May 4, 2005 - FORT WORTH -- Local hotel and motel operators are pocketing hundreds of thousands of dollars each year in city taxes earmarked in part for arts, cultural and tourism programs, officials say.

The city is now seeking payment on more than $400,000 in delinquent hotel/motel taxes from five companies through court actions, negotiations or payment plans.

"This is a recurring problem," City Manager Charles Boswell said. "They're collecting money for this from people who stay at the hotel and using it for some other purpose.

"We've taken legal action and gotten money from many hotels, but this continues to be a problem."

The bed tax is collected on each room rented, and is shared by the city and state.

In Fort Worth, the bed tax is 15 percent, of which 7 percent is used for cultural and tourism programs, 2 percent is used to pay off convention center bonds and 6 percent is paid to the state.

The 7 percent local share is used to help fund art and cultural groups, museums and the Fort Worth Convention & Visitors Bureau. It is expected to generate more than $8 million this fiscal year, officials said.

Information was not available on whether the state has similar collection problems. Owners who are delinquent in their state tax payments are generally kept confidential until legal action is taken, said Sheila Clancy, a spokeswoman for state Comptroller Carole Keeton Strayhorn's office.

Locally, some hotels and motels have failed to file the required tax reports or make their payments.

"In some cases, this is just fraud, and they are trying to keep the money," said Elizabeth Parmer, managing attorney for the Perdue, Brackett, Flores, Utt & Burns law firm that collects the city's delinquent taxes.

"In some cases, they get financially strapped and ... use the money to float bills, intending to make it up when the bill is due," she said. "Then they can't."

In 2003, 23 of 31 hotels and motels audited were delinquent in paying taxes, for a total of more than $450,000. The city took 12 hotels to court and collected more than $216,000, a city audit shows.

The city can shut down a hotel for nonpayment of taxes, but officials often negotiate payments for the past-due amounts.

Because hotels are allowed to self-report collections, however, the city has no way to prove the unpaid amount without auditing hotel records, which can be lengthy and costly, officials said.

A proposal making its way through the Texas Legislature could change that.

The proposal, by state Sen. Kim Brimer, R-Fort Worth, and state Rep. Toby Goodman, R-Arlington, would let a city charge the cost of the audit to the hotel operator and use past years' tax filings to determine an average amount due.

"This is an excellent tool for the city," Brimer said. "They wanted it to help them calculate an audit that's fair without having to spend a bunch of time on a court case trying to collect, but not knowing how much to collect."

The measure, one of Fort Worth's top five legislative priorities, is scheduled to be heard by the Senate Intergovernmental Relations Committee today and then heads to the full Senate for consideration. It has already been approved by the House.

"This will help us collect the money that we're rightly due and that we are being tied up in court with right now in unnecessarily lengthy litigation," said Brandon Aghamalian, director of governmental relations for Fort Worth. "If we have these tools, we can move through these more quickly."

IN THE KNOW:

Back taxes

The five operators from whom the city is seeking payment on delinquent hotel/motel taxes:

-- Comfort Inn West, 8345 West Freeway -- $113,645. A lawsuit has been filed.

-- Travelodge, 8401 West Interstate 30 -- $24,378. An installment agreement is in place.

-- American Inn, 7301 West Freeway -- $3,239. An installment agreement is in place.

-- Howard Johnson Inn, 12450 South Freeway -- $31,767. A lawsuit has been filed against previous owners. The current owners reached a settlement agreement with the city.

-- The Fort Worth Plaza, formerly known as the Ramada Plaza, 1701 Commerce St. -- $246,000. A lawsuit has been filed.

SOURCE: City records Anna M. Tinsley, (817) 390-7610 [email protected]

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