on their MB permit. Food must be sold with the alcohol taken for off-premises consumption. We note that HB 1024 does not prohibit a hotel with a package store permit from selling sealed alcoholic beverage via the hotel’s store. Additionally, HB 1024 does not affect a hotel’s ability to sell opened beer and wine and mixed drinks from the hotel’s bar and then allow that guest to consume that beverage anywhere on the hotel premises.
24-hour service in hotel bars (for registered guests) passes. This session, the Legislature passed HB 1518 by Rep. Dutton (D-Houston) that will allow a hotel bar to serve alcoholic beverages 24-hours a day to a registered guest of the hotel. The 24-hour hotel bar service is limited only to registered hotel guests. Additionally, HB 1518 became noteworthy in the media because the bill took on an amendment that will allow retail stores to sell packaged beer and wine at 10 am on Sundays instead of noon.
Local hotel occupancy tax bills that passed, and those that did not.
This legislative session, 27 hotel occupancy tax related bills were filed. Overall, however, a very small number of these bills passed this Session. This is largely because some of the hotel tax proposals were amended onto bills that ultimately died on May 30th when the House broke quorum to prevent the passage of the voting restrictions bill. Here is a summary of the hotel occupancy tax bills and bill amendments THLA worked on and their status.
Hotel occupancy tax bills and amendments that passed.
THLA conducted lengthy negotiations with the City of Dallas, Fair Park advocates, Rep. Anchia (D-Dallas), and Senator West (D-Dallas) to narrow the venue tax bill to only apply to the City of Dallas Fair Park facilities, and specifically to require that any venue project for Dallas Fair Park must be a limited part of an overall venue project for the expansion of the Kay Bailey Hutchison convention center.
The ultimate product of our negotiations was a bill that was supported by THLA, the Hotel Association of North Texas, and the advocates for Fair Park and the City of Dallas. The passed version of the bill provides that the City of Dallas can propose a ballot proposition to authorize up to a two-percent venue hotel occupancy tax to improve Fair Park, but only if that same ballot proposition also includes the expansion of the Kay Bailey Hutchinson Convention Center. The bill stipulates that no more than 20 percent of the funding from the hotel occupancy venue tax can be used for Fair Park facility improvements. The remaining 80 percent of the hotel occupancy venue tax proceeds must be dedicated to the Kay Bailey Hutchison convention center expansion. SB 2181 passed and has been sent to the Governor.
- Qualified Hotel Project (QHP) expansion: HB 4103. As noted earlier, the Qualified Hotel Project authority under state law provides for state tax rebates that can be accessed by local communities for their convention center hotel projects. As amended and finally passed, HB 4103 expands the QHP program and the attendant state tax rebates to three new communities: Victoria, Leander, and Missouri City for their qualified hotel projects.
HB 4103 also expanded Lubbock’s existing QHP authority to allow that city to engage in a QHP zone project, which enables tax rebates to the City from businesses that are within 1,000 feet of the convention center hotel project. Victoria is also eligible for a zone.
Additionally, HB 4103 provides QHP cleanup language for the City of Grand Prairie, allowing that city’s future project to be located on land owned by the U.S. Army Corps of Engineers.
Finally, HB 4103 extends the deadline for QHP zone projects to start construction of their projects to 2027 (current law required the construction to have started by 2023).
Hotel Tax for Sports facilities legislation that passed:
Queen City: HB 4103. Originally filed as SB 828, the Queen City sports facility legislation was amended onto HB 4103. The change in the law amends Queen City’s existing authority to use local hotel tax revenue to improve a sports facility. Specifically, it removes the requirement that the sports facility must have been used at least 10 times for regional, state, or national championship activity in the year prior to the improvement. State law still provides that five years after the improvements to the Queen City facilities are made, the City must show that the hotel revenue generated by events at the sports facility at least equals the amount of hotel tax revenue spent on the improvements.
Carrizo Springs: HB 2209. This bill provides that the City of Carrizo Springs may use hotel tax revenue to improve an existing sports facility in the same manner as many other Texas cities. Similar to the Queen City bill, it removes the requirement that the sports facility must have been used at least 10 times for regional, state, or national championship activity in the year prior to the improvement. State law still provides that five years after the improvements to the Carrizo Springs facilities are made, the City must show that the hotel revenue generated by events at the sports facility at least equals the amount of hotel tax revenue spent on the improvements.
Victoria: HB 4103. Originally filed as HB 2977, the City of Victoria sports facility bill was ultimately added onto HB 4103. The applicable provision allows Victoria to enter into the same type of sports facility lease agreements as was permitted for the City of Odessa in the 2019 session. Specifically, Victoria’s amendment allows the City to enter into a lease of at least 25 years with the University of Houston Victoria to construct and maintain sports facilities on land owned by UHV. 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.
Baytown: HB 3682. This bill provides that Baytown may use hotel tax revenue to improve an existing sports facility in the same manner as many other Texas cities. The sports facility must have been used at least 10 times in the preceding year for regional, state, or national championship activity. And, five years after the improvements to the facility are made, the City must show that the hotel revenue generated by events at the sports facility at least equals the amount of hotel tax revenue spent on the improvements.
County hotel tax legislation that passed:
Anderson County: HB 3217. Allows Anderson County to impose a countywide hotel occupancy tax at up to a two percent rate, including within the City of Palestine. Anderson County may use the tax revenue to improve and renovate a civic center owned by the County, and for the other standard county hotel tax purposes.
Atascosa County: SB 696. Allows Atascosa County to impose a countywide hotel occupancy tax at up to a two percent rate. Atascosa County may only use the tax revenue to construct, improve, enlarge, maintain, and operate a civic center with an arena used for rodeos, livestock shows, agricultural expositions, to substantially enhance hotel activity.
Fannin County: SB 696. Originally filed as HB 3565 and was later added onto SB 696. Allows Fannin County to impose a hotel occupancy tax at up to seven percent rate, applicable only in areas of the County that are not subject to a municipal hotel tax (such as within the City of Bonnen). THLA worked with the author to ensure the tax would not apply within the City of Bonnen. Fannin County may use the hotel tax revenue for the standard purposes as other counties.
Maverick County: SB 696. Originally filed as HB 2172 and amended onto SB 696. Maverick County had existing hotel tax authority to impose up to a seven percent hotel occupancy tax outside of the city limits. SB 696 changes that authority to allow Maverick County to impose a countywide hotel occupancy tax with a maximum rate of two percent. In addition to general authority for spending hotel tax revenue, Maverick County may also use hotel tax revenue for certain airport improvements with a cap on expenditures that is based on attributable hotel activity (using the same standard in place for certain other smaller population counties).
County hotel tax data reporting: SB 1655. SB 1655 will require counties that impose a hotel occupancy tax to report tax data on how the county uses the local hotel tax to the Texas Comptroller. This legislation will ensure that Texas counties are treated the same way as Texas cities regarding reporting hotel tax use data to the State of Texas.
Hotel occupancy tax bills and amendments that did not pass.
Use of hotel tax revenue for general infrastructure: HB 3091. Freshman Representative Cody Vasut (R-Angleton) filed HB 3091 that would have allowed cities to use hotel tax revenue for infrastructure such as streets, roads, bridges, utilities, and parks. THLA contacted Rep. Vasut and urged him to honor the statutory prohibition against the use of local hotel tax for general infrastructure purposes. The Representative agreed not to further pursue the bill and THLA committed to work with the Representative and area cities on their hotel tax priorities during the interim.
City of Forest Hill parks, trails, and sidewalks: SB 1851. The City of Forest Hill initially requested legislation that would allow the City to use hotel tax revenue for improvements to its municipal parks, trails, and sidewalks. THLA immediately contacted Senator Powell’s office regarding the legislation and urged them to defer consideration of their bill to our work with the Texas City Manager’s Association on use of local hotel tax for the parks. The Senator’s office honored our request.
City of Tomball parks, trails, and sidewalks: HB 2155. Tomball requested legislation that would allow that City to use hotel tax revenue for improvements to its municipal parks, trails, and sidewalks. THLA immediately began negotiating with Rep. Oliverson’s office and with the City. Ultimately, the legislation was not further pursued after Tomball’s city manager tragically passed away in a vehicle accident.
Use of hotel tax revenue for certain public parks: HB 3223, SB 1469, and SB 696 (attempted amendment). Prior to the start of the session, THLA was approached by leadership from the Texas City Manager’s Association regarding a proposal to allow small to medium sized cities to use hotel occupancy tax revenue to improve certain city parks. The bill as proposed would have simply created a new category for use of hotel tax for park related improvements that directly promote hotel activity.
THLA worked with the proponents to develop a compromise bill that had the following terms:
- ROI requirement: The City could not spend more on the park improvements than the amount of revenue that is generated for hotels from that specific park improvement. For example, if a festival held at a park generated $10,000 in hotel nights, up to $10,000 in hotel tax could be spent at that park on the improvements that generated the hotel activity.
- Documentation Requirement: The determination of the hotel night impact from the parks had to be done in good faith and based on reasonable documentation.
- Limitation on Expenditures to Improvements Generating Hotel Activity: The hotel tax expenditure could only be on the park improvement, and not on maintenance or operational costs of the park.
- Cap on Amount that Can Be Spent: In no case could the total amount of hotel tax spent on park improvements exceed 10 percent of the total annual hotel tax received by that city.
- CVB Funding Protection Provision: If the city expended any hotel tax on park improvements, the city must maintain the percentage of hotel tax that the City expends on marketing to be at or above the average percentage of the hotel tax that the city has historically spent on “marketing” over the last three years. This provision is intended to safeguard DMO/CVB funding.
- Limited Application of Bill to Smaller Communities: The bill was initially proposed to apply to cities of under 200,000 population but was later modified to only apply to the Cities of Wimberley, Fredericksburg, Dripping Springs, and Buda.
Ultimately, the bill did not pass, but due to the THLA good faith negotiations on the bill, we were able to divert the pursuit of the above four noted bills that also sought to use local hotel tax for the parks and related infrastructure. Additionally, the compromise version of the bill is now a much more reasonable and likely starting point if there are future attempts by cities to use local hotel tax for parks related improvements.
Online travel company tax parity bill by the Texas Comptroller: HB 2889. Refiled from the 2019 session, the Comptroller again asked the Legislature to take up tax parity between online travel companies and hotel companies when booking hotel rooms. Currently, online travel companies pay hotel occupancy tax only on the “wholesale amount” that they remit to the hotel for the room night, under the premise that the retail price differential is a non-taxable commission. The Comptroller appropriately asserted that hotel companies and online travel companies should all have to pay the hotel tax on the same “retail” price that is remitted by the customer for the room night. THLA was supportive of the Comptroller’s legislation. However, the online travel companies continued to inaccurately portray the bill as imposing a “new tax,” an argument that was fatal to the bill.
Denton County hotel tax amendment: Unexpectedly, on May 8th, Representative Stucky (R-Denton) added a House floor amendment to HB 2172, an unrelated hotel tax bill for Maverick County. The Stucky amendment was requested by the Denton County Judge. The authority would have allowed Denton County to impose up to a two-percent countywide hotel occupancy tax for the county expo/fairground and events arena.
THLA notified affected hoteliers and the cities within Denton County (Denton, Frisco, Lewisville, and Carrollton). Hoteliers within the City of Denton met with Judge Eads, and ultimately became supportive of the project. However, the County tax would have applied to a large PGA Resort development within the City of Frisco, and Frisco did not withdraw its objection to the tax proposal. Because the various local governmental entities in the area could not reach consensus, Judge Eads ultimately withdrew the county hotel tax proposal and the Stucky amendment was pulled off the bill when it reached the Senate.
Cameron County / City of Brownsville hotel tax legislation: HB 2543, SB 2089, amendment to HB 4305. Cameron County, and eventually the City of Brownsville, filed legislation that shifted forms multiple times during the session.
As initially filed, the legislation would allow Cameron County to use its hotel occupancy tax revenue to construct, improve, and maintain infrastructure related to an international toll bridge. When THLA objected to the legislation as filed, the legislation was substituted with an entirely different idea: allowing the City of Brownsville to establish a tax increment financing (TIF) zone that would allow the City to obtain state tax funds to construct a venue or towers to observe spacecraft launches.
When the substituted version of the bill failed to advance on the House calendar, the TIF idea was abandoned, and an amendment was added to HB 4305 that would allow Brownsville to take part in the qualified hotel project (QHP) program. HB 4305 died on May 30th when the House broke quorum over the voting restrictions bill.
City of Shenandoah road and wastewater line extension: Amendment to SB 828. In the last week of the session, at the request of the City of Shenandoah, Rep. Toth (R-The Woodlands) added a House floor amendment to SB 828 that would have allowed the City to use hotel tax revenue for “municipal infrastructure, including an extension of a road or wastewater pipeline” that fronted a number of existing and anticipated hotels. Shenandoah is a small commercial corridor community that has more hotel rooms within its city limits than it has single family residences.
Immediately after the amendment was posted to SB 828, THLA contacted the City of Shenandoah and Rep. Toth, and worked with them on alternative wording. The next day, Rep. Toth amended his original amendment to provide much stronger limitations on the use of the hotel tax revenue. SB 828 and the Toth amendment died on May 30th when the House broke quorum over the voting restrictions bill.
Dark skies authority for certain Far West Texas communities: HB 4305, SB 2133. Building on dark skies legislation passed in 2019 for certain Hill Country communities, THLA worked with the National Parks Conservation Association (NPCA) on expanding that local authority to the communities of Jeff Davis County, Presidio, and Alpine. At one point, the legislation also encompassed Brewster County and Marfa, but those communities were eventually removed from the bill. The legislation allowed a limited amount of local hotel tax to be used by these named communities for lighting adaptations that maximized the ability for star gazing activities that were incident to tourism in these areas. HB 4305 died on May 30th when the House broke quorum over the voting restrictions bill.
Blanco County hotel tax authority: HB 2345, HB 2433, and amended onto HB 4305. At the request of Blanco County, Rep. Zwiener (D-Kyle) filed legislation to allow Blanco County to impose a seven-percent hotel tax in unincorporated areas of the County and use a limited portion of hotel tax revenue for dark skies related purposes in that county. Both standalone bills, HB 2345 and HB 2433, made it out of the House, but stalled in the Senate in the final days of the session. To save the County hotel tax authority language, HB 4305 was amended on the House floor to include the Blanco County language. However, HB 4305 died on May 30th when the House broke quorum over the voting restrictions bill.
City of Richland Hills use of hotel tax for a sports facility: HB 3234, amended onto SB 828. THLA worked with the City of Richland Hills on legislation that would have allowed that city to use a limited amount of hotel tax revenue for certain qualified sports facilities. However, when SB 828 went to conference committee, the Senate stripped off the Richland Hills amendment because the item was never considered in a public hearing by the relevant Senate committee.
THLA continues to be a strong advocate for all the state events trust fund programs. These programs include the Major Events Reimbursement Program (MERP) and the Events Trust Fund (ETF). These programs allow cities to receive state tax rebates to help cover the local costs that cities and DMOs have for hosting competitively bid major tourism events. THLA continued its advocacy for both the preservation of this program and for the addition of additional qualifying events. The following events trust fund bills passed this session:
- HB 1472: Adds the Confederation of North, Central America and Caribbean Association Football (Concacaf) to the list of eligible events under the events reimbursement fund.
- SB 1265: Adds the National Hot Rod Association Fall Nationals at the Texas Motorplex to the list of eligible events under the events reimbursement fund.
- SB 1155: Adds the Texas Grand Prix to the list of eligible events under the events reimbursement fund.
Unfortunately, several MERP events did not pass this session due to partisan conflicts and conflicts between the House and Senate chambers which caused a number of these and other bills to die in the last week of the session. The proposed additional events that were not added into state law include the SXSW Conference, the LPGA Championship, the Professional Bull Riders World Finals, the PGA Championship, the Senior PGA Championship, and the Ryder Cup. There was substantial support in both chambers for the inclusion of these events into the MERP program and THLA will work to help ensure their inclusion and passage in the next legislative session.
Ensuring employers’ unemployment tax accounts are not assessed for unemployment benefit claims caused by the pandemic. HB 7 is important legislation that ensures employers are not taxed at higher unemployment tax rates due to unemployment benefit claims caused by emergencies such as the pandemic. This bill will ensure hotels do not face higher UI rates for layoffs caused by the pandemic.
Making sexual harassment an unlawful employment practice under state law. SB 45 codifies existing federal law that an employer commits an unlawful unemployment practice if sexual harassment occurs in the workplace and the employer knows or should have known of the conduct and fails to take immediate corrective action.
Excluding card payment processing charge from sales taxes. SB 153 clarifies that the fees charged to a merchant for processing customer payment cards is not subject to sales tax.
Providing tort claims immunity for automated external defibrillators (AEDs). SB 199 was supported by THLA. The bill provides for tort claims immunity regarding the use of an AED, regardless of whether employees are trained in the use of the AED. To be eligible for immunity, the business must maintain the AED in accordance with the manufacturer’s guidelines and conduct a monthly inspection of the AED. The monthly inspection must verify if the AED is placed at its designated location, reasonably appears ready for use, and does not reasonably appear to be damaged.
Applicability of the International Swimming Pool and Spa Code. HB 2205 harmonizes versions of the International Swimming Pool and Spa Code (ISPSC) between the state and local governments.
Regulating third-party food delivery companies. SB 911 requires third-party food delivery companies to register with the Texas Secretary of State, prohibits them from using a restaurant’s mark or trade without permission, prohibits them from charging a restaurant a fee without permission, and prohibits them from adding a restaurant to the service without permission.
SB 911 also prohibits the TABC from issuing a food endorsement to an establishment with a mixed beverage permit if the establishment lacks a permanent kitchen.
Allowing guests to leave a restaurant with unopened wine bottles. HB 1755. Under existing law, a restaurant can allow a patron to take home unconsumed wine remaining in an opened wine bottle at the end of the meal. HB 1755 expands this concept by allowing a person who orders wine with food to remove the bottle of wine from the restaurant whether the bottle is opened or unopened.
Allowing foodservice establishments to sell “grocery” food items to consumers. HB 1276. In the spring of 2020, Governor Abbott issued an emergency directive allowing restaurants to sell bulk food products such as uncooked produce, meat, and dry goods directly to consumers under guidance issued by the Texas Department of State Health Services (DSHS). Restaurants took advantage of the emergency directive to serve customers in new, innovative ways, creating family meal kits and even cooking class boxes. HB 1276 codifies the executive order into state law.
Reform of the Appraisal Review Board (ARB) process. SB 63 streamlines the appraisal review board process by allowing electronic notices and changes who is eligible to sit on the ARB. The bill also sets out specific deadlines for the ARB to provide information to the property tax payor.
Ability to sue appraisal districts for not following procedures. Concerns have been raised that some appraisal districts and appraisal review boards do not follow certain procedural requirements applicable to taxpayers’ protests of property taxes. HB 988 provides taxpayers with the option to bring suit to compel these entities to comply with the applicable requirements. HB 988 also includes a 10-day notice window to allow the district, chief appraiser, or appraisal review board an opportunity to comply before the suit could be filed.
Allowing local governments to authorize installment payments in a disaster or emergency. SB 742 expands the authority of a governing body of a taxing unit to allow certain qualifying taxpayers to remit property taxes in installments if the property was subject to certain types of disaster or emergencies.
Clarifying disaster related property tax exemptions must result from physical property damage. SB 1427 clarifies existing law and codifies a 2020 Texas Attorney General opinion that the temporary exemption from property taxes due to damage from a disaster must involve actual physical property damages. A question arose during the pandemic as to whether economic damages qualify for the exemption. This bill clarifies that purely economic damages do not qualify for the exemption.
Additional firearms bill: Prohibition against governmental contracts with entities that retaliate or discriminate against the firearms industry.
SB 19 passed which prohibits the State of Texas and all other governmental entities in Texas from contracting with entities that “discriminate” against firearms manufacturers, ammunition manufacturers, or trade associations representing the firearms industry. “Discrimination” is defined as refusing to do business with an entity involved with the firearms industry because the entity is affiliated with the firearms industry.
SB 1160 by Senator Taylor (R-Friendswood) authorizes creation of a special purpose district to help protect areas of the gulf coast from storms and other natural disasters. The district will be composed of state-owned territory in Chambers, Galveston, Harris, Jefferson, and Orange counties, and other territory annexed by the District. The District will be governed by a board of 11 directors appointed by the Governor and confirmed by the Senate.
The district can:
- Establish, construct, extend, maintain, operate, or improve a coastal barrier or storm surge gate in the manner provided by Local Government Code statutes governing seawalls and levies in coastal municipalities and counties.
- Establish, construct, and maintain recreational facilities for public use and environmental mitigation facilities related to certain district projects.
- Establish, construct, maintain, or operate a project recommended in the ecosystem restoration report or the protection and restoration study.
- Provide interior drainage remediation or improvements to reduce additional flood risk for a project recommended in the ecosystem restoration report where additional flood risk resulted from the design or construction of a project.
The district would be funded by a maximum property tax rate of up to 5 cents on each $100 valuation. The district is required to hold an election to obtain voter approval before imposing a property tax or bond payable from property taxes.
Additional bills that failed to pass:
Many 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 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 mandates against their private sector businesses or are preparing to do so.
Over a decade ago, THLA helped pass a statewide law that preempts Texas local governments (cities and counties) from mandating an artificially higher minimum wage for the private sector. Additionally, THLA worked with our industry partners within a broad-based coalition to oppose any efforts to provide municipalities or the State with the power to set artificially higher private sector wages.
The following other employment law bills did not pass:
- HB 60, HB 731, HB 1827, HB 1917, HB 3226, HB 4013, and HB 4484 would have raised the minimum wage to $15 / hour and eliminated the tip credit. HB 383 would have raised the minimum wage to $12 / hour and eliminated the tip credit.
- HB 244 and SB 389 would have allowed cities and counties to set their own minimum wage.
- HB 255 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 2507 would have:
- HB 360 and HB 419 would have prohibited employers from inquiring about an applicant’s wage history.
- HB 405 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 401 and HB 1915 would have required retail establishments (including hotels) to notify hourly employees of their schedules at least two weeks in advance if the establishment had more than 500 employees and at least 10 other retail establishments in Texas.
- HB 87, HB 284, and HB 1298 would have mandated businesses provide paid sick leave.
- HB 4100 would have created a Texas version of the FMLA and provided funding for the leave through a state appropriation.
- SB 209 would have prohibited most nondisclosure and alternative dispute resolution agreements between employers and employees.
- HB 4290 would have invalidated covenants not to compete for employees earning less than $15.01 per hour.
- SB 1669 would have made it unlawful to require vaccines of employees.
HB 778, HB 1502, HB 1556, HB 3230, HB 4242, SB 144, and SB 1255 would have extended the sunset of the Texas Economic Development Act in 2022, but all failed to pass. This item may be added to the call for a special legislative session.
This session, several bills related to the regulation of STRs were filed but none were successful.
Two bills (HB 612 and HB 3846) were filed that would have eliminated the exemption from the uniform school start date for public schools that since 2015 have declared their districts to be “Districts of Innovation” and thereby not subject to uniform school start date requirements. HB 3846 by Rep. Krause (R-Arlington) received a public hearing, but the bill did not advance out of committee. Last session, a similar bill advanced to the House floor, but did not receive sufficient votes to pass.
HB 1101 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 unreasonably increase commercial and residential property values for purposes of property tax liability. THLA opposes this legislation, and it did not pass.