Relating to municipal and county hotel occupancy taxes and the authority of certain municipalities to receive certain tax revenue derived from a hotel and convention center project and to pledge certain tax revenue for the payment of obligations related to the project; authorizing the imposition of taxes.

89(R) HB 2974 - Senate Committee Report version - Bill Text

By: Craddick (Senate Sponsor - King, et al.)

H.B. No. 2974

(In the Senate - Received from the House May 14, 2025;

May 14, 2025, read first time and referred to Committee on Economic

Development; May 23, 2025, reported adversely, with favorable

Committee Substitute by the following vote: Yeas 5, Nays 0;

May 23, 2025, sent to printer.)
Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR H.B. No. 2974

By: Schwertner

A BILL TO BE ENTITLED

AN ACT

relating to municipal and county hotel occupancy taxes and the

authority of certain municipalities to receive certain tax revenue

derived from a hotel and convention center project and to pledge

certain tax revenue for the payment of obligations related to the

project; authorizing the imposition of taxes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 334.0082, Local Government Code, is

amended by adding Subsections (d), (e), (f), and (g) to read as

follows:

(d)

Notwithstanding Subsection (a) and subject to this

subsection, this section also applies to a municipality that has a

population of at least 70,000 but not more than 180,000 and that is

located in a county that borders the United Mexican States and the

Gulf of Mexico.

A municipality described by this subsection may

impose a tax as authorized under Subsection (b)(2) only to finance a

convention center constructed before January 1, 2023. The

authority of the municipality to impose the tax as authorized under

Subsection (b)(2) expires on the earlier of:

(1)

the date the debt issued for the convention center

described by this subsection is repaid; or

(2) January 1, 2054.

(e)

Subsection (d) and this subsection expire January 1,

2054.

(f)

Notwithstanding Subsection (a) and subject to this

subsection, this section also applies to a municipality that has a

population of not more than 25,000, that contains a cultural

heritage museum, and that is located in a county that borders the

United Mexican States and the Gulf of Mexico.

A municipality

described by this subsection may impose a tax as authorized under

Subsection (b)(2) only to finance a convention center constructed

before January 1, 2025. The authority of the municipality to impose

the tax as authorized under Subsection (b)(2) expires on the

earlier of:

(1)

the date the debt issued for the convention center

described by this subsection is repaid; or

(2) January 1, 2056.

(g)

Subsection (f) and this subsection expire January 1,

2056.

SECTION 2. Section 156.2511, Tax Code, is amended by adding

Subsections (a-1) and (b-1) and amending Subsection (b) to read as

follows:

(a-1)

An eligible coastal municipality that receives a

warrant issued under Subsection (a) shall transfer the full amount

of the warrant

to the park board of trustees created by the

municipality not later than the last day of the calendar month

immediately following the date the municipality received the

warrant.

(b)
Money
[
An eligible coastal municipality may use money
]

received under this section
may be used
only to clean and maintain

public beaches in
the eligible coastal
[
that
] municipality.

(b-1)

The comptroller may issue a warrant under this section

only if the eligible coastal municipality has:

(1)

allocated at least one percent of the tax imposed

by the municipality under Chapter 351 to clean and maintain public

beaches in the municipality;

(2) either:

(A)

applied for state funds under Subchapter C,

Chapter 61, Natural Resources Code; or

(B)

made available to the comptroller the same

information required to be contained in an application under

Section 61.069, Natural Resources Code; and

(3)

on the request of the comptroller, submitted to

the comptroller:

(A)

financial data necessary to demonstrate that

the municipality has satisfied the requirements of Subdivision (1);

and

(B)

a signed attestation stating that the

municipality has satisfied the requirements of this subsection.

SECTION 3. Section 351.101, Tax Code, is amended by

amending Subsections (a) and (q) and adding Subsection (b-1) to

read as follows:

(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 800,000, 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 with a population of at

least 62,000 that:

(a) borders Lake Ray Hubbard; and

(b) is located in two counties, one of

which has a population of less than 110,000; and

(ii) Lake Ray Hubbard;

(D) the municipality:

(i) has a population of at least 9,000;

(ii)

is wholly located in a county in which

the State Capitol is located; and

(iii)

is adjacent to or bisected by State

Highway 71; or

(E)

the sporting event is conducted at a facility

located in and owned by a municipality:

(i)

located in a county with a population of

2.2 million or more and that is adjacent to a county with a

population of more than 850,000; and

(ii) with a population of:

(a)

more than 51,000 but less than

57,000; or

(b)

less than 1.3 million and that is

bisected by Interstate Highway 20 and U.S. Highway 67;

(7) subject to Section 351.1076, 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 610,000 or less;

(ii) has a population of at least 80,000 but

not more than 125,000 and is located in a county that has a

population of less than 240,000 but more than 233,500;

(iii) has:

(a) a population of at least 10,000

and is located in a county that has a population of more than 70,000

and borders Lake Livingston; or

(b) a population of 36,000 or more and

is located in a county with a population of less than 95,000 that

borders Oklahoma;

(iv) has a population of at least 13,000 but

less than 48,000 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) is located in a county that has a

population of 100,000 or less and the municipality has a population

of:

(a) more than 24,400 and less than

25,000; or

(b) more than 28,150 and less than

31,000;

(viii) is located in a county that has a

population of [
not
] more than
90,000, is adjacent to a bay connected

to the Gulf of Mexico, and contains a portion of the Guadalupe River

[
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 800,000,

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(4), Local

Government Code, that is related to the promotion of tourism.

(b-1)

Notwithstanding Subsection (a), revenue derived from

the tax authorized by this chapter may not be expended in a manner

or by a program or activity that discriminates or prioritizes on the

basis of race, color, disability, sex, religion, age, or national

origin.

(q) In addition to the purposes provided by Subsections (a)

and (e),
a municipality described by Section 351.152(75) or
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(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.
This subsection does not authorize a

municipality described by Section 351.152(75) to use revenue from

the hotel occupancy tax for the construction, improvement,

enlarging, equipping, renovating, repairing, operation, or

maintenance of a road, street, or water or sewer facility.

SECTION 4. Section 351.1015, Tax Code, is amended by adding

Subsection (m) to read as follows:

(m)

Notwithstanding any other provision of this section, a

municipality may pledge or commit revenue under this section for

only one qualified project.

After a municipality pledges or

commits revenue under this section for a qualified project, the

municipality may not ever again pledge or commit revenue for a

subsequent qualified project under this section. For purposes of

this subsection, the term "municipality" includes a local

government corporation created to aid and act on behalf of the

municipality.

This subsection may not be construed to prohibit a

municipality from pledging or committing revenue under this section

for a subsequent qualified project that is authorized by an act of

the legislature that becomes law on or after January 1, 2026.

SECTION 5. Section 351.102, Tax Code, is amended by adding

Subsections (a-1), (b-1), and (b-2) to read as follows:

(a-1)

Notwithstanding Subsection (a), a municipality with a

population of more than 1.5 million may not pledge or commit revenue

under that subsection for the payment of principal of or interest on

bonds or other obligations issued to pay the cost of the acquisition

and construction of a convention center hotel or the cost of

acquisition, remodeling, or rehabilitation of a historic hotel

structure if the acquisition, construction, remodeling, or

rehabilitation is commenced after December 1, 2016.

This

subsection may not be construed to prohibit a municipality with a

population of more than 1.5 million from pledging or committing

revenue under Subsection (a) for the payment of principal of or

interest on bonds or other obligations for the acquisition,

construction, remodeling, or rehabilitation of a historic hotel

structure if the pledge or commitment of revenue for that purpose is

authorized by an act of the legislature that becomes law on or after

January 1, 2026.

(b-1)

Notwithstanding Subsection (b) or (c) and except as

provided by Subsection (b-2), a municipality may pledge or commit

revenue under Subsection (b) for only one hotel project.

After a

municipality pledges or commits revenue under Subsection (b) for a

hotel project, the municipality may not ever again pledge or commit

revenue for a subsequent hotel project under that subsection.

This

subsection may not be construed to prohibit a municipality from

pledging or committing revenue under Subsection (b) for a

subsequent hotel project that is authorized by an act of the

legislature that becomes law on or after January 1, 2026.

(b-2)

A municipality that before January 1, 2025, pledged or

committed revenue under this section for more than one hotel

project:

(1) is not subject to Subsection (b-1); and

(2)

may not on or after January 1, 2025, pledge or

commit revenue under Subsection (b) for another hotel project

unless that hotel project is authorized by an act of the legislature

that becomes law on or after January 1, 2026.

SECTION 6. Section 351.1021, Tax Code, is amended by adding

Subsection (f) to read as follows:

(f)

An eligible municipality may pledge or commit revenue

under this section for only one multipurpose convention center

facility project.

After an eligible municipality pledges or

commits revenue under this section for a multipurpose convention

center facility project, the municipality may never again pledge or

commit revenue under this section for a subsequent multipurpose

convention center facility project.

For purposes of this

subsection, the term "eligible municipality" includes a local

government corporation created to aid and act on behalf of the

municipality.

This subsection may not be construed to prohibit a

municipality from pledging or committing revenue under this section

for a subsequent multipurpose convention center facility project

that is authorized by an act of the legislature that becomes law on

or after January 1, 2026.

SECTION 7. Section 351.1022, Tax Code, is amended by adding

Subsection (f) to read as follows:

(f)

A municipality may pledge or commit revenue under this

section for only one hotel project. After a municipality pledges or

commits revenue under this section for a hotel project, the

municipality may never again pledge or commit revenue under this

section for a subsequent hotel project.

This subsection may not be

construed to prohibit a municipality from pledging or committing

revenue under this section for a subsequent hotel project that is

authorized by an act of the legislature that becomes law on or after

January 1, 2026.

SECTION 8. Section 351.106, Tax Code, is amended by adding

Subsection (d) to read as follows:

(d)

In this subsection, "qualified project" has the meaning

assigned by Section 351.1015. Notwithstanding any other provision

of this section, a municipality may pledge or commit revenue under

this section for only one qualified project.

After a municipality

pledges or commits revenue under this section for a qualified

project, the municipality may not ever again pledge or commit

revenue for a qualified project.

This subsection may not be

construed to prohibit a municipality from pledging or committing

revenue under this section for a qualified project that is

authorized by an act of the legislature that becomes law on or after

January 1, 2026.

SECTION 9. Section 351.1066(a), Tax Code, is amended to

read as follows:

(a) This section applies only to:

(1) a municipality with a population of at least 3,500

but less than 5,500 that is the county seat of a county with a

population of less than 50,000 that borders a county with a

population of more than 1.6 million;

(2) a municipality with a population of at least 2,800

but less than 3,500 that is the county seat of a county with a

population of less than 22,000 that is bordered by the Trinity River

and includes a state park and a portion of a wildlife management

area;

(3) a municipality with a population of at least 8,000

that is located in a county that borders the Pecos River and that

has a population of not more than 15,000;

(4) a municipality with a population of not more than

15,000 that is located in a county through which the Frio River

flows and an interstate highway crosses, and that has a population

of at least 15,000;

(5) a municipality with a population of not less than

7,500 that is located in a county with a population of not less than

40,000 but less than 250,000 that is adjacent to a county with a

population of less than 750;

(6) a municipality that is the county seat of a county

with a population of at least 8,500 and that county contains part of

the Chaparral Wildlife Management Area; [
and
]

(7) a municipality that has a population of not more

than 25,000, that contains a cultural heritage museum, and that is

located in a county that borders the United Mexican States and the

Gulf of Mexico
;

(8) a municipality that:

(A) has a population of at least 9,000;

(B)

is wholly located in a county in which the

State Capitol is located; and

(C)

is adjacent to or bisected by State Highway

71; and

(9)

a municipality that is the county seat of a county

with a population of more than 10,000 that contains a state park

featuring sandhills
.

SECTION 10. Section 351.10712(a), Tax Code, is amended to

read as follows:

(a) This section applies only to:

(1) a municipality with a population of at least

95,000 that is located in a county that is bisected by United States

Highway 385 and has a population of not more than 170,000; and

(2) a municipality located in a county that has a

population of [
not
] more than
90,000, is adjacent to a bay connected

to the Gulf of Mexico, and contains a portion of the Guadalupe River

[
300,000 and in which a component university of the University of

Houston System is located
].

SECTION 11. Section 351.152, Tax Code, is amended to read as

follows:

Sec. 351.152. APPLICABILITY. This subchapter applies only

to:

(1) a municipality described by Section

351.001(7)(B);

(2) a municipality described by Section

351.001(7)(D);

(3) a municipality described by Section

351.001(7)(E);

(3-a)

a municipality described by Section

351.001(11);

(4) a municipality described by Section

351.102(e)(3);

(5) a municipality that contains more than 70 percent

of the population of a county with a population of 1.5 million or

more;

(6) a municipality with a population of 175,000 or

more but less than 200,000 that is partially located in at least one

county with a population of 125,000 or more;

(7) a municipality with a population of 250,000 or

more but less than one million that is located in one county with a

population of 2.5 million or more;

(8) a municipality with a population of 180,000 or

more that:

(A) is located in two counties, each with a

population of 100,000 or more; and

(B) contains an American Quarter Horse Hall of

Fame and Museum;

(9) a municipality with a population of 96,000 or more

that is located in a county that borders Lake Palestine;

(10) a municipality with a population of 96,000 or

more that is located in a county that contains the headwaters of the

San Gabriel River;

(11) a municipality with a population of at least

95,000 that is located in a county that is bisected by United States

Highway 385 and has a population of not more than 170,000;

(12) a municipality with a population of 110,000 or

more but less than 135,000 at least part of which is located in a

county with a population of less than 135,000;

(13) a municipality with a population of 28,000 or

more but less than 31,000 that is located in two counties, each of

which has a population of 900,000 or more and a southern border with

a county with a population of 2.5 million or more;

(14) a municipality with a population of 200,000 or

more but less than 300,000 that contains a component institution of

the Texas Tech University System;

(15) a municipality with a population of 95,000 or

more that:

(A) is located in more than one county; and

(B) borders Lake Lewisville;

(16) a municipality with a population of 45,000 or

more that:

(A) contains a portion of Cedar Hill State Park;

(B) is located in two counties, one of which has a

population of 2.5 million or more and one of which has a population

of 190,000 or more; and

(C) has adopted a capital improvement plan for

the construction or expansion of a convention center facility;

(17) a municipality with a population of less than

10,000 that:

(A) is almost wholly located in a county with a

population of 900,000 or more that is adjacent to a county with a

population of 2.5 million or more;

(B) is partially located in a county with a

population of 2.1 million or more that is adjacent to a county with

a population of 2.5 million or more;

(C) has a visitor center and museum located in a

19th-century rock building in the municipality's downtown; and

(D) has a waterpark open to the public;

(18) a municipality with a population of 60,000 or

more that:

(A) borders Lake Ray Hubbard; and

(B) is located in two counties, one of which has a

population of less than 110,000;

(19) a municipality with a population of 110,000 or

more that:

(A) borders Clear Lake; and

(B) is primarily located in a county with a

population of less than 355,000;

(20) a municipality with a population of less than

2,000 that:

(A) is located adjacent to a bay connected to the

Gulf of Mexico;

(B) is located in a county with a population of

290,000 or more that is adjacent to a county with a population of

four million or more; and

(C) has a boardwalk on the bay;

(21) a municipality with a population of 75,000 or

more that:

(A) is located wholly in one county with a

population of 800,000 or more that is adjacent to a county with a

population of four million or more; and

(B) has adopted a capital improvement plan for

the construction or expansion of a convention center facility;

(22) a municipality with a population of less than

70,000 that is located in three counties, at least one of which has

a population of four million or more;

(23) an eligible coastal municipality with a

population of 2,900 or more but less than 5,000;

(24) a municipality with a population of
125,000

[
90,000
] or more but less than
132,000
[
150,000 that:

[
(A) is located in three counties; and

[
(B)

contains a branch campus of a component

institution of the University of Houston System
];

(25) a municipality that is:

(A) primarily located in a county with a

population of four million or more; and

(B) connected by a bridge to a municipality

described by Subdivision (20);

(26) a municipality with a population of 25,000 or

more but less than 30,000 that:

(A) contains a portion of Mustang Bayou; and

(B) is wholly located in a county with a

population of less than 500,000;

(27) a municipality with a population of 70,000 or

more but less than 90,000 that is located in two counties, one of

which has a population of four million or more and the other of

which has a population of less than 50,000;

(28) a municipality with a population of 10,000 or

more that:

(A) is wholly located in a county with a

population of four million or more; and

(B) has a city hall located less than three miles

from a space center operated by an agency of the federal government;

(29) a municipality that is the county seat of a

county:

(A) through which the Pedernales River flows; and

(B) in which the birthplace of a president of the

United States is located;

(30) a municipality that contains a portion of U.S.

Highway 79 and State Highway 130;

(31) a municipality with a population of 70,000 or

more but less than 115,000 that is located in two counties, one of

which has a population of 1.1 million or more but less than 1.9

million;

(32) a municipality with a population of less than

25,000 that contains a museum of Western American art;

(33) a municipality with a population of 50,000 or

more that is the county seat of a county that contains a portion of

the Sam Houston National Forest;

(34) a municipality with a population of less than

25,000 that:

(A) contains a cultural heritage museum; and

(B) is located in a county that borders the

United Mexican States and the Gulf of Mexico;

(35) a municipality that is the county seat of a county

that:

(A) has a population of 115,000 or more;

(B) is adjacent to a county with a population of

2.1 million or more; and

(C) hosts an annual peach festival;

(36) a municipality that is the county seat of a county

that:

(A) has a population of 800,000 or more; and

(B) is adjacent to a county with a population of

four million or more;

(37) a municipality with a population of less than

10,000 that:

(A) contains a component university of The Texas

A&M University System; and

(B) is located in a county adjacent to a county

that borders Oklahoma;

(38) a municipality with a population of less than

17,000 that:

(A) is located in two counties, each of which has

a population of 900,000 or more but less than two million; and

(B) hosts an annual Cajun Festival;

(39) a municipality with a population of 13,000 or

more that:

(A) is located on an international border; and

(B) is located in a county:

(i) with a population of less than 400,000;

and

(ii) in which at least one World Birding

Center site is located;

(40) a municipality with a population of 3,200 or more

that:

(A) is located on an international border; and

(B) is located not more than five miles from a

state historic site that serves as a visitor center for a state park

that contains 300,000 or more acres of land;

(41) a municipality with a population of 36,000 or

more that is adjacent to at least two municipalities described by

Subdivision (15);

(42) a municipality with a population of 28,000 or

more that is located in a county with a population of 240,000 or

more that contains a portion of the Blanco River and in which is

located a historic railroad depot and heritage center;

(43) a municipality located in a county that has a

population of [
not
] more than
90,000, is adjacent to a bay connected

to the Gulf of Mexico, and contains a portion of the Guadalupe River

[
300,000 and in which a component university of the University of

Houston System is located
];

(44) a municipality with a population of less than

500,000 that is:

(A) located in two counties; and

(B) adjacent to a municipality described by

Subdivision (31);

(45) a municipality that:

(A) has a population of more than 67,000; and

(B) is located in two counties with 90 percent of

the municipality's territory located in a county with a population

of at least 800,000, and the remaining territory located in a county

with a population of at least four million;

(46) a municipality that:

(A) has a population of 100,000 or more; and

(B) is wholly located in, but is not the county

seat of, a county with a population of one million or more:

(i) in which all or part of a municipality

with a population of one million or more is located; and

(ii) that is adjacent to a county with a

population of 2.5 million or more;

(47) a municipality that is the county seat of a county

bordering the Gulf of Mexico and the United Mexican States;

(48) a municipality that is bisected by the Guadalupe

River and is the county seat of a county with a population of

170,000 or more;

(49) a municipality with a population of 70,000 or

more but less than 150,000 that borders Joe Pool Lake;

(50) a municipality with a population of 115,000 or

more that borders the Neches River;

(51) a municipality described by Section 351.101(k);

(52) a municipality that is the county seat of a

county:

(A) through which the Brazos River flows; and

(B) in which a national monument is located;

(53) a municipality with a population of 45,000 or

more that:

(A) is not the county seat of a county;

(B) is located in a single county; and

(C) contains a portion of Lake Lewisville;

(54) a municipality that is the county seat of a county

with a population of more than 900,000 that is adjacent to two

counties, each of which has a population of more than 1.8 million;

(55) a municipality that hosts an annual wine festival

and is located in three counties, each of which has a population of

more than 900,000;

(56) a municipality that has a population of at least

150,000 but less than 1,300,000 and is partially located in a county

that contains a portion of Cedar Creek Reservoir;

(57) a municipality that is located in a county that

contains a portion of Cedar Creek Reservoir and in which a private

college is located;

(58) a municipality that is the county seat of a

county:

(A) with a population of one million or more;

(B) in which all or part of a municipality with a

population of one million or more is located; and

(C) that is located adjacent to a county with a

population of 2.5 million or more;

(59) a municipality that is the county seat of a county

that contains a portion of Cedar Creek Reservoir and borders a

county with a population of more than 240,000;

(60) a municipality with a population of more than

80,000 but less than 150,000 that is located in a county with a

population of more than 369,000 but less than 864,000 that contains

part of an active duty United States Army installation;

(61) a municipality with a population of 750,000 or

more that is located in a county with a population of 1.5 million or

less;

(62) a municipality with a population of less than

7,000 that contains a country music hall of fame;

(63) a municipality with a population of 35,000 or

more that contains a railroad museum and is located in a county

that:

(A) has a population of 800,000 or more; and

(B) is adjacent to a county with a population of

four million or more; [
and
]

(64) a municipality:

(A) that is the county seat of a county:

(i) with a population of 60,000 or less; and

(ii) that borders the Rio Grande; and

(B) in which is located a United States military

fort listed in the National Register of Historic Places
;

(65)

a municipality through which the Comal River

flows;

(66)

a municipality with a population of 7,000 or more

that contains Lake Marble Falls;

(67) a municipality that:

(A)

has a population of more than 130,000 but

less than 1.3 million; and

(B)

is located in three counties, each of which

has a population of more than 900,000;

(68)

a municipality with a population of 47,000 or

more that:

(A)

is located in two counties, one of which has a

population of 2.1 million or more and one of which has a population

of 179,000 or more; and

(B) is bisected by State Highway 174;

(69)

a municipality with a population of more than

240,000 but less than 270,000 that borders a man-made lake that has

a surface area of more than 20,000 acres;

(70)

a municipality that is the county seat of a county

that:

(A) has a population of 600,000 or more; and

(B)

is adjacent to the county that contains the

State Capitol;

(71)

a municipality described by Section

334.0082(a)(2), Local Government Code;

(72) a municipality that:

(A)

has a population of 10,000 or more but less

than 75,000;

(B)

is located in two counties, one of which is a

county in which the State Capitol is located; and

(C) hosts an annual German festival;

(73) a municipality that:

(A)

is located in a county with a population of

600,000 or more that is adjacent to the county that contains the

State Capitol; and

(B)

has a population of more than 16,000 but less

than 27,000;

(74)

a municipality with a population of more than

16,000 but less than 18,000 that is located in a county with a

population of more than 2.5 million that is adjacent to a county

with a population of more than 2.1 million;

(75)

a municipality with a population of more than

285,000 that is wholly located in two counties, each with a

population of more than 900,000; and

(76)

a municipality with a population of 15,000 or

more but less than 30,000, that is bisected by United States Highway

75, and that is wholly located in a county:

(A) with a population of 750,000 or more;

(B)

in which all or part of a municipality with a

population of one million or more is located; and

(C)

that is adjacent to a county with a

population of two million or more
.

SECTION 12. Subchapter C, Chapter 351, Tax Code, is amended

by adding Section 351.1535 to read as follows:

Sec.

351.1535.

EXCEPTIONS APPLICABLE TO ELIGIBLE BARRIER

ISLAND COASTAL MUNICIPALITY. (a)

This section applies only to a

municipality described by Section 351.001(11).

(b) Section 351.151(2)(C) does not apply to a facility:

(1)

that otherwise meets the requirements of a

qualified convention center facility under Section 351.151;

(2)

for which the nearest qualified hotel is located

near a natural impediment, including open water or protected

wetlands, that makes it impractical for the facility to be located

not more than 1,000 feet from the nearest exterior wall of the

qualified hotel; and

(3)

that has an exterior wall that is located not more

than 2,000 feet from the nearest exterior wall of a qualified hotel.

(c) Section 351.151(3)(B) does not apply to a hotel:

(1)

that otherwise meets the requirements of a

qualified hotel under Section 351.151;

(2)

for which the nearest qualified convention center

facility is located near a natural impediment, including open water

or protected wetlands, that makes it impractical for the hotel to be

located not more than 1,000 feet from the nearest exterior wall of

the qualified convention center facility; and

(3)

that has an exterior wall that is located not more

than 2,000 feet from the nearest exterior wall of a qualified

convention center facility.

(d)

Notwithstanding Section 351.151(4)(B)(i)(b), a parking

area or structure that otherwise meets the requirements of a

qualified project under Section 351.151 may be located not more

than 2,000 feet from the nearest property line of a qualified

convention center facility or qualified hotel if the facility or

hotel is located near a natural impediment, including open water or

protected wetlands, that makes it impractical to acquire, lease,

construct, repair, remodel, expand, or equip a parking area or

structure located not more than 1,000 feet from the facility or

hotel.

(e)

Section 351.151(4)(B)(ii)(b) does not apply to

infrastructure:

(1)

for which the qualified convention center facility

or qualified hotel is located near a natural impediment, including

open water or protected wetlands, that makes it impractical to

acquire, construct, repair, remodel, or expand infrastructure

located not more than 1,000 feet from the facility or hotel; and

(2)

that is located not more than 2,000 feet from the

nearest property line of the qualified convention center facility

or qualified hotel.

SECTION 13. Section 351.155, Tax Code, is amended by

amending Subsection (c) and adding Subsection (c-1) to read as

follows:

(c) A municipality may pledge or commit revenue under this

section for only one qualified project. After a municipality

pledges or commits revenue under this section for a qualified

project, the municipality may not ever again pledge or commit

revenue for a qualified project.
This subsection may not be

construed to prohibit a municipality from pledging or committing

revenue under this section for a qualified project that is

authorized by an act of the legislature that becomes law on or after

January 1, 2026.

(c-1)

This subsection applies only to a municipality

described by Section 351.152(12) that has a population of 130,000

or more.

Notwithstanding Subsection (c), a municipality to which

this subsection applies may pledge or commit revenue under this

section for only two qualified projects.

SECTION 14. Section 351.157, Tax Code, is amended by

amending Subsection (b) and adding Subsection (b-1) to read as

follows:

(b) This section applies only to:

(1) a municipality described by Section 351.152(3);

(1-a) a municipality described by Section 351.152(5);

(2) a municipality described by Section 351.152(6);

(3) a municipality described by Section 351.152(7);

(3-a) a municipality described by Section 351.152(9);

(4) a municipality described by Section 351.152(10);

(4-a) a municipality described by Section

351.152(14);

(5) a municipality described by Section 351.152(16);

(6) a municipality described by Section 351.152(22);

(7) a municipality described by Section 351.152(25);

(8) a municipality described by Section 351.152(34);

(9) a municipality described by Section 351.152(35);

(10) a municipality described by Section 351.152(36);

(11) a municipality described by Section 351.152(38);

(11-a) a municipality described by Section

351.152(41);

(12) a municipality described by Section 351.152(43);

(13) a municipality described by Section 351.152(46);

(14) a municipality described by Section 351.152(47);

(15) a municipality described by Section 351.152(49);

(15-a)

a municipality described by Section

351.152(51);

(16) a municipality described by Section 351.152(53);

(17) a municipality described by Section 351.152(54);

(18) a municipality described by Section 351.152(56);

and

(19) a municipality described by Section 351.152(58).

(b-1)

In addition to the municipalities described by

Subsection (b), this section applies to a municipality described by

Section 351.155(c-1).

SECTION 15. Section 351.161(a), Tax Code, as added by

Chapter 1030 (S.B. 627), Acts of the 88th Legislature, Regular

Session, 2023, is amended to read as follows:

(a) This section applies only to a municipality described by

Section 351.152(5)
or (75)
.

SECTION 16. Section 352.002, Tax Code, is amended by

amending Subsection (a) and adding Subsections (gg), (hh), (ii),

(jj), and (kk) to read as follows:

(a) The commissioners courts of the following counties by

the adoption of an order or resolution may impose a tax on a person

who, under a lease, concession, permit, right of access, license,

contract, or agreement, pays for the use or possession or for the

right to the use or possession of a room that is in a hotel, costs $2

or more each day, and is ordinarily used for sleeping:

(1) a county that has a population of more than 3.3

million;

(2) a county that has a population of 90,000 or more,

borders the United Mexican States, does not border the Gulf of

Mexico, and does not have four or more cities that each have a

population of more than 25,000;

(3) a county in which there is no municipality;

(4) a county in which there is located an Indian

reservation under the jurisdiction of the United States government;

(5) a county that has a population of 30,000 or less,

that has no more than one municipality with a population of less

than 2,500, and that borders two counties located wholly in the

Edwards Aquifer Authority established by Chapter 626, Acts of the

73rd Legislature, Regular Session, 1993;

(6) a county that borders the Gulf of Mexico
, other

than a county authorized to impose the tax under Subdivision (30)
;

(7) a county that has a population of less than 5,000,

that borders the United Mexican States, and in which there is

located a major observatory;

(8) a county that has a population of 12,000 or less

and borders the Toledo Bend Reservoir;

(9) a county that has a population of less than 12,500

and an area of less than 275 square miles and does not border a

county that borders Arkansas and Louisiana;

(10) a county that has a population of 30,000 or less

and borders Possum Kingdom Lake;

(11) a county that borders a county with a population

of more than 300,000 and the United Mexican States and has a

population of more than 300,000 and less than 900,000;

(12) a county that has a population of 35,000 or more

and borders or contains a portion of Lake Fork Reservoir;

(13) a county that borders the United Mexican States

and in which there is located a national recreation area;

(14) a county that borders the United Mexican States

and in which there is located a national park of more than 400,000

acres;

(15) a county that has a population of 28,000 or less,

that has no more than four municipalities, and that is located

wholly in the Edwards Aquifer Authority established by Chapter 626,

Acts of the 73rd Legislature, Regular Session, 1993;

(16) a county that has a population of 25,000 or less,

whose territory is less than 750 square miles, and that has two

incorporated municipalities, each with a population of 800 or less,

at least one of which is located on the Frio River;

(17) a county that has a population of 34,000 or more

and borders Lake Buchanan;

(18) a county that has a population of more than 45,000

and less than 75,000, that borders the United Mexican States, and

that borders or contains a portion of Falcon Lake;

(19) a county with a population of 22,000 or less that

borders the Neches River and in which there is located a national

preserve;

(20) a county that has a population of 28,000 or less

and that borders or contains a portion of Lake Livingston;

(21) a county through which the Pedernales River flows

and in which the birthplace or the childhood home of a president of

the United States is located;

(22) a county that has a population of 35,000 or less

and borders Lake Buchanan;

(23) a county with a population of less than 11,000

that is bordered by the Sulphur River;

(24) a county that has a population of 16,000 or more

and borders the entire north shore of Lake Somerville;

(25) a county that has a population of 20,000 or less

and that is bordered by the Brazos and Navasota Rivers;

(26) a county that has a population of more than 15,000

and less than 25,000 and is located on the Trinity and Navasota

Rivers;

(27) a county that has a population of less than 15,000

and that is bordered by the Trinity and Navasota Rivers;

(28) a county that borders or contains a portion of the

Neches River, the Sabine River, and Sabine Lake; [
and
]

(29) a county that borders Whitney Lake
; and

(30)

a county that has a population of more than

90,000, is located adjacent to a bay connected to the Gulf of

Mexico, and contains a portion of the Guadalupe River
.

(gg)

The commissioners court of a county in which the

headwaters of the Guadalupe River are located may impose a tax as

provided by Subsection (a). A tax imposed under this subsection

does not apply to a hotel located in a municipality that imposes a

tax under Chapter 351 applicable to the hotel.

(hh)

The commissioners court of a county in which the

confluence of the Llano River and the James River is located may

impose a tax as provided by Subsection (a). A tax imposed under

this subsection does not apply to a hotel located in a municipality

that imposes a tax under Chapter 351 applicable to the hotel.

(ii)

The commissioners court of a county that borders

Oklahoma and is bisected by United States Highway 62 may impose a

tax as provided by Subsection (a). A tax imposed under this

subsection does not apply to a hotel located in a municipality that

imposes a tax under Chapter 351 applicable to the hotel.

(jj)

The commissioners court of a county that has a

population of more than 125,000, borders the Red River, and has a

county seat with a population of more than 100,000 may impose a tax

as provided by Subsection (a). This subsection expires September

1, 2030.

(kk)

The commissioners court of a county with a population

of less than 100,000 that borders the Navasota River and in which an

annual renaissance festival is held may impose a tax as provided by

Subsection (a).

SECTION 17. Section 352.003, Tax Code, is amended by adding

Subsections (ff), (gg), and (hh) to read as follows:

(ff)

The tax rate in a county authorized to impose the tax

under Section 352.002(jj) may not exceed two percent of the price

paid for a room in a hotel.

This subsection expires September 1,

2030.

(gg)

The tax rate in a county authorized to impose the tax

under Section 352.002(kk) may not exceed seven percent of the price

paid for a room in a hotel, except that the tax rate may not exceed

two percent of the price paid for a room in a hotel if the hotel is

located in:

(1)

a municipality that imposes a tax under Chapter

351 applicable to the hotel; or

(2)

the extraterritorial jurisdiction of a

municipality that imposes a tax under Section 351.0025 applicable

to the hotel.

(hh)

The tax rate in a county authorized to impose the tax

under Section 352.002(a)(30) may not exceed seven percent of the

price paid for a room in a hotel, except that the tax rate may not

exceed two percent of the price paid for a room in a hotel if the

hotel is located in:

(1)

a municipality that imposes a tax under Chapter

351 applicable to the hotel; or

(2)

the extraterritorial jurisdiction of a

municipality that imposes a tax under Section 351.0025 applicable

to the hotel.

SECTION 18. Subchapter B, Chapter 352, Tax Code, is amended

by adding Section 352.119 to read as follows:

Sec.

352.119.

USE OF REVENUE: CERTAIN COUNTIES BORDERING

NAVASOTA RIVER.

In addition to the purposes authorized by this

chapter, the revenue from a tax imposed under this chapter by a

county authorized to impose the tax under Section 352.002(kk) may

be used for:

(1)

the construction, enlarging, equipping,

improvement, maintenance, repairing, and operation of a civic

center with an arena used for rodeos, livestock shows, or

agricultural expositions to enhance hotel activity and encourage

tourism;

(2)

advertising and conducting solicitations and

promotional programs to attract tourists or convention delegates to

the county, any of which may be conducted by the county or through a

contract with a person or organization selected by the county; and

(3)

encouraging, promoting, and improving historical

preservation and restoration efforts.

SECTION 19. (a) Sections 351.1035 and 351.155(d), Tax

Code, are repealed.

(b) The repeal by this section of Section 351.1035, Tax

Code, applies only to revenue collected on or after the effective

date of this Act. Revenue collected before the effective date of

this Act is governed by the law in effect when the revenue was

collected, and the former law is continued in effect for that

purpose.

(c) The repeal by this section of Section 351.155(d), Tax

Code, does not affect the validity of a bond, contractual

obligation, or other obligation for which revenue was pledged,

committed, or authorized by a municipality under Subchapter C,

Chapter 351, Tax Code, before the effective date of this Act.

Bonds, contractual obligations, or other obligations for which

revenue was pledged or committed before that date are governed by

the law in effect when the revenue was pledged or committed, and

that law is continued in effect for the purposes of the validity of

those bonds, contractual obligations, and other obligations.

SECTION 20. It is the intent of the 89th Legislature,

Regular Session, 2025, that the amendments made by this Act be

harmonized with another Act of the 89th Legislature, Regular

Session, 2025, relating to nonsubstantive additions to and

corrections in enacted codes.

SECTION 21. This Act takes effect immediately if it

receives a vote of two-thirds of all the members elected to each

house, as provided by Section 39, Article III, Texas Constitution.

If this Act does not receive the vote necessary for immediate

effect, this Act takes effect September 1, 2025.

* * * * *