DAN MORALES 

ATTORNEY GENERAL 

QlXfice of tfie !&tornep 

&,tate of Zltexae’ 

November 7,1997 

QiSeneral 

The Honorable Steven D. Wolens 

Chair, State Affairs Committee 

Texas House of Representatives 

P.O. Box 2910 

Austin, Texas 78768-2910 

Opinion No. DM-453 

Re: Whether Harris County must hold a referendum 

election before imposing certain taxes authorized by 

House Bill 92, Act of May 22,1997,75th Leg., RS., 

ch. 551, 1997 Tex. Sess. Law Serv. 1929, 1929 

The Honorable Senfkonia Thompson 

Chair, Judiciary Committee 

Texas House of Representatives 

P.O. Box 2910 

Austin, Texas 78768-2910 

(RQ-1002) 

Dear Representatives Wolens and Thompson: 

You have requested our opinion regarding House Bill 92, Act of May 22, 1997, 75th 

bg., RS., ch. 551, 1997 Tex. Sess. Law Serv. 1929, 1929. That bill authorized certain political 

subdivisions to create “venue districta” to “plan, acquire, establish, develop, construct, or renovate. 

. . . venue projects.” Local Gov’t Code ch. 335. Pursuant to that authority, Harris County and the 

City of Houston established the Harris County-Houston Sports Authority (the “authority’7 as of 

September 1, 1997. The authority is about to begin construction of its first “‘venue project,” the 

Ballpark at Union Station, a facility for major league baseball. 

House Bill 92 authorized municipalities and counties to impose, inter &a, a short-term rental 

tax on motor vehicles of Local Government Code section 334.102,’ and a special hotel occupancy 

tax, Local Gov’t Code 5 334.252: as a moans of financing “venue projects.” The provisions of 

House Bill 92 permitting these taxes were made contingent upon their approval by the voters: 

A municipality or county may impose a tax under this subchapter [shortterm motor vehicle rental tax] only iE 

(1) an approved venue project is or is planned to be located in the 

municipality or county; and 

‘Local Gov’t Code § 334.103 (tax not to exceed 5 percent). 

=ld. $ 334.254 (tax not to exceed 2 percent). 
The Honorable Steven D. Wolens - Page 2 

The Honorable Sent?onia Thompson 

(DM-453) 

(2) the tax is approved at an election held under Section 334.024.) 

Id. $ 334.102(c). House Bill 92 also contained a grandfather clause that obviated the need for a 

second election to impose these taxes in certain situations: 

SECTION 7. Notwithstanding any other provision of Chapter 334 or 335, 

Local Govemment Code, as added by this Act, au election to approve a sports 

and community venue project, to approve a method of financing for the 

venue project, other than the imposition of a sales and use tax or a facility use 

tax, or to create a sports and community venue district in a specific county or 

municipality is not necessary if, at an election held before the effective date 

of this Act, the voters of that county, or of the county in which the 

municipality or district is primarily located, authorized the establishment and 

operation of new or renovated stadiums, arenas, or other facilities for 

professional sports teams. This section: 

(1) negates the necessity of an election only for the type of venue 

project approved at the previous election; and 

(2) does not negate the necessity of au election for approval of the 

imposition of a sales and use tax or a facility use tax to fmance a venue 

project. 

An election to which section 7 clearly refers was held in the City of Houston and Harris 

County on November 5,1996. A majority of the voters appmved the following ballot proposition: 

Authorizing Harris County to establish and operate new or renovated 

stadimns, arenas, and other facilities for professional baseball and football 

teams, provided that no county real or personal property taxes are spent to 

acquire, construct or equip these facilities. 

You first ask whether Houston and Harris County must hold another referendum election prior to 

imposing the taxes authorized by House Bill 92. You suggest that, since the ballot proposition did 

not disclose that the special hotel occupancy tax and the short-term car rental tax would be used as 

a method of funding, those taxes may not be levied without a second election. In addition, you 

contend that, to the extent that section 7 purports to authorize such taxes without a second election, 

it contravenes the due process clauses of the state and federal constitutions. 

‘Section 334.252(b) of the Local Govemment Code uses identical language with regard to the special hotel 

occupancy tax. 

p. 2538 
The Honorable Steven D. Wolens - Page 3 

The Honorable Senfmnia Thompson 

(DM-453) 

We note initially that, in Attorney General Letter Opinion 96-120, we approved the specific 

ballot proposition at issue here, tinding that it “contains a fair description of the proposition 

submitted such that it can be understood by those entitled to vote and submits the question 

authorized by section 323.0035 with such definiteness and certainty that the voters will not be 

misled.” Letter Opinion No. 96-120 (1996) at 4. 

Except for the special requirements of House Bill 92, neither hotel occupancy taxes nor car 

rental taxes require a referendum before they may be imposed. Section 35 1.002 of the Tax Code 

permits a municipality to levy a hotel occupancy tax to be used for certain purposes specified in 

section 35 1.101, and section 352.002 authorizes certain counties to adopt such a tsx for the purposes 

listed in subchapter B of chapter 352, Tax Code. A statewide car rental tax has long been imposed 

by section 152.026 of the Tax Code. Neither the state nor federal constitutions require an election 

prior to the imposition of either kind of tax. See, e.g., Kelly v. Macon-Bibb County Bd. of Elections, 

608 F. Supp. 1036 (M.D. Ga. 1985); People ex rel. Stamos v. Public Bldg. Comm ‘n, 238 N.E.2d 390, 

398 (Ill. 1968). Thus, although the legislature chose in House Bill 92 to require an election in most 

counties to levy the special taxes authorized thereby, it was under no obligation to do so. 

Nor does the imposition of a hotel occupancy or car rental tax without an election have due 

process implications. Taxation does not constitute a taking of property without just compensation 

under article I, section 17, of the Texas Constitution. State ex rel. Pun Am Products Co. v. Texas 

City, 303 S.W.2d 780,782 (Tex. 1957), appeaZdism’d, 355 U.S. 603 (1958). A reasonable exercise 

of the power of taxation does not constitute a denial of property without due course of law under 

article 5 section 19, of the Texas Constitution. Phillips Chem. Co. v. Dumas Zndep. Sch. Dist., 3 16 

S.W.2d 382,385 (Tex. 1958), rev’d on other grounds, 361 U.S. 376 (1960). 

You suggest that the case of City ofHouston v. Fore, 412 S.W.2d 35 (Tex. 1967), stands for 

the proposition that due process requirea the disclosure to referendum voters of “the method and rate 

of taxation.” In that case, the city failed to notify a pmperty owner of a hearing at which he could 

have challenged certain street paving assessments. Under the situation described in Fore, the 

legislature, in article 1105b, V.T.C.S., had permitted an administrative determination of the 

assessment rate rather than prescribing a fixed formula Thus, due process required that rm individual 

pmperty owner be afforded the opportunity to contest his assessment. In House Bill 92, on the other 

hand, the legislature has set a fixed maximum rate for the hotel occupancy and car rental taxes 

imposed thereby. The taxes are of general applicability and do not vary on the basis of the benefit 

‘The ballot proposition reads: 

Authorizing Harris County to establish and operate new or renovated stadiums, arenas, and 

other facilities for professional baseball and football teams, provided that no county real or 

personal propay taxes are spent to acquire, comet, or equip these facilities. 

?-he statute under which tie referendum eledion was held, Local Gov’t Code 5 332.003, authorizes a county 

to “submit in an election of its qualiied voters the question of whether it should exercise the powers conferred by tbis 

subchapter..” Section 332.002 autborizm a county to “establish, provide, acquire, maintain, construct, equip, operate, 

and supervise recreotionalfociliries andprograms. . . .” 

p. 2539 
The Honorable Steven D. Wolens - Page 4 

The Honorable Senfronia Thompson 

(DM-453) 

received by the taxpayer. As the court said in Fore: ‘TA]n owner ordinarily is not entitled to notice 

or hearing before assessment of the cost of public improvements in accordance with an inflexible 

legislative formula” Id. at 37. We conclude that the imposition of the hotel occupancy and car rental 

taxes imposed by House Bill 92 does not, in the absence of an election, contravene the due process 

clauses of the United States and Texas Constitutions. 

You also ask whether section 7 of House Bill 92 discriminates against the voters of Harris 

County, in that it generally requires a referendum election prior to the imposition of the special hotel 

occupancy and car rental taxes, but provides that an election “is not necessaty” in counties that have 

previously held an election to approve a venue project. In PZyler v. Doe, 457 U.S. 202 (1982), the 

United States Supreme Court declared: 

The Equal Protection Clause directs that “all persons similarly 

circumstanced shall be treated alike.“. . The initial discretion to determine 

what is “different” and what is “the same” resides in the legislatures of the 

States. A legislature must have sub&&al latitude to establish classifications 

that roughly approximate the nature of the problem perceived, that 

accommodate competing concerns both public and private, and that account 

for limitations on the practical ability of the State to remedy every ill. In 

applymg the wual Protection Clause to most forms of state action, we thus. 

seek only the assurance that the classification at issue bears some fair 

relationship to a legitimate public purpose. 

Id. at 216. Furthermore, 

where individuals in the group affected by a law have distinguishing 

characteristics relevant to interests State has the authority to implement, the 

courts have been very reluctant . . . to closely scrutinize legtslative choices 

as to whether, how, and to what extent those interests should be pursued. In 

such cases, the Equal Protection Clause requirea only a rational means to 

serve a legitimate end. 

Ci@ of Clebume, Texas v. CkbumeLiting Ctr., 473 U.S. 432,441 (1985). While it may readily be 

acknowledged that House Bill 92 treats Harris County residents different from residents of many 

other counties, it is also the case that residents of Harris County, for purposes of the purposes sought 

to be achieved by that legislation, are not similarly situated to those of other counties. Harris County 

had previously held a referendum election only months before the enactment of House Bill 92. The 

legislature might have determined that the residents of Harris County were in fact adequately 

informed of the funding sources for the pmject6 For this reason, and because the cost of holding an 

‘Although the ballot proposition did not state that hotel occupancy and car rental taxes were to be employed 

as a fimding me&a&m, their probable USC was widely reported in the media: 

The major source of public funding for tbe ballpark will be $180 million from three sources: 

(coatblued...) 

p. 2540 
The Honorable Steven D. Wolens - Page 5 

The Honorable Senfronia Thompson 

(DM-453) 

election and the need to maintain public confidence in the Snality of election results, the legislature 

may well have concluded that wunties that had so recently held a referendum election on a venue 

project did not need to repeat the procedure. We believe a court would conclude that the 

classification scheme of House Bill 92, by obviating the need for an election in certain counties that 

had recently held a referendum election, sought to accomplish a “legitimate public purpose” by a 

“rational means,” and that, as a result, House Bill 92 does not unwnstitutionahy discriminate against 

residents of Harris County on equal protection grounds. 

Finally, you ask whether section 7 of House Bill 92 is a “local or special law,” in 

contravention of article III, section 56 of the Texas Constitution. That provision states: “The 

Legislature shah not, except as otherwise provided in this Constitution, pass any local or special 

law . . . regulating the atfairs of counties, cities, towns, wards, or school districts . . _ .” The Texas 

Supreme Court has stated that “[t]he primary and ultimate test of whether a law is general or special 

is whether there is a reasonable basis for the classification made by the law, and whether the law 

operates equally on all within the class.” Maple Run at Austin Mm. Util. Dist. v. Monaghan, 931 

S.W.2d 941,945 (Tex. 1996); see also, Rodriguez v. Gonzales, 227 S.W.2d 791,793. 

a cm@wide mtal car tax, a limited downtown parking tax and stake sales and liquor taxes 

generated in and around the stadium Public dollam for the Astrodome will be hotel 

occupancy tax revewes and state sales and liquor tax dollars generated in and around the 

dome. John Williams, Astms to Keep Home Base in Houston/Backers Face Uphill Fight 

in Winning Vote, Poll Shows, HOUSTON CfiRONICLS, Sept. 15,1996, at Al, A19. 

The question on the ballot carries some complicated and vague language, but the issue is 

fairly direct: Should the powers-that-be use a car-rental tax, a downtown parking tax, the 

hotel mom tax and state sales and liqucw taxes to foot the w~nstmction bii? Alan Bemstein, 

HOusmN CHRONICLE, Candidates Playbook May Include Signals an Stadium Issue, 

Sept. 22, 1996, at A38. 

Imead, they intend to rely on hotel occupancy taxes, some state Sales and liquor taxes and 

proposed taxes cm rental CBIS and downtown parking. John William, On Deck/lhe Stadium 

Vote/Stadium Vote Crucial to City, Advocate Says, HOUSTON CHRONICLE, Sept. 22, 1996, 

&Al, A27. 

A final fnancing plan is not in place, but EckeLs in counting on hotel occupancy taxes, a 

proposed rental car tax and a downtown parking tax among public revenues needed for the 

two proposed projects. John Williams, $20 Million in Proper@ Taxes Spent on Dome, 

HOUSTON CHRONICLE, Oct. 22, 1996, at Al, A8. 

Bunch also said be opposes using public money--including hotel/motel or car rental taxes-to 

fund a downtown stadium. RA. Dyer, Voter’s Guide, Texas House of RepresentativesDUbict 145, HOUSTON CHRONICLE, Oct. 27, 1996, at 18. 

“But because stadium constmction would be paid for with other revenues that consumers 

have discretion ever paying, such as rental-car and hotel-occupancy taxes, no vote is 

needed.” John Williams and Dan Feldstein, On Declu7’he Stadium Vote/Questions Abound 

Regarding Vote on Stidium Proposal, HOUSTON CHRONICLE, Nov. 3, 1996, at Al, A22. 

p. 2541 
The Honorable Steven D. Wolens - Page 6 

The Honorable Sentionia Thompson 

(DM-453) 

For purposes of article III, section 56, analysis of the reasonableness of the classification 

imposed by section 7 is similar to the analysis applied to section 7 for purposes of equal protection 

and we therefore reach the Same conclusion. J.n addition, section 7 operates equally upon all counties 

within the class described, i.e., those counties which had held, or could have held, the requisite 

election prior to the effective date of House Bill 92. In our opinion, a court would probably conclude 

that section 7 is not a “local or special law” in contravention ofthe prohibition of article III, section 

56 of the Texas Constitution.’ 

SUMMARY 

Hsrris County is not required to hold an election under the provisions of 

House Bill 92, Act of May 22, 1997, 75th Leg., RX, ch. 551, 1997 Tex. 

Sess. Law Serv. 1929,1929. The imposition of hotel occupancy and shortterm car rental taxes does not, in the absence of a second election, contravene 

the due process clauses of the federal or state constitutions. Neither does 

House Bill 92 unconstitutionally discriminate against residents of Harris 

County on equal protection grounds. Section 7 of the bill is not a “local or 

special law” in contravention of article III, section 56, Texas Constitution. 

DAN MORALES 

Attorney General of Texas 

JORGE VEGA 

First Assistant Attorney General 

SARAH J. SHIRLEY 

Chair, Opinion Committee 

Prepared by Rick Gilpin 

Assistant Attorney General 

‘Because we believe that a court would find that section 7 is not a local or special law, we do not need to 

consider the relevance of article III, section 57 of the Texas Constih~tion. 

p. 2542