By Andy Sevilla
In a suit filed in district court this month, attorneys for Buda allege Microtel Inn & Suites owes the city more than $47,000 in back taxes and penalties. Officials now want the business’ doors shut until that debt gets settled.
The city is petitioning a Hays County district court for injunctive relief seeking an order prohibiting Microtel from operating until it pays all its outstanding taxes, penalties, interest and the city’s attorney’s fees, according to the suit.
“The City (Buda) will likely prevail at trial in this matter,” attorneys Cynthia Trevino and George Hyde said in the suit. “The City would show probable injury by showing that the City is in danger of imminent harm by being deprived of the tax revenue that it is entitled to as a matter of law…”
The state’s tax code allows municipalities to impose a hotel occupancy tax, and Buda has levied a seven percent tax, the maximum allowed, on the cost of any hotel room that is rented inside the city’s limits.
The city’s suit alleges Microtel Inn & Suites, located at 1285 Cabela’s Drive, has collected the hotel occupancy taxes from its customers, but has failed to remit those funds to the city.
“Defendant (Microtel) has regularly failed to report its sales and pay collections of the hotel occupancy taxes for the previous six months,” city attorneys allege in the suit.
The money the city is owed: $47,204.93 in unpaid taxes, penalties plus interest, and attorney’s fees, according to the suit. City officials were able to calculate moneys owed — for hotel occupancy taxes collected from Aug. 20 through Jan. 20 — based on hotel tax reports filed with the Texas Comptroller’s Office, the suit states.
Chapter 351, Sec. 351.044 allows a municipality to bring suit against a hotel who has failed to file a tax report or pay the tax when due, and the city also may request a court to keep the hotel from operating in the municipality until the taxes due are paid.
Microtel did not file hotel tax reports with the city during those months.
A managing partner of Microtel, Ted Torres, said Tuesday his office was unaware of the Feb. 12 suit filed Buda officials. He said he would consult with his legal team, but as of now has no comment.
The Feb. 12 civil suit is not the first time Buda officials have had to take Microtel to court.
The hotel’s last payment to Buda was in the amount of $20,000 on July 21, 2014. That payment came out of a settlement in response to a prior lawsuit filed by the city.
Since Microtel’s $20,000 payment in July, city officials argue the hotel has not filed a hotel tax report with the city, nor paid any of the hotel occupancy collections, according to the February suit.
“Said injury is irreparable because of the continued fiscal constraints placed upon the City by being unduly deprived of the tax revenue,” officials argue in the suit.
Hotel occupancy tax dollars may only be used in a manner directly enhancing and promoting tourism and the convention and hotel industry in the city, according to the state’s tax code. That revenue may not be used for general revenue purposes or general governmental operations.
Buda city officials wouldn’t comment on the case, as the matter is an ongoing legal matter, but one of the city’s attorneys, Trevino, said February’s suit is the second time in nine months the city has had to take action against Microtel in effort to collect hotel taxes that are due.
Trevino said Microtel is the only hotel in Buda with delinquent hotel occupancy taxes.
The hotel occupancy tax applies not only to hotels and motels, but also to bed and breakfasts, condominiums, apartments, homes for rent, and rooms being rented out in people’s homes, per the state’s tax code.
Microtel was built in 2012 at an estimated cost of $3 million, according to the Texas Department of Licensing and Regulation. The hotel is a three-story building with 83 units, the state agency reports on its website. It’s owned by Pritor Longhorn Buda Hotel Llc.
