04/03/2025

House Bill 138

Lead Sponsors: Representative Mike Dovilla and Representative Nick Santucci

Status: First hearing in House Arts, Athletics, and Tourism (April 1, 2025)

Description: The bill authorizes counties, townships, and municipalities to create tourism promotion districts (TPDs) which can levy special assessments against hotels ("lodging businesses") to fund supplemental services designed to increase overnight stays and improvements to benefit hotels in the district.

A TPD cannot be created without a request to the creating entity from at least one lodging business owner of the proposed district, and the requester must provide a plan for the district and a summary of the plan. After receiving the request and if it wishes to pursue the TPD, the creating entity must adopt a resolution declaring its intent to consider the TPD and provide notice to other lodging business owners in the proposed TPD of a public hearing on the matter.

The creating entity may set the terms of a special assessment (called a "benefit assessment" in the bill) on hotels in the TPD. The assessment can take the form of a percentage of gross lodging business revenue or a fixed dollar amount per transaction. If the lodging business owner(s) representing 40% of the estimated assessment revenue object to the creation of a TPD, the TPD cannot be formed.

Aside from a 2% administrative retention, all revenue collected from the assessment must be used to fund supplemental services and improvements. If the funds are to be used for improvements, the association formed to manage the TPD may issue revenue bonds backed by the assessment revenue.

When a TPD is formed, the creating entity must contract with a nonprofit corporation to serve as the TPD's management association. The nonprofit can be created specifically to manage the TPD or it can be a preexisting organization.

The creating entity may dissolve the TPD prematurely if there are no outstanding revenue bonds and it finds that the TPD has misappropriated funds or otherwise violated the law.

When a TPD is dissolved, any remaining funds it has in its possession must either be spent according to the TPD's plan or refunded to the lodging businesses.

CCAO Position: No position (as of April 2025)