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Measure allowing Metro to raise hotel tax passes, heads to Lee





A spectator watches from the balcony as legislators conduct business in the Tennessee House of Representatives in Nashville.File / Larry McCormack for Chalkbeat

A spectator watches from the balcony as legislators conduct business in the Tennessee House of Representatives in Nashville.File / Larry McCormack for Chalkbeat

A measure to allow Metro to raise the local hotel-motel tax by 1% to help fund a new domed stadium for the Tennessee Titans received final, bipartisan approval from the state House and Senate on Wednesday morning.

It now goes to Gov. Bill Lee’s desk. Lee has already demonstrated a commitment to the new stadium project: His budget, passed by lawmakers last week, included an investment of $500 million toward a new stadium.

If signed by Lee and approved by the Metro Council, Nashville’s increased hotel-motel tax rate would align more closely with hotel-motel tax rates in other counties in Tennessee. Last year, the legislature voted to allow local governments to raise hotel tax rates up to 8% but excluded Nashville.

“It’s not just about the Titans. It’s not just about the stadium,” said House Finance Chair Patsy Hazlewood, R-Signal Mountain. “There’s an incredible amount of development that will happen around that stadium: multi-use, retail, restaurants, bars, all of the same things — you’re looking at the potential for another Broadway.”

 

 

Proposed by Nashville Rep. Bill Beck and Sen. Jeff Yarbro, HB 681 would allow the Metro Council to raise the hotel-motel tax from the current 6% to 7%. House members approved the bill in a 62-26 vote, and senators approved the measure in a 30-2 vote.

The proposed hotel tax increase could provide an additional $10 million per year in revenue for Metro, according to state fiscal analysts, which would be used toward construction of a proposed Titans stadium. Nashville Convention & Visitors Corp. CEO Butch Spyridon says the tax increase could yield much more.

Under Metro’s agreement with the Titans, Metro must provide and maintain a “first-class” stadium for the team.

Resulting new revenue is just one piece of the financial puzzle to make a proposed domed stadium for the Titans a reality. A new stadium is projected to cost between $1.9 billion and $2.2 billion.

State lawmakers last week approved $500 million in bonds as part of the $52.8 billion state budget. Titans ownership has pledged an additional $700 million.

The 1% hotel-motel tax increase would not go into effect unless all funding pieces for a new stadium fall into place.

Metro Nashville could finance the remaining $700 million, with a portion of the funding coming from a hotel tax increase permitted by this bill. Mayor John Cooper has emphasized that the project should not divert Metro tax dollars from education, affordable housing or infrastructure. Cooper made no mention of new funding for the stadium project in his State of Metro address on Wednesday.

If funded, a new stadium would be situated between the current stadium and Interstate 24, and could open in time for the 2026 season.

The measure passed the House with opposition from some conservative Republicans, including Rep. Chris Todd, R-Madison.

“This would raise taxes on your constituents and my constituents,” Todd told colleagues during the House debate. “Mine have called me about that. They realize this is a bad deal for them — not for Nashville, but for visitors to Nashville, the capital city. Our citizens have to come to Nashville for business, as we do.”

Many Republicans supported the tax increase, based on a state analysis that projected positive economic impact from the stadium would recoup the costs of the rebuild. However, analysis by sports economists of other new stadiums and the neighborhoods around them shows that publicly funded stadiums often do not pay off.

Last year, state lawmakers approved a measure allowing 100% of sales tax from tickets and concessions at the stadium to go back to the Titans. Another 50% of sales tax from transactions taking place in the 130 acres surrounding the potential new stadium would also go to the Titans.

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