Relating to the authority of certain municipalities to use certain tax revenue for certain qualified projects.
LowStandard timeline
Low Cost
Effective:2025-06-20
Enforcing Agencies
Texas Comptroller of Public Accounts • Qualifying Municipalities (specifically targeting Lubbock and Amarillo)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025.
Compliance Deadline:Q4 2025. While the law is effective in September, municipalities will likely move immediately to pass designation ordinances to establish the "Base Year" before 2026.
Agency Rulemaking: The Texas Comptroller must validate the zone boundaries and the "Base Year" tax amounts. Expect a "regulatory gray zone" between September 2025 and January 2026 regarding the specific definition of "hotel-associated revenue" for non-lodging businesses (e.g., lobby retail).
Immediate Action Plan
1.Audit Tenant Coding: If you are a Hotel GM, verify that all third-party tenants on your property are coded in the Comptroller’s system as located *at* the hotel address, not a generic street address, to ensure their taxes are captured.
2.Prepare Historical Data: Instruct your tax team to compile monthly Sales, HOT, and Mixed Beverage tax returns for the 2024 calendar year to anticipate "Base Year" verification requests.
3.Monitor City Agendas: Assign a government affairs liaison to monitor City Council agendas in Lubbock, Amarillo, Corpus Christi, and Frisco starting August 2025 for the "Project Financing Zone Designation Ordinance."
4.Review POS Categories: Ensure alcohol sales are distinct from food sales in your reporting systems, as these feed into separate tax buckets (Mixed Beverage vs. Sales Tax) eligible for capture.
Operational Changes Required
Contracts
Commercial Leases (Hotels): Landlords must review leases for third-party tenants (restaurants, spas, coffee shops located *within* the hotel). Insert clauses requiring tenants to cooperate with City/Comptroller audits to verify their status as "hotel-associated businesses."
Chapter 380 Agreements: Developers seeking infrastructure funding must finalize Chapter 380 agreements with the municipality prior to the zone designation ordinance to lock in revenue-sharing terms.
Hiring/Training
Finance/Accounting: Staff must ensure Point of Sale (POS) systems strictly segregate revenue streams. "Mixed Beverage" revenue is captured differently than standard "Sales Tax." Misclassification in the General Ledger will result in lost revenue for the municipality and potential audit scrutiny.
Reporting & Record-Keeping
Geographic Verification: Businesses must verify their physical address against the specific longitude/latitude coordinates or the "continuous geographic area" map defined in the City's designation ordinance.
Base Year Data: Retain all 2024 and 2025 tax remittance records. The City will request this data to model the "Base Year." You must be prepared to contest inaccurate base-year calculations that could artificially lower the captured increment.
Fees & Costs
No New Fees: There are no new taxes or fees at the register.
Administrative Cost: Expect low-to-moderate internal costs related to data retrieval for City Economic Development departments and Comptroller verification requests.
Strategic Ambiguities & Considerations
The "Retroactive" Deadline: Section 1(B)(ii) references a designation deadline of "December 31, 2024" for certain boundary types, yet the law is not effective until September 1, 2025. This drafting conflict creates a legal void. Businesses in zones utilizing "continuous geographic areas" (rather than a simple 3-mile radius) must watch for a technical corrections bill or specific Attorney General guidance.
"Hotel-Associated" Scope: The statute is vague on whether revenue from "grab-and-go" kiosks or subleased retail spaces (e.g., a gift shop not owned by the hotel) qualifies. The Comptroller has discretion here; expect strict interpretation until rulemaking clarifies.
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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
The bill author has informed the committee that the City of Lubbock has expressed its desire to designate a project financing zone (PFZ), which would entitle the city to receive the incremental hotel associated revenue from all hotels in the zone. C.S.H.B. 2313 seeks to allow the City of Lubbock to designate a PFZ.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
C.S.H.B. 2313 amends the Tax Code to include a municipality with a population of more than 250,000 but less than 300,000 that contains a component institution of the Texas Tech University System among the municipalities authorized to designate a project financing zone for a qualified project, to use revenue from the municipal hotel occupancy tax to fund the project, and to pledge revenue derived from that tax or other eligible tax proceeds from a hotel located in the project financing zone for the payment of obligations issued or incurred to acquire, lease, construct, improve, enlarge, and equip the project.
C.S.H.B. 2313, to the extent of any conflict, prevails over another act of the 89th Legislature, Regular Session, 2025, relating to nonsubstantive additions to and corrections in enacted codes.
EFFECTIVE DATE
September 1, 2025.
COMPARISON OF INTRODUCED AND SUBSTITUTE
While C.S.H.B. 2313 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.
While both the substitute and the introduced include a specified municipality among the municipalities authorized to designate a project financing zone for a qualified project, to use revenue from the municipal hotel occupancy tax to fund the project, and to pledge revenue derived from that tax or other eligible tax proceeds for the payment of certain obligations, the substitute raises the minimum population for that municipality from 200,000 or more, as in the introduced, to more than 250,000.
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB2313 by Tepper (Relating to the authority of certain municipalities to use certain tax revenue for certain qualified projects.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2313, As Introduced: a negative impact of ($1,200,000) through the biennium ending August 31, 2027.
The negative fiscal impact to General Revenue Related Funds would continue to grow after fiscal year 2030, with total revenue foregone by the state estimated to total ($142,600,000) by fiscal year 2055, the last full year of entitlement for the zones.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($400,000)
2027
($800,000)
2028
($1,400,000)
2029
($1,900,000)
2030
($2,500,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue Gain/(Loss) from General Revenue Fund 1
2026
($400,000)
2027
($800,000)
2028
($1,400,000)
2029
($1,900,000)
2030
($2,500,000)
Fiscal Analysis
The bill would authorize a project finance zone for a municipality with a population of 200,000 or more but less than 300,000 that contains a component institution of the Texas Tech University System.
Methodology
The bill would authorize a project finance zone for the cities of Lubbock and Amarillo. Lubbock and Amarillo would be provided authority to receive incremental hotel-associated revenue from all hotels within the zone's boundaries, for a period of up to 30 years, less any amount distributed to a qualified hotel project already within the zone in the year the zone is designated.
Hotel-associated revenue includes state sales tax revenue, state hotel tax revenue, state mixed beverage sales tax revenue and state mixed beverage gross receipts tax revenue collected from a hotel and businesses located within a hotel. The incremental revenue would be sum of all revenue in excess of the amounts from hotels within the zone during the year the project zone is designated by the municipality.
The Comptroller would begin depositing the estimated monthly incremental hotel-associated revenue into Fund 0805 – Incremental Hotel-Associated Revenue Suspense Trust once the hotels, and associated businesses in the hotels, within the zone have been determined by the city and validated by the Comptroller.
As incremental revenue available to finance development of project-associated infrastructure would be maximized by establishing the earliest year possible as base year for the determination of incremental revenue, it is assumed project designations for Lubbock and Amarillo would occur during 2025, the year of the effective date of the bill, with deposits to the project trust accounts beginning in 2026. The estimates are based on hotel tax revenue from hotels currently in operation and identified as within the likely boundaries of the zones, multiplied by a factor to account for associated sales tax and mixed beverage tax revenue based on data for extant hotel projects, extrapolated to future years at an average annual growth rate of six and a half percent as representative of typical hotel tax growth rates prior to the pandemic.
As this estimate for project financing zone rebates is extrapolated from hotels currently in operation, it does not reflect higher payments to a project zone that would occur if the project-associated infrastructure improvements result in capture of market share by the project hotel and other hotels in the project zone from hotels elsewhere in a designating municipality or from other parts of the state. It also does not reflect higher payments as would occur if the project improvements attracted additional tourist visits from outside the state that otherwise would not have occurred anywhere in the state; revenue from such additional tourist visits paid to a project zone would not represent revenue foregone by the state.
Local Government Impact
The bill would authorize a project finance zone for the cities of Lubbock and Amarillo. Lubbock and Amarillo would be provided authority to receive incremental hotel-associated revenue from all hotels within the zone's boundaries, for a period of up to 30 years, less any amount distributed to a qualified hotel project already within the zone in the year the zone is designated.
Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
JMc, KK, SD, BRI
Related Legislation
Explore more bills from this author and on related topics
HB2313 authorizes municipalities—specifically targeting Lubbock and Amarillo, with provisions for Corpus Christi and Frisco—to capture incremental State Sales, Hotel Occupancy, and Mixed Beverage taxes generated by hotels and on-site businesses to fund convention center projects. While consumer tax rates remain unchanged, hotel operators and tenants within designated "Project Financing Zones" (PFZ) must strictly verify revenue coding and geographic location to ensure the municipality captures these funds starting in 2026. Implementation Timeline Effective Date: September 1, 2025.
Q
Who authored HB2313?
HB2313 was authored by Texas Representative Carl Tepper during the Regular Session.
Q
When was HB2313 signed into law?
HB2313 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce HB2313?
HB2313 is enforced by Texas Comptroller of Public Accounts and Qualifying Municipalities (specifically targeting Lubbock and Amarillo).
Q
How urgent is compliance with HB2313?
The compliance urgency for HB2313 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB2313?
The cost impact of HB2313 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB2313 address?
HB2313 addresses topics including taxation, taxation--hotel, motel occupancy, lubbock, city of, corpus christi, city of and frisco, city of.
Legislative data provided by LegiScanLast updated: November 25, 2025
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