LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
April 27, 1995
TO: Honorable Ken Armbrister, Chair IN RE: Committee Substitute
Committee on State Affairs for Senate
Senate Bill No. 1346
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on Senate Bill No.
1346 (Relating to the creation of sports authorities and sports
facility enterprise zones and to the financing of sports
facilities.) this office has determined the following:
This bill would authorize the creation of sports facility
enterprise zones ("zones") and qualified sports facility projects
("projects"). A sports facility enterprise zone would be defined
as an area designated by a municipality as a reinvestment zone
pursuant to the provisions of the Tax Increment Financing Act
chapter of the Tax Code and containing a project. A sports
authority ("authority") would be a non-profit corporation created
by local government pursuant to the Texas Transportation
Corporation Act.
A qualified sports facility project would mean an arena,
coliseum, stadium, or speedway (including administrative,
service, concession and parking facilities) intended to be used
for NFL, NBA, National Hockey League, or major league baseball
games; NASCAR or Indy Car events; or for Olympic or international
games. The project would be constructed, remodeled, or
rehabilitated by a municipality, county, or other local
government or by a sports authority which receives or will
receive rebates, refunds, or payments from the state or local
government.
A local government could enter into an agreement to guarantee,
from hotel occupancy or sales taxes, the bonds or other
obligations of an authority issued or incurred to pay for a
project.
The Tax Code would be amended to authorize a sports authority
which owns a project or is assisting a local government with a
project to receive a rebate, refund, or payment of:
80 percent of state sales and use taxes (not otherwise dedicated
by law) generated, paid, or collected by the project, businesses
operating in the project, or for events at the project;
80 percent of state mixed beverage taxes generated, paid, or
collected by the project or businesses operating in the project;
and
80 percent of the amount of incremental increase in state sales
and use taxes and mixed beverage taxes retained by the state.
Incremental increase means the amount of tax generated, paid, or
collected in a year by all businesses operating in a zone that
exceeds the amount of tax generated, paid, or collected by
those businesses in the year before the year in which the zone
was created.
The authority would receive the tax revenue for the term of the
debt incurred to build or remodel the facility.
A sports authority would not receive a rebate, refund, or payment
of state taxes before September 1, 1998.
A sports authority, would not be entitled to the state rebates,
refunds, or payments unless each local government that created
the authority agrees to rebate, refund, or pay to the sports
authority all of the hotel occupancy, ad valorem, sales, and
mixed beverage taxes collected at the project and all of the
incremental increase in certain tax revenues collected from
businesses operating in the sports facility enterprise zone.
The bill would provide that a tax incremental bond or note issued
to finance a project would have to mature within 30 years of
issuance. A municipality would be able to pledge certain tax
revenues and the incremental increase in certain tax revenues to
the payment of bonds or notes issued to pay for a facility
according to terms and conditions the municipality deems
appropriate.
Two municipal taxes, specifically for use with projects, would be
authorized. An event parking tax could, by city ordinance, be
imposed within a zone during the time which an event at a project
is taking place. The tax could be based on a flat charge per
parked vehicle or on a percentage of the price; however, the tax
could not exceed $2.50 per vehicle. An admissions tax could be
imposed in the same manner and it could not exceed $2 per person.
The taxes could only be imposed if bonds are issued to finance a
project and only while those bonds are outstanding and unpaid.
Revenues from the two municipal taxes could only be used for the
acquisition of sites for and the acquisition, construction,
improvement, rehabilitation, remodeling, enlarging, equipping,
or repairing of projects. A municipality would be required to
pledge the revenues from the parking tax and the admissions tax
for the payment of bonds issued by a municipality for the above
purposes.
An enactment of the 74th Legislature, Regular Session, 1995, that
would impose a restriction or limitation on a rebate, refund, or
payment of state or local taxes to an enterprise zone or
qualified project would not apply to a sports facility enterprise
zone or to a qualified sports facility project created pursuant
to this bill.
This bill would take effect September 1, 1995.
The fiscal implications to the state and units of local
government cannot be determined.
The loss of state tax revenue could be substantial. The loss of
state taxes generated in the facility could represent one portion
of the state taxes received by the sports authority. The zone
from which the sports authority would receive the incremental
state sales and mixed drinks taxes could encompass up to 15% of
all appraised value in the municipality in which the facility is
located.
While the actual payment of state taxes to the sports authority
would not begin until September 1, 1998, the status of the taxes
for the period between the date the authority was formed and
September 1, 1998 is not clear.
Source: Comptroller of Public Accounts
LBB Staff: JK, SM, RS, DF