If rental car taxes can’t be used for the Lubbock County Expo Center, what’s next ?

Last week, two weeks ahead of early voting, questions were answered about the location and costs of the Lubbock County Expo Center proposed on November 6 ballots.

The expo effort, which is operating as a non-governmental 501c3, said the venue would be located on North University Avenue north of Loop 289. Construction costs are estimated between $40 and $50 million. Leaders also said the effort will have an endowment of at least $10 million.

The expo group is proposing a 30-year bond that would be serviced by hotel occupancy rental car taxes.

But what if taxes on rental car companies and their consumers cannot any longer be used to fund projects away from the airport? Projects like expo centers.

Washington seems to have hit the brakes on this practice a few days ago.

On October 5, President Donald Trump signed the Federal Aviation Administration Reauthorization Act of 2018, an act that was signed as effective immediately. 

Section 159 of the act says states, political subdivisions (like counties and cities) may not:

(v) except as otherwise provided under section 47133, levy or collect a tax, fee, or charge, first taking effect after the date of enactment of this clause, upon any business located at a commercial service airport or operating as a permittee of such an airport that is not generally imposed on sales or services by that State, political subdivision, or authority unless wholly utilized for airport or aeronautical purposes.

(b) RULE OF CONSTRUCTION —Nothing in this section or an amendment made by this section shall affect a change to a rate or other provision of a tax, fee, or charge under section 40116 of title 49, United States Code, that was enacted prior to the date of enactment of this Act. Such provision of a tax, fee, or charge shall continue to be subject to the requirements to which such provision was subject under that section as in effect on the day before the date of enactment of this Act.

The Lubbock County November 6 ballot language is much easier to read:

Vote For or Against.

Authorizing Lubbock County to develop a new multipurpose arena with adjacent facilities and any related infrastructure (‘the Venue Project’) in Lubbock County that is capable of hosting a variety of events, including, but not limited to concerts, family shows, sporting events, community and high school sporting events and ceremonies, rodeos and other agricultural and equestrian shows, and to impose a short term motor vehicle rental tax at a rate not to exceed five percent (5%) of the gross receipts from the rental of a motor vehicle in Lubbock County, and a tax on the occupancy of a room in a hotel within the County at a rate not to exceed two percent (2%) of the price paid for the room, for the purpose of financing the Venue Project.

If approved, the maximum hotel occupancy tax rate imposed from all sources in Lubbock County would be 15 percent (15%) of the price paid for a room in a hotel.

It’s fairly clear that the new federal act and the county ballot are at odds with one another– and tension voters might feel at the booth when early voting starts Monday, October 22.

The rental car tax issue is ill-timed, if not worse, for places like Lubbock with similar venue proposals.

There are varying opinions about whether the act also includes both rental car businesses at both airport and non-airport locations. Texas Municipal League has warned it’s both.

Expo Center steering committee chairman Randy Jordan says he had no knowledge of any potential conflicts with the proposition and newly signed federal legislation, and that he has received no notification from any county or state agency. “Based on the information we have in front of us right now, we see nothing to deter us from moving forward,” Jordan said. Projections for how much rental car tax revenues of up to 5 percent factored into servicing the 30-year bond were unavailable at the time of publish.

Lubbock County Assistant District Attorney Morgan Vaughan says her office is currently studying the impact of the new law on the expo center proposal. “We will be in full compliance with the law, and we will not collect any taxes that are unlawful to collect should the (expo) proposal pass.”

Vaughan also said the rental car language on November ballots will not change. Ballots were finalized on August 22, six weeks before the bill passed out of Congress.

Noting that an FAA reauthorization entails months and months of process to get from congressional committees to the president’s desk, U.S. Rep. Jodey Arrington (R, Lubbock) said, “If there was a problem, it was never flagged as a concern for me. The feedback we received positive from stakeholders in the district with regard to helping meet (airport) infrastructure needs,” he said. “No local stakeholders raised (revisions on rental car taxes) as a concern.”

Suddenly, a new question arises about the Expo Center– and it’s not about votes, it’s about bucks.

[This story will be updated as more information comes forth.]


Jay Leeson is the founder of Other Side of Texas. You can hear the radio program by the same name each weekday 5-6pm CST on AM 580 Lubbock, streaming OtherSideofTexas.com. Each episode is posted as a podcast, subscribe at Apple podcasts.

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