“We can lock their doors”

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Are some local hotels delinquent in paying city taxes?

Finding their daily operations completely shut down by order of the city government may prove not only embarrassing but also force the hand of hotel owners who have failed to meet tax obligations.
According to reports filed at Cotulla City Hall last week and announced publicly in a council meeting on Thursday, at least two of the city’s 25 hotels are delinquent in paying occupancy taxes and may soon be subject to enforcement under the municipal code.
The Hotel Occupancy Tax (HOT) is represented by a surcharge on every hotel or motel booking in the city, and the funds are used by the city government for projects that promote tourism and economic development, ultimately prompting more people to book hotel rooms when the city attracts more visitors.
In Cotulla’s case, HOT funds have been used to pay for Main Street Program projects such as downtown beautification, installation of attractions such as bronzes of Joseph Cotulla and Lyndon Johnson, parks upgrades, promoting economic development and historic preservation, repurposing some of the city’s oldest buildings, and hosting festivals such as the Independence Day celebration.
An upcoming project for the city with hotel tax revenues will be consideration of a design for a veterans’ memorial by sculptor Armando Hinojosa and a commemorative bronze of Florita Maltsberger; and reconstruction of the Plaza Florita to more closely match its original design of the 1930s. The project includes demolition of the basketball pavilion / performance stage and public restrooms built 20 years ago with funds from the Texas Department of Parks & Wildlife. The facilities will be moved to a site adjacent to the park, thereby giving plaza visitors a clearer view of the historic Welhausen School. Both the Plaza Florita and the school building are listed on the National Register of Historic Places for their cultural significance to South Texas.
In a presentation to the city council on April 14, finance director Jorge Flores said the city recently received payments totaling $9,000 in hotel taxes that had been due since the previous month and that the tally for the first six months of the current fiscal year has nearly reached half a million dollars.
For the second fiscal quarter alone, Cotulla collected over $234,000 in hotel taxes, Flores said.
The state of Texas restricts the use of HOT funds, and cities may not use the surcharges to pay for routine operations.
Flores said an audit is presently being conducted in order to determine whether hotels have been paying the correct amount in occupancy taxes.
The city has indicated in the past that there remains an ongoing dispute between some hotel managers and the municipal government regarding the type of hotel bookings that are exempt from the surcharge. While some have argued that a room reservation for more than a month does not incur the fee, City Hall has posited that the room must be occupied by the same person for the duration and cannot be used by a succession of guests under the same reservation. Such has been the case with long-term hotel bookings made by corporations who require that their staff or work crews spend several nights in Cotulla as part of their work rotation. The hotel rooms have been booked for months at a time but used by multiple guests in succession.
City Hall has indicated the surcharge applies to each guest and can only be exempted if the same guest remains in the same room longer than a month.
City administrator Larry Dovalina has told councilors at their meetings over the past year that City Hall is diligent in its hotel tax collection and that staff are aware which establishments have fallen behind in their payments.
“There are two properties at least who have not paid their taxes,” Dovalina said on Thursday. “At some point, we will do enforcement, which means we can lock their doors.”
The city administrator said Cotulla will be within its rights effectively to shut down any hotels or motels that are delinquent in their taxes. If such action is taken, it will be the first time that Cotulla has done so. Past incidents of tax delinquency have included written reminders an in-person meetings between city staff and hotel managers responsible for the payments.
Councilors voiced no opposition to Dovalina’s opinion that City Hall may take further steps to collect past due hotel taxes and that physically closing one or more hotels until the dues are paid will be an option to be considered without further council action.