‘Community first and visitor second’: Citizens voice hotel occupancy tax and short-term rental concerns

MARFA — City officials and local residents gathered at the USO Building this week for two separate meetings on hotel occupancy tax (HOT) and short-term rentals (STRs), where staff from the Texas Hotel and Lodging Association (THLA) gave presentations and answered questions. 

Justin Bragiel, general counsel and operations manager for THLA, who has been working with the City of Marfa for many years, presented on rules, regulations and potential changes in policy at both meetings. The HOT public hearing Monday night saw city council members gather with around 20 citizens, who asked how HOT taxes could better help the local community as opposed to contributing to a never-ending cycle of tourism. Tuesday morning’s more STR-focused meeting saw fewer attendees express similar sentiments, frustrated with how little affordable housing is available for local residents compared to temporary overnight stays for tourists. 

On Tuesday, one local business owner expressed concerns about her staff’s ability to find housing in town. Options are sparse due to an overabundance of short-term rentals, she said.

“I own a business in town, I don’t want short-term rentals to go away,” said Marfa resident and operator of Margaret’s restaurant Marielle La Rue. “But I also want to be able to live in the town and the staff members I pay to live in the town, whether that be affordable rent, somewhat affordable rent or purchasing a home.”

La Rue said affordability is an issue, with her rent going up 33% in the coming year, but availability was the community’s top problem — the only reasonably priced homes on the market are getting scooped up by out-of-towners and converted into Airbnbs, she said. 

“The $200,000 to $400,000 homes are the ones that get bought sight unseen. You ask to go and see one and the real estate agent calls you the next day to let you know, ‘Could you move your viewing up?’ because she already has two offers,” said La Rue, wondering if second-home owners were even fully aware of the problem they were causing. 

Beyond a shortage of restaurant staff or activities for tourists to do, Director of Tourism and President of the Marfa Chamber of Commerce Abby Boyd worried aloud that the lack of housing could lead to a shortage of essential services — if locals who work for the county or for American Electric Power (AEP), for example, continue to get priced out. 

“We’re not even just worried about our restaurants being staffed. We’re worried about people who can work the jobs that make our city function,” she said.

Bragiel stated that while Marfa might be experiencing pains associated with tourism, the industry led to locals having a higher quality of life because of visitor traffic. Tim Johnson said he has lived in Marfa for 20 years and while that might have been the case for a few years, it no longer rings true. 

“​​It’s certainly decreased for the last five or six years and it has a lot to do with this — the pressures of young people who are professionals, who grew up here, who can’t afford housing to rent or can’t buy or afford long-term housing,” said Johnson. 

In the end, most in the room agreed focusing on creating additional housing or incentivizing home owners to opt for long-term versus short-term rentals might be the best use of their efforts. 

Bragiel said he anticipates the 2023 legislative session will also likely see a return of 2019 efforts by the Realtors Association, Airbnb and VRBO to create a preemption bill which would seek to limit city’s regulations of STRs. He said THLA would continue to back its previous stance that cities have a right to impose reasonable regulations relating to noise and permitting, and to limit the number of non-owner occupied STRs within city limits.

The city should consider showing up to the Legislature and advocating for their position as well as track bills that might affect local STR goings-on at texaslodging.com, said Bragiel. Meeting attendees agreed the gathering, while sparsely attended, was a good start to a larger conversation that needed to continue with more community members. 

“I’m not against Airbnbs. I think mostly I would like our community to be community first and visitor second,” said La Rue. “There’s enough people who live here that we should all be engaged in what that looks like for our community.”

On Monday night, Bragiel reviewed the legal uses of HOT funds and answered questions from concerned citizens about how the town might better levy the taxes.

According to Texas law, HOT funds may only be used to promote tourism and the hotel industry and local municipalities are limited in how they may allocate HOT revenue. For the most part, said Bragiel, HOT money cannot be spent on permanent infrastructure improvements to the community, like the repaving of city streets.

In the City of Marfa, HOT grants are used to support arts and cultural activities, historic restoration and preservation projects and for advertising reimbursements. In the past, the city has also allocated funds to improve the visitor center and the Marfa Fire Station, due to its popularity as a tourism site. The HOT committee — made up of Mayor Manny Baeza, Mayor Pro Tem Irma Salgado and Boyd — is in charge of allocating funds. The city brought in $710,000 in HOT funds in 2020-21 and budgeted for $700,000 this fiscal year. 

Bragiel said the state Legislature often hears proposals that advocate for expanding local uses for HOT funds. For example, in 2021 there was a bill introduced by Rep. Eddie Morales to allow the cities of Marfa, Alpine and Presidio to use HOT revenue on dark skies initiatives. The bill was inadvertently killed the final night the house was in session due to House Democrats walking out in protest of a voting restriction bill. Bragiel said if reintroduced, the THLA would back the bill. 

When it comes to HOT revenue, said Bragiel, there are creative uses for the funds that may not be immediately apparent — the City of Marfa used money generated from hotels and short term rentals to make improvements to the local airport. The city was the first to do so under Mayor Dan Dunlap and helped pave the way for other communities to do the same, said Bragiel. 

Councilmember Jason Ballmann raised the concern that allocations of HOT revenue only promote a cycle of tourism without helping bolster the local infrastructure and services to support those visitors. He wondered if HOT revenue could somehow help fund EMS and medical care, for example. 

Marfa resident Buck Johnston echoed those concerns. “I think the community should really discuss this. We have enough heads in beds. We don’t necessarily need to advertise for more tourists,” she said. “How can we use these funds in more creative ways?” 

Bragiel said alternative HOT tax usage was possible, but expenditures have to directly tie back to tourism. He used examples of coastal communities using HOT funds to pay lifeguards and Brewster County using them for trash collection. 

Bragiel said while the tax code doesn’t currently allow for HOT revenue to be spent on hotel and short-term rental tax collection, THLA was working to change the laws to allow cities and counties to use HOT funds for electronic tax collection systems. The tri-county area has long struggled with the collection of HOT taxes as the number of short-term rentals has ballooned. But singular Airbnb owners aren’t only to blame — large lodging operations such as the Hotel Saint George have failed to pay taxes in the past, and Basecamp Terlingua is currently under fire for neglecting to pay HOT taxes for two years. 

Some citizens raised questions about the process of applying and receiving HOT tax grants and asked for greater transparency from the HOT committee. Boyd said she was brainstorming ways to streamline the process — notifying applicants of deadlines, formalizing processes in writing, perhaps even hosting a workshop to help people with their applications. 

The HOT committee makes recommendations on how to allocate HOT grants to the city council, who ultimately votes whether to approve the proposals. But its capacity is limited — it is composed of just three who rarely convene. There might be a need to diversify the committee and increase meetings, said Boyd. The city’s website states the committee “is comprised of representatives from local tourism, arts, and preservation fields, as well as Marfa citizens,” but currently only consists of city officials and staff. 

Boyd asked Bragiel whether funding for advertising and a site focused on stewardship and being a responsible tourist, similar to a campaign launched by Fredericksburg, could be helpful moving forward. Bragiel said he believed such a project would qualify for HOT funds. He also acknowledged the importance of ensuring Marfa was liveable for locals into the future. 

“It’s going to benefit the long-term tourism economy for Marfa. Marfa is not going to be a very fun place for people to visit if nobody can afford to live here,” said Bragiel. He was met with multiple gruff comments from the audience: “We’re there.”