SB529

Regular Session

Relating to the entitlement of certain municipalities to receive and use tax revenue from certain establishments located near a hotel and convention center project.

LowStandard timeline

Low Cost

Effective:2025-09-01

Enforcing Agencies

Texas Comptroller of Public Accounts • City of Midland (Municipality)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025.
Compliance Deadline: August 31, 2027 (Projected Hotel Opening). *Note: Businesses must validate their status with the Comptroller prior to this date to ensure proper revenue routing.*
Agency Rulemaking: The Texas Comptroller will assign specific project codes and validate the "Qualified Establishment" list between late 2025 and mid-2027. Watch for administrative guidance regarding the precise measurement of the 1,000-foot zone.

Immediate Action Plan

1. Map Your Proximity: Immediately commission a survey or review GIS data to determine if your Midland property falls within 1,000 feet of the proposed convention center site.
2. Review Lease Terms: If you are a tenant in the zone, prepare for landlord requests regarding data sharing; if you are a landlord, draft these amendments now.
3. Validate POS Data: Ensure your sales systems accurately separate mixed beverage sales from general sales tax items.
4. Monitor Comptroller Registry: In 2026, verify your business is listed on the Comptroller's "Qualified Establishment" list for the Midland project to avoid retroactive correction notices.

Operational Changes Required

Contracts

Commercial Leases: Landlords within the capture zone will likely require lease amendments inserting "Cooperation Clauses." These compel tenants to share monthly sales tax return data with the landlord to verify rebates against Comptroller records.
Triple Net (NNN) Provisions: Tenants must review leases to ensure they are not charged for Common Area Maintenance (CAM) or capital improvements that are already being subsidized by the state tax rebate.

Hiring/Training

POS Segmentation: Staff must be trained to strictly segregate revenue streams in Point of Sale systems (e.g., alcohol vs. food vs. merchandise). These categories are subject to different tax capture buckets (Mixed Beverage vs. Sales Tax), and misclassification will trigger audits.

Reporting & Record-Keeping

Address Validation: Businesses must verify their physical address is perfectly coded in the Texas Comptroller’s system. A minor address discrepancy will prevent tax capture, triggering an audit by the City or Developer.
Audit Readiness: Retain daily sales summaries for four years. If project financing falls short, the Developer will audit zone businesses to identify uncaptured revenue.

Fees & Costs

No New Fees: There is no increase in tax rates or licensure fees.
Administrative Costs: Legal costs may be incurred for lease review; minor IT costs may be required to update POS tax categorization.

Strategic Ambiguities & Considerations

The "1,000-Foot" Measurement: The statute specifies "1,000 feet from the nearest exterior wall." It is currently unclear how the Comptroller will treat multi-tenant strip centers or malls where only a portion of the building falls within the radius.
"Connected To" Definition: Section 351.156 allows capture from establishments "connected to" the hotel. The Comptroller must define if a physical walkway constitutes a connection sufficient to capture taxes from an adjacent, non-hotel property (e.g., a mall or office tower).

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsTaxation Taxation--hotel, Motel Occupancy Conventions & Convention Centers Midland, City of

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

Senate Research Center	S.B. 529
89R1467 RDS-D	By: Sparks
	Economic Development
	3/20/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

This bill increases the population threshold to qualify for the Texas Qualified Hotel Project and Convention Center Program from 110,000 or more to 130,000 or more.

Chapter 351 of the Tax Code supports economic growth by making hotel and convention center development feasible for over 60 eligible communities across the state. Midland currently qualifies under Section 351.156, but recent rapid population growth puts future eligibility at risk. With Midland already surpassing the 135,000 population threshold according to recent annual census estimates, the city is likely to lose eligibility after the next decennial census.

According to a 2020 report, since its inception, the program has generated over 6,000 jobs and $2.06 billion in capital investment across Texas. Midland, a vital hub in West Texas, plays a leading role in the state's oil and gas industry. In April 2023, Midland County produced over 17 million barrels of oil, ranking fourth nationally and second in Texas. In 2022, the oil and gas sector contributed $26.3 billion in state and local taxes, funding critical services like education, infrastructure, and emergency response. As the energy industry thrives, Midland grows. With a nearly 17 percent population increase from 2012 to 2022 and a three percent rise from 2022 to 2023, Midland is the seventh fastest-growing metropolitan area in the U.S., solidifying its status as a commercial center in West Texas.

This bill amends Section 351.157 of the Tax Code to expand its applicability by adding a new Subsection (b-1) that extends the provisions of Section 351.157 to include municipalities that meet the criteria in Section 351.152(12) and have a population of 130,000 or more. In essence, the bill ensures that larger municipalities meeting the specified description in Section 351.152(12) are included under the rules or benefits provided in Section 351.157.

As proposed, S.B. 529 amends current law relating to the entitlement of certain municipalities to receive tax revenue from certain establishments located near a hotel and convention center project.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 351.157, Tax Code, by adding Subsection (b-1), as follows:

(b-1) Provides that, in addition to the municipalities described by Subsection (b) (relating to municipalities to which Section 351.157 (Additional Entitlement for Certain Municipalities) applies), this section applies to a municipality described by Section 351.152 (12) (relating to municipalities meeting certain population requirements) that has a population of 130,000 or more.

SECTION 2. Effective date: upon passage or September 1, 2025.

Senate Authors

Sen. Kevin SparksRepublican · Primary Author

House Sponsor

Rep. Tom CraddickRepublican · Primary Sponsor

Bill Text(with markup)

S.B. No. 529

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the entitlement of certain municipalities to receive
	and use tax revenue from certain establishments located near a
	hotel and convention center project.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 351.155, Tax Code, is amended by adding
	Subsection (c-1) to read as follows:
	(c-1) This subsection applies only to a municipality
	described by Section 351.152(12) that has a population of 130,000
	or more. Notwithstanding Subsection (c), a municipality to which
	this subsection applies may pledge or commit revenue under this
	section for only two qualified projects.
	SECTION 2. Section 351.157, Tax Code, is amended by adding
	Subsection (b-1) to read as follows:
	(b-1) In addition to the municipalities described by
	Subsection (b), this section applies to a municipality described by
	Section 351.155(c-1).
	SECTION 3. This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 22, 2025

TO:	Honorable Phil King, Chair, Senate Committee on Economic Development

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB529 by Sparks (Relating to the entitlement of certain municipalities to receive tax revenue from certain establishments located near a hotel and convention center project.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for SB529, As Introduced: an impact of $0 through the biennium ending August 31, 2027.

However, there would a negative impact of ($797,000) through the biennium ending August 31, 2029. Similar fiscal implications would continue for 10 years after date of entitlement.

General Revenue-Related Funds, Five- Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	$0
2027	$0
2028	($342,000)
2029	($355,000)
2030	($370,000)

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue Gain/(Loss) from General Revenue Fund 1
2026	$0
2027	$0
2028	($342,000)
2029	($355,000)
2030	($370,000)

Fiscal Analysis

The bill would amend section 351.157 of the Tax Code to add Subsection (b-1), a municipality described by Section 351.152 (12) with a population of 130,000 or more, to the list of municipalities that are entitled to receive certain tax revenue derived from a hotel and convention center project and to pledge certain revenue for the payment of obligations related to the project.

The bill's provisions would affect the City of Midland.

Methodology

The City of Midland would be eligible to receive funds described in Sections 351.156 and 351.157 which provides, in relevant part, that a municipality to which Section 351.152 applies is entitled to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax. Additionally, Section 351.157 provides, in relevant part, that a municipality to which the section applies is entitled to receive funds from qualified restaurants, bars, retail establishments, swimming pools, and swimming facilities located no more than 1,000 feet from the exterior wall of a qualified hotel or convention center facility. Section 351.157(d) provides, in relevant part, that a municipality to which the section applies is entitled to receive the revenue derived from the state sales and use taxes, and local mixed beverage taxes generated, paid, and collected from a qualified establishment. Section 351.158 would entitle Midland to receive the revenue until the tenth anniversary of the date the qualified hotel to which the entitlement relates is open for initial occupancy.

The city of Midland has plans for a qualified hotel with the additional entitlement from restaurants, bars, retail establishments, swimming pools and swimming facilities as provided under Section 351.157 and could avail itself of the tax rebates should eligibility be acquired through this legislation. The estimate is based on a projected opening date of August 31st, 2027, a comparison and review of revenues paid to the owners of extant qualified hotel projects, and estimated attributes of such prospective hotel.

Local Government Impact

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, RStu, SD, BRI

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Frequently Asked Questions

Common questions about SB529

What does Texas SB529 do?

SB529 grants the City of Midland authority to capture state tax revenues (Sales, Hotel Occupancy, and Mixed Beverage) from the new convention center hotel and all qualified establishments within 1,000 feet of the facility to service project bonds. While this statute does not increase tax rates, it subjects retail, dining, and hospitality businesses within this "capture zone" to strict location verification and potential lease renegotiations regarding sales data sharing. Implementation Timeline Effective Date: September 1, 2025.

Who authored SB529?

SB529 was authored by Texas Senator Kevin Sparks during the Regular Session.

When was SB529 signed into law?

SB529 was signed into law by Governor Greg Abbott on May 30, 2025.

Which agencies enforce SB529?

SB529 is enforced by Texas Comptroller of Public Accounts and City of Midland (Municipality).

How urgent is compliance with SB529?

The compliance urgency for SB529 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB529?

The cost impact of SB529 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB529 address?

SB529 addresses topics including taxation, taxation--hotel, motel occupancy, conventions & convention centers and midland, city of.

Legislative data provided by LegiScanLast updated: November 25, 2025

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