The Greeneville City Council took no official action on Hotel/Motel Tax appropriations during the Tuesday meeting of the board.
Board members did however discuss the possibility of doing so at their next meeting in two weeks.
City Manager Todd Smith, in a two page note (attached below) to council members earlier this week indicated the meeting would include discussion of and guidance for drafting a proposed hotel/motel tax policy on how the funds will be spent in the future. Smith says the goal is to have a policy ready for your consideration on August 5. After some discussion, City Council members decided they would like to take action in two weeks on funding those for this year who typically benefit from the hotel/motel tax, then turn their attentions to moving ahead with plans for next fiscal year and beyond.
NOTE FROM TODD SMITH TO CITY COUNCIL CONCERNING THE FUTURE OF HOTEL/MOTEL TAX FUNDING
City Council,
Greeneville is a pioneer in implementing the most recent state statute allowing for the collection of hotel/motel tax. Expenditures are limited to tourist-related activities, but unknowns exist as to how these expenditures should be distributed. The state Comptroller’s office is also trying to fully understand the statute. One recommendation the Comptroller’s office had, however, was to adopt a Council approved spending policy for hotel/motel tax collections.
Expenditures are limited to tourism activities, defined as “attracting nonresidents to visit a particular municipality and encouraging those nonresidents to spend money in the municipality”. Under this definition there are two categories to spend these funds: operations and capital.
Operations
These expenditures would cover recurring and ongoing expenses. Examples include paying for ongoing marketing, advertising, event planning/execution, materials for event execution, staff time for events and other recurring expenses.
Capital
This category includes equipment and property purchases/improvements related to tourist activities. Examples include equipment for special events and sporting events (ie stages, portable bathrooms, bleachers, etc). Property improvements/construction include building renovations for tourism events, infrastructure improvements for tourism related properties, construction of facilities to promote tourism, and other one-time large expenses.
Considerations
The City Council could choose to spend hotel/motel tax on one option (operations or capital) or choose a combination of those options. In looking back on the implementation of the tax, recurring operational expenses were seemingly covered prior to implementing the hotel/motel tax. Granted, we may have seen enhanced recurring operations since the tax, but advertising, marketing, event planning/execution, and staff expenses were being covered prior to the additional spending brought about through the hotel/motel tax.
I recommend the City Council consider a policy reserving the hotel/motel expenditures for large significantly impactful capital projects. Revenues received can be used for debt service, allowing the funds to leverage large projects that could have a meaningful draw of tourists. Examples of these types of projects run the gamut from the low end of purchasing portable stages ($200,000) or portable restroom trailer ($200,000) to be used for special events. On the higher end building an access road connecting hotels/restaurants along Hwy 11E, revamping the Little Theatre at the Roby Center or constructing a farmers market facility. These are projects that can utilize the hotel/motel tax for ten plus years and make a significant impact on the future of tourism for generations to come. I recommend we create a policy that considers projects that will impact tourism for decades into the future.
