Kilgore stiffed more than $16,000 by two hotels, council learns
March 13, 2012 at 10 p.m.
KILGORE - Two local inns owe the city of Kilgore more than $16,000 in taxes they've collected from overnight guests, the Kilgore City Council learned Tuesday.
"We can actually stop them from operating anymore," City Attorney Robert Schleier told the council. "We actually have the ability to say, you can't do business in Kilgore anymore."
One of those hotels, the Deluxe Inn, owes $14,000 in hotel/motel tax revenue due the city. The Ramada Inn, Schleier reported, owes a smaller debt it was paying down until the fall when it stood at $2,400, according to an audit the city ordered about a year ago.
No formal action was taken during an information-only report, but council members were clear they want their hotel/motel tax revenue.
"I think we ought to take whatever action we need to take," Councilman Randy Renshaw said during Schleier's presentation.
"I agree," Councilman Bobby Hale later added as Schleier retook his seat. "Go do what you have to do."
Cities can collect a hotel/motel tax, charged to guests as a percentage of their bill, for use in promoting tourism and other limited roles.
"All the hotel operator is supposed to do is collect that tax from those individuals and remit it to the city of Kilgore," Schleier said, outlining the council's options. "They are violating a trust obligation."
The city also could seek its $2,400 from a small claims court and the $14,000 from a state district lawsuit, he said.
The audit revealed each hotel has been paying its state taxes of the hotel/motel tax. The last city portion paid by the Deluxe Inn was for the third quarter of 2010, he said.
This past month, the city discovered it had not been receiving quarterly reports on how the hotel/motel tax revenue is spent. The Kilgore Chamber of Commerce now is submitting those reports, City Manager Scott Sellers said Tuesday.
Earlier Tuesday, Kilgore College President Bill Holda noted that three out of five people who visit the East Texas Oil Museum on the school campus stay overnight in a local hotel. Holda made the remark in pitching for hotel/motel tax money to help the museum and the annual Rangerette Revels dance troupe review.
Holda asked for a one-time, $25,000, grant to the museum and $15,000 annually for the Rangerette Revels, though not necessarily in time for the upcoming review April 11-14, he said.
The dance show traditionally has funded the Rangerettes' annual travel budget but is experiencing smaller returns as production quality, and costs, keep track with those of other drill teams, he said.
It might have been a soft sale. Mayor Ronnie Spradlin noted before Holda sat down that he, Hale and Councilman Neil Barr served as Rangerette managers during their Kilgore College days.
The council on Tuesday also finalized an agreement to sell up to 1.5 million gallons of treated wastewater a year to Alpha Reclaim Technology. The company plans to sell water from the wastewater treatment plant to oil and gas drillers in South Texas for their hydraulic fracturing operations.
The company will pay Kilgore up to $914,000 annually for the water, which normally would be returned to the Sabine River.
The first-time Kilgore contract was up for a vote earlier this year, but council members wanted it to include language favoring local needs that might arise and assurance from the state environmental agency and the Sabine River Authority that the water can be diverted to the distant drill sites.
Also Tuesday, the council held the first of two public hearings on annexing 217 acres along Baughman Road into the city.
Director of Planning Carol Windham told about 10 residents at the meeting that, initially, the area will be zoned agricultural.
"But whatever you're zoned at initially, you're still going to be able to continue your use," she said.
She later added residents have two years before they must join the city's trash pickup service, and there are no plans to bring sewer service.
Sellers added that Baughman Road, which also is called Rusk County Road 186, will become a three-lane road with a turn lane near school campuses on the city's south tip.
The second public hearing on the annexation is March 27.