Hotel Occupancy Tax Reimbursement Grant

Grant Purpose

The purpose of the City of Buda Hotel Occupancy Tax Reimbursement Grant (HOT grant) is to provide hotel occupancy tax funds as a resource to organizations who are hosting tourism related events and activities that will bring visitors to Buda for overnight stays in Buda hotels.  

In order to qualify for HOT grant funding, the organization’s event/activity expenditures must also fit into one of the nine allowable uses of the tax as required by Texas state law. The Hotel Occupancy Tax Reimbursement Grant is reimbursement only. Funding is limited and is awarded on a first come, first serve basis starting at the beginning of the City’s fiscal year, which runs October 1 to September 30. Additionally, funding is determined based on the applicant’s ability to provide evidence of return on investment for the City of Buda hotel occupancy tax funds.  Applications are accepted four times a year.

Hotel Occupancy Tax (HOT) 101

 The Texas Tax Code provides a set of rules that state how the revenue from the HOT may be used. According to the Texas Tax Code, the use of HOT revenue is limited to expenditures that meet the following two-part test:  

  • First, every hotel occupancy tax revenue expenditure must directly enhance and promote tourism and the hotel and convention industry. See Tex. Tax Code 351.101(b). In other words, the expenditure must be likely to attract visitors from outside Buda into the city or its vicinity. If the expenditure is not reasonably likely to accomplish this result, it is not eligible for funding by HOT revenues.  
  • Second, each hotel occupancy tax revenue expenditure must fit into one of the nine categories shown below:  

Expenditure Categories. See Texas Tax Code §§ 351.101(a) and 351.110.

  1. Funding the establishment, improvement, or maintenance of a convention center or visitor information center
  2. Paying the administrative costs for facilitating convention registration
  3. Paying for advertising. Solicitations, and promotions that attract tourists and convention delegates to the county or its vicinity
  4. Expenditures that promote the arts. Please note that it is not enough that a facility or event promotes the arts; state law requires that the expenditure also must be likely to directly promote tourism and the hotel and convention industry.
  5. Funding historical restoration or preservation programs
  6. Certain sporting event-related expenses
  7. Certain sporting-related structures
  8. Certain tourist shuttles
  9. Signage directing tourists to attractions frequently visited by hotel guests

Date Restrictions

Since the purpose of the HOT grant is to attract visitors to Buda for overnight stays in Buda hotels, the funds will not be awarded for tourism-related events or activities that occur during times of peak hotel occupancy. All date restrictions will be identified prior to the fiscal year in which HOT grant funds are being awarded and are listed below:  

  1. Formula 1 – October 21-23, 2022
  2. Austin City Limits – October 7-16, 2022
  3. Buda’s Birthday – March 31-April 2, 2023
  4. SXSW - March 10-19, 2023
  5. MotoGP – April 14-16, 2023

Application Submission Deadlines

Application packets, along with any required supporting documents, must be fully completed and submitted to the City of Buda Department of Destination Services prior to the tourism-related event/activity. Applications submitted after the due date will not be accepted or considered for funding.  

Applications are submitted online through the online portal located at www.discoverbuda.com/grants  in person at the Welcome Center located at 303 Main Street, Buda, TX 78610.

Funding Determination

1. Applicants who qualify to receive HOT grant funds will be awarded a set amount of funding per room night based on the average daily room rate for Buda hotels. The average daily room rate is established and set at the beginning of the fiscal year by the Buda City Council.

FY2023 Average Daily Room Rate: $150.00  

  1. Funding is capped at $10,000 per event.
  2. Evaluation for funding is determined by room nights obtained as a direct result of the tourism-related event or activity. The number of room nights is determined through past event data provided by the applicant and may be verified by the City of Buda Destinations Services Department

For example, if an event has historically obtained 50 room nights as a direct result of their event, then the funding would equate to $150 multiplied by 50 room nights for a total of $7,500 in HOT grant funding.  

Disclaimer: Hotel Occupancy Tax Reimbursement Grants are not guaranteed. All HOT grant applications must be reviewed for completeness and eligibility by city staff and allocation of funds is awarded at the discretion of Buda City Council.