LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 11, 2025 TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB3076 by Patterson (Relating to the authority of certain municipalities to use certain tax revenue for certain qualified projects.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB3076, As Introduced: a negative impact of ($13,000) through the biennium ending August 31, 2027. However, in fiscal year 2033 the negative impact would increase significantly. The negative impact would continue until fiscal year 2055. General Revenue-Related Funds, Ten- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2026($4,000)2027($9,000)2028($16,000)2029($22,000)2030($29,000)2031($36,000)2032($44,000)2033($2,759,000)2034($6,147,000)2035($6,516,000)All Funds, Ten-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund12026($4,000)2027($9,000)2028($16,000)2029($22,000)2030($29,000)2031($36,000)2032($44,000)2033($2,759,000)2034($6,147,000)2035($6,516,000) Fiscal AnalysisThe bill would amend Section 351.1015(b) of the Tax Code to apply to a municipality described by Section 351.152(15) that has a population of 200,000 or more.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 11, 2025
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB3076 by Patterson (Relating to the authority of certain municipalities to use certain tax revenue for certain qualified projects.), As Introduced
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB3076 by Patterson (Relating to the authority of certain municipalities to use certain tax revenue for certain qualified projects.), As Introduced
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB3076 by Patterson (Relating to the authority of certain municipalities to use certain tax revenue for certain qualified projects.), As Introduced
HB3076 by Patterson (Relating to the authority of certain municipalities to use certain tax revenue for certain qualified projects.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3076, As Introduced: a negative impact of ($13,000) through the biennium ending August 31, 2027. However, in fiscal year 2033 the negative impact would increase significantly. The negative impact would continue until fiscal year 2055.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3076, As Introduced: a negative impact of ($13,000) through the biennium ending August 31, 2027. However, in fiscal year 2033 the negative impact would increase significantly. The negative impact would continue until fiscal year 2055.
General Revenue-Related Funds, Ten- Year Impact:
2026 ($4,000)
2027 ($9,000)
2028 ($16,000)
2029 ($22,000)
2030 ($29,000)
2031 ($36,000)
2032 ($44,000)
2033 ($2,759,000)
2034 ($6,147,000)
2035 ($6,516,000)
All Funds, Ten-Year Impact:
2026 ($4,000)
2027 ($9,000)
2028 ($16,000)
2029 ($22,000)
2030 ($29,000)
2031 ($36,000)
2032 ($44,000)
2033 ($2,759,000)
2034 ($6,147,000)
2035 ($6,516,000)
Fiscal Analysis
The bill would amend Section 351.1015(b) of the Tax Code to apply to a municipality described by Section 351.152(15) that has a population of 200,000 or more.
Methodology
The bill would authorize a project finance zone for the city of Frisco. Frisco would be provided authority to receive incremental hotel-associated revenue from all hotels within the zone's boundaries, for a period of up to 30 years, less any amount distributed to a qualified hotel project already within the zone in the year the zone is designated.Hotel-associated revenue includes state sales tax revenue, state hotel tax revenue, state mixed beverage sales tax revenue and state mixed beverage gross receipts tax revenue collected from a hotel and businesses located within a hotel. The incremental revenue would be sum of all revenue in excess of the amounts from hotels within the zone during the year the project zone is designated by the municipality.The Comptroller would begin depositing the estimated monthly incremental hotel-associated revenue into Fund 0805 Incremental Hotel-Associated Revenue Suspense Trust once the hotels, and associated businesses in the hotels, within the zone have been determined by the city and validated by the Comptroller.As incremental revenue available to finance development of project-associated infrastructure would be maximized by establishing the earliest year possible as base year for the determination of incremental revenue, it is assumed project designations for Frisco would occur during 2025, the year of the effective date of the bill, with deposits to the project trust accounts beginning in 2026. The estimates are based on hotel tax revenue from hotels currently in operation and identified as within the likely boundaries of the zones, multiplied by a factor to account for associated sales tax and mixed beverage tax revenue based on data for extant hotel projects, extrapolated to future years at an average annual growth rate of six and a half percent as representative of typical hotel tax growth rates prior to the pandemic.As this estimate for project financing zone rebates is extrapolated from hotels currently in operation, it does not reflect higher payments to a project zone that would occur if the project-associated infrastructure improvements result in capture of market share by the project hotel and other hotels in the project zone from hotels elsewhere in a designating municipality or from other parts of the state. It also does not reflect higher payments as would occur if the project improvements attracted additional tourist visits from outside the state that otherwise would not have occurred anywhere in the state; revenue from such additional tourist visits paid to a project zone would not represent revenue foregone by the state.The fiscal impact to the state would be negligible for the first 7 years of the project, but in fiscal year 2033 the Omni PGA Frisco Resort qualified hotel project will reach the end of its entitlement period. At that time, the state revenue collected by the resort will be eligible, because excluded from base year revenue of the zone under Sec. 351.1015(2)(A)(i) and recognized in Comptroller Rule 3.12(b)(1)(F), to be included as incremental hotel-associated revenue within Frisco's project finance zone. The practical effect of establishing a project finance zone inclusive of the Omni PGA Frisco Resort qualified hotel project would be to extend the period of local entitlement to state tax revenue collected at the resort from the 10 years provided by Sec. 351.158 to a total of 32 years.
As this estimate for project financing zone rebates is extrapolated from hotels currently in operation, it does not reflect higher payments to a project zone that would occur if the project-associated infrastructure improvements result in capture of market share by the project hotel and other hotels in the project zone from hotels elsewhere in a designating municipality or from other parts of the state. It also does not reflect higher payments as would occur if the project improvements attracted additional tourist visits from outside the state that otherwise would not have occurred anywhere in the state; revenue from such additional tourist visits paid to a project zone would not represent revenue foregone by the state.The fiscal impact to the state would be negligible for the first 7 years of the project, but in fiscal year 2033 the Omni PGA Frisco Resort qualified hotel project will reach the end of its entitlement period. At that time, the state revenue collected by the resort will be eligible, because excluded from base year revenue of the zone under Sec. 351.1015(2)(A)(i) and recognized in Comptroller Rule 3.12(b)(1)(F), to be included as incremental hotel-associated revenue within Frisco's project finance zone. The practical effect of establishing a project finance zone inclusive of the Omni PGA Frisco Resort qualified hotel project would be to extend the period of local entitlement to state tax revenue collected at the resort from the 10 years provided by Sec. 351.158 to a total of 32 years.
Local Government Impact
The bill would authorize a project finance zone for the city of Frisco. Frisco would be provided authority to receive incremental hotel-associated revenue from all hotels within the zone's boundaries, for a period of up to 30 years, less any amount distributed to a qualified hotel project already within the zone in the year the zone is designated.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD, BRI
JMc, KK, SD, BRI