Addison TPID
What is a Public Improvement District (PID)?
For many years, cities have had the power to create local public improvement
districts (PIDs) within defined areas of a city. For example, larger cities often
approve the creation of a “Downtown” Public Improvement District composed of
“contiguous” properties within the downtown area of the city. The term
“contiguous” refers to the fact that the properties within such a district are all
located next to each other. Alternatively, cities can also approve the creation of
one or more “Neighborhood” Public Improvement Districts, composed of
contiguous properties within a specific neighborhood of a city. Creation of a
public improvement district is usually done to generate funding for special
physical improvements (e.g., enhanced lighting, landscaping, sidewalks, etc.) or
special services (e.g., public safety services, marketing services, etc.) that are
desired by the property owners in that area.
What is a Tourism Public Improvement District (TPID)
A Tourism Public Improvement District is a special type of public improvement
district that is composed solely of “non-contiguous” hotels. The term “noncontiguous” refers to the fact that the hotels within such a district are located
throughout the city and are not adjacent to each other. State law and/or the
organizers of the proposed district may provide a minimum room count for a
hotel to be eligible for inclusion in the district.
The authority to create a Tourism Public Improvement District in Texas was
approved by the Texas Legislature in 2011 and initially only allowed such a
District to be created in Dallas. Under state law, the Dallas Tourism PID only
includes hotels within the City of Dallas with 100 or more rooms.
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In 2015, the Texas Legislature expanded this authority to allow the Cities of
Arlington, Fort Worth, San Antonio, and Austin will also consider the creation of a The
Tourism Public Improvement District is composed solely of hotels. In 2019, the
Texas Legislature further amended State law to allow all Texas municipalities to
consider the creation of a Tourism Public Improvement District that is solely
composed of hotels. There are now seven cities that have created TPIDs
operating in the state of Texas: Dallas, Ft. Worth, Arlington, San Antonio,
Corpus Christi, and Frisco
How would the Addison TPID Board of Directors selected?
The composition of the proposed Addison TPID Management Corporation Board of Directors would be selected by area hotel leaders with a goal of creating a board that is geographically, ethnically, and gender diverse.
The hotel leaders also seek to ensure that the number of directors on the TPID The
board reflects the actual number of hotels within the District from different hotels
size categories. Finally, the board’s composition reflects the penetration of
various brands, ownership groups, management companies, and independent
operators within that city.
The TPID Board Members each serve two-year terms. At the end of the twoyear term, the TPID Board of Directors creates a nominating committee that can either renew the hotelier’s term or nominate a different hotelier from within the
district to hold that board seat.
How is a Tourism Public Improvement District Created?
To create a tourism public improvement district, the owners of over 60 percent
of the properties within the proposed district must sign a petition asking the
City Council to approved creation of the district. State law requires that the
petition must meet two out of three set signatory thresholds to be valid. Once
a petition with sufficient signatures is presented to the City Council, the City
must publish notice and also provide written mailed notice to each owner of
property within the proposed district. After these notices have been provided,
the City Council must hold two public hearings. At the end of the first public
hearing, the Council must decide whether to approve or not approve the
creation of the Tourism Public Improvement District and the proposed service
plan. Since all of the petitions that were signed were based on a set service
plan, the City Council cannot amend the terms of the proposed service plan
without requiring the TPID organizers to do a completely new petition drive that
incorporates the amended service plan.
If the City Council approves the creation of the proposed District and its service
plan, a second public hearing is held to approve the proposed assessment rate
against each property to fund the District. At the conclusion of the second
public hearing, the City Council can choose to either approve or not approve
the proposed assessment rate to fund the District. There is nothing that
prevents a city council from holding both public hearings consecutively on the
same day. Again, since all of the petitions that were signed were based on a set
assessment rate, the City council cannot amend the proposed assessment rate
without requiring the TPID organizer to do a new petition drive that
incorporates the amended assessment rate. The process for creating a tourism
public improvement district is controlled by Chapter 372 of the Texas Local
Government Code.
What is the Required Petition Approval Percentage?
Traditional public improvement districts must be initiated by a petition that is
signed by at least 50 percent of the ownership of the properties within the
proposed district. For Tourism Public Improvement Districts, the petition to
The creation of the district must be signed by at least 60 percent of the ownership of the
properties within the proposed district.
What is the motivation for the local hotel industry to propose the creation of a
Tourism PID?
Tourism PID?
Creation of a Tourism PID allows the local hotel industry to self-generate
additional funding to pursue three primary purposes:
• To fund an enhanced marketing program to generate increased business,
leisure, and other transient tourism and hotel activity throughout the
City.
• To provide increased funding for sales incentives to attract and retain
groups, large conferences, conventions, and other hotel night generating
meetings.
• To provide funding for the administration and research activities that are
incident to doing an effective marketing and sales program to generate
group and transient hotel activity.
Prior to the creation of a Tourism PID, many CVBs struggled to find sufficient
funding for marketing and sales incentives. It is important to note that the
creation of a Tourism PID is to supplement and not to replace the funding that
the existing Convention and Visitors Bureau has historically received from local
hotel occupancy tax for marketing and business promotion.
What entity would oversee the management of the proposed Addison Tourism
Public Improvement District?
Public Improvement District?
Hoteliers create a nonprofit corporation, a Tourism District Management
Corporation, to manage and oversee the work of the TPID. This corporation has
a board of directors. The voting members of the TPID Board of Directors are
solely composed of area hoteliers who have hotels within the District.
The Board of Directors of the TPID nonprofit corporation typically executes a
contract with the local Convention and Visitors Bureau (CVB), or in Addison’s
case the Town of Addison Marketing and Tourism Department. This contract
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outlines the duties, oversight, and reporting mechanisms of the Town (CVB)
regarding the administration of the TPID with the assistance of the local and
State Hotel Association.
How can TPID funds be expended?
Chapter 372 of the Local Government Code sets out the statutory provisions
categories for expenditure of public improvement district funds. When a group
If property owners petition to create a public improvement district, they
provide a “Service Plan” that indicates which of these statutory categories are
included as eligible expenditure categories for the District. In addition to
expenditures for the cost of administering and overseeing the district, the
“Service Plan” for Texas Tourism PIDs generally allows expenditures that fall
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within two statutory categories under Local Government Code Section 372.003
(b) (13) of the public improvement district law:
1. Services related to “advertising and promotion” to increase hotel activity
and convention business (e.g., marketing, site visits, familiarization tours,
promotion of eligible events); and
2. Services related to “business recruitment and development” to increase
hotel activity and convention business (e.g., business incentives and sales
efforts).
What has been the impact of existing Texas Tourism PIDs?
The Dallas Tourism Public Improvement District is the first and longest
operating Tourism PID in Texas. On all counts, it has been a tremendous
success.
1. Conversion Rate: When the Dallas TPID was created, Visit Dallas had a
“conversion rate” of securing 23% of the bids it put out for city-wide
convention business. With the additional funding from the TPID, Visit
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Dallas has been able to double its “conversion rate” and is now securing
46% of the bids that they put out for city-wide convention business. The
up-tick has resulted in a doubling of the number of city-wide
conventions in Dallas.
2. Return on Incentives (ROI): For every dollar the TPID expended in sales
incentives, it produced an unprecedented $16 in hotel room night
activity.
3. Overall Hotel Occupancy City-Wide: Since the creation of the Dallas TPID,
hotel occupancy throughout the City has increased an average of over 17
percent.
4. Satisfaction of Area Hoteliers: Dallas hoteliers were so satisfied with the
work of the Dallas TPID that they recently petitioned the City of Dallas to
renew the Tourism PID for an additional 13-year term. The petition for
renewal secured signatures from the owners of over 60 percent of the
hotels within the District. At the public hearing on renewal of the district,
the local hotel association supported continuation of the district and
there was not any hotel in opposition to the renewal of the district.
What is the role of the Service Plan for a Tourism Public Improvement District?
The Service Plan for a Tourism Public Improvement District (TPID) is included
with the petitions that are signed by the hotel ownership groups in order to
create the proposed District. The Service Plan is also specifically approved by
the City Council when it authorizes the creation of the Tourism Public Improvement
District (TPID). Similar to a bond proposition, the funding categories within the
approved TPID Service Plan set out the only purposes for which the TPID funds
can be expended during the full term of the TPID.
How are Tourism Public Improvement District funds different than local hotel
occupancy tax funds?
occupancy tax funds?
Tourism Public Improvement District funds are only permitted to be expended
for the purposes noted in the TPID Service Plan that was approved when the
TPID was created. For the entire term of the district, these purposes and
limitations remain the same. In all of the Tourism Public Improvement Districts
within Texas, there have been three primary purposes for which TPID funds can
be expended: hotel and tourism related marketing, hotel related sales activities,
and administrative costs of overseeing and implementing these marketing and
sales programs.
Alternatively, local hotel occupancy tax funds can be expended by most
medium to larger cities for any of 7 authorized categories under State law.