City considers HOT tax return
The city of Wimberley’s on-again, off-again relationship with a Hotel Occupancy Tax seems to be heating up once again.
At the final meeting in October, the city council heard the first reading of a potential new HOT tax ordinance.
“Occupancy tax is a tax on the rental of rooms that the city, county, state or country may require; it is generally owed on the price of accommodations or any additional fees like cleanings or extra guests,” according to the Texas Hotel and Lodging Association. “...Occupancy tax is generally paid by the guest, but the obligation to remit the taxes to the government usually falls on the host.”
The state of Texas has a six-percent Hotel Occupancy Tax in place. Cities are allowed, in most cases, to add an additional seven-percent to that tax in a similar manner to how the state collects sales tax for local governmental entities.
City Administrator Mike Boese presented the item recommending a seven-percent tax on overnight stays.
Boese also detailed the back-and-forth nature of the HOT tax in Wimberley as different councils were elected to leadership. He stated that the tax was originally set at five-percent in September 2015. The tax rate was then reset to zero in January of 2017. A little more than a year later the city reinstated the HOT tax in March of 2018 to five percent before lowering it back to zero in May of the same year. Finally, the HOT tax was repealed in September of 2018.
Given the divisive nature of the previous HOT tax iterations, it was no surprise that there was some pushback from local hotel and short-term rental owners.
“The majority of short term rental owners are concerned about what is going on and the HOT tax,” Phil Collins, who owns multiple short term rentals in the Wimberley Valley, said. “The seven-percent (suggestion) is somewhat scary… We collected this money (previously), and how long did it take to spend? Two years, three years? The issue is the original thrust for HOT tax was to put heads in beds in the off-season. If you haven’t noticed, we don’t have a visitor problem here.”
Chris Mahoney, who owns Blair House Inn, said that he had numerous issues with a HOT tax in Wimberley.
“I think it was something that was jumped into fast, but there was no plan,” Mahoney said, referencing the previous versions of the HOT tax in Wimberley. “(The city administrator) was talking about other cities, and I don’t think you can compare Wimberley with Buda or Kyle or San Marcos. They have chain restaurants and regular hotels… HOT tax may not be right for every town… To me it sounds like a money grab.”
Funds collected from a Hotel Occupancy Tax can only be spent on a specific set of items that are largely related to the tourism industry. The item brought up by Boese that received the most attention during the meeting was the potential for HOT funds to pay for a shuttle or rideshare system for tourists.
“When we consider our citizens’ complaints, and when you look at our downtown area, transportation is certainly a vital concern,” Boese said. “There are definitely certain parameters that the city can use the HOT money for but one of those does involve the transportation system. So, pointing out that we could provide a shuttle and rideshare service on weekends to transport tourists from designated parking lots and hotels/lodging centers to Wimberley Square, Old Kyle Road, Blue Hole and (Market Days,) which would impact the community by reducing traffic and parking issues allowing tourists to spend more time in businesses and less time in vehicles.”
All of the members of the council expressed some form of agreement with the idea of the HOT tax returning. The discussion largely centered around what needed to occur before the city was ready to move forward.
“I have a couple of (short term rentals) on my street and (bed and breakfasts) across the creek,” Councilmember Christine Byrne said. “I’ve talked to hotel owners, and there doesn’t seem to be a big amount of people who are absolutely against the HOT. I agree, we have to have a plan, but it doesn’t need to be divisive if we can get on the same page.”
Some members of the council were interested in moving forward quickly with the creation of the HOT tax so the city and lodging facilities could start the sometimes-long process of actually implementing the tax while the details of a plan were created. Others on the council wanted the plan to be more formalized before moving forward with the hope of having more widespread agreement on the potential tax and plan for its use.
The item is on the agenda for this week’s regularly scheduled Wimberley City Council meeting on Thursday at City Hall starting at 6 p.m.
“Occupancy tax is a tax on the rental of rooms that the city, county, state or country may require; it is generally owed on the price of accommodations or any additional fees like cleanings or extra guests... Occupancy tax is generally paid by the guest, but the obligation to remit the taxes to the government usually falls on the host.”
Texas Hotel and Lodging Association