.


                            October 18, 1988




    Honorable James L. Anderson, Jr.   Opinion No.   JM-965
    Aransas County Attorney
    Aransas County Courthouse          Re: Whether a municipal-
    301 N. Live Oak                    ity may utilize a portion
    Rockport, Texas 78382              of the hotel-motel     tax
                                       for   supplementing    the
                                       operations    budget    for
                                       certain       recreational
                                       facilities and     related
                                       questions   (RQ-1438)

    Dear Mr. Anderson:

         You ask whether the city of Rockport may use a portion
    of its hotel tax for supplementing the operations budget for
    city recreational facilities at Rockport Beach.

        . Section
          . _. .    350.002
                        .     of  the .Tax    Code    authorizes
    municipalities to impose a tax on tne use or possession of a
    hotel room. M     Tax Code 55 351.001(5); 156.001   (d;::n:;y
    qlhotelt*for purposes of section 350.002). Section       .
    of the Tax Code provides:

               (a) Revenue   from the municipal      hotel
            occupancy tax may be used only for:

                   (1) the acquisition of sites for and
               the construction, improvement,  enlarging,
               equipping,   repairing,   operation,    and
               maintenance    of    convention      center
               facilities;

                   (2) the   furnishing of     facilities,
               personnel,   and    materials    for    the
               registration of convention    delegates  or
               registrants:

                   (3) advertising for general promotional
               and     tourist     advertising    of   the
               municipality    and    its   vicinity   and
               conducting a solicitation     and operating




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Honorable James L. Anderson, Jr. - Page 2   (JM-965)




           program    to   attract   conventions   and
           visitors either by Tthmunicipality       or
           through    contracts          persons
           organizations      selected     bY      t::
           municipality:

               (4)   the  encouragement,    promotion,
           improvement, and application of the arts,
           including instrumental  and vocal music,
           dance, drama, folk art, creative writing,
           architecture, design and allied     fields,
           painting, sculpture, photography,   graphic
           and craft arts, motion pictures,     radio,
           television, tape and sound recording,   and
           other arts related to the presentation,
           performance, execution, and exhibition   of
           these major art forms; and

               (5)    historical   restoration     and
           preservation projects or activities:

                 (A) at or in the immediate vicinity
              of convention center facilities: or

                  (B) that would be frequented by
              tourists    and  visitors  to    the
              municipality.

           (b) It is the intent of the legislature
        that revenues derived from the tax authorized
        by this chapter are to be expended in a man-
        ner directly enhancing and promoting   tourism
        and the convention and hotel industry.

     Although you do not describe in detail the facilities
at Rockport Beach or their operation,  the information you
provide suggests that the facilities are used for general
recreation rather than for any of the purposes set out in
section (a) of article 351.101.

     It has been suggested  that subdivision (b) of article
351.101, which provides that is the intent of the legisla-
ture that the hotel tax be used to promote tourism and the
convention and hotel industry, adds to the purposes      for
which the hotel tax may be used. We conclude, however! that
section (b) does not add to section (a). Rather, it limits
it by providing  that when money is spent for one of the
purposes listed in subsection (a), it should be done so in a
manner that promotes tourism and the convention and hotel
industry.




                              p. 4913
      Honorable James L. Anderson, Jr. - Page 3      (JM-965)




           The language of section 351.101 set out in the text of
      this opinion was adopted by the 70th Legislature as part of
      a nonsubstantive  revision of statutes relating to local
      taxation.  Acts 1987, 70th Leg., ch. 191, p. 1410   (herein-
      after "Chapter 191"). Section 351.101 was a recodification
      of former section 3c of article 12693-4.1, V.T.C.S.

           Another bill adopted by the 70th Legislature  purported
      to amend subsection (a) of section 3c of article  12693-4.1,
      which Chapter 191 expressly repealed. Acts 1987, 70th Leg.,
      ch. 1125, p. 3856 (hereinafter "Chapter 1125"). That bill
      purported to amend subsection (a) of section 3c of article
      12693-4.1 as follows:

                 (a) The revenue derived from any occupancy
              tax authorized or validated  by this Act may
              only be used to nromote tourism      and the
              convention and hotel industrv. and such use
              is limited to the followinq [for]:

                  (1) the acquisition of sites for and the
              construction,      improvement,     enlarging,
              equipping,     repairing,    operation,     and
,-.           maintenance of convention center    facilities
              including, but not limited to, civic center
              convention buildings, auditoriums, coliseums,
              civic theaters, museums, and parking areas or
              facilities for the parking or storage of
              motor vehicles or other conveyances     located
              at or in the immediate vicinity         of the
              convention center facilities;

                  (2)  the   furnishing   of    facilities,
              personnel and materials for the registration
              of convention delegates or registrants:

                  (3)   for   [adverkising---Ser]        general
              promotional and tourist advertising        of the
              city and its vicinity           and conducting   a
              solicitation  and operating a program           to
              attract conventions     and visitors    either by
              the city or through contracts with persons or
              organizations selected by the city:

                 (4)    the    encouragement,     promotion,
              improvement, and application    of the arts,
              including music    (instrumental and vocal),
              dance, drama,  folk art, creative writing,
              architecture,  design    and allied    fields,
              painting, sculpture, photography, graphic and



                                      p. 4914
                                                                          I


                                                                          .
Honorable James L. Anderson, Jr. - Page 4          (JM-965)




        craft arts, motion pictures,      television,
        radio, tape and sound recording, and the arts
        related to the presentation,     performance,
        execution, and exhibition of these major   art
        forms:

            (5)    historical     preservation      and
        restoration projects or activities at or in
        the immediate vicinity   of convention   center
        facilities   or historical   preservation   and
        restoration projects   or activities    located
        elsewhere   in   the   city that    would    be
        frequented by tourists and visitors to the
        city.

Chapter  1125   amended   subsection    (c)   of    section     3c   as
follows:

       Re nue (I~-is-the-ia~ea~-ef-~he--~eg~s~Q~~~e
       thzz---revenues]       derived       from    the   tax
       authorized   by this Act &              [are] to    be
       expended   solely      in     a     manner    directly
       enhancing   and promoting          tourism and     the
       convention and hotel industry as oermitted in
       Subsection (a) of this section. Such revenue
       Shall not be used for the aeneral              revenue
       p rn es or aeneral a0 ernmental             onerations
                           (UnderlXning indicates         new
       i&i&-    . overstriking           indicates    deleted
       language:)

     The repeal of a statute as part of a recodification
does not affect an amendment of the statute by the same
legislature  that enacted the code.       The amendment     *
preserved and given effect as part of the code provisio?
Gov't Code 5 311.031(c).      .Therefore, the substance    of
Chapter 1125 is be be given effect. We think that Chapter
1125 was intended to clarify,      rather than change,    the
existing law, in regard to the purposes for which the city
hotel tax may be spent.    a   Bill Analysis, S.B. No. 1532,
70th Leg. (prepared for House Committee on Ways and Means);
see also Attorney General Opinion JM-690      (1987). In any
case, no matter how the prior law was interpreted,    Chapter
1125 provides unequivocally   that the promotion of tourism
and the convention  and hotel   industry is not a separate,
general category for which cities may use the hotel tax.
Rather, the law requires that when a hotel tax is used    for
one of the purposes set out in section        (a) of article
351.101, it must also have the effect of promoting    tourism
and the hotel and convention industry.



                                 p. 4915
Honorable James L. Anderson, Jr. - Page 5    (JM-965)




     You also  ask whether the hotel tax may be used to
reduce the debt on bonds issued under article     12693-4.1,
V.T.C.S.   Article  12693-4.1 authorizes   cities to issue
revenue bonds for the westablishment, acquisition, purchase,
construction, improvement, enlargement, equipment or repair"
of a variety of public improvements.  Section 351.102(a)  of
the Tax Code provides:

           Subject to the limitations      provided   by
        this subchapter,   a municipality   may pledge
        the revenue derived from the tax imposed
        under this chapter   [the hotel tax] for the
        payment  of bonds that are issued          under
        Section 3,  Chapter   63,  Acts   of  the   59th
        Legislature, Regular Session, 1965      (Article
        12693-4.1, Vernon's Texas Civil Statutes),
        for one or more of the nurnoses nrovided      bv
        Section 351.101.   (Emphasis added.)


That provision allows the hotel tax to be used for payment
of bonds issued under article 12693-4.1 only if the bonds
were issued for one of the purposes set out in section
351.101 of the Tax Code. In other words, section 351.102(a)
does not expand the purposes for which the hotel tax may be
used. Rather, it merely provides that the tax may be used
for payment of bonds that were issued for purposes listed in
section 351.101 as well as for direct expenditures       for
purposes listed in section 351.101.

     We do note that section 351.105 does permit           an
"eligible coastal municipality" that levies a hotel tax of
at least seven percent to use a portion     of the tax for
certain recreation  facilities that "serve the purpose     of
attracting visitors and tourists to the municipality."     An
eligible coastal municipality  is @Iahome-rule  municipality
that borders on the Gulf of Mexico and has a population    of
less than 80,000." Tax Code 8 351.001(4).       Because   you
state that Rockport   "does not adjoin a Gulf of Mexico
beach," we need not consider whether section 351.105 would
permit the use of the tax for operation     of the type of
facilities you ask about.




                               p. 4916
Honorable James L. Anderson, Jr. - Page 6    (JM-965)




           Section 351.101 of the Tax Code sets out
        the exclusive    purposes   for  which   the
        municipal hotel tax may be used. The tax may
        not be used   for the operation  of general
        recreational facilities.




                                     JIM     MATTOX
                                     Attorney General of Texas

MARYKELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLHY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Sarah Woelk
Assistant Attorney General




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