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Hotel occupancy tax about getting ‘heads in beds’

July 13th, 2017 under Top Stories


MARFA — Hoteliers, short-term rental owners and Marfa residents interested in learning more about the rules for where hotel occupancy tax dollars can be spent all attended a seminar by Justin Bragiel, the General Counsel for the Texas Hotel and Lodging Association, at the USO building Monday night.

At its simplest, the money from the tax, known colloquially as the Hotel-Motel Tax, is all about getting “heads in beds,” Bragiel told the approximately 40 attendees.

Mayor Ann Marie Nafziger and Marfa Visitor Center Director Minerva Lopez organized the event after receiving many questions asking what can and can’t be done with the revenue from the hotel occupancy tax. It is estimated that the city gathered $580,000 in hotel occupancy tax revenue in the past year.

The revenue spending must comply with the tax code, which states, “Every expenditure must directly promote tourism, and the hotel, and the convention industry.”

Bragiel, who is currently on a tour of Texas towns and cities running similar seminars, described a three-pronged test that can be applied to make sense of this.

The first boils down to whether it will ultimately increase tourist numbers, or as he put it, get “heads in beds.”

Secondly, Bragiel outlined a number of categories that govern where the tax revenues can legally be spent, three of which were most relevant to the city of Marfa: advertising and promotion, arts and culture and historical restoration and preservation.

The city may also add its own strictures to determine where tax dollars can be spent.

The third element relates to the rate of return on expenditure. A potential project is more valuable to the city if it can bring in more tourism. Bragiel suggested the city start surveying tourist numbers to help establish this.

Bragiel cited an anecdote he uses to help people understand his work. He described visiting a small, unnamed town. The town’s mayor queried Bragiel on whether the town could use hotel occupancy tax revenue to build a water processing plant because tourists often complained about the taste of the drinking water. Yes, this would improve the tourists stay, Bragiel said, but good tasting drinking water would not directly bring in more tourists, so he told the Mayor this was not a suitable way to spend tax revenues.

“Spending one dollar of hotel tax revenue must put one head in one bed,” Bragiel said reiterating the point.

The city council decides where the revenue is spent. Those who seek funding via hotel occupancy tax revenue are encouraged to apply to the city. Currently the city works on a rolling application period, but Bragiel recommended that his be changed to be based on deadlines, which will help the city council committees tasked with allocating tax revenue.

Following his presentation, Bragiel, and Nafziger fielded questions from the crowd. Many of these focused on how to report individual tax back to the city.

One audience member, who used Airbnb and VRBO for her short-term rentals complained of not receiving any word back from the city after she filed her taxes with them. Nafziger said this is something the city is working on.

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