Honorable Craig Estes, Chair, Senate Committee on Natural Resources & Economic Development
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
SB1354 by West (relating to the authority of certain municipalities to pledge certain tax revenue for the payment of obligations related to hotel projects.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for SB1354, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2019.
However, there would be a negative impact of ($660,000) through the biennium ending August 31, 2021.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018
$0
2019
$0
2020
($320,000)
2021
($340,000)
2022
($360,000)
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
2018
$0
2019
$0
2020
($320,000)
2021
($340,000)
2022
($360,000)
Fiscal Analysis
The bill would amend Section 351.102 of the Tax Code regarding the pledge of municipal hotel tax revenue to certain bonds, and entitlement of certain municipalities to state tax revenue associated with certain hotel projects.
The bill would amend Subsections (b), (c) and (d) and add new Subsection (e), to extend the application of this section's provisions to a municipality that 1) contains a portion of Cedar Hill State Park; 2) has a population of more than 45,000; 3) is located in two counties, one of which has a population of more than two million and one of which has a population of more than 149,000; and 4) has adopted a capital improvement plan for the construction or expansion of a convention center facility.
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 September 1, 2017.
Methodology
The bill would affect the City of Cedar Hill, within which a 130 room hotel is planned that is not expected to be operational before September 2019.
The City of Cedar Hill would be entitled to state sales tax revenue and state hotel occupancy tax revenue associated with a qualified hotel project under Section 151.429(h) of the Tax Code via Sections 351.102(b) and (c) of the Tax Code. Such funds must be deposited in a suspense account outside the state treasury to be paid to the owner of a qualified hotel project.
This estimate is based on the planned or assumed room size of the prospective hotel, assumed average nightly room rate and annual average occupancy rate, an incremental gain in room nights sold in the state, and the ratio of state sales tax to hotel tax revenues paid to the owner of the extant qualified hotel project.
In fiscal 2016, a total of $12,135,272 in state tax revenue was allocated for qualified hotel projects in the cities of Dallas, Fort Worth and San Antonio.
Local Government Impact
The bill would include the City of Cedar Hill in the definition of an eligible municipality for the purposes of a qualified hotel project.