Honorable Paul Bettencourt, Chair, Senate Committee on Local Government
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB5321 by Bell, Cecil (Relating to the authority of the East Montgomery County Improvement District to receive certain tax revenue derived from a hotel and convention center project and to pledge certain tax revenue for the payment of obligations related to the project.), As Engrossed
Estimated Two-year Net Impact to General Revenue Related Funds for HB5321, As Engrossed : an impact of $0 through the biennium ending August 31, 2025.
A negative fiscal impact to the state is estimated to begin in fiscal year 2027.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2024
$0
2025
$0
2026
$0
2027
($1,760,000)
2028
($1,830,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue Gain/(Loss) from General Revenue Fund 1
2024
$0
2025
$0
2026
$0
2027
($1,760,000)
2028
($1,830,000)
Fiscal Analysis
The bill would amend Chapter 3846 of the Special District Local Laws Code (East Montgomery County Improvement District) to add Subchapter K (Hotel and Convention Center Projects.)
The bill would add Sections 3846.501-502 to allow the East Montgomery County Improvement District (district) to be considered a municipality for purposes of Subchapter C, Chapter 351 of the Tax Code including the ability to pledge or commit revenue under Section 351.155 of the Tax Code, for bonds or other obligations issued for a qualified project or contractual obligations for a qualified project and to receive certain tax revenue under Sections 351.156 and 351.157 of the Tax Code. For purposes of a qualified project of the district, "qualified establishment" means an establishment: that is a restaurant, bar, or retail establishment; located on land owned by any person; constructed on or after the date the district commences a qualified project under this subchapter; and the nearest exterior wall of which is located not more than 1,000 feet from the nearest exterior wall of a qualified convention center facility or qualified hotel.
The bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2023.
Methodology
East Montgomery County Improvement District would be eligible to receive funds described in Sections 351.156 (Entitlement to Certain Tax Revenue) which provides, in relevant part, that a municipality to which Section 351.152 applies is entitled to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax. Section 351.157(d) provides, in relevant part, that a municipality to which the section applies is entitled to receive the revenue derived from the state sales and use taxes, and local mixed beverage taxes generated, paid, and collected from a qualified establishment. Section 351.158 (Period of Entitlement) would entitle East Montgomery County Improvement District to receive the revenue until the tenth anniversary of the date the qualified hotel to which the entitlement relates is open for initial occupancy.
According to the Comptroller of Public Accounts, East Montgomery County Improvement District has current plans for a qualified hotel with 175 rooms and could avail itself of the tax rebates should eligibility be acquired through this legislation. The estimate shown in the tables above is based on an assumed opening date of September 1, 2026, or state fiscal year 2027, a comparison and review of revenues paid to the owners of extant qualified hotel projects, and estimated attributes of such prospective hotel.
Local Government Impact
The bill's provisions would apply to the East Montgomery County Improvement District.
East Montgomery County Improvement District would be eligible to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax.