Texas Legislative Update | Qualified Projects

Texas Legislative Update, 88th Legislature, Regular Session | Qualified Projects Under Texas Tax Code Chapter 351, Subchapter C

Summary: The Texas Legislature enacted four bills that 1) expand the list of cities that can build qualified projects (i.e., hotel and convention center projects subject to certain specifications) under Texas Tax Code Chapter 351, Subchapter C; 2) establish a claw back mechanism if state tax revenue generated by a qualified project does not meet certain metrics, 3) require a biennial report from the Texas Comptroller of Public Accounts regarding qualified projects, and 4) clarify that the provisions in Subchapter C do not provide any additional mechanism for taking property for public purposes or economic development.

Bills Enacted:

HB 5012, 88th Leg., R.S. (2023) (effective September 1, 2023)
SB 627, 88th Leg., R.S. (2023) (effective immediately)
HB 3727, 88th Leg., R.S. (2023) (effective immediately)
SB 1420, 88th Leg., R.S. (2023) (effective immediately)

Background: Texas Tax Code Chapter 351, Subchapter C entitles certain cities to receive rebates of state taxes if the cities use their municipal hotel occupancy tax revenue in connection with a “qualified project.”[1] (Note that Texas Tax Code Chapter 351 also envisions qualified projects that are not governed by Subchapter C. For the sake of clarity, I’ll refer to the projects in this post as Subchapter C qualified projects.)

A Subchapter C qualified project is a project to acquire, construct, repair, remodel, expand, or equip a qualified convention center facility, a qualified hotel, and/or certain restaurants bars, retail establishments, spas, and parking areas or structures within a certain proximity to the qualified convention center facility or qualified hotel.[2]

A “qualified convention center facility” means a facility that:
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Texas Makes It Easier To Challenge State Tax Assessments

Texas Legislature Adds Suits After Redetermination As Option To Challenge State Tax Assessments

In 2021, the Texas Legislature made it easier for taxpayers to challenge tax assessments without first paying the disputed amounts of tax due.

Prior to this change, pay-to-play was the only game in town. Under pay-to-play, a taxpayer first has to pay the total amount of tax, penalties, and interest assessed before challenging that assessment in court.[1]

This obviously created problems for taxpayers who can’t afford to pay, which could violate the Open Courts Provision in the Texas Constitution.[2] The Open Courts Provision provides that “[a]ll courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.”[3] The Texas Supreme Court has indicated that under certain circumstances a statute that requires prepayment of a tax assessment for judicial review may violate this provision.[4]

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