Texas Tax Code

Sec. § 351.101
Use of Tax Revenue


(a)

Revenue from the municipal hotel occupancy tax may be used only to promote tourism and the convention and hotel industry, and that use is limited to the following:

(1)

the acquisition of sites for and the construction, improvement, enlarging, equipping, repairing, operation, and maintenance of convention center facilities or visitor information centers, or both;

(2)

the furnishing of facilities, personnel, and materials for the registration of convention delegates or registrants;

(3)

advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity;

(4)

the encouragement, promotion, improvement, and application of the arts, including instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major art forms;

(5)

historical restoration and preservation projects or activities or advertising and conducting solicitations and promotional programs to encourage tourists and convention delegates to visit preserved historic sites or museums:

(A)

at or in the immediate vicinity of convention center facilities or visitor information centers; or

(B)

located elsewhere in the municipality or its vicinity that would be frequented by tourists and convention delegates;

(6)

expenses, including promotion expenses, directly related to a sporting event in which the majority of participants are tourists who substantially increase economic activity at hotels and motels within the municipality or its vicinity if:

(A)

the municipality is located in a county with a population of one million or less;

(B)

the municipality has a population of more than 67,000 and is located in two counties with 90 percent of the municipality’s territory located in a county with a population of at least 580,000, and the remaining territory located in a county with a population of at least four million; or

(C)

the municipality has a population of at least 200,000 and shares a border with:

(i)

a municipality described by Section 351.102 (Pledge for Bonds)(e)(7); and

(ii)

Lake Ray Hubbard;

(7)

subject to Section 351.1076 (Allocation of Revenue: Certain Municipalities), the promotion of tourism by the enhancement and upgrading of existing sports facilities or fields if:

(A)

the municipality owns the facilities or fields;

(B)

the municipality:

(i)

has a population of 80,000 or more and is located in a county that has a population of 350,000 or less;

(ii)

has a population of at least 75,000 but not more than 95,000 and is located in a county that has a population of less than 200,000 but more than 160,000;

(iii)

has a population of at least 36,000 but not more than 39,000 and is located in a county that has a population of 100,000 or less that is not adjacent to a county with a population of more than two million;

(iv)

has a population of at least 13,000 but less than 39,000 and is located in a county that has a population of at least 200,000;

(v)

has a population of at least 70,000 but less than 90,000 and no part of which is located in a county with a population greater than 150,000;

(vi)

is located in a county that:
(a)
is adjacent to the Texas-Mexico border;
(b)
has a population of at least 500,000; and
(c)
does not have a municipality with a population greater than 500,000;

(vii)

has a population of at least 25,000 but not more than 26,000 and is located in a county that has a population of 90,000 or less;

(viii)

is located in a county that has a population of not more than 300,000 and in which a component university of the University of Houston System is located;

(ix)

has a population of at least 40,000 and the San Marcos River flows through the municipality;

(x)

has a population of more than 67,000 and is located in two counties with 90 percent of the municipality’s territory located in a county with a population of at least 580,000, and the remaining territory located in a county with a population of at least four million;

(xi)

contains an intersection of Interstates 35E and 35W and at least two public universities; or

(xii)

is described by Subdivision (6)(C); and

(C)

the sports facilities and fields have been used, in the preceding calendar year, a combined total of more than 10 times for district, state, regional, or national sports tournaments;

(8)

for a municipality with a population of at least 70,000 but less than 90,000, no part of which is located in a county with a population greater than 150,000, the construction, improvement, enlarging, equipping, repairing, operation, and maintenance of a coliseum or multiuse facility;

(9)

signage directing the public to sights and attractions that are visited frequently by hotel guests in the municipality;

(10)

the construction, improvement, enlarging, equipping, repairing, operation, and maintenance of a coliseum or multiuse facility, if the municipality:

(A)

has a population of at least 90,000 but less than 120,000; and

(B)

is located in two counties, at least one of which contains the headwaters of the San Gabriel River; and

(11)

for a municipality with a population of more than 175,000 but less than 225,000 that is located in two counties, each of which has a population of less than 200,000, the construction, improvement, enlarging, equipping, repairing, operation, and maintenance of a coliseum or multiuse facility and related infrastructure or a venue, as defined by Section 334.001 (Definitions)(4), Local Government Code, that is related to the promotion of tourism.

(b)

Revenue derived from the tax authorized by this chapter shall be expended in a manner directly enhancing and promoting tourism and the convention and hotel industry as permitted by Subsection (a). That revenue may not be used for the general revenue purposes or general governmental operations of a municipality.

(c)

The governing body of a municipality by contract may delegate to a person, including another governmental entity or a private organization, the management or supervision of programs and activities funded with revenue from the tax authorized by this chapter. The governing body in writing shall approve in advance the annual budget of the person to which it delegates those functions and shall require the person to make periodic reports to the governing body at least quarterly listing the expenditures made by the person with revenue from the tax authorized by this chapter. The person must maintain revenue provided from the tax authorized by this chapter in a separate account established for that purpose and may not commingle that revenue with any other money. The municipality may not delegate to any person the management or supervision of its convention and visitors programs and activities funded with revenue from the tax authorized by this chapter other than by contract as provided by this subsection. The approval by the governing body of the municipality of the annual budget of the person to whom the governing body delegates those functions creates a fiduciary duty in the person with respect to the revenue provided by the tax authorized by this chapter.

(d)

A person with whom a municipality contracts under this section to conduct an activity authorized by this section shall maintain complete and accurate financial records of each expenditure of hotel occupancy tax revenue made by the person and, on request of the governing body of the municipality or other person, shall make the records available for inspection and review to the governing body or other person.

(e)

Hotel occupancy tax revenue spent for a purpose authorized by this section may be spent for day-to-day operations, supplies, salaries, office rental, travel expenses, and other administrative costs only if those administrative costs are incurred directly in the promotion and servicing expenditures authorized under Section 351.101 (Use of Tax Revenue)(a). If a municipal or other public or private entity that conducts an activity authorized under this section conducts other activities that are not authorized under this section, the portion of the total administrative costs of the entity for which hotel occupancy tax revenue may be used may not exceed the portion of those administrative costs actually incurred in conducting the authorized activities.

(f)

Municipal hotel occupancy tax revenue may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of which is not directly related to the promotion of tourism and the convention and hotel industry or the performance of the person’s job in an efficient and professional manner.

(g)

This section does not prohibit a person that receives a grant from a municipality to conduct an activity authorized by Subsection (a)(4) from making a grant by contract to another person to conduct an activity authorized by that subdivision. A person that receives a grant from a grantee of the municipality under this subsection shall:

(1)

at least annually submit a report of the person’s expenditures of funds received from the grantee to the governing body of the municipality; and

(2)

make records of those expenditures available for review to the governing body of the municipality and any other person.

(g-1)

A municipality may not require a person that receives funds directly from the municipality through a grant to conduct an activity authorized by Subsection (a)(4) to waive a right guaranteed by law to the person or to enter into an agreement with another person.

(h)

In addition to the uses authorized by Subsection (a), a municipality described by Subsection (a)(7)(B)(viii), as added by Chapter 546 (S.B. 585), Acts of the 83rd Legislature, Regular Session, 2013, may use revenue derived from the tax authorized by this chapter to promote tourism and the convention and hotel industry by constructing, maintaining, or expanding a sporting-related facility owned by the municipality if:

(1)

the majority of the events at the facility involve participants staying at hotels in the municipality; and

(2)

for a fiscal year, the municipality does not reduce the amount of that revenue that it uses for a purpose described by Subsection (a)(3) to an amount that is less than the lesser of:

(A)

the amount of that revenue used by the municipality for that purpose during the municipality’s 2015 fiscal year; or

(B)

the total amount of that revenue received in the fiscal year.

(i)

In addition to the purposes provided by Subsection (a), a municipality that has a population of at least 75,000 but not more than 95,000 and that is located in a county that has a population of more than 160,000 but less than 200,000 may use revenue from the municipal hotel tax to promote tourism and the convention and hotel industry by constructing, operating, or expanding a sporting related facility or sports field owned by the municipality, if the majority of the events at the facility or field are directly related to a sporting event in which the majority of participants are tourists who substantially increase economic activity at hotels in the municipality.

(j)

In addition to the purposes provided by Subsection (a), a municipality that has a population of not more than 5,000 and at least part of which is located less than one-eighth of one mile from a space center operated by an agency of the federal government may use revenue from the municipal hotel occupancy tax for expenses, including promotion expenses, directly related to a sporting event in which the majority of participants are tourists who substantially increase economic activity at hotels and motels within the municipality or its vicinity.

(k)

In addition to other authorized uses, a municipality that is intersected by both State Highways 71 and 95 may use revenue from the municipal hotel occupancy tax for the promotion of tourism by the enhancement and upgrading of an existing sports facility or field as specified by Subsection (a)(7), provided that the requirements of Subsections (a)(7)(A) and (C) are met.

(m)

In addition to the uses authorized by Subsections (a) and (e), and notwithstanding any provision of this chapter to the contrary, a municipality with a population of 6,500 or less that has at least 800 hotel rooms within the corporate boundaries of the municipality and that is located in a county adjacent to a county with a population of 3.3 million or more may use revenue derived from the tax authorized by this chapter to directly enhance and promote tourism and the convention and hotel industry by acquiring sites for and constructing, improving, enlarging, equipping, repairing, operating, and maintaining a municipally owned:

(1)

convention center facility;

(2)

sports-related facility with seating for at least 4,500 people that is used or is planned for use for one or more professional or amateur sports events or other events, including rodeos, livestock shows, and performing arts events;

(3)

multiuse facility that includes facilities described by Subdivisions (1) and (2); and

(4)

related infrastructure for a facility described by Subdivision (1), (2), or (3), as that term is defined by Section 334.001 (Definitions)(3), Local Government Code, for a venue.

(m-1)

A municipality described by Subsection (m) that issues obligations secured wholly or partly by revenue derived from the tax authorized by this chapter for a use described by that subsection may use that revenue for those uses as long as the obligations are outstanding even if the municipality is no longer a municipality described by that subsection.

(n)

In addition to other authorized uses, a municipality that has a population of not more than 1,500 and is located in a county that borders Arkansas and Louisiana may use revenue from the municipal hotel occupancy tax for the promotion of tourism by the enhancement and upgrading of an existing sports facility or field as specified by Subsection (a)(7), provided that the requirements of Subsections (a)(7)(A) and (C) and Section 351.1076 (Allocation of Revenue: Certain Municipalities) are met.

(o)

In addition to the purposes provided by Subsection (a), a municipality that has a population of not more than 10,000, that contains an outdoor gear and sporting goods retailer with retail space larger than 175,000 square feet, and that hosts an annual wiener dog race may use revenue from the municipal hotel occupancy tax to promote tourism and the convention and hotel industry by constructing, operating, or expanding a sporting related facility or sports field owned by the municipality, if the majority of the events at the facility or field are directly related to a sporting event in which the majority of participants are tourists who substantially increase economic activity at hotels in the municipality. If a municipality to which this subsection applies uses revenue derived from the municipal hotel occupancy tax for a purpose described by this subsection, the municipality may not reduce the percentage of revenue from that tax allocated for a purpose described by Subsection (a)(3) to a percentage that is less than the average percentage of that revenue allocated by the municipality for that purpose during the 36-month period preceding the date the municipality begins using the revenue for a purpose described by this subsection.

(q)

In addition to the purposes provided by Subsection (a), a municipality with a population of more than 48,000 but less than 95,000 that is located in two counties, one of which has a population of at least 900,000 but less than 1.7 million, may use revenue from the municipal hotel occupancy tax to promote tourism and the convention and hotel industry by constructing, improving, equipping, repairing, maintaining, operating, or expanding a coliseum or multiuse facility if the majority of the events at the coliseum or facility attract tourists who substantially increase economic activity at hotels in the municipality.

(q)

In addition to the purposes provided by Subsections (a) and (e), a municipality with a population of more than 10,000 that has a city hall located less than three miles from a space center operated by an agency of the federal government and that is wholly located in a county with a population of four million or more may use revenue from the hotel occupancy tax for the construction, improvement, enlarging, equipping, renovating, repairing, operation, and maintenance of a coliseum or multiuse facility and related infrastructure or a venue, as defined by Section 334.001 (Definitions)(4), Local Government Code, that is related to the promotion of tourism, including a hotel, resort, or convention center facility located on land owned by the municipality or a nonprofit corporation acting on behalf of the municipality.
Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.24(a), eff. Aug. 28, 1989; Acts 1989, 71st Leg., ch. 1110, Sec. 4, eff. Oct. 1, 1989; Acts 1993, 73rd Leg., ch. 680, Sec. 3, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 1027, Sec. 1, eff. Aug. 28, 1995; Acts 2001, 77th Leg., ch. 755, Sec. 1, eff. June 13, 2001; Acts 2001, 77th Leg., ch. 1308, Sec. 3, eff. June 16, 2001; Acts 2003, 78th Leg., ch. 209, Sec. 90, eff. Oct. 1, 2003; Acts 2003, 78th Leg., ch. 303, Sec. 1, eff. June 18, 2003.
Amended by:
Acts 2005, 79th Leg., Ch. 1247 (H.B. 1734), Sec. 1, eff. June 18, 2005.
Acts 2007, 80th Leg., R.S., Ch. 1144 (S.B. 765), Sec. 1, eff. June 15, 2007.
Acts 2009, 81st Leg., R.S., Ch. 402 (H.B. 1789), Sec. 1, eff. June 19, 2009.
Acts 2009, 81st Leg., R.S., Ch. 1220 (S.B. 1247), Sec. 3(a), eff. June 19, 2009.
Acts 2009, 81st Leg., R.S., Ch. 1322 (H.B. 3098), Sec. 1, eff. June 19, 2009.
Acts 2011, 82nd Leg., R.S., Ch. 91 (S.B. 1303), Sec. 23.004, eff. September 1, 2011.
Acts 2011, 82nd Leg., R.S., Ch. 247 (H.B. 970), Sec. 1, eff. June 17, 2011.
Acts 2011, 82nd Leg., R.S., Ch. 764 (H.B. 1690), Sec. 1, eff. June 17, 2011.
Acts 2011, 82nd Leg., R.S., Ch. 1163 (H.B. 2702), Sec. 120, eff. September 1, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 161 (S.B. 1093), Sec. 19.012, eff. September 1, 2013.
Acts 2013, 83rd Leg., R.S., Ch. 541 (S.B. 551), Sec. 1, eff. June 14, 2013.
Acts 2013, 83rd Leg., R.S., Ch. 546 (S.B. 585), Sec. 1, eff. June 14, 2013.
Acts 2015, 84th Leg., R.S., Ch. 663 (H.B. 3595), Sec. 1, eff. June 17, 2015.
Acts 2015, 84th Leg., R.S., Ch. 665 (H.B. 3629), Sec. 1, eff. June 17, 2015.
Acts 2015, 84th Leg., R.S., Ch. 666 (H.B. 3772), Sec. 1, eff. June 17, 2015.
Acts 2015, 84th Leg., R.S., Ch. 970 (H.B. 1585), Sec. 1, eff. September 1, 2015.
Acts 2015, 84th Leg., R.S., Ch. 979 (H.B. 3615), Sec. 1, eff. June 19, 2015.
Acts 2015, 84th Leg., R.S., Ch. 979 (H.B. 3615), Sec. 2, eff. June 19, 2015.
Acts 2017, 85th Leg., R.S., Ch. 53 (S.B. 1365), Sec. 1, eff. May 22, 2017.
Acts 2017, 85th Leg., R.S., Ch. 267 (H.B. 1896), Sec. 4, eff. September 1, 2017.
Acts 2017, 85th Leg., R.S., Ch. 324 (S.B. 1488), Sec. 17.003, eff. September 1, 2017.
Acts 2017, 85th Leg., R.S., Ch. 453 (S.B. 942), Sec. 1, eff. June 9, 2017.
Acts 2017, 85th Leg., R.S., Ch. 652 (S.B. 2166), Sec. 1, eff. June 12, 2017.
Acts 2017, 85th Leg., R.S., Ch. 785 (H.B. 2445), Sec. 5, eff. June 15, 2017.
Acts 2017, 85th Leg., R.S., Ch. 785 (H.B. 2445), Sec. 6, eff. June 15, 2017.
Acts 2019, 86th Leg., R.S., Ch. 351 (H.B. 3356), Sec. 1, eff. June 2, 2019.
Reenacted and amended by Acts 2019, 86th Leg., R.S., Ch. 405 (S.B. 1262), Sec. 1, eff. September 1, 2019.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 467 (H.B. 4170), Sec. 14.003, eff. September 1, 2019.
Acts 2019, 86th Leg., R.S., Ch. 998 (H.B. 1634), Sec. 1, eff. June 14, 2019.
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Jun. 7, 2021