BILL ANALYSIS

 

 

Senate Research Center

S.B. 1756

89R6020 RDS-D

By: Birdwell

 

Economic Development

 

4/11/2025

 

As Filed

 

 

 

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

 

Over the years, the Texas Legislature has granted authorizations for certain municipalities to execute hotel and convention center projects. These projects typically allow the hotel occupancy tax, sales and use tax, and alcoholic beverage tax to be rebated to the municipality for a period of years as an incentive and financing tool to construct large hotels and connected convention centers that bring in new tourism and subsequent revenue. Importantly, municipalities are limited to one qualified project in perpetuity, except municipalities with a population of 175,000 or more which do not have the same limitation. Further, multiple "project financing zones" or PFZs have been recently authorized by the legislature with no such limitation on how many zones a municipality could implement.

 

The fiscal implications of these projects can be significant. While interested parties correctly assert that these tools have been effective in creating positive economic development for the state and local jurisdictions, financial stewardship must be carefully maintained. S.B. 1756 would limit all hotel and convention center projects to one instance per authorization in perpetuity while not impacting projects in municipalities that have already commenced more than one. In doing so, a municipality would need to come to the legislature to request an exception to receive authorization for an additional project. This will allow the legislature to examine each project it has authorized for effectiveness and appropriateness before granting an additional project. 

 

As proposed, S.B. 1756 amends current law relating to the authority of certain municipalities to use certain tax revenue for hotel and convention center projects and other qualified projects.

 

RULEMAKING AUTHORITY

 

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

 

SECTION BY SECTION ANALYSIS

 

SECTION 1. Amends Section 351.1015, Tax Code, by adding Subsection (m), as follows:

 

(m)� Provides that a municipality, notwithstanding any other provision of Section 351.1015 (Certain Qualified Projects), is authorized to pledge or commit revenue under this section for only one qualified project. Prohibits a municipality, after the municipality pledges or commits revenue under this section for a qualified project, from ever again pledging or committing revenue for a subsequent qualified project under this section. Provides that, for purposes of this subsection, the term "municipality" includes a local government corporation created to aid and act on behalf of the municipality.

 

SECTION 2. Amends Section 351.102, Tax Code, by adding Subsections (a-1), (b-1), and (b-2), as follows:

 

(a-1) Prohibits a municipality, notwithstanding Subsection (a) (relating to authorizing a municipality to pledge the revenue derived from the tax imposed under Chapter 351 (Municipal Hotel Occupancy Taxes) for the payment of certain bonds or the principal of or interest on certain bonds or obligations), from pledging or committing revenue under that subsection for the payment of principal of or interest on bonds or other obligations issued to pay the cost of the acquisition and construction of a convention center hotel or the cost of acquisition, remodeling, or rehabilitation of a historic hotel structure if the acquisition, construction, remodeling, or rehabilitation is commenced after December 1, 2016.

 

(b-1) Authorizes a municipality, notwithstanding Subsection (b) (relating to authorizing a municipality meeting certain criteria to pledge the revenue derived from the tax imposed under Chapter 351 from a hotel project meeting certain criteria for the payment of certain bonds or obligations) or (c) (relating to the funds from a project described by Subsection (b) that an owner of a project is authorized to receive under certain provisions) and except as provided by Subsection (b-2), to pledge or commit revenue under Subsection (b) for only one hotel project. Prohibits a municipality, after the municipality pledges or commits revenue under Subsection (b) for a hotel project, from ever again pledging or committing revenue for a subsequent hotel project under that subsection.

 

(b-2) Provides that a municipality that before January 1, 2025, pledged or committed revenue under Section 351.102 (Pledge for Bonds) for more than one hotel project is not subject to Subsection (b-1) and is prohibited on or after January 1, 2025, from pledging or committing revenue under Subsection (b) for another hotel project.

 

SECTION 3. Amends Section 351.1021, Tax Code, by adding Subsection (f), as follows:

 

(f)� Provides that an eligible municipality is authorized to pledge or commit revenue under Section 351.1021 (Pledge or Commitment of Certain Tax Revenue for Certain Projects) for only one multipurpose convention center facility project. Prohibits a municipality, after the eligible municipality pledges or commits revenue under this section for a multipurpose convention center facility project, from ever again pledging or committing revenue under this section for a subsequent multipurpose convention center facility project. Provides that, for purposes of this subsection, the term "eligible municipality" includes a local government corporation created to aid and act on behalf of the municipality.

 

SECTION 4. Amends Section 351.1022, Tax Code, by adding Subsection (f), as follows:

 

(f) Provides that a municipality is authorized to pledge or commit revenue under Section 351.1022 (Pledge or Commitment of Certain Tax Revenue by Certain Municipalities With Sports Stadiums) for only one hotel project. Prohibits a municipality, after the municipality pledges or commits revenue under this section for a hotel project, from ever again pledging or committing revenue under this section for a subsequent hotel project.

 

SECTION 5. Amends Section 351.106, Tax Code, by adding Subsection (d), as follows:

 

(d)� Defines "qualified project." Provides that a municipality, notwithstanding any other provision of Section 351.106 (Allocation of Revenue: Populous Municipalities With Council-Manager Government), is authorized to pledge or commit revenue under this section for only one qualified project.� Prohibits a municipality, after the municipality pledges or commits revenue under this section for a qualified project, from ever again pledging or committing revenue for a qualified project.

 

SECTION 6.� Repealer: Section 351.155(d) (relating to excepting municipalities of at least 175,000 from a provision providing that a municipality is authorized to pledge or commit revenue under Section 351.155 (Pledge or Commitment of Certain Tax Revenue for Obligations for Qualified Project) for only one qualified project), Tax Code.

 

SECTION 7. Provides that the changes in law made by this Act do not affect the validity of a bond, contractual obligation, or other obligation for which revenue was pledged or committed under Subchapter B (Use and Allocation of Revenue) or C (Municipal Hotel and Convention Center Projects), Chapter 351, Tax Code, before the effective date of this Act. Provides that bonds, contractual obligations, or other obligations for which revenue was pledged or committed before that date are governed by the law in effect when the revenue was pledged or committed, and that law is continued in effect for the purposes of the validity of those bonds, contractual obligations, and other obligations.

 

SECTION 8. Effective date: upon passage or September 1, 2025.