LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 21, 1997
         
         
      TO: Honorable Bill Ratliff, Chair            IN RE:  Senate Bill No. 893
          Committee on Finance                              By: Moncrief
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB893 ( Relating 
to certain convention center hotel facilities.) this office 
has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB893-As Introduced
         
Implementing the provisions of the bill could result in a negative 
fiscal impact to the State.  The fiscal impact to the state 
would vary depending on which cities or counties would choose 
to develop convention center facilities under Section 4B of 
the Development Corporation Act of 1979.  The impact would depend 
on the number and amount of local taxable property removed from 
the local tax rolls due to being converted to public-use property, 
but it is possible to provide a hypothetical example of such 
an impact.  In a hypothetical school district that qualifies 
for both tier-one and tier-two state aid for public education, 
it would cost the state one dollar for each dollar of local 
school district property tax revenue loss due to the provisions 
of the bill.  In such a hypothetical school district in which, 
for example, $100 million of taxable property would be converted 
to public-use property, the probable cost to General Revenue-related 
funds during each fiscal year that the property remained off 
the local tax rolls would be $1.5 million, based on a tax rate 
of $1.50 per $100 of valuation.
         

         
 
FISCAL ANALYSIS
The bill would lower the population bracket 
in the municipal hotel tax law for certain hotel facilities 
and for the pledging of hotel tax revenue for bonds.  It would 
include convention center facilities as a project for economic 
development and lower the population bracket for a qualified 
hotel project in an enterprise zone.  The bill would take effect 
immediately. 

METHODOLOGY
Currently, the definition of convention 
center facilities in the hotel tax law includes hotels within 
1,000 feet of a convention center owned by a city with a population 
of 1.5 million or more, and historic hotels within one mile 
of a convention center owned by a city with a population of 
1.5 million or more.  Hotel tax revenue from these two types 
of hotels may be pledged by a city of population 1.5 million 
or more for the payment of bonds issued to acquire and construct 
a convention center hotel or to acquire, remodel or rehabilitate 
a historic hotel.  A hotel owned by a city with a population 
of 1.5 million or more is a qualified hotel project in an enterprise 
zone.  The Development Corporation Act of 1979 does not include 
convention center facilities as an eligible project.

The 
bill would lower the city population bracket to 440,000 or more 
and include counties with a population of 440,000 or more in 
the hotel tax law and would allow the hotels to be within the 
same specified distance to a city-owned or county-owned convention 
center.  By lowering the population bracket, the City of Houston 
would be joined by the cities of Dallas, San Antonio, El Paso, 
Austin and Fort Worth.  The city population bracket would also 
be lowered to 440,000 for a qualified hotel project in an enterprise 
zone.

The bill would also include convention center facilities 
as an eligible project in Sec. 4B of the Development  Corporation 
Act of 1979.  There are currently 190 4B city development corporations 
within the state.

Under Sec. 4B, a qualified convention center 
facility would be owned, used, and held for public purposes 
by the city or county.  While a facility was owned by the city 
or county, it would not be subject to property taxation.

The 
fiscal impact on the state and on local governments in reduced 
property tax revenue would vary depending on which cities or 
counties enacted the provisions of the bill and converted taxable 
property to exempt "public-use property."  Article 5190.6, Development 
Corporation Act, Section 4B. (k) provides a property tax exemption 
for all approved projects owned, used and held by an eligible 
municipality or county.  The exemption is based on a provision 
that defines all such projects as "public-use property" which 
is exempt from ad valorem taxes.
 
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.


Similar annual fiscal implications would 
continue as long as the provisions of the bill are in effect.
          
LOCAL
The fiscal impact on units of local government would 
vary depending on which cities or counties would choose to finance 
convention center facilities through the municipal hotel tax.
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,RR ,SM