If you’ve been following our series of blog posts on the fiscal year 2022 budget and tax rate, it should be clear the City works hard to find sources other than property taxes to pay for services. We do a lot with sales taxes, as this post explains, but this week we’re going to focus on a tax you don’t even pay that goes a long way to providing some great quality of life programs and amenities in Round Rock.
It’s called HOT, and it does a LOT.
The Hotel Occupancy Tax (HOT) is the tax out-of-towners pay when they stay in one of Round Rock’s 4,544 hotel rooms. The City collects a 9 percent HOT tax from hotel stays. By law, HOT revenues are restricted to uses that promote overnight tourists. In other words, you can’t use HOT funds to pay for police and firefighter salaries.
In Round Rock, we’ve chosen to invest the bulk of our HOT revenues on facilities and programs focused on sports tourism. Three big facilities – the Dell Diamond, Round Rock Sports Center and half of the Round Rock Multipurpose Center – were built and are maintained with HOT funds.
We’ve developed a successful sports tourism program – Go Round Rock! – that generates $16 million in economic activity every year in our community. We host national, state and regional tournaments in sports ranging from soccer and volleyball to table tennis and even Quidditch. These tournaments help keep our hotels full and generate a steady stream of customers for Round Rock restaurants and shopping centers.
But what’s great for Round Rock residents is that the Sports Center and Multipurpose Complex are used 75 percent of the time by local and area residents. We also offer 18 summer sports camps at our facilities.
That’s a lot of benefit for Round Rock residents at facilities paid for by visitors.
City of Round Rock Sports Facility Usage
The City leverages HOT funds in other ways as well. The City Arts and Culture Division is supported by HOT funds. We fund popular events like Chalk Walk, Hometown Halloween and Beaujolais Nights, as well as our sculpture program in Downtown Round Rock with HOT revenues. HOT funds are also used for the City’s Arts Grant program.
In the current budget proposal, we’re converting a part-time position to full-time, giving us two full-time employees dedicated to the arts. There is also funding to update the City’s arts master plan, to help guide the development of our arts efforts over the next 10 years.
A new use of HOT funds in the current budget will support historic preservation, which, like the arts, is a permitted use of HOT revenue. The City is budgeting $300,000 for preservation, and is planning to take 3 percent of HOT revenue each year to put toward capital projects such as the restoration of the Stagecoach Inn.
Last but certainly not least, the City’s biggest economic impact project in 2021 is supported by HOT revenue. The City’s agreement with Kalahari Resorts and Conventions – which invested more than $350 million and employs more than 700 – is fueled by HOT funds. State and City HOT taxes paid by the resort’s overnight guests are being used to pay the debt issued for construction of the Convention Center, as well as infrastructure that serves the facility.
The benefit to residents? The City expects to net more than $4 million a year in new revenues from Kalahari. To put that in perspective, new residential and commercial properties that came on the tax rolls this year are expected to produce $1.5 million in property tax revenue.
Utilizing HOT revenues are another way the FY 22 budget keeps Round Rock Building Toward the Future.