Metro Nashville Council on Tuesday increased the city’s hotel occupancy tax. The increased funds from the tax hike are required by state law to be used solely for the construction and future capital improvements and the associated debt service of a new enclosed stadium with seating for at least 50,000.
The increase in the hotel occupancy tax will be combined with other funding sources to cover Metro’s $760 million contribution to the $2.1 billion total cost of a new stadium, including its local tax collections on the sales within the stadium, ticket tax revenues, rent revenues and local tax collections on sales within the 130 acres contiguous to the new stadium yet to be developed. A one-time contribution of $500 million will come from the state, for a total public contribution of $1.26 billion, with $840 million coming from the Tennessee Titans.
The hotel occupancy tax portion is expected to start contributing to the stadium funding next year, with an estimated $19 million in collections during 2023 and going up to $36.5 million by the end of the 30-year lease in 2056.
On a voice vote, an amended version of ordinance BL2022-1529 increasing the hotel occupancy tax by one percent passed on to a third reading, which will occur on December 20.
Asking to be recorded as a no vote were Council Member At Large and Chair of the East Bank Stadium Committee Bob Mendes, as well as Council Members Sean Parker (District 5), Emily Benedict (District 7) and Ginny Welsh (District 16).
Bill sponsor Council Member Brett Withers (District 6) requested approval on the second reading and suggested there would be more deliberation at the next meeting.
“It is important, I think, to go ahead and pass this tonight on second. We will still have deliberation on third reading in two weeks,” said Withers.
Parker confirmed with Metro Council Director Margaret Darby that, like zoning legislation, a tax ordinance is indeed amendable on the third reading.
Currently, Nashville levies an occupancy privilege tax of $2.50 and one of six percent on hotel room stays. The ordinance passed on second reading Tuesday will levy an additional one percent, as authorized by the state legislature in 2022.
The bill in its original form called for the hotel occupancy tax to go into effect as of February 1, 2023, and referred to a council-approved term sheet that outlines the various agreements, transactions, rights and responsibilities of Metro government, Metro’s Sports Authority, and the Titans.
An amendment by Withers calls out the term sheet as “non-binding” and makes the effective date after approval of the final, binding documents to construct the stadium.
“The reassurance that this is non-binding as well as the reassurance that this would not take effect until all of the truly binding documents are agreed upon,” Withers pitched to his fellow council members as he asked for approval of the amendment, “I think should give comfort to those of us on the body as we continue to deliberate those going forward.”
On a voice vote, the amendment passed and Withers went on to ask for approval of the amended bill.
“This hotel occupancy tax was approved by the state. It has a very limited scope. I know we hear a lot of public comment about couldn’t you do other things with the funds and I wish that there were other things that we could do with the funds sometimes, but the state legislation that passed to enable this tax is very specific that it could only be used for a new stadium and specifically an enclosed stadium. So, there is not a whole lot on this that the Metro Council can change through additional amendments, although as I understand it, we can certainly entertain those on third reading. But it is important, I think, to go ahead and pass this tonight on second. We will still have deliberation on third reading in two weeks.”
The ordinance to increase the hotel occupancy tax to fund stadium-related expenses in its amended form had previously been approved by the Council’s Public Facilities, Arts and Culture Committee with a 9 to 0 vote and the Budget and Finance Committee with a 10 to 2 vote before going to the full Council Tuesday.
Also on the agenda at Tuesday’s council meeting was the resolution RS2022-1827 approving the term sheet summarizing agreements between the three parties for the new enclosed stadium on the East Bank.
Resolution sponsor Withers requested that the resolution and all proposed amendments be deferred for one meeting.
The December 20 meeting, Withers pointed out, would come after the remaining two of five public comment meetings scheduled by the East Bank Stadium Committee for Wednesday, December 7 at the Bellevue Regional Community Center at 6 p.m. and Monday, December 12 at the Hermitage Police Precinct at 6 p.m.
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Laura Baigert is a senior reporter at The Star News Network, where she covers stories for The Tennessee Star.
