Hotel Occupancy Tax Bills – 2017 Legislative Session
This legislative session, over 50 bills were filed that directly affect local hotel occupancy taxes. Here is a summary of the hotel occupancy tax bills that we are tracking and working on.
HB 1896 adds clarity to certain statutory definitions in the Tax Code and Local Government Code with respect to local hotel occupancy taxes. The bill incorporates clarifying wording to ensure the long held statutory interpretations of these provisions is clear in the state statutes.
HB 1896 adds that clarity in several important areas.
1. First, regarding venue taxes: The bill makes clear that eligible hotel tax venue projects may have incidental uses for community and other civic or charitable events.
2. Second, the bill reinforces that qualifying facilities “within the vicinity” of a convention center are eligible for venue hotel tax funding.
3. Third, the bill adds a needed definition for the term “meetings.”
4. Fourth, the bill clarifies that the application of increases in the local hotel tax to pre-existing contracts be consistent with state tax practice, as well as the existing interpretation of U.S. Constitutional Law.
5. Finally, the bill removes a provision that limits eligibility of certain sports facilities based on the type of sport, and makes all sports facilities eligible for local hotel tax funding, provided the facility has the required statutory impact on tourism and hotel activity.
This bill provides authority to the Texas Comptroller to make the monthly room night sales information for individual hotels available to the public by an open records request, while removing this proprietary information about individual hotel sales data from the Texas Comptroller’s public website. We anticipate the legislation will diminish the onslaught of unsolicited calls to hotels by vendors, while still providing access to this information to governmental entities, the media and other interested individuals and entities.
Sports facility bills
Several Texas cities have filed legislation to secure authority to use local hotel occupancy tax revenue on a sports facility. THLA works closely with these cities to ensure that the sports facility bill contains return-on-investment provisions, to ensure the hotel tax revenue is used in a way that benefits the hotel industry and that the hotel tax funding for marketing is protected. With regard to ROI, under these bills, a community can use hotel tax revenue on a sports facility only if the amount of area hotel revenues from the sports facility over five years equals the hotel tax revenue invested into the facility. The following sports facility bills have been filed. Please note that there are committee substitutes that are being worked for most of these bills that will have THLA negotiated language which is not yet reflected in the below links for the bills:
- Brownfield: HB 3973 / SB 2056
- Bryan / College Station: HB 4187
- Buda: HB 2354
- Denton: HB 2445
- Edinburg: HB 2526 / SB 1136
- Missouri City: HB 1806 / SB 1365
- Queen City: SB 942
- Marshall & Carthage: HB 3484
- Shenandoah: HB 939 / SB 2166 / SB 1442
- South Padre Island: HB 4029 / SB 1804
Convention center hotel bills
A number of bills were filed to allow the following cities to use rebates of certain state taxes along with local hotel tax from a convention center hotel to help cover the costs incurred to construct a convention center hotel. These bills add these cities to existing authority held by other communities to use local and state hotel occupancy tax revenue for this purpose. Referred to as “qualified hotel projects,” only the hotel tax revenue generated by the particular convention center hotel can be used to pay for the project. Additionally, these cities are entitled to receive a rebate of state hotel occupancy taxes, state sales taxes, and local alcoholic beverage taxes from the eligible project for the first 10 years after the project opens for occupancy. THLA requested and received vital language in these bills to protect the continued funding for the area CVB at historic levels.
- Abilene: HB 1529 / SB 729
- Cedar Hill: HB 2794 / SB 1354
- Grand Prairie: HB 3731 / SB 354
- Laredo: HB 2538
- League City: HB 3575
- Lewisville: HB 1853
- Lubbock: HB 1680 / SB 797
- Katy: HB 3838 / SB 1545
- Port Aransas: HB 3626 / HB 3838 / SB 1545
- City of Prosper: HB 1578 / SB 832
- Roanoke: HB 3794
- Rowlett: HB 1694
- Sugar Land: HB 1647 / HB 3838 / SB 1545
Corrective bill for electronic tax collection system: HB 1300
Last legislative session, MuniServices passed legislation that would allow a city to use local hotel tax revenue for an electronic hotel tax collection and reporting system. However, due to a legislative staff mistake, that bill failed to include several important provisions. THLA worked with MuniServices to correct the following:
- Include a limitation on the amount of local hotel tax revenue that can be expended by a city on an electronic collection and reporting system to the lesser of 1% of the local hotel tax revenue or $75,000 annually.
- If a city uses hotel tax revenue for such a system, the city must allow the area hotels to retain 1% of the hotel tax revenue collected to offset the costs of collecting the tax.
- The city may not use local hotel tax revenue to audit hotels.
HB 3280 / SB 1221 requires cities to report hotel tax budget information to the Texas Comptroller annually. That report must include: 1) tax rate, 2) any venue tax rate, 3) amount of revenue collected for the preceding fiscal year, 4) the amount and percentage of funds used on each category of local hotel tax expenditures. This bill was requested by Texans for the Arts.
Arts-related hotel tax bills
Two bills were filed that would increase the amount of hotel tax revenue that two specific communities can use on arts expenditures.
HB 1494 for the City of Rockport would allow that city to annually use up to 50% of its local hotel tax revenue on arts-related expenditures. Similar to virtually all other Texas cities, Rockport is currently capped at using no more than 15% of its local hotel tax revenue on the arts. THLA is opposing this legislation unless language is included that will protect the current level of marketing funding to the CVB and a provision to ensure a set return-on-investment mechanism and clawback provision if there is an allocation to the arts over 15%.
HB 4173 for the City of Austin would allow that city to annually use up to 19.3% of its hotel tax revenue on arts-related expenditures. Currently, the City is capped at using no more than 15% of its hotel tax revenue on the arts. THLA is opposing this legislation.
Use of local hotel tax revenue for homeless assistance programs: HB 3485
HB 3485 allows local hotel tax revenue to be used for homeless assistance programs. THLA is opposing this legislation.
Travis County (Austin area) venue hotel tax authority: HB 3077
HB 3077 would allow cities and counties to use hotel tax revenue for a venue project for a city or county-owned or managed convention center, park facility, or watershed protection project. THLA is opposing this legislation due to the inclusion of park facilities and watershed protection projects to be funded by local hotel tax.
Marfa is in unique situation, located hundreds of miles from the nearest airport with scheduled airline service, yet the town caters to a thriving high-end tourism base. As the number of private jets ferrying tourists and hotel guests has increased, the small county-owned airport has suffered from a lack of repairs to handle private jet aircraft. THLA worked with the City on legislation that ensures important protections for the local lodging industry: The bill is bracketed only to Marfa and for an airport without commercial air service, the city cannot spend more money on the airport improvement than that city will see in returned hotel revenue from increased private air passengers staying at Marfa hotels, and there is a sunset on the enabling legislation.
Rural county airport bill: HB 2871
HB 2871 allows county hotel tax revenue for counties with no municipality to be used for a county-owned airport, and for beautification projects. Because this bill does not contain any of the safeguards found in the Marfa airport bill, THLA is working with the bill’s sponsor on an amendment, and the new version contains a substitute that provides for the necessary ROI.
State Hotel Tax Funding for Beach Erosion: HB 2690
HB 2690 transfers to the General Land Office for coastal erosion response 2% of the 6% state hotel occupancy tax that is remitted by hotels in a coastal county. Much of this money is then transferred to the counties that perform the erosion response work. This transfer does not affect the dedicated state hotel tax revenue for tourism promotion.
Decades ago, the legislature gave Real County authority to impose a county hotel occupancy tax. However, there was a technical error in the geographic description of Real County that went unchanged for many years. These bills correct that error.
El Paso County has had authority to impose a County hotel tax for many years. This authority is dependent upon the population bracket for the County, and one of the cities within the county is quickly growing in population. Rather than wait for the 2021 omnibus corrective bill, El Paso County is proactively seeking an amendment to the County’s description in the Tax Code now.