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Bee Cave adopts new hotel occupancy tax policy to structure annual grant rounds
Summary
The council adopted Resolution 2025-11 creating a structured policy and two annual application rounds for hotel occupancy tax (HOT) funding, with staff-set deadlines and a suggested 75%/25% split for first and second rounds; council reserved discretion to adjust limits.
The Bee Cave City Council adopted a formal hotel occupancy tax (HOT) funding policy (Resolution 2025-11) on March 11 that establishes two annual application rounds and new procedures intended to make HOT grants more strategic and predictable.
City staff presented a draft policy that would align the first application round with the city budget timetable (applications due May 9, staff completeness review May 12'May 23, council review May 27'July 8, and council action in September with funds available Oct. 1). A second annual round was proposed to start Jan. 9 with council action anticipated in April. The draft includes a guideline that the first round should allocate no more than 75% of available funds and the second round the remaining approximately 25%, with staff noting the policy could be adjusted annually.
During council discussion members asked whether staff review windows were adequate and whether council should retain discretion to waive the 75% guideline for compelling projects. Staff said the policy would include authority to update the calendar annually and that the council could be given explicit discretion to adjust percentage allocations in exceptional cases.
Staff used an example illustrating how the policy would work under a hypothetical annual HOT budget. Using a notional annual allocation of $550,000 and the statutory 15% cap for certain categories, staff calculated a hypothetical maximum pool of $82,500 for eligible categories and showed how a 75%/25% split would distribute those funds between the two rounds.
The council moved and passed the resolution unanimously. Council members said the structured approach will let the city evaluate HOT requests in totality rather than on a first-come, first-served basis.
Key takeaways: The policy formalizes two annual application windows, allows staff to update dates annually for logistics, and preserves council discretion to modify allocations when warranted. The council directed staff to incorporate minor clarifying language about council discretion before finalizing the printed policy.
