Dallas voters could raise hotel taxes in November. How much you pay depends on where you are staying.

By Judy J. Beasley Last updated Dec 4, 2022

Dallas voters will head to the polls in a few weeks to decide whether to increase the amount of taxes collected for renting hotels and other rooms from 13% to 15% to pay for a new convention center and fairground renovations.

So why do some people say that the true tax rate would be 17%?

As usual, the devil is in the details: people who get rooms in Dallas’ big hotels will indeed pay more than 17% of their bill to the government. But that extra 2% – called a fee or assessment – has been around for a while and isn’t called a tax.

The city collects tourist taxes on hotels, motels, short-term rentals, and bed and breakfasts in Dallas. The current rate is 13% of the cost of a room. Currently, seven of those percentage points go to the city and six to the state. Proposal A on the ballot for the November 8 election suggests voters increase city’s share to nine points. The new two percentage point tax increase could raise $1.5 billion over 30 years.

This hotel resort tax increase is intended to help pay for a new convention center downtown, which is currently estimated to cost $2 billion. It is planned to be built next to the Kay Bailey Hutchison Convention Center, which would be demolished.

And up to 20% of the $1.5 billion can also be spent renovating six venues about three miles from Fair Park, including the Cotton Bowl and the Coliseum.

Early voting begins October 24 and ends November 4.

But what about that extra 2% people are already paying for hotel rooms?

Guests of Dallas hotels with at least 100 rooms are now also charged a 2% assessment on room rentals. These fees come from the municipality Tourism Public Improvement District, which since 2012 has generated cash to help market and promote Dallas as a tourist destination. This does not apply to other room rentals such as short term rentals.

Technically, it’s not a tax, so there’s no mention of it on the ballot. But if you’re staying at one of the bigger hotels in Dallas, it’s definitely going out of your wallet.

More than 130 hotels are part of the Tourism Public Improvement District. Less than 10 are located under Interstate 30, which is generally considered the midpoint of the city that divides the more affluent north and less affluent south of Dallas.

Here are some other facts about the hotel resort tax and Proposition A.

What is the tax for

About two-thirds of hotel occupancy taxes collected by the city are currently used to pay for operations and improvements at the Kay Bailey Hutchison Convention Center. Nearly 25% goes to VisitDallas, a nonprofit organization hired by the city to promote Dallas as a convention and visitor destination. The rest goes to the city’s arts and culture office.

What other cities collect

The 17% total that goes to the government for renting hotel rooms would put Dallas on par with other major cities in Texas. Houston, San Antonio, Austin, El Paso and Fort Worth have total rates around the same amount.

San Antonio, for example, has a total rate of up to 18%. This includes the state’s 6% reduction, the city’s 9% reduction, the Bexar County reduction of 1.75%, and a 1.25% tax related to the Tourism Public Improvement District of San Antonio which applies to hotels with at least 100 rooms.

Austin, Fort Worth and El Paso are also already keeping 9% of their cities’ hotel occupancy tax, the amount Dallas would keep on most hotels, motels and all short-term rentals if voters approved the proposal. .

Fair Park Labor

The method of funding the hotel occupancy tax is more commonly referred to as the Brimer Bill, after former state Rep. Kim Brimer, R-Arlington. It’s a state law that allows cities to use increased taxes on hotels and vehicle rentals to pay off bonds to build places like convention centers, sports arenas, and entertainment districts. entertainment. Voters must approve its use beforehand.

Hotel occupancy taxes have only been used once before in Dallas, when voters in the late 1990s approved a 2% increase, along with a 5% increase in rental fees car, to help pay for the construction of the American Airlines Center.

Dallas-area state lawmakers introduced bills in 2021 to remove an exclusion from the Brimer Bill that prohibited the use of silver in an area or facility that is part of a park. urban and recreational system to include Fair Park.

Governor Greg Abbott signed a bill in 2021 allowing Dallas to use up to 20% of revenue from the hotel occupancy tax rate increase on costs related only to an amphitheater, arena , an exhibition hall, a music hall or a stadium located in a municipally owned park.

This would allow up to $300 million of the planned $1.5 billion in new 2% tax increase to be used to renovate the Cotton Bowl, Coliseum, Automobile Building, Centennial Hall, Music Hall and the Band Shell.

If voters approve the proposal in November, the city would be prohibited from using general fund tax revenue and general bonds for the six Fair Park venues.

There is no guarantee that Fair Park will get the full 20% funding over 30 years if the proposal passes in November. While the The Dallas City Council in April approved allowing the six sites to be eligible for the money from the tax increase, the wording of the resolution is not binding.

The resolution contains a clause that directs the city, pending voter approval, to “make good faith efforts to spend 20% of the revenue from the new 2% resort tax on listed Fair Park facilities.” in the proposal”.

What the fans are saying

Proponents of the proposal say the revamping of venues at the two sites will help attract larger conventions and events to Dallas, which will increase tourism, pave the way for the creation of a new entertainment district around the center conventions and will be able to create new jobs thanks to construction work and new amenities. which are built.

A political action committee called the Transforming Dallas Committee was created to support the proposal. No organized opposition to the ballot measure has been announced.

Not just tourists

Proponents of the November election proposal have referred to the hotel resort tax as a “tourism tax” that will be paid by out-of-town visitors. But it can also affect city dwellers, especially people looking for temporary shelter.

Hotels can also be used by people without stable shelter or displaced from their homes, such as during the winter storm of 2021.

In August, the director of the Dallas Homeless Solutions Office, Christine Crossley, told council members that homeless service providers paid for hotel rooms for people to stay when places in the shelters are full. She suggested the city consider a standardized grant to give groups to subsidize their funding.

“We confirm that this is currently a successful model, and has been for some time,” Crossley told council members when they asked if expanding the capacity of homeless shelters through hotels was a viable option. “We don’t see that changing.”

In September, the city council approved the transfer of $1 million in federal grants that were to remain unused for rapid relocation services to help pay for hotel accommodations.

“A renewed and urgent need has been identified to extend accommodation services, particularly overflow services, to hotels for homeless individuals and families due to the recent loss of pandemic protections, the rise inflation and scarcity of rental housing,” the resolution said.

Some who should pay might not

Dallas requires short-term rental properties listed on platforms like Airbnb and Vrbo to register with the city and charge hotel occupancy taxes that are routed to the government. But the city has no rules for handling short-term rentals and no regulations that result in penalties for landlords who don’t register.

In June, the city said it had nearly 1,300 active and registered short-term rental properties, but also estimated about the same number of other unregistered properties. Other sources, such as the AirDNA data analysis website, claimed that there was over 5,000 active rentals in Dallas.

In June, the city estimated it received nearly $2.6 million in hotel occupancy taxes from short-term rentals, compared to about $65 million from other hotel tax revenue and nearly $16.6 million from dollars from the city’s Tourism Public Improvement District.

The city is currently considering zoning and registration changes to regulate short-term rentals.

That’s not the only way the city plans to pay for a new convention center

The city also has a separate funding method for the new convention center. Last year, the state approved the city’s request to retain a portion of the state’s percentage of hotel sales taxes, hotel mixed drink taxes, and hotel occupancy taxes collected from businesses. within three miles of the Kay Bailey Hutchison Convention Center. It will run for 30 years – until 2051 – and is expected to bring in $2.2 billion.

The state allows this money to be used for a convention center, as well as a multi-purpose arena or venue that includes a livestock facility.