Lago Vista paid its chamber $228,000 with no signed contract

The limestone Lago Vista entrance monument at dusk, lit from below, with the United States and Texas flags flying behind it — Lago Vista entrance monument. AI illustration. Image credits.

From October 2020 through September 2025, the City of Lago Vista paid its chamber of commerce $228,000 in hotel tax money, $48,000 in most years (our addition).^1,2,3 State law lets a city hand that money to a chamber only by contract, with the council approving the chamber's budget in advance and receiving spending reports at least every quarter.⁴ The council minutes and packets we reviewed contain no signed agreement with the chamber.^5,6 On September 3, 2026, the council voted 6 to 1 to negotiate a formal hotel tax agreement with the chamber, with Mayor Shane Saum voting no.⁷ The city's 2026-2027 budget sets the chamber's line at $0.³ The city's hotel tax fund held $1,206,714 when the 2025 budget year ended.⁸

What hotel tax money is

Lago Vista charges a 6% hotel occupancy tax on hotel, motel, and short-term rental stays inside the city limits.⁹ State law says the money "may be used only to promote tourism and the convention and hotel industry." The allowed uses include visitor information centers, advertising to attract tourists, the arts, and historical preservation. Each dollar must be spent "in a manner directly enhancing and promoting tourism and the convention and hotel industry." The money "may not be used for the general revenue purposes or general governmental operations of a municipality."⁴

The Texas Municipal League, which advises cities, puts the test this way. "Every expenditure of hotel taxes must put 'heads in beds.'"¹⁰

A city may hand the money to a group such as a chamber of commerce "by contract." The council must then approve the group's annual budget "in writing" and "in advance." The group must report "at least quarterly listing the expenditures." It must also keep the money "in a separate account established for that purpose."⁴

How the money flowed

In the year that ended September 30, 2021, the city's audit shows $48,000 in hotel fund spending.¹¹ The city's budget book shows $48,000 paid to the chamber that year.¹ That year's audit said, "The Hotel Fund does not have an appropriated budget since other means control the use of these resources."¹¹

In July 2022, a council agenda packet reprinted the city's hotel tax rules. They said the money "may be paid to the Lago Vista Chamber of Commerce" for advertising the city and promoting tourism "pursuant to an agreement to be entered into between the City and the Chamber of Commerce."¹²

The city's budget books show these payments to the chamber from the hotel tax fund.^1,2,3

Budget year	Paid to the chamber
October 2020 to September 2021	$48,000
October 2021 to September 2022	$48,000
October 2022 to September 2023	$48,000
October 2023 to September 2024	$36,000
October 2024 to September 2025	$48,000
Total (our addition)	$228,000

The budget books do not say why the chamber received $36,000 in the 2023-2024 year.³

What the city told the state

Each year the city reports its hotel tax spending to the Texas Comptroller.⁴ For the 2022 budget year, Lago Vista reported $236,651.64 in hotel tax revenue, $60,000 for a visitor information center, and $6,792.50 for advertising.¹³ The city's budget book shows $48,000 paid to the chamber that year.²

In the report it filed on February 27, 2025, the city listed $190,781.66 in revenue, $48,000 for a visitor information center, and $1,203 for advertising. That report listed $1,035,319.49 in unspent hotel tax money.¹⁴

State law says a city with a population of less than 200,000 "shall allocate" to advertising at least the revenue from one percentage point of its hotel tax.⁴ With a 6% tax, that is one-sixth of the revenue, about $39,442 for 2022 and about $31,797 in the 2025 report (our math).^4,13,14 The reports do not show whether the city set advertising money aside in some other way.^13,14

September 2025, a request for $185,000

On September 11, 2025, the council held a budget workshop. According to the minutes, chamber Executive Director Allison Sargent said the chamber "had been receiving a flat amount of $48,000 annually for over a decade without adjustments for inflation." The minutes say the chamber "requested $185,000 from HOT (Hotel Occupancy Tax) funds, citing the city's HOT fund balance of $1.2 million."⁵

Council members raised concerns that the minutes list, including "The need for proper accounting and oversight of funds" and "The need for a contract with specific deliverables." The council reached consensus that "The Chamber could be funded up to $100,000, but only through reimbursement for documented HOT-eligible expenses." It also agreed that "A contract would be established with specific deliverables and potential clawback provisions."⁵ On September 25, 2025, the council adopted that year's budget unanimously.¹⁵

April 2026, a partial payment and a new policy

On April 2, 2026, the council took up a hotel tax fund policy.¹⁶ On the meeting video, a city staff member said, "The staff took steps this week to make a reimbursement to the chamber for a partial reimbursement of what was requested." The staff member added, "Our legal counsel advised that we did not have enough documentation there to suffice to meet the intent of the law."¹⁷

The minutes list Sargent and Justin Loucks, the chamber's board president, as speakers.^7,16 Sargent said, "There's over $1 million in this account and that has been accumulating for years and years and years." She also said, "It baffles me that not one person has questioned anything with how this has been reported for the last 15 years." Loucks said, "The chamber has not requested reimbursement for any ineligible expenses." He said "formal contracts between municipalities and CVBs are not strictly required," and that the chamber was "completely open to entering into a contract."¹⁷

On April 16, 2026, the council voted 7 to 0 to approve a hotel tax fund policy and application.¹⁸ The policy requires a "Post-Funding Analysis and proofs of payment" no later than 60 days after an event or expense.¹⁹

September 2026, a $61,762.63 request

The September 3, 2026, agenda packet says the council "has previously directed city staff to work on a formal contract with the Chamber of Commerce." It says the chamber proposed edits to that draft and "submitted a request for reimbursement of $61,762.63." The chamber's proposed version would have the city pay "an annual service fee of $100,000 dollars ($25,000) per quarter for the three year term" using hotel tax money.⁶

The packet also holds a letter from the general counsel of the Texas Hotel & Lodging Association, written at the chamber's request. It says a city "may contract with an area chamber of commerce and may use municipal hotel occupancy tax revenue to support the operation of a visitor information center."⁶

At the meeting, an attorney spoke for the chamber. The council voted 6 to 1 to have the city attorney negotiate a hotel tax agreement for the 2026-2027 year with the chamber's lawyer. Mayor Shane Saum voted no. The motion said reimbursement for the 2025-2026 year "must be on qualified Hot Fund Monies."⁷

The city's newest budget book shows $38,237 paid to the chamber in the 2025-2026 year, against the $100,000 budgeted. It lists $0 for the chamber in the year that began October 1, 2026, and $174,000 for tourism promotion.³

What you can do

In April 2026, Sargent told the council that in the past nine months she had "conducted a full operational and financial audit" of the chamber.¹⁷ Residents can ask the chamber for that audit and for its federal tax returns.^17,20 The chamber is registered with the IRS as a 501(c)(6) organization, the type used by chambers of commerce.²⁰ Federal rules say such a group "must make available for public inspection and copying its annual return," and each return must stay available for three years.²¹

State law also says a group that spends a city's hotel tax money must keep "complete and accurate financial records of each expenditure." It must make them available "on request of the governing body of the municipality or other person."⁴

Residents can file a public information request with the city for any agreement with the chamber, the chamber's reimbursement requests, and payment records for the hotel fund's chamber account, 511-8610.^1,22

If you have records on this, you can share them with us at /share-records. We protect your identity and publish the evidence when we can do so safely.

Podcast transcript

Read the transcript

Host 1. This is the Lago Vista Watchdog briefing. The two voices you are hearing are AI generated. Every fact in this episode is sourced in the full story on our website, and a person validates each story before it is published.

Host 2. Here is the bottom line. From October 2020 through September 2025, the City of Lago Vista paid its chamber of commerce 228,000 dollars in hotel tax money, by our addition. State law lets a city hand that money to a chamber only by contract, with the council approving the chamber's budget in advance and getting spending reports at least every quarter. The council minutes and packets we reviewed contain no signed agreement with the chamber. On September 3, 2026, the council voted 6 to 1 to negotiate a formal agreement, with Mayor Shane Saum voting no. And the city's hotel tax fund held 1,206,714 dollars when the 2025 budget year ended.

Host 1. First, what is hotel tax money? Lago Vista charges a 6 percent hotel occupancy tax on hotel, motel, and short-term rental stays inside the city limits.

Host 2. State law says that money may be used only to promote tourism and the convention and hotel industry. The allowed uses include visitor information centers, advertising to attract tourists, the arts, and historical preservation. It may not be used for general government operations.

Host 1. The Texas Municipal League, which advises cities, puts the test this way. Every expenditure of hotel taxes must put heads in beds.

Host 2. A city may hand the money to a group like a chamber of commerce by contract. The council must approve the group's annual budget in writing and in advance. The group must report at least quarterly, and it must keep the money in a separate account.

Host 1. Now, in order, here is how the money flowed. In the year that ended September 30, 2021, the city's audit shows 48,000 dollars in hotel fund spending, and the budget book shows 48,000 dollars paid to the chamber. That year's audit said the hotel fund did not have an appropriated budget. In July 2022, a council agenda packet reprinted the city's hotel tax rules. They said the money may be paid to the Lago Vista Chamber of Commerce, pursuant to an agreement to be entered into between the city and the chamber.

Host 2. According to the city's budget books, the chamber received 48,000 dollars a year from the hotel tax fund, except for the year that ended in September 2024, when it received 36,000 dollars. The budget books do not say why.

Host 2. The city also reports its hotel tax spending to the Texas Comptroller. For the 2022 budget year, it reported about 236,652 dollars in revenue, 60,000 dollars for a visitor information center, and about 6,793 dollars for advertising. The budget book shows 48,000 dollars paid to the chamber that year.

Host 1. In the report the city filed on February 27, 2025, it listed 1,203 dollars for advertising, and more than 1 million dollars in unspent hotel tax money.

Host 2. State law says a city with fewer than 200,000 people shall allocate to advertising at least the revenue from one percentage point of its hotel tax. With a 6 percent tax, that is one-sixth of the revenue, by our math. The reports do not show whether the city set advertising money aside in some other way.

Host 1. That brings us to September 11, 2025, and a council budget workshop. According to the minutes, chamber Executive Director Allison Sargent said the chamber had been receiving a flat 48,000 dollars a year for over a decade, without adjustments for inflation. The chamber asked for 185,000 dollars in hotel tax funds.

Host 2. Council members raised concerns, including the need for proper accounting and oversight, and the need for a contract with specific deliverables. The council agreed the chamber could be funded up to 100,000 dollars, but only through reimbursement for documented expenses that qualify under the hotel tax law.

Host 1. On April 2, 2026, the council took up a hotel tax policy. On the meeting video, a city staff member said staff had made a partial reimbursement to the chamber, and that the city's legal counsel advised there was not enough documentation to meet the intent of the law.

Host 2. Sargent told the council there was over 1 million dollars in the account, accumulating for years. The chamber's board president, Justin Loucks, said the chamber had not requested reimbursement for any ineligible expenses. He said formal contracts are not strictly required, but that the chamber was completely open to entering into one.

Host 1. On April 16, 2026, the council voted 7 to 0 to approve a hotel tax fund policy. It requires a post-funding analysis and proofs of payment within 60 days.

Host 2. On September 3, 2026, the agenda packet showed the chamber had asked for a reimbursement of 61,762 dollars and 63 cents. The chamber's proposed agreement would pay it 100,000 dollars a year, 25,000 dollars a quarter, for three years.

Host 1. A letter in the packet, from the general counsel of the Texas Hotel and Lodging Association and written at the chamber's request, says a city may contract with a chamber and use hotel tax money to support a visitor information center.

Host 2. An attorney spoke for the chamber at that meeting. The council voted 6 to 1 to have the city attorney negotiate an agreement for the coming year with the chamber's lawyer. Mayor Shane Saum voted no.

Host 1. The city's newest budget book shows 38,237 dollars paid to the chamber in the 2025 to 2026 year, against 100,000 dollars budgeted. For the year that began October 1, 2026, it lists zero dollars for the chamber.

Host 2. What can you do? In April 2026, Sargent told the council she had conducted a full operational and financial audit of the chamber. You can ask the chamber for that audit and for its federal tax returns. The chamber is registered with the IRS as a 501 c 6 organization, and federal rules say such a group must make its annual returns available for public inspection and copying for three years.

Host 1. State law also says a group that spends a city's hotel tax money must keep complete and accurate records of each expenditure, and make them available on request of the council or other person.

Host 2. You can also file a public information request with the city for any agreement with the chamber, the chamber's reimbursement requests, and payment records for the hotel fund's chamber account.

Host 1. And if you have records on this, you can share them with us on the Share Records page of our website. We protect your identity and publish the evidence when we can do so safely. The full story, with links to every record, is on our website. Thanks for listening.

Sources and documents

Every fact in this story comes from the records below. The small numbers in the story point to them. Links go to the exact moment in the meeting video or the page in the document.

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