For a city developing two separate convention-center-area hotel projects (with ancillary restaurants/shops), when can each qualify as a separate 'qualified hotel project' entitled to a 10-year 100% state and local tax rebate, and how do ancillary businesses sign up for and split that rebate?

Plain-English summary

This document is also filed as a companion hotel-tax document at STAR 201312811L, and carries an unrelated 2023 legislative alert about the "qualified employee" definition — see the disclaimer for details.

The City of Irving asked the Comptroller to confirm, in advance, that two separate convention-center-area hotel developments would each qualify as their own "qualified hotel project" entitled to a 10-year, 100% rebate of state and local taxes — information the City wanted to hand to lenders, developers, and prospective restaurant/shop tenants before construction. The two projects: the "Northshore Project" (private developer-owned land the developer planned to deed to the City with a leaseback) and the "City Project" (land the City already owned, developed with separate hotel and entertainment/restaurant partners). The Comptroller combined both requests into one ruling.

Key holdings:

• Two hotels can each separately qualify. If both projects are actually constructed and each meets Tax Code § 351.102(b)'s requirements (owned by, or on land owned by, the City or a City-affiliated nonprofit, within 1,000 feet of the convention center), each is its own qualified hotel project — with its own designation method (a Capital Improvement Plan amendment or a separate plan), its own opening date, and its own independent 10-year rebate clock.
• Ancillary businesses don't need to sit inside the hotel building — restaurants and shops qualify as long as they're on City-owned (or City-nonprofit-owned) land within 1,000 feet of the convention center, and they must sign a confidentiality waiver so the Comptroller can release their sales tax data (normally confidential under § 151.027) to the City.
• No hotel-hopping to extend the rebate window. Once a business signs up as ancillary to one qualified hotel project, it can't later switch to a different project to reset or stretch its 10-year period. If the two hotel projects belong to different legal entities, a business can only join the one on whose land it's actually located — proximity to the OTHER hotel doesn't matter.
• The clock runs from the HOTEL's opening, not the business's. A restaurant that opens five years after its hotel project's initial occupancy only gets the remaining five years of that project's 10-year window — it doesn't get its own fresh 10 years.
• No pre-approval before construction. The Comptroller has no statutory authority to formally approve either project for benefits until it's actually built and a verified refund application is submitted — though nothing about either proposal, as described, would categorically disqualify it.
• Refund mechanics. The ruling includes the current document checklist for requesting a rebate (formation documents, the City's Capital Improvement Plan, the tax-rebate ordinance, a venue plan, a proximity map, taxpayer ID numbers, and signed confidentiality waivers from every vendor), and confirms the Comptroller pays out monthly. It declined to weigh in on Chapter 380 economic-development agreements, since it doesn't administer those.

What this means for you

Municipalities planning multiple hotel/convention-center developments

You can structure and time multiple qualifying hotel projects around the same convention center independently — separate opening dates, separate designation methods, separate 10-year clocks — as long as each independently satisfies § 351.102(b)'s ownership and proximity requirements.

Restaurant, shop, and other ancillary-business owners near a qualifying hotel project

Get your confidentiality waiver and site-ownership facts straight before signing up with a qualified hotel project — you can't later switch projects to chase a better rebate window, and your own 10-year clock is tied to your project's opening date, not your own.

Developers and lenders relying on a "reliance letter" for financing

This ruling shows the Comptroller will address hypothetical/proposed project structures for planning purposes, but stops short of guaranteeing final approval — actual certification still requires the project to be completed and a verified application submitted.

Common questions

Q: Can two hotels near the same convention center each get their own 10-year, 100% tax rebate?
A: Yes, per this ruling — as long as each independently meets § 351.102(b)'s ownership and 1,000-foot proximity requirements, they're treated as separate qualified hotel projects with independent rebate clocks.

Q: Does a restaurant have to be inside the hotel building to get the rebate?
A: No, per this ruling — it just needs to be on City-owned (or City-affiliated-nonprofit-owned) land within 1,000 feet of the convention center, with a confidentiality waiver on file.

Q: Can a business switch from one qualified hotel project to another to get a longer rebate period?
A: No, per this ruling — once signed up with a project, a business can't switch later to reset or extend the 10-year window.

Citations and references

Statutes:

• Tex. Tax Code § 351.001(7)(A) (eligible central municipality)
• Tex. Tax Code § 351.102 (pledge for bonds; hotel project ownership/proximity requirements)
• Tex. Tax Code § 151.429(h) (100% state tax rebate for qualified hotel projects, first 10 years)
• Tex. Tax Code § 151.027 (sales tax confidentiality, waived via agreement)
• Tex. Gov't Code § 2303.003(8) (qualified hotel project definition)
• Tex. Gov't Code § 2303.5055 (local tax rebate mechanics)
• Tex. Local Gov't Code, Chapter 380 (economic development agreements — outside Comptroller's administration)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/201312946L

Original ruling text

This document is also available as a hotel tax document at STAR 201312811L

ALERT: House Bill 1515, 88th Legislative Session amended 2303.003, Government Code, to revise the definition of a qualified employee. It adds the requirement that the employee be a Texas resident and allows the employee to qualify if they engage in services off-site and reside within 25 miles of the qualified business site. Effective 09/01/2023.

December 6, 2013

Re: Private Letter Ruling # 13337562

Dear ***

:

We received a request for a private letter ruling dated June 7, 2013, signed by
you and a representative of COMPANY A, with respect to the City of Irving
Entertainment and Hotel Project (“the Project”). The request asks for a
“reliance letter” that can be furnished to “lenders, purchasers, lessees, and
other interested parties who wish to develop hotels, restaurants and other
businesses ancillary to the hotel located in the Project, as it may be
amended.” According to the information provided in the request, Resolution No.
REF-2010-19 was adopted by the City Council of the City of Irving, which
adopted a Capital Improvement Plan that covers the Project, commonly referred
to as the “Northshore Project.”

As part of the Capital Improvement Plan, it is the intent of COMPANY A to
develop 30 acres of land it currently owns that is located between the City of
Irving Convention Center and the DART Station for the Convention Center (“the
Northshore land”) to include a hotel, restaurants, shops and other businesses
and facilities ancillary to the hotel. Portions of that land are within 1000
feet of the Convention Center (“the Eligible Northshore land”). In addition,
the City of Irving intends to develop a hotel adjacent to the Convention Center
on land currently owned by the City, along with restaurants, shops and other
businesses on that land or on the Northshore land.

The City intends that both hotels be designated as qualified hotel projects
pursuant to either an amendment of the City’s existing Capital Improvement Plan
or separate capital improvement plans adopted by the City, and that both
projects be entitled to rebates of state sales and use taxes and state hotel
occupancy taxes under Tax Code Section 151.429(h) and rebates of various local
taxes under Government Code Section 2303.5055. Because the Northshore eligible
land is not currently owned by the City, COMPANY A plans to transfer the land
upon which the restaurants or other businesses are located to the City before
the City applies for a refund of taxes. The transfer will be accomplished by
means of a deed to the City with a leaseback from the City in a way that the
building and other improvements used by the restaurant or other businesses will
meet the requirements of Tax Code Sections 351.102 and 151.429(h).

It is also the intent of the City of Irving to enter into an economic
development agreement under Chapter 380 of the Texas Local Government Code to
pay any taxes due the City to operators of the hotels and businesses. We
understand that before any Chapter 380 agreement is entered into, the City and
COMPANY A needs answers from the Comptroller to specific questions regarding
the planned Capital Improvement Project and associated planned qualified hotel
projects.

On September 4, 2013, we received a second private letter ruling request, also
from you, concerning the City of Irving Entertainment and Hotel Project. This
letter addressed a qualified hotel project that is commonly referred to as the
“City Project.”

The City owns an approximately 40 acre tract of land in the Las Colinas Urban
Center. The City-owned convention center, which opened in January 2011, is
located on the north portion of the tract. The City has entered into a
development agreement with COMPANY B to construct a hotel immediately south of
the convention center on land owned by the City. The City has also entered a
development agreement with ARK Group of Irving, Inc. to construct
entertainment-related facilities, restaurants, shops, and parking facilities
immediately south of the convention center facility, also on land owned by the
City. The land and associated development projects are intended to qualify as a
qualified hotel project that entitle the City to a refund of taxes under Tax
Code Section 151.429(h) and Government Code Section 2303.5055.

The City and its development partners request that the Comptroller confirm that
the City is entitled to a refund of such taxes so that the information can be
made available to lenders, subtenants, and other interested parties that wish
to develop the restaurants and businesses located at the project.

In response, we issue one private letter ruling under Rule 3.1 on which you may
rely for purposes of detrimental reliance according to Rule 3.10, and intend
that it cover the issues and questions presented for both the Northshore and
City Projects. Please disregard any previous letters that we sent you in
response to the June 7 and September 4 private letter ruling requests.

We rely on statutory provisions as in effect as of the date of this letter
ruling, which are as follows.

Tax Code Chapter 351 - Municipal Hotel Occupancy Taxes

Tax Code Section 351.001. DEFINITIONS.

(7) "Eligible central municipality" means:

(A) a municipality with a population of more than 140,000 but less than 1.5
million that is located in a county with a population of one million or more
and that has adopted a capital improvement plan for the expansion of an
existing convention center facility.

Tax Code Section 351.102. PLEDGE FOR BONDS.

(b) An eligible central municipality or a municipality with a population of
173,000 or more that is located within two counties may pledge the revenue
derived from the tax imposed under this chapter from a hotel project that is
owned by or located on land owned by the municipality or, in an eligible
central municipality, by a nonprofit corporation acting on behalf of an
eligible central municipality, and that is located within 1,000 feet of a
convention center facility owned by the municipality for the payment of bonds
or other obligations issued or incurred to acquire, lease, construct, and equip
the hotel and any facilities ancillary to the hotel, including convention
center entertainment-related facilities, restaurants, shops, and parking
facilities within 1,000 feet of the hotel or convention center facility. For
bonds or other obligations issued under this subsection, an eligible central
municipality or a municipality with a population of 173,000 or more that is
located within two counties may only pledge revenue or other assets of the
hotel project benefiting from those bonds or other obligations.

…

(c) A municipality to which Subsection (b) applies is entitled to receive all
funds from a project described by this section that an owner of a project may
receive under Section 151.429(h) of this code, or Section 2303.5055, Government
Code, and may pledge the funds for the payment of obligations issued under this
section.

Tax Code Chapter 151 – Limited Sales, Excise, and Use Tax

Tax Code Section 151.429. TAX REFUNDS FOR ENTERPRISE PROJECTS.

(e) In this section:

…

(2) "Qualified employee" and "qualified hotel project" have the meanings
assigned to those terms by Section 2303.003, Government Code.

(h) This subsection does not apply to a qualified hotel project described by
Section 2303.003(8)(B), Government Code. Notwithstanding the other provisions
of this section, the owner of a qualified hotel project shall receive a rebate,
refund, or payment of 100 percent of the sales and use taxes paid or collected
by the qualified hotel project or businesses located in the qualified hotel
project pursuant to this chapter and 100 percent of the hotel occupancy taxes
paid by persons for the use or possession of or for the right to the use or
possession of a room or space at the qualified hotel project pursuant to the
provisions of Chapter 156 during the first 10 years after such qualified hotel
project is open for initial occupancy. The comptroller shall deposit the taxes
in trust in a separate suspense account of the qualified hotel project. A
suspense account is outside the state treasury, and the comptroller may make a
rebate, refund, or payment authorized by this section without the necessity of
an appropriation. The comptroller shall rebate, refund, or pay to each
qualified hotel project eligible taxable proceeds to which the project is
entitled under this section at least monthly.

Government Code Chapter 2303 – Enterprise Zones

Government Code Section 2303.003. DEFINITIONS.

(8) "Qualified hotel project" means:

(A) a hotel proposed to be constructed by a municipality or a nonprofit
municipally sponsored local government corporation created under the Texas
Transportation Corporation Act, Chapter 431, Transportation Code, that is
within 1,000 feet of a convention center owned by a municipality having a
population of 1,500,000 or more, including shops, parking facilities, and any
other facilities ancillary to the hotel; and

(B) a hotel proposed to be constructed, remodeled, or rehabilitated by a
municipality or a nonprofit municipally sponsored local government corporation
created under the Texas Transportation Corporation Act, Chapter 431,
Transportation Code, that is within 3,000 feet of the property line of a
convention center owned by a municipality having a population of more than
500,000 and that borders the United Mexican States.

Government Code Section 2303.5055. REFUND, REBATE, OR PAYMENT OF TAX PROCEEDS
TO QUALIFIED HOTEL PROJECT.

(a) For a period that may not exceed 10 years, a governmental body, including a
municipality, county, or political subdivision, may agree to rebate, refund, or
pay eligible taxable proceeds to the owner of a qualified hotel project at
which the eligible taxable proceeds were generated.

…

(c) An agreement under this section must be in writing, contain an expiration
date, and require the beneficiary to provide documentation necessary to support
a claim.

(d) A governmental body that makes an agreement under this section shall make
the rebate, refund, or payment directly to the beneficiary.

(e) In this section, "eligible taxable proceeds" means taxable proceeds
generated, paid, or collected by a qualified hotel project or a business at a
qualified hotel project, including hotel occupancy taxes, ad valorem taxes,
sales and use taxes, and mixed beverage taxes.

(f) Notwithstanding any other law, the comptroller shall deposit eligible
taxable proceeds that were collected by or forwarded to the comptroller, and to
which the qualified hotel project is entitled according to an agreement under
this section, in trust in a separate suspense account of the project. A
suspense account is outside the state treasury, and the comptroller may make a
rebate, refund, or payment authorized by this section without the necessity of
an appropriation. The comptroller shall rebate, refund, or pay to each
qualified hotel project eligible taxable proceeds to which the project is
entitled under this section at least quarterly.

Based on the above authorities, we conclude that for the City of Irving to
receive all the funds that an owner of a qualified hotel project can receive
under Tax Code Section 151.429(h), which are state sales and use and hotel
occupancy taxes, and Government Code Section 2303.5055, which are various local
taxes, as authorized by Tax Code Section 351.102(c), the City and hotel project
must qualify under Tax Code Section 351.102(b).

And, although the definition of a qualified hotel project in Government Code
Section 2303.003(8) is limited to a municipality having a population of
1,500,000 or more, the Comptroller has determined that the definition, but not
the population requirement, applies to a hotel project referenced, but not
defined, in Tax Code Section 351.102(b). Tax Code Section 151.429(e) defines a
qualified hotel project by referencing the definition in Government Code
Section 2303.003. Since Tax Code Section 351.102(c) says an eligible central
municipality can receive all funds from a project that the owner of a project
under Tax Code Section 151.429(h) can receive, we conclude that the legislature
intended that a “hotel project” referenced in Tax Code Section 351.102(b) is a
“qualified hotel project.”

The City of Irving qualifies under Tax Code Section 351.001(7)(A) as an
“eligible central municipality” because it has a population of 216,290 in the
2010 Census, which is more than 140,000 but less than 1.5 million, it is
located in Dallas County which is a county with a population of one million or
more, and because it has adopted a capital improvement plan (Resolution Number
REF-2010-19) for the expansion of an existing convention center. Based on these
facts, the City of Irving can request that the Comptroller review a claim for
benefits under Tax Code Section 151.429(h) and Government Code Section
2303.5055 as authorized by Tax Code Section 351.102(c).

Your September 4, 2013 letter states that the City of Irving meets the
requirements of Tax Code Section 351.102(b) because the planned hotel, the
facilities ancillary to the hotel and the convention center
entertainment-related facilities, restaurants, shops, and parking facilities
are on land owned by the City that is adjacent to the convention center and
within the 1000 feet requirement. You ask the Comptroller to agree that the
City is entitled to receive taxes associated with the City Project. The City
and COMPANY A essentially asks for the same recognition with respect to the
Northshore Project as described in the June 7, 2013 letter ruling request.

The Comptroller does not have statutory authority to approve a qualified hotel
project for any benefits until the project has been completed and an
application for benefits has been submitted and verified. Therefore, although
the Comptroller at this time does not find anything that would preclude the
City from being eligible to request a refund related to the Northshore and City
Projects under the applicable statutory provisions, the Comptroller will have
to verify all relevant facts after receiving a request for refund of the taxes
described in Tax Code Section 151.429(h) and Government Code Section 2303.5055.

The June 7 letter presented a series of questions related to the proposed
Northshore Project. We have restated your questions and included answers below.
In the June 7th letter, the Project is described “as it may be amended.” This
response refers to the hotel projects as described to us in your letter of June
7, 2013, without amendments.

Section I. Questions related to what constitutes a “qualified hotel project”
under Chapter 351.102 of the Texas Tax Code that would meet the requirements of
Section 151.429(h) of the Tax Code in order for rebates to be paid to an
“eligible central municipality” as defined therein.

1. If there are two hotels located within 1,000 feet of the Convention Center,
   may each hotel qualify as a separate qualified hotel project?

Yes, if both projects are constructed and the hotels qualify to be hotel
projects under Tax Code Section 351.102(b), then the hotels are entitled to the
benefits described in Section 351.102(c).

2. If each of these hotels qualifies as a qualified hotel project, must they be
   designated either in (i) an amendment to the City’s existing Capital
   Improvement Plan or (ii) a separate capital improvement plan adopted by the
   City?

Either designation is acceptable.

3. If each of these two hotels qualifies as a qualified hotel project, may the
   rebates related to businesses ancillary to the hotel be tied to the opening of
   one hotel and not the other?

Yes, each of the businesses ancillary to the hotel can be tied to a particular
hotel project. We need to know which businesses are tied to which qualified
hotel project for purposes of the rebate.

4. May each qualified hotel project qualify with a separate opening date?

Yes, they are separate qualified hotel projects. Each qualified hotel project
can open for initial occupancy on a different date.

5. May either qualified hotel project be owned by, or located on land owned by,
   either the City or by a nonprofit corporation acting on behalf of the City,
   provided that each qualified hotel project is located within 1,000 feet of the
   Convention Center?

Tax Code Section 351.102(b) provides that, “An eligible central municipality…
may pledge the revenue derived from the tax imposed under this chapter from a
hotel project that is owned by or located on land owned by the municipality or,
in an eligible central municipality, by a nonprofit corporation acting on
behalf of an eligible central municipality, and that is located within 1,000
feet of a convention center facility owned by the municipality for the payment
of bonds or other obligations issued or incurred to acquire, lease, construct,
and equip the hotel and any facilities ancillary to the hotel, including
convention center entertainment-related facilities, restaurants, shops, and
parking facilities within 1,000 feet of the hotel or convention center
facility.”

It is not a hotel project in accordance with Tax Code Section 351.102 unless
the City of Irving or nonprofit organization acting on the City’s behalf owns
the hotel project or the land where the hotel project is located at the time
the application for benefits is submitted to the Comptroller. The hotel project
includes the hotel, convention center entertainment-related facilities,
restaurants, shops, and parking facilities within 1,000 feet of the convention
center facility.

Section II. Questions relating to restaurants or other businesses that will be
located in, at or ancillary to a qualified hotel project.

1. What is the “litmus test” for the purpose of determining whether a
   restaurant or other business meets the requirements of Sections 351.102 and
   151.429 of the Texas Tax Code that a restaurant or other business be located
   at, in or ancillary to a qualified hotel project?

In order for a hotel project to receive a rebate of local and state taxes under
Government Code Section 2303.5055 and Tax Code Section 151.429(h), the
restaurant or other business must be located within 1,000 feet of the
convention center facility owned by, or on land owned by, the City or, in the
case of the City of Irving, the nonprofit corporation acting on its behalf, and
have a confidentiality agreement with the hotel project that permits the
Comptroller to disclose the restaurants’ or other businesses’ sales tax
information, which is otherwise confidential under Tax Code Section 151.027.

For a hotel project formed in accordance with Tax Code Section 351.102(b), the
City of Irving would be entitled to receive all funds from a hotel project that
an owner of a hotel project may receive under Tax Code Section151.429(h) or
Government Code Section 2303.5055, and pledge the funds for the payment of
obligations issued for the hotel project including convention center
entertainment-related facilities, restaurants, shops, and parking facilities
within 1,000 feet of the hotel or convention center facility. Eligible funds
under Tax Code Section 151.429(h) include state sales and use tax and state
hotel occupancy tax collected within the hotel project; eligible funds under
Government Code Section 2303.5055 include ad valorem taxes and local sales and
use, hotel occupancy and mixed beverage gross receipts taxes.

To receive the eligible funds under Tax Code Section 151.429(h) from the
Comptroller, the hotel project owner (the City or a nonprofit corporation
acting on behalf of the City) must provide a confidentiality agreement with the
restaurants or businesses that are part of its hotel project that permits the
Comptroller to disclose the businesses’ sales tax information. Otherwise, sales
tax information is made confidential by Tax Code Section 151.027.

2. Assuming that there are two qualified hotel projects located within 1,000
   feet of the Convention Center, may the City and a restaurant or other business
   choose the hotel with which it will be considered a business “ancillary to the
   hotel”, as referred to in Section 351.102 of the Texas Tax Code, or a business
   “located in the qualified hotel project”, as referred to in Section 151.429(h)
   of the Texas Tax Code, so that when the City files its application pursuant to
   Section 2303.5055 of the Texas Government Code as to such restaurant or other
   business, such restaurant or other business may be able to maximize the 10-year
   period by choosing the hotel with a later initial opening, even though it may
   be closer in distance to the first hotel that opens?

Assuming the two hotel projects are owned by the same legal entity, any
business located within 1000 feet of the convention center facility on land
owned by the City or, in the City of Irving’s case, by the nonprofit
corporation operating on its behalf, may sign up with either of the hotel
projects, before or after that hotel’s initial opening date. After entering
into an agreement with a qualified hotel project, the business cannot switch to
another hotel project to extend the ten-year period referenced in Government
Code Section 2303.5055 and Tax Code Section 151.429(h).

However, if there are two hotel projects that are owned by separate legal
entities, any business located within 1000 feet of the convention center can
sign up only with the project to which it is ancillary, meaning the business is
located on the same land owned by the City or the nonprofit corporation acting
on the City’s behalf as the hotel project.

3. Assuming that a restaurant or business opens prior to the initial opening of
   the second hotel to open, when the second hotel is opened for business, may the
   business then elect to become a part of the second qualified hotel project? May
   it do so if it was already considered a business that was “ancillary to” or
   “in” the first hotel?

See answer to # 2 in this section.

4. If a restaurant or business located within a qualified hotel project opened
   following the date that the hotel opens initially, may the 10-year period for
   the restaurant or business start on the date that it opened or must the 10-year
   period relate back to the opening of the hotel, for the purpose of triggering
   the date from which rebates or refunds will be permitted?

First we note that Tax Code Section 151.429(h) and Government Code Section
2303.5055(a) use different language to describe the 10-year period during which
state taxes under the Tax Code and local taxes under the Government Code may be
rebated. The Comptroller interprets both provisions to mean “during the first
10 years after such qualified hotel project is open for initial occupancy,”
which is the language used in Tax Code Section 151.429(h).

Based on this interpretation, the ten-year period for both state and local tax
rebates begins on the date the hotel opened for initial occupancy, not ten
years from the date the restaurant or business opened. For example, assume a
hotel project opened for initial occupancy five years ago. Then a new business
located on the same land owned by the City or the nonprofit corporation acting
on the City’s behalf as the hotel project opens within 1,000 feet of the
convention center facility and enters into an agreement with the hotel project.
The rebate period remaining for receipts from that business is five years.

5. Does the distance between the restaurant or other business determine which
   hotel must be designated? For example, assume there are two hotels in existence
   at the time that the restaurant or business opens, does the distance to the
   hotel determine the hotel to which it shall be considered “ancillary to” or
   “in”?

No.

6. Section 151.429(h) of the Texas Tax Code refers to taxes paid or collected
   by the “qualified hotel project or businesses located in the qualified hotel
   project.” Section 351.102(b) of the Texas Tax Code refers to revenue derived
   from a hotel project and “any facilities ancillary to the hotel, including
   convention center entertainment-related facilities, restaurants, shops, and
   parking facilities within 1,000 feet of the hotel or the convention center
   facility.” Both Sections are silent as to the actual location of a business.
   Must a restaurant or business be located within an area deemed to be a hotel
   project? Would businesses within close proximity of a hotel, such as those
   contemplated to be developed with respect to either or both of the hotels that
   are to be developed in the existing Project and/or on the Eligible Northshore
   Land qualify under Sections 351.102 and 151.429 of the Texas Tax Code if they
   are not located within the hotel building themselves?

Government Code Section 2303.003(8) defines a qualified hotel project as a
hotel proposed to be constructed that is within 1,000 feet of a convention
center facility, including shops, parking facilities, and any other facilities
ancillary to the hotel.

Tax Code Section 351.102(b) refers to revenue derived from the tax imposed from
a hotel project that is owned by or located on land owned by the municipality
or, in the case of a qualifying city, such as the City of Irving, by a
nonprofit corporation acting on its behalf. As previously noted, the hotel
project includes those facilities within 1,000 feet of the convention center
facility, not those within 1,000 feet of the hotel.

Tax Code Section 351.102(b) further says that the obligations issued or
incurred are to be used to acquire, lease, construct, and equip the hotel and
any facilities ancillary to the hotel, including convention center
entertainment-related facilities, restaurants, shops, and parking facilities
within 1,000 feet of the hotel or convention center facility.

Businesses do not have to be located in the hotel building itself to qualify,
but they must be owned by, or on land owned by, the City or the nonprofit
corporation acting on the City’s behalf, and must be within 1,000 feet of a
convention center facility.

Section III. Questions relating to refund, rebate or payment of tax proceeds to
a qualified hotel project.

1. If the City or a non-profit corporation that owns the qualified hotel
   project or the land upon which the qualified hotel project is situated makes
   application for a refund, rebate or payment of tax proceeds pursuant to
   2303.5055, Government Code, will the Comptroller issue such funds upon a
   request meeting the requirements listed in “Exhibit A” attached hereto and made
   a part hereof for all purposes?

Government Code Section 2303.5055(d) directs a governmental body to rebate
directly to the qualified hotel project. Subsection (f) allows the governmental
body to forward the eligible taxable proceeds to the Comptroller for
disbursement.

See also Section II, Question 1.

Below are the current agency requirements to initiate a request for rebate,
refund, or payment of taxes. The City should submit a written request to the
Comptroller’s Audit Division along with the required information. After review,
the Comptroller will give the City written notice as to the results of that
review and will initiate the refund process as appropriate.

1. Copy of the Certificate of Formation (formerly Articles of Incorporation)
   for the Convention Center Hotel Corporation;

2. Copy of the City’s Capital Improvement Plan;

3. Copy of the ordinance from the City approving the tax rebate agreement
   between the Corporation and the City;

4. Copy of the venue plan for the hotel project;

5. A map that shows the hotel project is within 1,000 feet of the convention
   center;

6. Name and address of the hotel along with the taxpayer identification and
   outlet (location) number that the hotel is using to report state sales and
   hotel taxes;

7. Name, taxpayer identification and outlet (location) numbers for all vendors
   under agreement with the hotel project;

8. Waiver of confidentiality forms signed by the authorized officer or director
   from each vendor under agreement with the hotel project. These forms allow the
   Comptroller’s office to release the sales tax information to the City and/or
   the Corporation;

9. Name and phone numbers of the contact person with the City and the
   Corporation; and

10. Completed direct deposit authorization form from the City.

11. What is the processing time with respect to the payment of such funds?

Under current agency practice, the Comptroller makes monthly payments of both
state sales and hotel taxes under Tax Code Section 151.429(h) and of eligible
taxable proceeds forwarded to the Comptroller under Government Code
2303.5055(f).

3. May the City then make payment of such funds to COMPANY A or its assigns
   pursuant to the Chapter 380 Agreement?

The Comptroller does not administer Chapter 380 agreements and has no authority
to provide guidance with respect to them.

If you have questions about this private letter ruling, please email us at
[email protected] and reference Private Letter Ruling # 13337562.

Sincerely,

Tax Policy Division