LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 13, 1997
TO: Honorable Kenneth Armbrister, Chair IN RE: House Bill No. 92, As Engrossed
Committee on State Affairs By: Brimer/et al.
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB92 ( Relating
to the financing of sports and community venues and related
infrastructure; authorizing the imposition of certain local
taxes and the issuance of local bonds; providing penalties.)
this office has detemined the following:
Biennial Net Impact to General Revenue Funds by HB92-As Engrossed
The probable net fiscal impact to General Revenue Related funds
is zero. The Comptroller must determine that implementation
of the bill's provisions will not have a significant negative
fiscal impact.
The bill would amend the Local Government Code by adding two
additional chapters: sports and community venues, and sports
and community venue districts. The new chapters would authorize
cities or counties (or a combination) to build venues, levy
certain taxes, and issue bonds to finance the stadiums.
A
venue would be defined as an arena, coliseum, stadium, or other
type of facility or area that was used, or planned for use for
one or more professional or amateur sports events, community
events, or other sports events, including rodeos, livestock
shows, agricultural expositions, promotional events, and other
civic or charitable events, and for which a fee for admission
was charged or planned to be charged. Also included in the
definition of "venue" would be convention centers, auditoriums,
theaters, museums, aquariums, certain tourist development areas,
or any other economic development projects authorized by other
law.
A venue project would be defined as a venue and the
related infrastructure that was planned, acquired, established,
developed, constructed, or renovated under the provisions of
the bill. Related infrastructure would include any store, restaurant,
on-site hotel, parking or transportation facility, road, street,
water or sewer, or other improvement-either on-site or off-site-that
would relate to and enhance the use, value, or appeal of a venue,
and any other expenditure that was reasonably necessary to construct,
improve, renovate, or expand a venue. A municipality or county
could use the provisions of this bill for a venue project originated
under other law, including Section 4B, Development Corporation
Act of 1979 or Subchapter E, Chapter 451 of the Transportation
Code.
The Sports and Community Venue chapter of the Local
Government Code would apply to a municipality with a population
of more than 1.2 million and to a county with a population of
more than 2.2 million only if the municipality and county create
a venue district under the Sports and Community Venue District
chapter of the Local Government Code.
Before calling an
election on a resolution providing for the development or construction
of a stadium, a municipality or county would obtain from the
Comptroller a determination that the implementation of the resolution
would not have a significant negative fiscal impact on the state.
Within 15 days of receipt of the resolution, the Comptroller
would be required to perform an analysis to determine the fiscal
impact on the state and to provide the municipality or county
with a written notice of the results. Upon a finding that implementation
would result in a significant negative fiscal impact on state
revenue, the written notice of results would include information
on how to change the resolution so as to avoid the significant
negative fiscal impact. No response from the Comptroller would
be considered to mean that there would be no significant negative
fiscal impact on the state.
If the Comptroller found that
a resolution would have a significant negative fiscal impact
on the state, a municipality or county could contest the finding
by filing an appeal with the Comptroller. Within 11 days of
receipt of an appeal, the Comptroller would be required to reply
with the results of a new analysis. If it was again found that
implementation would result in a significant negative fiscal
impact on state revenue, the written notice of the results of
the new analysis would include information on how to change
the resolution so as to avoid the significant negative fiscal
impact. No response from the Comptroller would be considered
to mean that there would be no significant negative fiscal impact
on the state.
If the Comptroller determined that a resolution
would have no significant negative fiscal impact on the state,
a municipality or county could call an election on the proposed
venue project. Voters would vote for or against the authorization
of a venue project and the imposition of one or more local taxes
to be used to finance the project.
Further, and very similar
to the Comptroller's determination of state impact process,
if a resolution contained a sales and use tax and that tax would
reduce the tax rate of a rapid transit authority, the authority
would perform an analysis to determine if a reduction in their
tax rate would have a significant fiscal impact on the authority's
ability to provide services or impair any existing contracts.
Once
approved by a majority of the voters, a municipality or county
could proceed with the planning, acquisition, establishment,
development, construction, or renovation of a venue project.
A municipality or county would be authorized to contract with
persons (both public and private), including a sports team,
club, or organization, to do this. No ad valorem taxes could
be used by municipalities or counties to plan, acquire, establish,
develop, construct, or renovate an approved venue project.
A
municipality or county in which a venue project had been established
would be required to establish a Venue Project Fund (fund).
Into the fund would be deposited the proceeds from any taxes
levied under the provisions of this bill; proceeds from bonds
sold to finance a venue; proceeds from the sale of luxury boxes,
seat licenses, stadium rental payments, or concessions or parking;
and any other monies required by law to be deposited into the
fund.
Money in the fund could be used by a municipality
or county to pay for the cost of developing or constructing
a venue project; the principal, interest, and other costs of
bonds issued; or the operation or maintenance of a venue project.
The bill states that a venue project would be owned, used,
and held for public purposes by the municipality or county.
While a facility was owned by a local government it would not
be subject to property taxation. If the implementation of a
resolution resulted in a loss of school property tax, the operator
of the venue located on the affected property would pay to the
school district an amount, annually, equal to the amount of
school property taxes that otherwise would have been paid.
This provision, however, would not apply to a venue operator
that was a political subdivision of this state.
Several
local option taxes would be authorized under the provisions
of this bill.
Sales and use tax - A municipal sales tax
would be governed by the Municipal Sales and Use Tax Act, except
as inconsistent with the bill. Similarly, a county sales tax
would be governed by the County Sales and Use Tax Act, except
as inconsistent with the bill. The sections of both Acts addressing
a maximum local sales tax rate of 2 percent would apply. Imposition
in a city or county where certain other sales taxes are levied,
such as transit authority, crime control district, or industrial
development (4A or 4B), would be allowed, but, if necessary,
the rate of one of these other entity sales taxes would be reduced
so as to keep the total local rate less than or equal to 2 percent.
If the tax rate of a transit authority was reduced as a result
of enacting a sales tax, the revenue collected could only be
used for purposes for which the transit authority could have
used the revenue.
Municipalities and counties would be authorized
to levy the tax at a variety of rates not exceeding 0.5 percent.
Revenue from the tax would be deposited into the new Venue
Project Fund. The tax would be abolished once all bonds issued
to finance a venue project had been paid in full, or the necessary
amount of money to do so had been set aside in a trust account.
Short-term
motor vehicle rental tax - Municipalities and counties would
be authorized to levy a tax on the rental for 30 days or less
of motor vehicles. Motor vehicles would include passenger cars,
vans, station wagons, sport utility vehicles, and trucks. The
tax would be imposed in increments of one-eighth of one percent,
not to exceed 10 percent. The owner of the rental car would
be required to collect the taxes due under this bill and remit
them to the appropriate local government. The tax could only
be levied if bonds had been issued for a venue project, and
it would cease to be imposed upon the retirement of that debt.
Revenue from the tax would be deposited into the new Venue
Project Fund.
Admissions tax and a parking tax - A tax on
each ticket sold to an event at a sport venue project could
be levied at a rate not to exceed 10 percent. A tax on each
motor vehicle parked in a facility of a sport venue project
could be levied at an amount not to exceed $3 per vehicle.
The owner of the project, or owner or lessee of the parking
facility would be required to collect the tax and remit the
revenue to the appropriate local government. The tax could
only be levied if bonds had been issued for a venue project,
and it would cease to be imposed upon the retirement of that
debt. Revenue from the tax would be deposited into the new
Venue Project Fund.
Facility use tax - A tax on each member
of a major league professional sports team that played a professional
sports game in a venue project would be authorized. The tax
rate could not exceed $5,000 per game. The owner or lessee
of the project would be required to collect the tax and remit
the revenue to the appropriate local government. The tax could
only be levied if bonds had been issued for a venue project,
and it would cease to be imposed upon the retirement of that
debt. Revenue from the tax would be deposited into the new
Venue Project Fund.
Athletic events in certain municipalities
- Municipalities with a population in excess of 500,000 located
in a county bordering the United Mexican States would be allowed
to imposed a tax on the short-term rental of motor vehicles
for the purpose of operating or paying costs associated with
a post-season intercollegiate football bowl game.
Sports
and Community Venue Districts (combinations of municipalities
and counties) would be allowed by this bill. The districts
could consist of two or more counties, two or more municipalities,
or a combination of municipalities and a counties, and such
districts would become a political subdivision of the state.
These districts would be able to do the same things as municipalities
or counties with regard to venues and venue projects, subject
to the same determination of fiscal impact on the state by the
Comptroller and, if necessary, the local transit authority.
The districts would be allowed to impose the same local
option taxes discussed above and in the same manner. A district
would not be allowed to impose an ad valorem tax. A district
could use the provisions of this bill for a venue project originated
under other law, including Section 4B, Development Corporation
Act of 1979, or Subchapter E, Chapter 451 of the Transportation
Code.
The bill would amend the Development Corporation
Act of 1979 to provide that cities that create or have created
corporations under either Section 4A or 4B of that act would
be allowed to submit a proposition to voters authorizing the
use of 4A or 4B sales tax revenue for specific projects, including
sports venues.
A municipality would be allowed to contribute
or dedicate up to 25 percent of the sales tax revenue received
by the municipality to pay for all or part of the costs of one
or more venue projects in the municipality. The contribution
or dedication would be subject to voter approval. A municipality
dedicating sales tax in such a manner could direct the Comptroller
to deposit the pledged revenue to a trust or account.
The
changes in law that would be made by the bill would not apply
to the use of tax revenue pledged to secure bonds issued before
the effective date of this bill. Also, the bill would not affect
the authority of a municipality that had created an industrial
development corporation, before the effective date of this bill,
to continue collecting any tax authorized for the benefit of
the corporation, or to continue any project or projects, before
that date.
Notwithstanding any other provision of the bill,
a Comptroller fiscal analysis would not be required if, at election
held before this bill takes effect, voters approved of the establishment
of stadiums for professional sports teams.
This bill would
expire August 31, 2001.
This bill would take effect immediately
upon enactment, assuming that it received the requisite two-thirds
majority votes in both houses of the Legislature. Otherwise,
it would take effect 90 days after adjournment.
Methodology
The fiscal impact on the state and local governments
would vary depending on which cities and counties would form
authorities and, of those, what taxes the authorities would
choose to enact under the provisions of this bill.
The
fiscal impact on local governments would depend on the local
option taxes that a locality chose to impose and that a majority
of the local voters approved. It is possible to provide examples
of what the impact might be for a city in Texas if that city
were to impose the local option sales tax at certain rates to
finance a venue project pursuant to the provisions of the bill.
Local
Option Tax: Houston
Dallas San Antonio
Sales
Tax @ 1/2 cent $106,956,000
$69,498,000 $42,986,000
The fiscal
impact on the state and on local governments in reduced property
tax revenue would vary depending on which cities and counties
enacted the provisions of the bill and converted taxable property
to exempt "public-use" property. Section 334.044 of the bill
provides a property tax exemption for all approved sports venue
projects owned, used, and held by a municipality or county.
The exemption is based on a provision that defines all such
facilities as "public-use" property which is exempt from ad
valorem taxation. In addition, the bill would specifically
exempt all leasehold or other possessory interest granted by
the municipality or county while the municipality or county
owns the project.
The bill would require an operator of
an approved venue project to pay to a local school district
an amount equal to the ad valorem taxes that would otherwise
have been levied for the preceding year on the subject venue
property, without including the value of any improvements.
This would be payable to the district on January 1 of each year
in which the project is in operation and in which the real property
is exempt from ad valorem taxation. This section does not apply
if the operator of the project is a political subdivision of
this state. This section would have no effect on the calculation
of state aid for public education.
Section 403.302, Government
Code, requires the Comptroller to conduct a property value study
to determine the total taxable value for each school district.
Total taxable value is an element in the state's school funding
formula. Passage of the bill could cause a reduction in a school
district's taxable values reported to the Commissioner of Education
by the Comptroller.
When calculating state aid for public
education, the state must recognize the loss in local property
value due to exemptions granted to qualified organizations within
the school district. Depending on a school district's wealth
per student, this could result in an increased cost to state-funded
public education.
The economic benefits of the type of developments
authorized by the provisions of the bill should be positive
over time. However, no estimate of the secondary economic benefits
have been calculated. Similar annual fiscal implications of
the bill would continue as long as the provisions of the bill
are in effect.
Source: Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK ,JD