According to the Legislative Budget Board (LBB), HB 3509 is not expected to have any fiscal implications for the State of Texas. The bill does not mandate any state expenditures or appropriations, nor does it alter state revenue streams. Therefore, it poses no budgetary impact at the state level, either in terms of costs or savings.

At the local level, the fiscal note similarly indicates that no significant financial impact is anticipated for municipalities or other local government entities. While the bill changes the procedures for establishing Public Improvement Districts (PIDs) for hotel-related purposes, including who qualifies as a petitioner and how support thresholds are calculated, these changes largely affect administrative processes and do not impose new financial obligations on local governments. In practice, the operational and financial burden of the PID remains with the property owners within the district.

In effect, the bill enables certain hotel operators and managers to initiate or participate in PID formation and allows hotel-related PIDs to fund advertising and promotion, but it does so without creating new public expenditures. Thus, while the bill may indirectly encourage the creation of more PIDs, which can lead to increased local project funding through assessments, those costs are not borne by the state or general local government budgets, but by assessed property owners within each district.

HB 3509 modifies the legal framework governing tourism‑focused Public Improvement Districts (PIDs) in a way that substantially alters both who holds power within these districts and how assessment‑based projects may be initiated and executed. While the stated purpose of the bill is to “clarify” current law at the request of the Texas Hotel & Lodging Association, the practical effect is to shift significant authority from property owners and municipal governing bodies toward hotel operators and management‑level employees who may not themselves own property but would gain the ability to trigger publicly enforced assessments on others.

The bill accomplishes this through several structural changes. First, it replaces the requirement that PID petitions be signed by record owners of taxable property with a new system allowing “qualified petitioners”, essentially hotel operators, general managers, regional managers, or certain management company employees, to sign on behalf of hotel owners, provided they supply a written authorization statement. This lowers the ownership‑based threshold traditionally used to legitimize taxation‑like assessments and introduces third‑party representation into a process impacting real property rights. Shifting decision‑making from property owners to hotel managers dilutes direct accountability and risks allowing PIDs to be created or expanded without meaningful consent from those who bear the financial burden.

Second, the bill repeals §372.0035(a) and (e-1) of the Local Government Code, which had previously constrained when and how municipalities could use PID funds, especially for common‑characteristic or use‑based districts. Removing these guardrails broadens the ability of a PID to use assessments for marketing, promotion, and business recruitment activities without the prior statutory limitations requiring such projects to be supplemental, narrow in scope, or tied to public benefits rather than private sector advantage. This raises concerns about the use of a public financing mechanism to support what may be, in practice, industry‑driven advertising campaigns rather than traditional public improvements such as safety, sanitation, or infrastructure.

Third, the bill expands the definition of “hotel” to include properties that begin operating after a PID is created. This creates an open‑ended pool of potentially assessed properties without a corresponding requirement that newly affected owners have participated in, or consented to, the original petition. It enables assessments to apply automatically to future entrants, effectively a perpetual assessment structure imposed without their prior approval.

Although the Legislative Budget Board’s fiscal note anticipates no fiscal impact to the state or local governments, this should not be interpreted as an absence of financial consequence. Rather, the bill shifts costs entirely to private property owners within affected tourism PIDs, while simultaneously expanding the influence of private hotel industry actors over the imposition and use of those assessments. The absence of governmental fiscal impact does not resolve concerns related to fairness, property rights, or the risk of compelled subsidisation of private marketing efforts.

Taken together, these changes weaken fundamental protections around private property rights, reduce the transparency and accountability expected of a quasi‑public assessment mechanism, and create the potential for benefiting select commercial interests at the expense of others. Creating or expanding a district capable of levying binding assessments should require clear, direct, and owner‑driven consent, something this bill erodes rather than strengthens. For these reasons, Texas Policy Research recommends that lawmakers vote NO on HB 3509.

• Individual Liberty: The bill weakens individual liberty by enabling hotel managers or management‑company employees, not necessarily property owners, to initiate Public Improvement District (PID) formation and bind others to assessment obligations. Because assessments function similarly to taxes, granting non‑owners the ability to trigger them expands the power of private actors to impose financial burdens on others without requiring democratic or ownership-based consent. This erodes the principle that individuals should not be compelled into financial obligations without meaningful representation.
• Personal Responsibility: The bill shifts responsibility for hotel marketing, promotion, and business recruitment away from individual hotel operators and onto collective assessment mechanisms enforced through local government. Instead of businesses bearing their own marketing costs, PIDs can fund industry‑driven promotional strategies. This blurs the line between private responsibility and public‑like financing, reducing incentives for hotels to independently manage their own promotional investments and market risks.
• Free Enterprise: Free enterprise depends on fair competition and minimal government‑enabled distortion of markets. The bill risks undermining this principle by empowering large hotel groups and management companies to use a PID, a government-authorised assessment tool, to finance collective advertising or recruitment campaigns that may primarily benefit major industry players. Smaller or independent hotels, especially new entrants automatically included under the expanded definition of “hotel”, may be forced to pay assessments for marketing strategies they do not support. This effectively creates government‑backed industry cartels and distorts competitive market dynamics.
• Private Property Rights: This bill most directly conflicts with private property rights. It replaces the requirement that owners sign PID petitions with a system allowing non‑owners to sign “on behalf of” property owners through written authorization statements. It also broadens the definition of “hotel” to include properties that begin operating after a PID is created, meaning future property owners may be assessed without having had any input in the petition process. Property rights are undermined when assessments, with the same binding legal effect as taxes, can be imposed without direct owner approval.
• Limited Government: By repealing statutory limitations on the types of projects tourism PIDs may undertake, the bill expands the role of government in economic development rather than limiting it. The bill enables municipalities to facilitate broader, less‑restricted promotional activities for private businesses and weakens prior guardrails that confined PID usage to supplemental, public‑benefit services. This represents not only a growth of government power but also an entanglement of government authority with private sector interests, contrary to limited government principles.

• SB 1921 (Same As)