LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 7, 2001
TO: Honorable Frank Madla, Chair, Senate Committee on
Intergovernmental Relations
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1231 by West, Royce (Relating to certain hotel
facilities.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1231, As Introduced: negative impact of $(2,488,095) through *
* the biennium ending August 31, 2003. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 (2,488,095) *
* 2004 (2,488,095) *
* 2005 (2,488,095) *
* 2006 (2,488,095) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue Hotel Occupancy Cities Counties *
* Fund Tax Deposits *
* 0001 Account *
* 5003 *
* 2002 $0 $0 $0 $0 *
* 2003 (2,488,095) (183,333) (2,400,000) (800,000) *
* 2004 (2,488,095) (183,333) (2,400,000) (800,000) *
* 2005 (2,488,095) (183,333) (2,400,000) (800,000) *
* 2006 (2,488,095) (183,333) (2,400,000) (800,000) *
***************************************************************************
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* Fiscal Year Probable Revenue Gain/(Loss) from *
* Mixed Beverage Tax allocation to *
* Cities and Counties *
* 2002 $0 *
* 2003 (128,572) *
* 2004 (128,572) *
* 2005 (128,572) *
* 2006 (128,572) *
*****************************************************
Technology Impact
None.
Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code so that the rebate,
refund, or payment of state sales and use taxes for enterprise projects
would not apply to a qualified hotel project established by a city with a
population of more than 1 million under the Texas Enterprise Zone Act,
as amended by this bill.
Provisions of the bill would also amend Chapter 2303, Government Code, to
add to the definition of "qualified hotel project," a hotel (and any
facilities ancillary to the hotel, including shops and parking
facilities) owned by or located on land owned by certain civic center
authorities. To qualify, a civic center authority would have to have
been created under Chapter 281 of the Local Government Code by a
municipality with a population of more than one million and act on behalf
of that municipality. Additionally, to be a qualified hotel project, a
hotel would have to be located within 1,000 feet of a convention center
owned by the municipality.
The bill would also amend Chapter 351 of the Tax Code to expand the
definition of "convention center facilities" to include a hotel owned by
or located on land owned by a civic center authority created under the
Civic Center Authority Act by a municipality with a population of more
than one million and act on behalf of that municipality. As in the case
above, the hotel would have to be located within 1,000 feet of a
convention center owned by that municipality.
A civic center authority created by a municipality with a population of
more than one million, and that acts on behalf of that municipality,
could pledge the revenue from municipal hotel taxes from a hotel owned by
or located on land owned by the authority and located within 1,000 feet
of a convention center owned by that municipality for the payment of
bonds issued for the construction of the hotel.
Further, the bill would amend Chapter 1504 of the Government Code to
allow a civic center authority created by a municipality with a
population of more than one million, to, on behalf of that municipality,
establish, acquire, lease as leasee or lessor, construct, improve,
enlarge, equip, repair, operate, or maintain a hotel, and any facilities
ancillary to the hotel, including shops and parking facilities, owned by
or located on land owned by the authority, and that is located within
1,000 feet of a convention center facility owned by the municipality.
The civic center authority would be authorized to issue bonds or incur
other obligations to acquire, lease, construct, or equip a hotel and any
ancillary facilities as described under Chapter 1504 of the Government
Code, as amended by the bill.
The bill would take effect September 1, 2001.
Methodology
Under the current Texas Enterprise Zone Act, a governmental body,
including a municipality, county, or other political subdivision, could
agree, for a period not exceeding 10 years, to rebate, refund, or pay
eligible taxable proceeds to the owner of a qualified hotel project at
which the eligible taxable proceeds were generated. "Eligible taxable
proceeds" may include taxable proceeds generated, paid, or collected by a
qualified hotel project or a business at a qualified hotel project,
including hotel occupancy taxes, ad valorem taxes, sales and use taxes,
and mixed beverage taxes. It includes both state and local taxes. Based
on the expanded definition of qualified hotel projects, as proposed by
this bill, more projects in the cities of Dallas and San Antonio could be
eligible for state and local tax rebates.
This estimate assumes a total of 2 projects would qualify beginning in FY
2003. Taxable hotel receipts and mixed beverage tax remittances for an
appropriately-sized hotel were estimated based on Comptroller tax files.
A typical project would receive a rebate of approximately $1.1 million
in state hotel occupancy taxes, $1.2 million in city hotel taxes, and
$400,000 in county hotel taxes based on the 6 percent state hotel tax
rate, a representative 7 percent municipal hotel tax rate, and a
representative 2 percent county hotel tax rate. The project also would
be eligible for an estimated $300,000 in mixed beverage taxes and an
unknown amount of property taxes. These amounts would be paid to the
eligible project by the governmental body with which the project entered
into the agreement for the refund of taxes.
Local Government Impact
In addition to the fiscal impact to units of local governments shown in
the above table, a variable amount of property tax revenue would be lost
to local taxing jurisdictions.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, DB, WP, SD