County could find new uses for hotel tax
With Hamilton County’s hotel tax collections expected to top $10 million a year by 2023, city and county leaders are being asked to use part of the hotel tax now devoted entirely to the Chattanooga Area Convention and Visitors Bureau for other tourism-related and homeless relief projects.
County Commissioner Tim Boyd proposed Wednesday to freeze the money for the tourism bureau and use the growth from the hotel tax to help pay for tourism-related capital projects at local parks or monuments. At the same time, former Chattanooga Mayor Ron Littlefield asked county commissioners to allocate $1 million from the county’s hotel tax to match a similar amount from the city’s hotel tax and fund operations of a homeless shelter.
County commissioners voiced support Wednesday for both ideas, although they said they want to see a business plan and make sure other projects funded with the tax are beneficial.
“I do think it’s time that we take a new look at what we are doing [with the hotel tax collections], but we have to remember how we got here,” Hamilton County Mayor Jim Coppinger said.
County government has allocated all proceeds from its portion of the hotel-motel tax to the Chattanooga Convention and Visitor’s Bureau since 2007 to promote tourism. The county dissolved its Tourist Development Agency (TDA) more than a decade ago and committed all of the hotel tax to the Convention and Visitors Bureau amid complaints that the projects that TDA funded were often pet projects by county commissioners or were not related to tourism as the state act enabling hotel room taxes requires.
Boyd is proposing to again use some of the hotel tax collections for other projects than the CVB. He wants to freeze the bureau’s allocation from the hotel tax at the 2018-19 level, estimated to be about $8.2 million, for the next three years. Hotel-motel tax revenue above that amount would be designated for the new fund, which can only be used for capital projects.
Within four years, Boyd said more than $1.4 million a year of
additional tax money could be available for such projects.
The proposed new fund, if approved by the county commission, would be used to “expand the impact of the tourism economy by creating a fund dedicated to enhancing all tourism infrastructure, including arts and culture organizations,” according to Boyd’s resolution which commissioners will vote on next week. The presentation points to the Bessie Smith Hall, the convention center and Ross’s Landing and the Passage as examples of project previously funded by using the hotel-motel tax.
The hotel tax passed the Tennessee General Assembly in 1980, and county government used the revenue from the tax to fund its portion of McKenzie Arena, which opened in October 1982.
Boyd tried unsuccessfully to cut the amount of county hotel tax revenues going to the tourism-promotion bureau last year by 25% when he criticized the bureau for what he said were lavish expenses on dining and travel. But Boyd said CVB’s new president, Barry White, has helped improve spending practices since he joined the bureau last year and Boyd said he thought the bureau “is doing a good job.”
The Tennessee Comptroller criticized some of the bureau’s spending practices in a 2017 audit, but White is seeking accreditation through the Destination Marketing Accreditation Program to ensure they are using the best financial practices.
The hotel tax provides 89% of the budget of the Convention and Visitors Bureau.
In response to Boyd’s proposal, White said in a statement that “the intent of Commissioner Boyd’s proposal presented on Wednesday is a shared objective of the Chattanooga Convention and Visitors Bureau.
“We hope to work together with the County to discuss and explore the best method to achieve this mutual objective,” he said.
White was more wary of Littlefield’s proposal to use $1 million each from the county and the city hotel tax collections each year to support programs for the homeless.
“If this is a priority issue for our community, it should be addressed with community funds, not visitor generated funds,” he said.
But Littlefield told commissioners that hotel operators and other tourist attractions worry that homeless people downtown can sometimes create at least an adverse appearance or environment for some visitors in the city.
The former Chattanooga mayor said a “low barrier” homeless shelter could save the cost of more expensive jail and hospital stays and could improve Chattanooga’s $1.1 billion-a-year tourism industry.
“Let’s find a way to do it,” County Commissioner David Sharpe said of Littlefield’s proposal.
Commissioner Katherlyn Geter also said such a center is needed.
Commissioner Chip Baker said he would like to see a business plan on the proposed center before committing such funds.