HomeMy WebLinkAboutIR 046 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 22-046
To the Mayor and Members of the City Council March 1, 2022
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SUBJECT: HOTEL OCCUPANCY TAX COLLECTION
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In an Informal Report dated December 7, 2021, staff provided the Mayor and City Council with
information relating to the current state of regulation and enforcement of short-term rentals
(STRs) operating within the City of Fort Worth (City). This Informal Report outlines a phased
approach to developing a comprehensive Hotel Occupancy Tax (HOT) collection process for
STRs.
GENERAL INFORMATION ON HOTEL OCCUPANCY TAX
City Code of Ordinances (the Code), Chapter 32, Article II, grants authority to levy a 9% HOT on
hotels. The Code does not include specific language regarding STRs; however, it broadly defines
a hotel to include tourist homes, houses, lodging houses, and rooming houses used for sleeping
accommodations where the cost of occupancy is at the rate of $2 or more per day. In February
2018, City Council adopted Ordinance No. 23110-02-2018 which provided a definition for STRs
as a dwelling unit where compensation is received for overnight lodging for 1 to 30 days.
The Treasury Division of the Financial Management Services Department (FMS) is responsible
for managing the collection of HOT from hotels operating within the City. Traditional hotels are
required to register for an account within the City's HOT Online Application (HOT App) and
submit a monthly gross receipts report used to calculate HOT liability, interest, and penalty, if
applicable. In contrast, STRs currently report and remit on a voluntary basis and are not actively
monitored by FMS.
The HOT app is an internally developed, self-reporting tool, with limited functionality and reporting
capability. Further, the HOT App does not currently support categorization of hotels by type (i.e.
hotel, motel, bed and breakfast, STR, etc.). Suspected STRs are identified by registered name
and manually tagged as an STR if it meets the definition.
In Fiscal Year 2021, a total of twenty (20) identified STRs reported approximately $330,000.00 in
gross receipts generating approximately $28,000.00 in HOT revenue to the City. This represents
a little over a tenth of a percent of the approximately $23,750,000.00 in total HOT collected during
the year.
PHASED APPROACH
City staff will proceed with a phased approach to developing a comprehensive recommendation
relating to STR regulation, enforcement, and tax collection. The first step in this phased
approach involves hiring an outside third party data mining firm to identify STR properties
operating in the City, along with location, booking frequency, and other operating characteristics.
This data will provide City staff from the appropriate departments with valuable insight necessary
to support effective policy options for STR regulation. Staff will then explore procurement options
for outsourcing collection of HOT from STRs, which may be scaled up to incorporate traditional
hotels as well as other significant revenues.
ISSUED BY THE CITY MANAGER FORTWORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 22-046
To the Mayor and Members of the City Council March 1, 2022
Page 2 of 2
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SUBJECT: HOTEL OCCUPANCY TAX COLLECTION
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For questions concerning this report, please contact John Samford, City Treasurer, at (817) 392-
2318 or by email at iohn.samford(a_)fortworthtexas.gov.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORTWORTH, TEXAS