A Texas House bill that would allow the City of Commerce to gain more tax revenues for a “qualified hotel project” has been passed through the Legislature and now awaits action from the Governor.
House Bill 4347, which was filed by Rep. Rafael Anchia (D-Dallas), allows the city to reap the full amount of Hotel & Motel Tax revenues and almost all sales tax revenues on one of these qualified hotel projects, and pledge those extra funds to infrastructure, bond payments and more.
The idea to include Commerce in a qualified hotel project bill first came from City Manager Darrek Ferrell, who says that the City of McKinney tried something similar when he used to work there.
“I thought this was something we could look into, so I spoke to Mayor Williams and (Texas A&M University-Commerce President) Dr. Mark Rudin about it,” Ferrell said. “During ‘Hunt County Days’ when a group went to Austin to visit the legislature, I spoke to Representative Dan Flynn and Senator Bob Hall about sponsoring this bill I wrote up.”
Flynn (R-Van), who represents Hunt County in his district, agreed to sponsor House Bill 2665, which would have amended the state tax code with very specific language that added criteria for a “qualified hotel project,” which Commerce would have fit into. Several cities were added onto the bill, but it ended up stuck in committee. Ferrell said a “standoff” in committee was broken after the specifications that included Commerce were added to House Bill 4347 instead. This new bill advanced and went to a vote.
The bill passed through the House and on to the Senate, where it was amended and passed by a vote of 24-6. Senator Hall (R-Edgewood), who represents Hunt County’s district, voted against the bill. It was then passed unanimously by the House 146-0, and sent to Governor Greg Abbott’s desk. Abbott has until June 16 to take action on the bill, which would then become law if the Governor’s does not make a decision by that date.
What exactly is a “qualified hotel project?” The definition laid out in the bill states that a project is:
“A hotel project that is owned by or located on land owned by the municipality or, in an eligible central municipality, by a nonprofit corporation acting on behalf of an eligible central municipality, and that is located within 1,000 feet of a qualified convention center facility, as defined by Section 351.151, owned by the municipality for the payment of bonds or other obligations issued or incurred to acquire, lease, construct, and equip the hotel and any facilities ancillary to the hotel, including convention center entertainment-related facilities, [meeting spaces,] restaurants, retail establishments [shops], street and water and sewer infrastructure necessary for the operation of the hotel or ancillary facilities, and parking facilities within 1,000 feet of the hotel or convention center facility.”
Get all that?
In short, if the city builds a convention center with a hotel attached, they will receive all hotel tax and 7.25-percent of sales tax revenues from that location, instead of giving a portion to the state. These funds can be pledged back into the project for infrastructure, repayments of debts and more.
Commerce is included specifically in this legislation as it fits the criteria of “a municipality with a population of less than 10,000 that: (A) contains a component university of The Texas A&M University System; and (B) is located in a county adjacent to a county that borders Oklahoma.”
Ferrell says that if this legislation becomes law, it could be a significant boon to the city and any desire to complete the sort of project described in the bill.
“It would be a great bargaining tool to show to developers who might be interested in building something like that in Commerce,” Ferrell said. “We would have something new to offer.”
Ferrell also added that the economic impact of “[creating] a good, large regional meeting place” would be felt throughout the city.
“Two big impacts of a project like this would be to create a new regional draw to Commerce and to help our stagnant hotel tax fund,” Ferrell said. “I appreciate Representative Flynn’s efforts to better our city in the Legislature.”
Flynn offered a statement in an official press release announcing the bill’s passage last week.
“Since the beginning of the legislative session, I have been working closely with the city to secure access to this state program, and by co-authoring and passing HB 4347, I am happy to see that the City of Commerce now has the tool it needs to keep building on economic development, tourism, and job creation in the region,” Flynn said in the statement.
More than 40 other cities in the state would also be included in this bill to receive these funds through a qualified hotel project.
The full text of the bill can be found online at https://bit.ly/2Wr1Ujl.