Buda City Council approves hotel occupancy tax changes

BUDA — At its Jan. 3 meeting, Buda City Council unanimously approved grant program amendments to the grants funded through hotel occupancy tax.

Buda provides two grant opportunities to businesses, organizations and individuals to bring tourism activities to the community: the Downtown Co-Marketing Reimbursement Grant and the Hotel Occupancy Tax Reimbursement Grant.

According to the Texas Comptroller of Public Accounts, hotel owners, operators or managers must collect state hotel occupancy tax from their guests who rent a room or space in a hotel for $15 or more each day. The state hotel occupancy tax is currently at 0.06% of the cost of a room.

Director of Destination Services Lysa Gonzales prepared a presentation to show council members the three modifications that would be occurring, due to the recent change in state legislation that now states that a visitor is someone visiting the destination from more than 50 miles away. Gonzales explained that she tracks this by beginning at the city limits and adding 50 miles.

The first item was to amend the Downtown Co-Marketing Reimbursement Grant. The grant was established in 2020 with the purpose of assisting businesses and planners of events in the Historic Downtown district. The grant allows for up to 50% reimbursement for projects, eligible up to $3,000 for businesses and events located within the district. Currently, advertising for businesses under the grant is a 20-mile radius, but because it is funded by the hotel occupancy tax, it must follow state law. The ordinance will have no language change because it states that advertising requirements must comply with current state law. Only the application will have to adjust the radius size.

The same scenario applies for the Hotel Occupancy Tax Reimbursement Grant, which provides the tax funds as a resource to organizations that are hosting tourism-related activities that bring visitors for an overnight stay. The grant has been changed to state that it must comply with state law; however, the application will not change because the city currently has it listed as an advertising radius of 100 miles outside of Buda.

The city has issued the following blackout dates for the Hotel Occupancy Tax Reimbursement Grant, as it is focused on bringing events to the community at times when it is not a peak time or when Buda is already doing something.

For the 2023-24 fiscal year:

Formula 1 – Oct. 20-22, 2023

Austin City Limits – Oct. 6-15, 2023

Budafest – Dec.  1-3, 2023

SXSW – March 8-16, 2024

Buda’s Birthday – April 6-8, 2024

MotoGP – April 12-14, 2024

In the past, staff sent out emails asking for volunteers for the Hotel Reimbursement Grant Committee to review grant applications and tried to meet the following criteria when selecting individuals: hoteliers, downtown business owners, tourism organization/business representation, Main Street Advisory Board members, Arts Commission members and citizens. But recently, council members have expressed a desire to be involved in the process.

The new committee will begin the application process and have an April start date. The seven members will each be selected by a council member and will serve until they are replaced, whether this is because they leave or council wants to change the members. Staff members cannot serve on the committee.

Buda City Council will meet again on Jan. 15.