During their regular meeting Feb. 13, Fort Worth City Council approved putting a 2 percentage point increase to the hotel occupancy tax on the ballot in May.

The details

According to a city news release, the 2 percentage point HOT increase is estimated to generate approximately $10 million a year if the increase is approved by voters. The funds would help pay for escalating costs in the city’s convention center expansion.

The news release states that council designated the convention center as a “venue” project. Under state law, a voter-approved venue project cannot be supported by property tax or property-tax-backed bonds. The use of HOT funds is restricted to tourism-related expenditures, such as designated venues.

Diving in deeper

At a Jan. 9 meeting, Michael Crum, director of Fort Worth’s events department, gave council members a presentation on cultural and tourism funds. During his presentation, Crum explained why there is a need to increase the HOT rate.

Crum said that 2023 cost estimates for the convention center expansion are up 86% over original estimates in 2019. In terms of real numbers, Crum said that the 2019 cost estimate was $377 million, while the 2023 cost estimate is $701 million.

Quote of note

“[Culture and tourism] revenues have not kept pace with post-COVID inflation,” Crum said. “The cost of projects, particularly the second phase of the Fort Worth Convention Center expansion, have outrun the financing capacity of the current revenue streams.”

According to the news release, HOT is paid by those renting a hotel room. Texas state law allows for HOT of up to 17%. A 2 percentage point increase would put the total Fort Worth HOT at 17%, which is the current rate in Houston and Austin.