January 18, 2023 528 PM
BIG BEND REGION — As the Texas Legislature began its 88th legislative session this month, cities including Marfa and Alpine are tracking a bill that could allow municipalities to utilize hotel occupancy tax (HOT) funds for city infrastructure projects.
The bill, HB550, was filed in November of 2022 by Texas State Representative Cody Vasut who represents counties along the Texas Gulf Coast. It seeks to expand cities’ uses of collected HOT taxes — which are currently restricted toward specific tourism-driving initiatives — to include improvements to city-owned infrastructure including roads, streets and water and wastewater systems located within a mile of a hotel. HB550 proposes up to 20 percent of HOT taxes could be used on such projects.
Senator César Blanco, who represents Texas’ 29th Congressional District, including Far West Texas, said in a statement to The Big Bend Sentinel that he also intends to file a Senate bill on the matter soon for the Big Bend region.
“In Far West Texas, the tourism industry is booming, which is great for the economy, but it puts added pressure on our local infrastructure and local taxpayers. In recent years, for example, Marfa has hosted over 50,000 visitors per year, more than 25 times its population of 1,800 residents,” said Blanco in a written statement.
The way the current laws are written, municipalities are very limited in how they are able to use HOT tax funds. The taxes must be used to promote more tourism through visitors centers, arts and cultural activities, historic restoration and preservation projects or advertising reimbursements.
The Texas Hotel Lodging Association — which held meetings in August on HOT taxes and short-term rentals for the local community where more creative uses of HOT funds among other legislative topics were discussed — states on their website they will oppose measures, as they have previously, that would allow for HOT taxes to be used for initiatives other than tourism promotion, including street repair.
This past year, the City of Marfa budgeted $2 million for street repairs — those funds will target a handful of city thoroughfares, but leave more to be addressed. This winter, the city of Alpine’s residents have encountered city-mandated boil-water notices as a result of water main line breaks, prompting the city to turn its focus on repairing aging water infrastructure.
Blanco said the bill could help rural towns like Marfa and Alpine better levy the HOT taxes for sorely-needed infrastructure upgrades that could benefit both local and visiting communities.
“Our rural communities just don’t have the local tax base to support needed improvements to our infrastructure to keep up with growing demand. After speaking to local leaders and residents, the hotel occupancy tax is something we are looking at opening up in our rural communities to help fund needed improvements,” said Blanco.
Marfa City Manager Mandy Roane voiced support for the bill at last week’s city council meeting. She said because short-term rentals (STRs) also pay hotel taxes, she hopes the bill will be expanded to include them, not just hotels.
“I reached out to the representatives office to see if they can make sure that STRS were included, at least for small municipalities or rural municipalities,” said Roane. “If that does look like it’s going to move forward to the next step, maybe we can all write letters of support as a council.”
In an interview with The Big Bend Sentinel, Roane said it is likely that the city would use the funds for street repairs — the number one complaint she receives from both tourists and locals.
“We could do a little bit every year,” said Roane. “People complain about the streets, and I get that, but this would be an easy way for us to afford some of it.”
Roane said she will continue to track the bill, as well as several others, to see how it progresses in the session. Last year, the city of Marfa budgeted to receive $700,000 in HOT taxes, and likely received that amount as the budget amount was based on what the city brought in in 2021. In the past, the city successfully lobbied for HOT taxes to be used to fund airport improvements.
Megan Antrim, city manager for the City of Alpine, addressed council members on Tuesday regarding potential shifts to the city’s operations that could take place should the state allow for HOT funds to be used more broadly.
Antrim said that the bill, if passed, would allow the city to use HOT funds to repair a lift station — a piece of infrastructure that moves wastewater to higher elevations — near the Holiday Inn. (The station, which is in close proximity to both the inn and to Sul Ross State University, has been an ongoing problem area for Alpine, city secretary Geo Calderon clarified to The Big Bend Sentinel).
“The city has put money aside for the Holiday Inn station — it is within a mile of the Holiday Inn Hotel,” said Antrim. “We would, if this bill passes, be able to use HOT funds to make that improvement to that infrastructure.”
Antrim said the bill would further facilitate vital upgrades on Alpine’s east side, due to the abundance of hotels in the area.
“This is really important if you’re looking at the east side of Alpine and not having sewer infrastructure in place — you have the Holland, you have the Quality Inn, and you have Travel Lodge all along that area,” she said. “You can replace infrastructure within a mile. That would just be wonderful for the City of Alpine, to be able to use HOT funds to make those types of improvements.”
The Big Bend Sentinel will continue to track the progress of HB550 and other bills that relate to the tourism industry and the tri-county area more broadly in the coming months.