AUSTIN — Marfa City Manager Mandy Roane and Mayor Manny Baeza traveled to the Texas Capitol last week to testify at a Senate Natural Resources and Economic Development Committee hearing in support of expanding cities’ use of hotel occupancy tax (HOT).
Current laws require Texas municipalities to spend HOT revenue — generated from hotel and short-term rental (STR) stays — exclusively on tourism promotion and arts and culture funding. City officials are advocating ahead of the 89th Legislative Session taking place in 2025 for legislation that will allow them to use a portion of HOT funds for infrastructure improvements.
In Marfa, the 7% tax yields around $700,000 a year. City officials would like to use 10 to 20% of that revenue to help upgrade Marfa’s crumbling streets and aging water and sewer systems, infrastructure they argue is deteriorating at a faster rate due to exponential growth in tourism.
Roane, utilizing 2022 data gathered from The Chinati Foundation, said the ratio of visitors to residents that year was a stark 40 to 3, or 23,000 visitors per 1,725 residents. (Since not every tourist visits The Chinati Foundation that number is likely an undercount.) “It’s very clear that –– 40 people versus three people using our infrastructure, which one is going to have the greater impact?” Roane asked city council members in a recent meeting.
The push for HOT use expansion is nothing new; several bills proposed in the past have failed to make it past the finish line. The Texas Hotel Lodging Association (THLA), a nonprofit trade association that lobbies on behalf of the lodging and tourism industry at the Capitol, has opposed the idea of HOT funds being spent on infrastructure in the past. (The THLA did support a past project in Marfa which involved using HOT funds for airport improvements.)
Last legislative session, State Sen. César Blanco authored SB 1208, a bill allowing rural counties and municipalities in his district to leverage HOT revenue to “plan, construct and maintain” broadband, water and transportation infrastructure projects. The bill died in committee.
But Sen. Blanco — a member of the Senate Natural Resources and Economic Development Committee — invited Roane to speak at the hearing shortly after Roane expressed support for HOT use expansion to Lieutenant Governor Dan Patrick while he was visiting the area.
In a written statement provided to The Big Bend Sentinel, Sen. Blanco said he was grateful to Roane and Baeza for their attendance at the hearing, and he looks forward to filing legislation next session to expand the use of HOT funds to help communities like Marfa.
“It was so important for lawmakers to hear about Marfa’s unique challenges and compelling testimony to expand the use of HOT revenue for local infrastructure to continue to support its booming tourism industry,” Blanco wrote.
Roane said she expressed to legislators that by allocating a portion of HOT revenue to improving city infrastructure, Marfa would be able to continue to sustain tourism and attract return customers. “The point that we made is when you are spending that much money on an STR or a hotel room, you want the sewer to work, you want to be able to drive down a road comfortably,” Roane said. “If those things are not happening, you’re not coming back, and you’re not going to tell your friends and family.”
She argued to lawmakers that Marfa loses out compared to other municipalities in regards to property tax collection — an estimated $9.8 million worth of property is under nonprofit exemption and therefore not included on the tax rolls — meaning the city is losing out on an estimated $300,000 worth of taxes it could put towards infrastructure maintenance and improvements.
Ironically, those entities, primarily the Judd and Chinati foundations, have traditionally attracted the majority of tourists who are utilizing the town’s infrastructure. “I understand them not paying property taxes, it makes sense for what they do,” Roane said. “But this could be some sort of a trade-off.”
The city also brings in 1/4% sales tax revenue, but Roane said that amounts to a little over $100,000 a year, not nearly enough to fund major street repairs. Using 10 to 20% of the city’s HOT revenue — currently $70,000 to $140,000 — will not alleviate the city’s budget issues, said Roane, but would help supplement other revenue streams. “Even if we could fix a block, two blocks a year, or even just a couple of side streets every year, it would help us,” Roane said.
In 2023, the City of Marfa spent a significant amount of HOT revenue on advertising, 46.7%, with other expenditures including grants and events, historical preservation and the Marfa Visitor Center. Routine HOT grant recipients include the Marfa Lights Festival, Ballroom Marfa, the Marfa and Presidio County Museum, Agave Festival Marfa and more.
Roane said the HOT fund is healthy enough to sustain those existing programs, even if 10 to 20% is reallocated for infrastructure projects.
She said the city will continue to work with Sen. Blanco’s office in the lead-up to the 2025 legislative session on defining legislation language and tourism metrics. “Even if we don’t get something done this upcoming legislative session, we’re at least putting the bug in their ear, getting the ball rolling,” Roane said.
At the committee hearing, Sen. Blanco asked Roane why streets were in such poor condition and why there wasn’t a long-term plan for upkeep. Roane told The Sentinel that previous city officials did not anticipate the tourism boom that has occurred, and moving forward the city is working to plan for potential growth.
“We’re doing a good job of planning now. Before we work on streets, we put in new taps to empty lots and make sure things are ready for expansion,” Roane said. “But back in the ‘90s, early 2000s, I think it would have been hard to project this growth.”