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Title:
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Consider approving Resolution No. 2025-174 authorizing the City Manager to execute the First Amendment to the Economic Development Incentive Agreement with Southwest Airlines; and take appropriate action.
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Title
Consider approving Resolution No. 2025-174 authorizing the City Manager to execute the First Amendment to the Economic Development Incentive Agreement with Southwest Airlines; and take appropriate action.
Body
REQUESTOR:
Economic Development Department
BACKGROUND:
In 2024, Southwest Airlines generated 7,444 hotel room nights. To date in 2025, the airline has already generated 23,000 room nights, with discussions underway regarding an additional 20,000 potential room nights before the end of the year. This is a reimbursable incentive funded by hotel occupancy taxes that were already collected at the time of each stay and will be paid per room night generated. This investment of existing revenue is used to incentivize continued growth in hotel room nights.
The hotel owner, operator, or manager (for bed and breakfasts, condominiums, apartments, and houses) must collect a hotel occupancy tax for any space costing more than $15 per day (the local tax is $2 or more). Hotel/Motel is not charged to anyone staying at any one of these locations for longer than 30 days (the first 30 days are paid but exempt after that). The State charges 6% of total room receipts, including taxable receipts. The City charges 7% on just room receipts (excluding food and beverages that hotels/motels charge).
This incentive encourages companies to come and stay at Farmers Branch hotels so the City can benefit from taxes and tourism.
DISCUSSION:
The City of Farmers Branch is repealing Article II (Term) of the original agreement in its entirety and amending Article II Term with new terms that will be in effect until December 31, 2025. Upon expiration, this Agreement shall continue in full force until either party notifies the other party in writing of its intent to terminate this Agreement, in which case it shall terminate 60 days from the date of notice.
FISCAL IMPACT:
Financial impact on the Hotel/Motel fund.
DISTRICT:
Citywide
POSSIBLE COUNCIL ACTION:
1. I move to approve Resolution No. 2025-174 as presented.
2. I move to approve Resolution No. 2025-174 with modifications.
3. I move to table the issue for further study or take no action.
ATTACHMENT(S):
1. Resolution No. 2025-174
2. First Amendment to Incentive Agreement with Southwest Airlines
3. Resolution No. 2024-232
4. Original Economic Development Incentive Agreement
5. Presentation