Rental Car Giant: We can’t be taxed for Lubbock County Expo Center; Expo Leaders: We won’t need rental car taxes

Earlier this week, we reported that a new federal law likely prohibits collecting taxes from airport-based rental car companies to fund non-airport projects. Projects like convention centers, stadiums, and expo centers.

Signed into law on October 5, the Federal Aviation Authorization Reauthorization Act of 2018  included a car rental lobby-backed amendment that requires taxes levied at airports be used only for airport purposes. Press releases after the bill’s passage praised “preventing discriminatory taxes at airports that target certain industries like rental cars.” (For reference to amendment, see section 159 “State Taxation”)

Washington’s October Surprise is just that in Lubbock County. It comes just before voters consider a November 6 ballot proposition seeking to impose new taxes of up to five percent on rental cars and up to two percent on hotel occupancies to develop a $40-$50 million county expo center.

At least one big rental car company has already served notice that taxes can no longer be collected for such a venue project.

According to public records, Enterprise Holdings Vice President and General Manager Howard Zaroff sent an email on October 11 to Lubbock County Commissioner Bill McCay that stated, “As discussed, the motor vehicle tax collected at the Lubbock airport would no longer qualify to be used for the Venue Project.” (See Zaroff’s entire email below.)

Conceptual rendering of proposed Lubbock County Expo Center

However, expo center steering committee members say the sudden change in federal law will not impact their proposal. The group, which operates as a non-profit 501c3, argues that despite asking for voter approval for rental car taxes (in ballot language submitted in mid-August, well before the FAA reauthorization), the hotel occupancy tax (HOT) portion of the proposition would adequately fund the 30-year bond, and potentially pay the bond off ahead of schedule.

Tim Collins, a steering committee member who has previously help raise over $100 million for the Buddy Holly Performing Hall of Arts and Sciences, stated the following in a social media response our previous report: “In 2017, hotel revenue in the city of Lubbock was over $111 million. This amount was up 24 percent in just five years. The area has an additional 800 rooms under construction or being permitted. The HOT funding will be more than adequate to support the project. THAT said, any bond package would have to be based upon the Comptroller’s revenue projections, whatever that might be.”

Differing legal opinions on the new law is likely to set off a lengthy nationwide legal battle.

If courts ultimately rule in favor of rental car companies, the impact on the expo effort is yet unclear. These figures have been requested but yet not returned by the committee. The impact is highly unlikely to surpass the $10 million expo officials say they have raised in their endowment. An endowment they’ve been working to double.

Whatever the impact of the October Surprise, it would be overcome if indeed the HOT portion of the expo proposition sufficiently funds construction.

 

Email from Enterprise Holdings VP & General Manager Howard Zaroff to Lubbock County Commissioner Bill McCay, dated October 15, 2018

 

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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