Sports and
Community Venues
January 2010
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Financing Community and Sports Venues
Cities and counties have authority to levy certain taxes and issue bonds to finance a wide range of community and sports-related capital projects.
After the public approval process, cities may use up to 25 percent of their local sales tax revenue to finance the construction of community and sports venues. The Development Corporation Act of 1979 allows Type A and Type B corporations with voter approval to use sales tax revenue for various projects including sports venues and related infrastructure. Voters may approve or reject any reduction of an existing local sales tax to make room for a venue tax.
[Refer to Chapters 334, 335 and 501-505, Local Government Code, and Sec. 321.508, Tax Code.]
Texas law allows voters to approve or reject any reduction of an existing local sales tax to make room for a venue tax.
Defining a “venue”
As defined by Section 334.001, Local Government Code, the term “venue” can apply to a wide variety of facilities, such as a sports arena, coliseum, stadium and any other facility built to accommodate professional and amateur sports events.
A venue also can be a convention center or related improvements in its vicinity such as civic centers, museums, aquariums, auditoriums, exhibition halls, theaters, music halls and plazas.
“Related infrastructure” may include stores, on-site hotels, restaurants, parking facilities, water and sewer facility, streets, roads, and other improvements which enhance the venue’s use, value or appeal.
Additional venue options include parks and recreation systems, watershed protection and preservation projects, conservation easements, open-space preservation programs intended to protect water and recharge areas or recharge projects with protection features. Water obtained as a result of the acquisition of property for such projects may be used only for the maintenance of that property.
[Refer to Secs. 334.001, 334.007, Local Government Code.]
A city or county wishing to pursue a venue project first must submit a resolution describing the project to the Comptroller’s office.
Governing body
Chapter 334 of the Local Government Code allows a city or a county to undertake a venue project. In this case, either a city council or a county commissioners court must act as the governing body over all such projects.
Sections 335.021-.031 of the Local Government Code; however, permit a city or county to work jointly with any number of cities and counties on a venue project. In such cases, the participating governments must form a “venue district” and appoint a board of directors to serve as the district’s governing body.
Both chapters 334 and 335 of the Local Government Code include provisions that allow, under certain circumstances, voters to approve or reject the construction, improvement, infrastructure and method of financing of venue projects.
[Refer to Secs. 334.024, 335.054, Local Government Code.]
Comptroller analysis
A city or county wishing to pursue a venue project first must submit a resolution describing the project to the Comptroller’s office.
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The Comptroller’s office will determine the fiscal impact of the project on the state’s revenue and provide the city or county with a written summary of its analysis. If the analysis shows a significant negative impact on the state’s revenue, the Comptroller’s office will provide recommendations on how to avoid or lessen this impact. If the Comptroller does not provide such an analysis before 30 days, the resolution may be considered approved.
A city or a county has 10 days to contest and appeal a negative ruling made by the Comptroller. In response, the Comptroller must perform a second analysis. If the second analysis still shows a negative impact on state revenue, the Comptroller again must provide recommendations on how to avoid the negative impact. If the Comptroller’s office does not provide this second analysis before the 30th day after an appeal, the resolution may be considered approved.
[Refer to Secs. 334.022-.023, 335.052-.053 Local Government Code.]
Transportation authority analysis
Affected transit authorities have similar review powers.
If the resolution contains a proposed sales and use tax that would result in a tax rate reduction for an area transit authority, the resolution must be sent to the authority in addition to the Comptroller’s office.
A transit authority has 29 days from the date of receipt of a venue project resolution to determine whether a proposed sales and use tax would have a significant negative impact on its ability to provide service or meet existing contracts. If the transit authority does not provide this analysis within a 29-day period, the resolution may be considered approved.
If the transit authority determines that a resolution would hurt its ability to provide service or meet its existing contracts, the transit authority must provide recommendations on how to avoid or ameliorate the negative impact. A city or a county may appeal such a determination to the transit authority.
[Refer to Secs. 334.0235-.0236, 335.0535-.0536, Local Government Code.]
Election Procedure
After the Comptroller and transit authority, if applicable, approve the resolution, the city or county may order an election. Voters must be allowed to vote on each venue project separately and on each method of finance to be used.
The ballot must be printed as follows:
Authorizing (insert name of municipality or county) to (insert description of venue project) and to impose a tax at the rate of (insert the types of tax and the maximum rate of the tax) for the purpose of financing the venue project.
If more than one method of financing is included in a single proposition, the ballot must describe each method:
Authorizing (insert name of municipality or county) to (insert description of venue project) and to impose a (insert the types of tax) tax at the rate of (insert the maximum rate of the tax) for the purpose of financing the venue project.
A city or county may implement its resolution after a majority of voters approves the proposition.
[Refer to Secs. 334.024, 334.0241 and 335.054, Local Government Code.]
Revenue options
At the election, a city or a county may present voters with a tax package from the options listed below. Each tax must be described with specific ballot language. Each tax must be discontinued when the associated bonds or other obligations are paid off.
[Refer to Chapter 334 generally and Secs. 334.024, 335.054 and 335.071(e), Local Government Code.]
Sales and Use Tax
A local sales and use tax can be adopted at one-eighth, one-fourth, three-eights or one-half of one percent. The increase must not cause the local sales and use tax to exceed two percent.
[Refer to Secs. 334.081-.085, Local Government Code.]
Ad Valorem Tax
A county or municipality may use revenue derived from existing property taxes to enhance a municipal park and recreation system, undertake a watershed protection and conservation project; a conservation easement; an open-space preservation program intended to protect water; or a recharge area or recharge project with a protection feature.
[Refer to Secs. 334.0241 and 334.041(f), Local Government Code.]
Short-Term Motor Vehicle Rental Tax
This tax can be adopted in increments of one-eighth of one percent, not to exceed five percent, on motor vehicle rentals of 30 days or fewer.
[Refer to Secs. 334.101-.108, Local Government Code.]
Event Admissions Tax
This tax can be levied up to a maximum tax rate of 10 percent of the price of admission.
[Refer Secs. 334.151-.153, Local Government Code.]
Event Parking Tax may be levied as a flat tax per parked motor vehicle at an approved venue project or a percentage of the parking fee.
Event Parking Tax
This tax may be levied as a flat tax per parked motor vehicle at an approved venue project or a percentage of the parking fee. The tax may not exceed $3 per vehicle, except in the city of Fort Worth where the fee may not exceed $5 per vehicle.
[Refer to Secs. 334.201-.203, Local Government Code.]
Hotel Occupancy Tax
The maximum tax rate is two percent of the price paid for a hotel room, except for certain counties with large populations. There are certain limits on the use of the hotel occupancy tax such as for watershed protection and conservation projects, so be sure to consult your legal advisor.
[Refer to Secs. 334.2515-.258, Local Government Code and Sec 351.101(a6-7), Tax Code.]
Venue Facility Use Tax
This tax may be levied on each member of a major league team that plays in a venue facility, up to a maximum of $5,000 per player per game.
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[Refer to Secs. 334.301-.308, Local Government Code.]
A city or county may implement its resolution after a majority of voters approves the proposition.
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Texas Comptroller of Public Accounts
Publication #96-633
Revised January 2010
For additional copies write:
Texas Comptroller of Public Accounts111 East 17th Street
Austin, Texas 78711-1440
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