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Featured: The $88.3 million, 190,000 square foot Bert Ogden Arena, owned by the City of Edinburg, a first-class indoor multi-purpose center located at the corner of Interstate Highway 69-Central and Alberta Road in east Edinburg.

Photograph Courtesy BERT OGDEN ARENA

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Bringing new businesses, helping existing businesses, creating more jobs next to Bert Ogden Arena and H-E-B Park are top goals of successful legislation by Rep. Canales and Sen. Hinojosa

By DAVID A. DÍAZ
Legislativemedia@aol.com

One of the top state legislative priorities for the City of Edinburg will soon be on the way to the governor for his approval, and with it, allowing plans to be set in motion to bring new businesses, help existing businesses, and create more jobs next to Bert Ogden Arena and H-E-B Park, Mayor Richard Molina has announced.

Senate Bill 2137, sponsored by Rep. Terry Canales, D-Edinburg, Chair, House Committee on Transportation, and authored by Sen. Juan “Chuy” Hinojosa, D-McAllen, would allow the City of Edinburg to use municipal hotel occupancy tax revenues to pay for infrastructure projects within 2,500 feet of the Bert Ogden Arena and H-E-B Park.

That proposal was given final approval by the Texas Legislature on Tuesday, May 21, 2019, and is now on the way to Gov. Greg Abbott, who upon officially receiving the legislation, has 20 days to sign it into law, take no action, which allows it to become law, or veto (kill) the bill.

The sponsor is the legislator who guides a bill through the legislative process after the bill has passed the originating chamber. The sponsor is a member of the opposite chamber of the one in which the bill was filed.

The author is the legislator who files a bill and guides it through the legislative process (also called the primary author).

“The city already is experiencing rapid growth and quickly becoming a tourist destination because of the stadium, and the bill would help enable the area to adequately accommodate development nearby,” Molina said. “The bill would not add a new tax but merely expand the permissible uses of the existing hotel occupancy tax.”

SB 2137, which was written specifically with the City of Edinburg in mind, would help city and business leaders to adequately accommodate nearby development, according to the bill analysis of the measure.

“The City of Edinburg has recently seen several new hotels built, largely attributable to the Bert Ogden Arena and H-E-B Park, attracting tourists and overnight guests,” said Hinojosa. “Since the city has no plans to expand the facilities, a change in statute is needed to allow the City of Edinburg to utilize the hotel occupancy tax revenue to pay for related infrastructure that is located within 2,500 feet of the arena and soccer stadium.”

Related infrastructure, according to Canales, is defined “as any store, restaurant, on-site hotel, concession, automobile parking facility, area transportation facility, road, street, water or sewer facility, park, or other on-site or off-site improvement that relates to and enhances the use, value, or appeal of a venue, including areas adjacent to the venue, and any other expenditure reasonably necessary to construct, improve, renovate, or expand a venue, including an expenditure for environmental remediation.”

Miriam Cepeda, Governmental Relations Liaison, City of Edinburg, Elvia López Caballero, Legislative Consultant, Edinburg Economic Development Corporation, and Edinburg City Attorney Omar Ochoa worked on the measure with key state lawmakers, the mayor, the Edinburg City Council, and the Edinburg Economic Development Corporation Board of Directors.

“This bill would help the City of Edinburg meet its growing population’s demands as it would not only encourage tourism and cultivation of the arts, but produce a quality of life for the place we call home,” Cepeda testified on Thursday, April 4, 2019, before the Senate Committee on Natural Resources and Economic Development. “The City of Edinburg’s motto is ‘Something good is happening here’, and with your support, we can continue to fulfill our promise, not only to Edinburg’s residents, but the region as a whole.”

The House Research Organization, which is the nonpartisan research arm of the House of Representatives, explains that “Tax Code sec. 351.1068 allows a municipality that is the county seat of a county that is located on the Texas-Mexico border, has a population of 500,000 or more, and is adjacent to two or more counties with populations of 50,000 or more (Edinburg) to use revenue derived from the municipal hotel occupancy tax to construct, maintain, or expand a sporting-related facility or sporting-related field on property owned by the municipality, provided the municipality’s sports facilities and fields have been used in the preceding calendar year a combined total of more than 10 times for district, state, regional, or national sports tournaments, games, or events.”

In the early 1970s, the Texas Legislature authorized municipalities to begin collecting the local hotel occupancy tax (HOT), according to the Texas Comptroller of Public Accounts. Almost two decades later, the Legislature offered hotel occupancy taxing authority as one of several revenue options to support sports and community venues. The tax may be levied by a city, county or a partnership between the two.

(https://comptroller.texas.gov/transparency/local/hotel-receipts/)

One of the more valuable public construction projects in Edinburg’s history took a major step forward in January 2017 with the issuance of a building permit, valued at $80 million, for the city-owned, 190,000 square foot Bert Ogden Arena.

When it officially opened in August 2018, the total investment for the Bert Ogden Arena, a first-class indoor multi-purpose center built at the corner of Interstate Highway 69-Central and Alberta Road in east Edinburg, was estimated at $88.3 million.

The Bert Ogden Arena features 8,500 fixed seats, which includes 1,200 club seats, 12 luxury suites, a restaurant/club area, locker rooms, offices for sports team personnel, and marquee signs by the expressway.

The arena is designed to host a variety of entertainment events, including sporting events such as basketball, concerts, family shows, and trade shows.

It also serves as home for the Rio Grande Valley Vipers, which is affiliated with the NBA’s Houston Rockets. On Sunday, April, 14, 2019, the Vipers and their fans celebrated that team’s third G League Championship.

(https://bertogdenarena.com)

H-E-B Park, a $16.8+ million sports and entertainment outdoor complex that features a 9,700 seat capacity soccer-specific stadium, is home to the Rio Grande Valley Football Club Toros, which is a member of the United Soccer League (USL).

On March 22, 2017, the first game took place at the new stadium, which featured a match between the Toros and the Club de Futbol Monterrey, commonly known as Rayados, which had won the Mexican league championship four times from 2010 to 2013.

H-E-B Park and the RGV FC Toros are privately-owned.

The RGV FC Toros professional soccer club serves as the hybrid affiliate of the Houston Dynamo.

The stadium, which is modeled after the Houston Dynamo’s BBVA Compass Stadium, is located at the intersection of East Freddy González Drive and South Raúl Longoria Road.

https://hebparkrgv.com

LEGISLATION PROPOSES STATEWIDE VOTE ON PLACING EXPLICIT BAN ON PERSONAL INCOME TAX IN THE TEXAS STATE CONSTITUTION

Voters could enshrine a ban on a personal income tax in the state constitution under a measure approved by the Senate late Monday, May 20, 2019, according to Texas Senate News.

Texas Senate News is the state-supported news and information division of the Senate.

Texas’ lack of an income tax is one of the major drivers of the state’s economic success, said Sen. Pat Fallon, R-Prosper, the sponsor of House Joint Resolution 38, authored by Rep. Jeff Leach, R-Allen.

The sponsor is the legislator who guides a bill through the legislative process after the bill has passed the originating chamber. The sponsor is a member of the opposite chamber of the one in which the bill was filed.

The author is the legislator who files a bill and guides it through the legislative process (also called the primary author).

“Every day more people move to Texas seeking an opportunity to make their lives better for themselves and their families,” he said. “A big part of that is they know that a larger portion of what they earn will be kept in their pockets and not go to the government because Texas has a climate that is business-friendly, low-tax, high-prosperity and we have reasonable regulation.”

Many Texans, said Fallon, are under the mistaken impression that the state constitution explicitly prohibits a personal income tax, but it’s more complicated than that. At issue is the “Bullock Amendment,” named for the late Lt. Gov. Bob Bullock, who pushed for the amendment in the early 1990s. It requires that any personal income tax proposal be first approved by a majority of Texas voters.

While that’s not likely, as Fallon cited recent polling showing that more than 70 percent of Texans oppose an income tax, there is a way it could still become law. Any statute can pass the Legislature with a simple majority, meaning that 51 percent of lawmakers could hypothetically put the question of creating an income tax before voters.

It takes a two-third majority of the Legislature to place a constitutional amendment on the ballot, however, so any future bills that seek to repeal this proposed income tax ban would require the support of a supermajority of lawmakers in both houses.

One issue raised by those opposed to the legislation is the unintended impact it could have on the business franchise tax. The resolution would place this exact language in the constitution: “The legislature may not impose a tax on the net incomes of individuals, including an individual’s share of partnership and unincorporated association income.”

A possible issue arises due to the use of the term “individual” in place of “natural person” as exists in the Bullock Amendment today.

According to the fiscal impact statement by the Legislative Budget Board, the term could open the door to legal challenges of the franchise tax.

The Legislative Budget Board is a permanent joint committee of the Texas Legislature that develops recommendations for legislative appropriations for all agencies of state government. The Legislative Budget Board is composed of two joint chairs (the lieutenant governor and house speaker), three automatic members (the chairs of the House Appropriations Committee, House Ways and Means Committee, and Senate Finance Committee), and five appointed members (three senators appointed by the lieutenant governor and two representatives appointed by the speaker).

“The term ‘individuals’ is not defined and could be interpreted to include entities that are currently subject to the state’s franchise tax,” the fiscal impact statement reads.

The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. For general information, see the Franchise Tax Overview.

There are places in state law where the definition of “person” includes a corporation or other business interest. Subject to a lawsuit, if a court rules that “individual” means “person”, and affirms that “person” applies to corporations, then it could theoretically strike down all or part of the levy.

The Comptroller’s biennial revenue estimate projects that tax will bring in more than $6 billion in revenue over the next two years, so a court ruling exempting some, or all, businesses from the franchise tax could introduce a significant deficit into the budget.

In response, Fallon emphasized that his proposal could only apply to personal income taxes.

“The legislative intent of HJR 38 is that an individual is just like what it sounds: a single human being,” he said. “There’s no case law we can find where an individual is described by anything other than a single human being.”

More than that, he said, the amendment couldn’t apply to the franchise tax.

“The margins tax is not an income tax, the margins tax is a tax on gross margins,” said Fallon. “So even if this didn’t say ‘individual’ and said something else, it’s still not the same thing.”

Regardless of potential court rulings, other members worried that the amendment could be tying the hands of future legislatures.

Sen. Eddie Lucio, Jr., D-Brownsville, said that while he personally opposes an income tax, future lawmakers may see a need.

“If they’re going to vote to not have a state income tax in the future, they’re shutting down an option for other legislatures,” he said. “I’m not for shutting down options.”

Lucio said he preferred an interim study on the issue, so voters know the exact impact of what could effectively be an irreversible ban on a state income tax might be. Ultimately, the measure passed the Senate with the two-thirds vote approval necessary to be placed on the November 2019 ballot.

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For more on this and other Texas legislative news stories which affect the Rio Grande Valley metropolitan region, please log on to Titans of the Texas Legislature (TitansoftheTexasLegislature.com).

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