By Jon Styf | The Center Square, April 13, 2022- A new 1 percentage point hotel tax in Davidson County could help to pay for a new $2 billion Tennessee Titans domed stadium in downtown Nashville.
An amendment to House Bill 681 was introduced on Wednesday in the House Finance, Ways and Means Subcommittee that would allow Davidson County to raise its hotel tax above the current 6% rate. Last year, Metro Nashville reported $48.9 million in hotel tax collections, but a fiscal note estimates those revenues to increase to more than $60 million annually if the bill becomes law.
In a recent radio interview, House Speaker Cameron Sexton said that, along with the $500 million in state funding proposed in Gov. Bill Lee’s budget amendment, Titans’ ownership is expected to contribute $700 million to the costs of a new stadium and the city of Nashville is also expected to pay $700 million.
The state proposal involves the state issuing $500 million in bonds with $55 million in annual recurring payments for the state.
The bonds are separate from the hotel tax, which would have to be passed by Metro Nashville’s government and would likely be allocated to the stadium. The bill’s fiscal note states the funds will be "retained by the metropolitan government for the sports authority to pay debt service incurred through the construction of and capital improvements on an enclosed stadium."
Bill sponsor Rep. Bill Beck, D-Nashville, said that the funds from the new hotel tax would be used as leverage for Metro Nashville’s bonds for its portion of stadium funds and called it "part of the package" for funding a new stadium.
Several lawmakers, including Beck and Rep. Patsy Hazlewood, R-Signal Mountain, spoke of the economic impact of a domed stadium that could help the city secure events such as the Super Bowl, the Final Four, the Southeastern Conference Championship football game, concerts and WrestleMania.
But sports economists who have studied publicly financed private sports stadiums have repeatedly shown that those dividends do not pay off for municipalities that invest large sums into those stadiums.
"There's simply not a public policy case for funding a new NFL stadium in Nashville," J.C. Bradbury tweeted on Wednesday. "None. Yet, the folks elected 'to serve the public interest' will join hands and pass it anyway."
The hotel tax would be similar to state sales tax funds, which Tennessee conceded in a bill last year.
That includes 100% of the sales tax from tickets and sales at a stadium along with 50% of the sales tax from a planned development on the 130 acres surrounding a potential new stadium.
A fiscal note on that bill estimated that it would send $10 million annually to a special state account for the Davidson County Sports Authority.
Titans CEO Burke Nihill recently said a potential new stadium could be ready as soon as the 2026 season if there is a funding agreement in place before this fall. If that happened, Sexton said that the current 22-year-old Nissan Stadium would be torn down.
Rod's Comment: I can support the new stadium with this funding mechanism. In a perfect world, I would prefer all sports stadiums to be privately owned and funded, but that is not the way it is. We compete with other cities that would love to woo away our professional teams. I am bullish enough on Nashville to support a new stadium with this system of funding. I would not support the city funding the stadium with General Obligation bonds. I would not be so supportive of such a gamble if I were a resident of Memphis or Knoxville or most American cities and this was the proposal, but Nashville has a proven record as a tourist mecca and a local population that supports professional sports. Tourists are not going to stay away because of a modest increase in the Hotel/Motel tax. This is consistent for me. When the current Music City Center was proposed, some conservatives opposed it; I did not and I think it is undeniable that it has been a success and a boon for the city.
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