Cameron Tourism Advisory Board
HOTEL OCCUPANCY FUNDING OVERVIEW
Under the laws of the State of Texas, the City of Cameron collects a Hotel Occupancy Tax (HOT) from hotels, motels, and bed and breakfast inns. The law requires that every expenditure of the HOT revenue must directly enhance and promote tourism and the convention and hotel industry.
The law does not provide for general allocations for events or projects. Funds can only be used for the six particular purposes listed below. All uses must promote tourism and the convention and hotel industry. If the event or project is not reasonably likely to have such an effect, local hotel occupancy tax revenues cannot legally fund it. If an entity does not market its events outside of Cameron or in some other way provide notice of the events to guests and potential guest of hotels, it will be difficult to argue that the event will promote tourism and hotel activity. If the entity does not find the need to reserve a hotel block or negotiate a special hotel rate, it is probably not arguable that the organization anticipates that the event will have any reasonable impact on hotel activity. If the event does not generate HOT revenue for the city it is unlikely it will be funded.
The city municipal government does not retain the funds for other uses. The city can only utilize the funds for the same purposes and under the same conditions as any organization, business or individual. The Cameron Tourism Board has a fiduciary responsibility to assure that the funds are used only for purposes authorized under the law.
Cameron falls under certain state mandated categories which establish limits on how the HOT proceeds can be used. No more than 50% of the proceeds can be used for historical restoration and preservation projects, and if used for that purpose state law requires that the historical related expenditure also must be likely to directly promote tourism and the hotel and convention industry. At least one-seventh of the hotel tax proceeds must be spent on advertising and promoting the city to directly impact tourism and the hotel and convention industry. No more than 15% of Cameron’s HOT proceeds can be spent on promotion of the arts.
State law also provides that the hotel occupancy tax may not in any circumstance be used for purposes for which the city usually expends it general revenues (e.g. police, parks, recreation, streets, sidewalks, decorative improvements). The Texas Attorney General has ruled that the local hotel occupancy tax may not be used for advertising or other economic development initiatives or improvements to attract new businesses or permanent residents to a city.
State law specifies that for a facility to be funded as a convention center it must be one that is primarily used to host conventions and meetings. “Primarily used” in this context would arguably mean that at least 51% of the bookings for the facility are to host conventions or meetings that directly promote tourism and the hotel and convention industry. A visitor center must spend 51% of its time and revenue promoting tourism and the hotel industry. Simply naming a facility a convention center or visitor information center does not bring it under this section.
The use of HOT funds is limited to:
- 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;
- The furnishing of facilities, personnel, and materials for the registration of convention delegates or registrants;
- Advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity;
- 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 picture, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution and exhibition of these major art forms;
- Historic restoration and preservation projects or activities or advertising and conducting solicitation and promotional programs to encourage tourists and convention delegates to visit preserved historic sites or museums and are located in the immediate vicinity of convention center facilities or visitor information centers or located elsewhere in the municipality…that would be frequented by tourists and convention delegates.
- Sporting related expenses if the majority of the participants are tourists and if the event substantially increases economic activity at area hotels.
The City of Cameron accepts applications from groups and businesses wishing to receive HOT funds for qualifying events or projects. Entities must meet the following requirements:
- As required by state law on an annual basis the organization must submit a list of the scheduled activities, programs, or events that will directly enhance and promote tourism and the convention and hotel industry in the City of Cameron. State law also requires that all HOT expenditures be included in the annual budget. To facilitate the budgeting process the City of Cameron has set up a schedule to assure that budget timelines can be met.
- The organization must submit a completed application to the City Secretary, requesting a specific amount of funding by the set deadlines (see accompanying schedule). The organization may be asked to make a formal presentation to the Cameron Tourism Board showing how the request complies with state and municipal laws. No request for funding can be approved unless the organization shows how the expenditure will directly enhance and promote tourism and the convention and hotel industry in the city. A tourist is defined by state law as an individual who travels from the individual’s residence to a different municipality, county, state or country for pleasure, recreation, education, or culture. The city is required to maintain a record that accurately identifies the receipt and expenditure of all revenue derived from the tax.
- No later than 60 days after the event or completion of the project, the organization must submit a Post Event Report Form. Failure to submit the report will preclude any future funding to that organization.
- Funding guidelines for an event or project are: the greater of 100% of the HOT revenues projected to be generated by the event or 1% of the amount of HOT revenues due and paid during the prior fiscal year exclusive of any payments for taxes delinquent from previous fiscal years. Total funding for all events in a fiscal year will not exceed 50% of HOT revenues received during the prior fiscal year exclusive of past due taxes from previous years.
- The available funding period is from October 1 through September 30 of each year.
- City staff will give a general overview of the application process during the application period.