Is building additional rows of sky boxes, a media box, and extra stadium seating treated as new construction or as remodeling for Texas tax purposes?

Subject

Stadium — Construction Of Additional Rows Of Sky Boxes And Rows Of Seats — New Usable Square Footage Added

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9401128L

Plain-English Summary

A stadium owner asked the Comptroller whether recent construction work on the stadium should be classified as new construction or as remodeling for Texas sales tax purposes. The Comptroller determined that all of the improvements should be treated as new construction, because in every case the work added new usable square footage to the stadium that had not existed before.

The letter walks through four specific projects:

1. A second row of sky boxes, built below the existing sky boxes. Before construction, that area was just open air space with a wind-break wall — steel and concrete were used to build an actual floor and walls, creating usable space where there had been none.
2. A media box on the visitors' side, built on the roof of the existing sky boxes. That rooftop space was unusable before the media box was added.
3. Additional seating built above the entry ramp entrances, on both sides of the field and at the end of the field (used for handicapped seating). Previously the bleachers simply ended in a wall at the field; a new wall was built several feet in front of the old one, a concrete floor was poured between the two walls, and seats were installed on that new floor.
4. An additional row of seating between the 30 yard lines, created by extending a concrete-and-steel floor out from the existing bleachers and adding a new row of seats on top of it.

In each case, the Comptroller's reasoning was the same: because new usable square footage was created that did not exist before, the work meets the definition of new construction rather than remodeling of existing space.

What This Means For You

If you're adding sky boxes, press/media boxes, or extra seating rows to an existing stadium or arena: Whether the work creates genuinely new usable floor space — as opposed to reworking space that was already usable — is the key fact the Comptroller looked at here. Work that converts previously unusable areas (like open air space behind a wind-break wall, or an unused rooftop) into new floor space with walls, seating, or other structure was treated as new construction in this letter.

If you're a contractor or owner trying to classify similar stadium or arena work: Document, for each discrete project, what existed in that specific location before construction (e.g., open air, unusable roof space, a dead-end wall) and what usable square footage was added. This letter's classification turned entirely on that before-and-after comparison, project by project — not on the project as a whole.

Note on scope: This letter does not cite any statute or rule, and it does not explain what tax consequences follow from a "new construction" versus "remodeling" label (for example, differences in contractor tax treatment). It answers only the classification question the taxpayer asked.

Q&A

Q: Does adding a new row of sky boxes below existing ones count as new construction?
A: Yes, according to this letter — because the area below the existing sky boxes was previously just air space with a wind-break wall, and steel and concrete were used to build an actual floor and walls, creating new usable square footage.

Q: Is building a media box on top of existing sky boxes considered remodeling since it's built on an existing structure?
A: No. The Comptroller treated it as new construction because the rooftop space where the media box was built was unusable before the media box was added — the test is whether new usable square footage was created, not whether the work sits on an existing structure.

Q: What if the new seating is built between two existing structures, like extending bleachers or building over an entry ramp?
A: The letter treated that as new construction too, as long as the space didn't previously have a usable floor. In the ramp-seating example, the old bleachers simply ended in a wall; a new wall and concrete floor were added in front of it to create new seating space. In the 30-yard-line example, a concrete-and-steel extension created a new floor for an additional row of seats.

Original ruling text

January 18, 1994

Dear **:

Last Thursday, I met with you and ** to discuss the construction that
was done on STADIUM last year. Several items of the stadium were improved, and
you wanted to know whether we would consider the improvements new construction
or remodeling. All of the improvements should be treated as new construction
because new usable square footage was added to the stadium in each case.

The areas of construction were as follows:

1. The addition of a second row of sky boxes. These boxes were built below the
   then existing sky boxes. Prior to their construction, there was an air space
   with a wall to break the wind. In order to construct the boxes, steel and
   concrete were used to create a floor and walls.

2. The addition of a media box on the visitors side of the stadium on the roof
   of the then existing sky boxes. This space was unusable prior to the addition
   of the media box.

3. The construction of additional seating on top of the entry ramp entrances.
   Prior to the addition, the bleachers ended with a wall at the field. An
   additional wall was constructed several feet in front of the existing wall and
   a concrete floor was run from the first wall to the second wall. Seats were
   then placed on this new floor. This construction was done on both sides of the
   field and at the end of the field where it was used to accommodate the
   handicapped.

4. The construction of an additional row of seating between the 30 yard lines.
   A concrete and steel extension was built from the existing bleachers to create
   floor for another row. Additional seats were then placed on the new row.

All of the construction performed meets our definition of new construction. I
hope this satisfactorily answers your concerns. Should you have any further
questions, please feel free to call me at 1-800-531-5441, extension 3-4004.

Sincerely,

Wade Anderson
Assistant Director
Tax Administration

cc: Glen Hunt, Director, Tax Administration
Chuck Johnstone, Manager, Tax Administration