Lago Vista taxpayers may pay $30,531 as $1.3M hotel tax sits

The lawyer, Justin Bragiel, is general counsel and legislative director of the Texas Hotel & Lodging Association.^6,10 At his class, Council Member Adam Benefield called proof of the return "the big disagreement" at the council's meeting a week earlier.⁷ Mayor Pro Tem Norma Owen said the city still has "a million dollars sitting in the bank" in hotel tax.¹¹ The 2026-27 budget plans to spend $174,000 from that fund, the same as it expects to take in.⁸

The $30,531 total and the advertising minimum at Lago Vista's 6% rate are our calculations from the cited records.^1,12,13

What the hotel tax is

The hotel occupancy tax (HOT) is a tax on the price of a room. Lago Vista charges 6% on hotels, motels, short-term rentals (STRs), and other taxable lodging inside the city.¹² "We're taxing our visitors," Bragiel said.¹⁴

State law limits what the money can buy. It "may be used only to promote tourism and the convention and hotel industry." It "may not be used for the general revenue purposes or general governmental operations" of a city.⁹ Bragiel said the money is "administered locally," so local officials make the calls within those limits.⁷

The topic matters now because the General Fund may carry the chamber's three-month deal.¹ Council Member Paul Prince made that motion, and Owen seconded it.^1,3 One member said on Oct. 15 that the item comes back in January.⁴ Benefield told the class that Lago Vista has "no hotels" and that the return is "very difficult to quantify."¹⁵

Earlier coverage

Our Oct. 16 story covers the 6-1 vote and each member's reasons. Earlier stories cover the city's hotel tax payments to the chamber since 2021 and the Brews & Balloons request. Mayor Shane Saum cast the only no vote on Oct. 15.^3,4 The council also agreed that night to pay up to $50,000 in hotel tax money for the Brews & Balloons festival, with $30,000 in advance.¹⁶ Owen made that motion, and Council Member Jess Hall seconded it.^3,16 This story reports what the hotel industry's lawyer told local officials a week later.

How the talks went

In September 2025, the council agreed the chamber could get up to $100,000 for 2025-26, but only as repayment for documented hotel tax costs.¹⁷ The city's budget book shows $38,237 paid to the chamber that year.¹³

The chamber's executive director, Allison Sargent, gave us the chamber's account of the year of talks on Oct. 26, along with its own timeline. She gave us permission to publish her email, and it is linked in the sources.¹⁸ Where city records cover a point, we say what they show. Much of her account, including emails between the two sides' lawyers and the terms of a new draft deal, is not in any city record we have seen. On Oct. 26 we sent her account's main points to the city secretary, asked that they go to the city attorney, and asked for the city's side.¹⁹ We will update this story if the city responds.

Sargent wrote that the $38,237 answered the chamber's request for October through December 2025, which totaled $66,742.49.¹⁸ She wrote that the city paid it in two checks, $30,000 mailed April 1, 2026, and $8,237.37 dated April 8.²⁰ She wrote that no repayment has been made for January 2026 onward.¹⁸

Sargent wrote that the chamber expected a formal agreement after the budget passed but got its first draft from the city in April 2026.¹⁸ The Sept. 3, 2026, agenda packet includes that draft, dated April 8, 2026.²¹

Her timeline lists the chamber's efforts to reach an agreement. It met with the economic development director on Sept. 30, 2025, and with the city manager on Oct. 14, 2025. On Jan. 6, 2026, with no agreement yet, it asked for a meeting within two weeks to draft one, along with reporting rules and payment timelines. It met with city leaders and council members on Feb. 2.¹⁸ The council discussed adopting a hotel tax policy with the city attorney at a Feb. 19 work session.²² The chamber sent a detailed repayment request for October through December 2025 on March 5.¹⁸ Her timeline says that on April 2, the council directed City Manager Charles West to negotiate and sign a hotel tax contract with the chamber.²⁰ The approved minutes of that meeting say the council directed staff to draft a hotel tax policy and bring it back at the next meeting.²³ The chamber met with the city manager, the economic development director, and the mayor on April 14.¹⁸ Two days later, the council approved a hotel tax fund policy and application 7 to 0, as our earlier story reported.²⁴ On June 23 the chamber met with city staff and a council member to go over proposed changes.¹⁸

The Sept. 3 packet shows the chamber's proposed changes to the city's draft and its stated reasons for them.²⁵ The packet also holds two chamber visitor center reports for 2026. The first, for Jan. 19 through March 31, counts 344 calls, 433 emails, and 234 walk-in visitors. The second, for April through June, counts 313 calls, 607 emails, and 159 walk-ins.²⁶ The chamber's timeline says the first packet included chamber draft financial records that the mayor picked from an email the chamber sent the council. It says the city removed them at the chamber's request and reposted the packet, though it was not legally required to.²⁰ The packet we cite is the one the city's meetings page links today, posted Sept. 2, the day before the meeting.²⁷

She wrote that City Manager Charles West resigned on July 29, before the agreement and the remaining payments were settled. The work passed to Police Chief Ron Joy as acting city manager, she wrote.¹⁸ On Aug. 11, Mayor Shane Saum relayed the city attorney's position by text, the chamber's timeline says.²⁰ In a screenshot of that text the chamber shared, Saum wrote that, as the city attorney describes it in emails, there was "a ceiling amount approved of qualifying reimbursements," not a guaranteed amount. He wrote that the attorney "can't qualify some of the requested reimbursements." He wrote that the attorney would not meet with the hotel association's attorney until the council asked him to, and that the meeting was "unlikely to change his opinion as he said his colleagues agree."²⁸ She answered that the chamber had been repaid for only one quarter.²⁰

The chamber's timeline describes what came next. On Aug. 13, the mayor directed the chamber to fill out the city's 25-page event grant application. The chamber objected in writing that this folded its visitor center work into the event grant process, when a separate contract had been discussed for it. Between Aug. 9 and Aug. 19, it delivered draft records of its January through June expenses to get the city's advice, and on Aug. 19 it formally raised the payment and the agreement again. On Aug. 27, the chamber met with Economic Development Director Eric Zeno, Joy, and another attendee, with the mayor joining online. At that meeting, the chamber was shown a $2 receipt with several pages of handwritten notes as an example of the backup the city expected.²⁰

The Sept. 3, 2026, agenda packet shows the chamber asked to be repaid $61,762.63.²¹ That day the council voted 6 to 1, with Mayor Shane Saum opposed, to have the city attorney negotiate with the chamber's lawyer. The motion said repayment for 2025-26 "must be on qualified Hot Fund Monies." It called for a proposed agreement on Sept. 17 and a final one at the first council meeting in October.²⁹

Sargent described two votes that day. In her account, the council first voted unanimously to repay only qualifying event costs and to leave out visitor center operating costs, then voted 6 to 1 on the talks.¹⁸ The minutes record one motion, passed 6 to 1, and do not mention visitor center costs.²⁹

Sargent wrote that the chamber's attorney emailed the city attorney eight times in September asking to meet, and no meeting took place. The first reply came Oct. 1, she wrote, and said no changes would be considered until the council held its strategy and planning meetings. She wrote that the October deadline passed without an agreement. She also wrote that the council did not discuss or review the chamber's financial documents on Oct. 15. The chamber has met with city staff many times, but those meetings have not produced an agreement or a standard for submitting costs, she wrote. In her words, the chamber "has never been given an opportunity to review its documentation with the City Attorney."¹⁸

Sargent wrote that before current leadership, the chamber's reserves fell from about $140,000 to about $10,000. She wrote that the losses "were from events and offsetting visitors center costs from not reporting actual numbers for visitor center operations." Under current leadership, she wrote, the chamber has had no operating losses in 2026 and carries no debt. The chamber has kept the visitor center open without interruption and covered costs beyond what the city has paid, she wrote. She wrote that it hired a bookkeeper and a certified public accountant and now keeps visitor center and tourism costs apart from other chamber costs. The chamber serves Lago Vista, Jonestown, and Point Venture, she wrote, and it may go away for the whole region if Lago Vista ends its support. She added that Point Venture does not collect or distribute hotel tax.¹⁸

The chamber supports "clear, written, reasonable reporting standards," Sargent wrote. She noted that Bragiel recommended the same thing at the class, and that the chamber has asked for written standards since September 2025.¹⁸

The chamber "strongly disagrees" with suggestions at earlier council meetings that it misused funds or sought repayment for costs that did not qualify, Sargent wrote. She wrote that the city never set a process for submitting costs, and that the chamber shared all its bank spending on its own.¹⁸ The chamber's timeline says the yearlong problem "did not result from a lack of reporting, responsiveness, or participation by the Chamber."²⁰ She also wrote that when the chamber asked how Lago Fest reported its hotel tax costs, it got a Word document with no receipts, which the city accepted. She wrote that the city confirmed in June 2026 that Lago Fest did not go through the city's hotel tax application.¹⁸ The timeline gives the city's reason, that Lago Fest's money was in the October 2025 budget, before the policy was adopted.²⁰ Lago Fest is the city's own festival.³⁰ The city's budget shows $52,458 spent on it from the General Fund in 2025-26, and $50,000 planned for 2026-27.³¹ On Oct. 26 we sent her Lago Fest statement to the city's economic development director, Eric Zeno, and asked for the city's side.³² We will update this story if he responds.

How the class came about

On Oct. 15, a speaker told the council about a talk with the hotel association's general counsel. "And I asked, can you please come out and give us a class?" the speaker said. The speaker suggested inviting every nonprofit that might qualify for hotel tax money. The speaker said the class could be open to anyone and the lawyer could come "as early as end of next week."³³ Sargent wrote that the chamber organized the class and that she asked Bragiel to come to Lago Vista right after that meeting.¹⁸

Later that night, a speaker said the attorney "who's governing this hot tax" had told them hotel stays must be proven, but "there is not a minimum requirement." The speaker added that one person staying overnight "is acceptable."¹

On Oct. 16, the chamber sent a calendar invitation to all council members and city staff, Sargent wrote. She wrote that the chamber told the city secretary a quorum of the council, enough members to act, might attend, so a meeting notice could be posted. The city did not post a notice, and most of those invited declined, she wrote. Two council members came, Benefield and Owen, she wrote.¹⁸

The city's draft deal

On Oct. 19, the city sent the chamber a proposed three-month agreement for $10,177 a month, up to $30,531, paid at first from the General Fund, Sargent wrote. It is not signed, and the chamber's attorney is reviewing it. The terms below are as her email describes them.¹⁸

The draft says the city "does not maintain an internal tourism or marketing department," according to her email. It also calls hiring out the work "an efficient and cost-effective means" of doing it. And it says the chamber has "the experience, personnel, and local knowledge necessary" to do it.¹⁸ The city's April draft in the Sept. 3 packet says something similar, that the city has "no in-house marketing and tourism department."³⁴

The chamber would have to run the visitor center out of the flat monthly amount. That amount would also cover staff, the building, overhead, advertising, printing, and digital work, and unspent money would go back to the city.¹⁸

Visitor center costs would be paid from the General Fund unless the chamber shows they attract or are likely to attract overnight visitors. The city's decision on that would be final. If the city approves a cost for hotel tax money, it would issue a hotel tax check, and the chamber would write an equal check back to the General Fund within five business days.¹⁸

The work would focus mainly on Lago Vista's city limits, and city money could not promote another city except incidentally to regional promotion. The draft "does not renew" unless the council extends it. Website content, photos, and subscriber lists made for the work would become city property. The chamber would help "any successor provider" for 60 days after the deal ends. Sargent wrote that the chamber wants an agreement with clear written standards, terms both sides can meet, and a fair chance to show the tourism value of its work.¹⁸

The class

The class took place on the evening of Oct. 22 at the chamber's visitor center on FM 1431, Sargent wrote.^5,18 The recording is titled "Chamber Hot Funds Class."¹⁰ Bragiel said the room they sat in was a visitor information center.³⁵ "Thank you for having us," he said, and noted it was his first seminar in Lago Vista.¹⁰

Who taught the class

Bragiel introduced himself as counsel for the association and director of its legislative program.¹⁰ The association's team page lists him as General Counsel & Legislative Director.⁶ He said the association was founded in 1903. He said he teaches two or three of these tax classes a week at this time of year.¹⁰

Bragiel said every spending choice must pass a "two-part test."¹⁰ Under it, he said, "Every expenditure must directly promote tourism and the hotel and convention industry." He gave a Permian Basin example, where a mayor asked whether hotel tax money could drill water wells to improve the town's tap water. Bragiel said no, because new wells would not bring more people to the town. Cities have two main pots of money, he said, dedicated funds like hotel taxes and general revenue. General revenue "can be used for just about anything that benefits the community in general."³⁶

State law defines a tourist as someone who travels from home "to a different municipality, county, state, or country" for business, pleasure, recreation, education, or culture.⁹

Visitor centers and proportional funding

Bragiel said state law lets a city use hotel tax money for a visitor information center. A city can buy the land, equip the building, pay utilities, and staff it, he said, but "we can only fund the portions of the building that are actually being used as a visitor information center."³⁵ State law bars a city from spending hotel tax money on any part of a visitor center building "that is not primarily used to distribute or disseminate tourism-related information to tourists."⁹

"There's been some lively debate," Bragiel said, about whether the center here should keep its hotel tax funding. "We don't have an opinion on that." He said the law allows the city to fund part of the center, and the city can also decide against it. That choice, he said, "is a local decision."³⁵

The advertising minimum

Bragiel called advertising and promotion the one use that has a minimum. He said the minimum is one percentage point of the tax rate. Assuming a 7% tax, he said, that works out to "about 14.28%" of the annual hotel tax budget.³⁷

State law sets the floor for a city with fewer than 200,000 people. It must spend on advertising at least the revenue from one percent of the cost of a room.⁹ Lago Vista charges 6%, not 7%. At that rate, one point is one-sixth of the tax.¹² On the $140,000 in hotel tax the 2026-27 budget expects, one-sixth is about $23,333.¹³

Bragiel said a city may save its hotel tax money. It must still spend at least the minimum share on advertising each year, he said.³⁷

Administrative costs

An audience member asked whether wages and other administrative costs can be paid with hotel tax money. "The answer is maybe," Bragiel said. He pointed to Section 351.101(e) of the Tax Code.³⁸ It allows salaries, rent, and office costs only if they are "incurred directly in the promotion and servicing expenditures" the law authorizes. When a group also does other work, hotel tax can cover only its share of costs for the allowed work.⁹

Bragiel used a chamber of commerce as his example. He called promoting local businesses and recruiting members a "wonderful service" that does not promote tourism by itself. A chamber employee who only bills members cannot be paid with hotel tax money, he said. A staff member who also acts as the area's destination marketing organization (DMO), or as visitor center staff, can be paid for those duties, he said.³⁸

Return on investment

Bragiel then took up return on investment (ROI), which he said has been "no pun intended, a hot topic" in the area. He framed the question as how many room nights an event actually picked up. A billboard is hard to track, he said, and digital marketing is easier to measure.⁵

For "most of these categories," he said, state law has "not a hard ROI component." "It's up to the community to decide what standards are appropriate for them," he said. He said officials sometimes want a rule in the statute so they can tell an applicant no. The lack of one, he said, does not mean a city should not set its own.⁵

An audience member asked how a new event can get started without a test where "it's got to be this time or never." Bragiel said many communities let a first-time event meet a lower ROI threshold, like "seed money." He added, "We're using public money to give to a private organization to put on an event." An event that does not bring many people to the area is "probably not a good idea to continue funding," he said.¹⁴

Another audience member asked how a town with no hotels and many STRs can show a return. "It's extremely challenging," Bragiel said. In some cases the figure will be "an educated guess," he said. He said applicants should explain to the community how they reached the estimate.³⁹

Sporting events

Bragiel described a limit on hotel tax spending for sporting events.⁴⁰ The law's main test requires a county of one million people or fewer.⁹ He called that "the Travis County problem" and said the wording was "inartfully drafted." He said his cleanup bill would tie the limit to the city's size instead, perhaps under 500,000 or 600,000.⁴⁰

Benefield asks about proof

Council Member Adam Benefield said he had to leave but had one question.^3,7 Bragiel addressed him as "Councilman." Benefield called "the nexus, the ROI" the big disagreement at the council's meeting a week earlier. Everyone understands that the visitor center qualifies, Benefield said. The question is "how do we prove how much it qualifies."⁷

Bragiel answered that the law funds only the part of a visitor center used for tourism. The code sets no minimum level of tourism activity, he said. "You have to show some," he said, but the code "doesn't specify how much." Some officials tell him they wish the law had a return rule, he said, while other cities are glad it does not because they want flexibility.⁷

Bragiel urged the council to write its own. "I think that's a smart decision," he said. When the city negotiates the contract, he said, it should state what it expects and how the chamber must report. "I think that should all be in writing." The state does not check how a city uses the money, he said, and "doesn't audit your hotel tax funds."⁷ Cities do file a yearly report with the state comptroller.⁹

Benefield then said it may be easy to quantify a $10,000 hotel tax request but harder to quantify $100,000. He asked who would say Brews & Balloons justifies $50,000. Bragiel replied that "nothing requires you to have a visitor center." He said the city could instead back a group "that acts as our DMO," a different category of use, and said the requirements could be clearer there. He said the city must decide "do we want to be in this business at all."¹⁵

Benefield answered, "I think we do. I think we just need to understand it." A speaker for the chamber then said that without the visitor center component, "all of it goes away." The speaker said a shutdown would also reach Jonestown. The speaker asked whether Lago Vista is willing to be a partner in the regional community.¹⁵

The mayor pro tem on the city's plans

Mayor Pro Tem Norma Owen, whom Bragiel addressed by that title, described the city's plans.^3,11 She said the city is redoing many of its systems, including "a total revamp of how our accounts are handled." She said the city is trying to settle its hotel tax policy first.¹¹

Owen said "we really haven't done a strategic plan" on tourism. She said the city has "historically" left that part to the chamber. A strategic plan will happen in November, she said, followed by an economic development plan in December that includes tourism.¹¹

She said this is the first year the city plans to spend what it takes in. "That means we still have a million dollars sitting in the bank," she said.¹¹

Owen said the city apparently needs to spend 17%.¹¹ Bragiel replied that the figure is one-seventh, which assumes a 7% tax.^11,37 One-sixth, the share at a 6% rate, is about 16.7%.¹²

Owen also said the city has looked at using its land for a venue for archery, theater, meetings, and festivals. She said that has not been part of the city's conversation, but "I can guarantee you" it will be now.¹¹

Is the hotel tax going away?

An audience member said the mayor had said at a council meeting that the hotel tax is "going away" in about a year. The audience member asked whether that is true. "I don't think so," Bragiel said.⁴¹

A city can repeal its hotel tax by ordinance, Bragiel said, and "You don't have to have one." He said the state's own 6% hotel tax is not going away. He said that at a Senate hearing a month earlier he asked why a city would collect a hotel tax "if you don't have a use for that hotel tax." He added that he was not arguing the legislature should take away a city's power to impose the tax.⁴¹

A speaker said their understanding of that remark was that it concerned the visitor center and its value, not so much the tax. The speaker said the tax is "also a conversation." The speaker asked whether the city could give short-term rentals a break from the tax for a while to encourage more visitors. An audience member said taking that tax away would tell the community the city does not want events or overnight guests. The audience member said it would need a big discussion.⁴²

Owen urged residents to "please pay attention to the council meetings." She invited them to email her with ideas. Asked whether the council had discussed the break idea at a meeting, a speaker said no. The speaker called the ideas "ancillary thoughts" and said they can be taken back to the council as an agenda item.⁴²

Unspent balances and interest

An audience member asked whether it is normal for a city to hold a large unspent balance. Bragiel said it happens, though only a minority of Texas cities do it. He said he did not know whether it is normal. A city might save for a later project, such as a convention center or sports facility, he said.⁴³

Without such a plan, he said, the tax was designed to be "an economic development tool." A city that does not use it is "not being as effective as you otherwise could be." That does not mean a city should spend on anything, he said, because the ROI question still applies.⁴³

Another audience member asked whether the city can earn interest on the balance. Bragiel said he assumed it does, and that interest carries the same spending limits as the principal.⁴³ State law defines revenue to include interest.⁹

Collecting from short-term rental platforms

An audience member said many STRs do not report. Bragiel said Texas has settlements with Airbnb and with Expedia Group, which controls Vrbo. The settlements require the platforms to collect the state 6% hotel tax at booking. They bar the platforms from sending property-specific information to the state, so the comptroller cannot give a city a list of its STRs.⁴⁴

He said he is working on a bill so platforms would also collect the local hotel tax at booking. The platforms would send it to the comptroller, which would pass it back to cities. He called it a tricky bill to pass. He said it would level the field with traditional hotels, which already collect and send the tax.⁴⁴

A speaker told the class the city had looked at software that could find STRs in the area. The speaker said some council members thought it had value and some did not. The speaker put the cost at "around 30,000." An audience member said Jonestown runs a similar program and that its council and mayor call it "a very worthwhile investment."⁴⁵

Bragiel said he has heard "mixed" reviews of such programs. He said he would rather fix the problem at the legislature. Even if his bill passes, he said, cities would not get data on individual operators. "You get the money at least," he said.⁴⁵

Tracking overnight stays

A chamber speaker said the chamber made a website for Brews & Balloons with Vrbo and Airbnb built in. "I can track how many are looking to book overnight," the speaker said. The speaker did not know whether visitors booked a stay and called the tracking "a baby step."⁴⁶

That fits what a chamber speaker told the council on Oct. 15, that ticket buyers will now have to enter their home postal code.³³

Day visitors and the close

An audience member asked about a performing arts event where tourists come, spend money on dinner, and leave. Bragiel said that, as a pure hypothetical, such an event "would not qualify for hotel tax funding." Eligibility needs "somebody spend the night at an STR in your city," he said.⁴⁷

Bragiel closed by offering his cell phone number to officials and residents. He said he is glad to answer calls and emails.⁴⁸

What it means for taxpayers

The Oct. 15 motion allows $10,177 a month for three months, and all of it may come from the General Fund.¹ State law bars hotel tax money from paying for general government.⁹ The motion asks the chamber to show as much of its work as possible "as being HOT fund eligible." Any part it proves would "reduce the burden on the General Fund."¹ Under the city's Oct. 19 draft as Sargent describes it, the General Fund pays first. For any cost the city approves for hotel tax money, the chamber would get a hotel tax check and write the same amount back to the General Fund.¹⁸

State law does set some rules when a city hires an outside group by contract to run hotel tax programs. The council must approve the group's yearly budget in writing, in advance. The group must report its hotel tax spending to the council at least every three months. It must also keep the hotel tax money in a separate account.⁹

The 2026-27 budget book shows the hotel fund taking in $140,000 in hotel tax and $34,000 in interest. It plans to spend the same $174,000, all of it on tourism promotion. The chamber line in that fund is $0.¹³ So the $1,320,732 balance would stay about where it is.⁸

Interest counts as hotel tax money under state law, so the expected $34,000 follows the same spending limits.^9,13 Bragiel said a city that does not use its hotel tax is "not being as effective as you otherwise could be."⁴³ He also said many officials prefer no hard return rule because they want flexibility.⁷ Some officials want a return rule because it gives a cleaner answer for an applicant, Bragiel said.⁵

Owen said the strategic plan comes in November and the economic development plan in December.¹¹

What we could not find

• A city notice for the class. We found none, and the chamber wrote that the city did not post one.
• The city's side of the chamber's account of the talks, including the attorney emails and meetings it describes. No city record we reviewed covers them.
• The city's October draft agreement. We have not seen it, so its terms here are as the chamber described them.
• The Lago Fest hotel tax records the chamber describes. We did not review them, and we asked the city about them.
• Where the software cost a speaker gave came from, and who said it. No city record we reviewed lists the cost.
• A written return standard for the chamber deal. The chamber wrote that none exists because no agreement is final.
• How much of the tourism promotion line counts toward the advertising minimum. The budget pages we reviewed do not break it down.
• Any record of the mayor's remark that the hotel tax would end. An audience member described it, and the mayor was not shown at the class.

What you can do

• Watch the November strategic planning meeting and the December economic development planning meeting, and speak during citizen comments. We did not find dates for them.
• Ask the city secretary under the Texas Public Information Act for the chamber service agreement, the October draft sent to the chamber, and any written return standard. A written request costs nothing to file.
• Watch for the chamber item to return in January, and speak during citizen comments.
• Email your council members with questions about how the city should measure the return.
• Ask the city attorney and your council members whether the chamber's account of the talks is accurate. You can also ask the city secretary for the emails between the city attorney and the chamber's attorney this fall, under the same law.