A bill that would allow Nashville hotels to charge a 1% additional hotel tax to fund the construction of a new domed Tennessee Titans stadium passed another House committee and will now head to the full House.
Opponents criticized the bill, which is part of a package that would provide $1.2 billion of taxpayer funds toward the stadium with a $500 million proposed incentive from the state — paid for with bonds requiring $55 million in annual payments — and $700 million from Metro Nashville government, which would include funds from the sales tax in House Bill 681.
The stadium is estimated to cost between $1.9 billion to $2.2 billion.
The companion bill, Senate Bill 421, is scheduled to be discussed in Senate Finance, Ways, and Means on Wednesday.
“It sounds to me with this bill that Metro Nashville’s plan to come up with their portion of this puzzle is to put that on the backs of my constituents, many constituents of my colleagues here — not yours because yours live here — but ours get to pay the bill on behalf of Metro Nashville,” Rep. Chris Todd, R-Madison County, said to sponsoring Rep. Bill Beck, D-Nashville, on Tuesday.
Beck used information from a report generated by the state Finance and Administration Department touting the economic benefits of Nissan Stadium and a new stadium. But sports economists have nearly unanimously stated that the type of economic impact numbers touted in the report are inaccurate.
Todd then read from a report from sports economists Dennis Coates, Brad Humphreys and J.C. Bradbury that looked at 130 independent impact reports on sports stadium incentives from over a 30-year span.
“Recent analyses continue to confirm the decades-old consensus of very limited economic impacts of professional sports teams and stadiums,” Todd read. “Even with the added pecuniary social benefits from quality of life externalities and civic pride. Thus, the large subsidies commonly devoted to constructing professional sports venues are not justified as worthwhile public investments.”
The current hotel tax rate in Nashville is 6% and is added on after regular sales tax, which is between 7.25% and 7.75%. 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.
That would mean the 1% additional tax could raise $10 million per year.
“The Tennessee Titans and pro football bring an economic engine to this state every time that they play,” Beck said. “That we’re out in front of this nation as an elite city, as an elite state. And, the economic studies that you referred to, a lot of those were talked about when they first came here 20 years ago.
“Well, it’s been a fantastic marriage for us, for Middle Tennessee and for the state with the economic generation.”
Beck said that the hotel association in Nashville brought the idea of the additional tax on Davidson County hotels and motels to him.
“If we were able to put this together, and it’s still an if, this would bring not only a Super Bowl, WrestleMania, NCAA football playoffs, NCAA Final Four, NFL Combine and significant other economic engines,” Beck said.
All of those events, however, have bidding processes between multiple cities.
Rep. Mike Sparks, R-Smyrna, said that Nashville already has the highest-priced hotels in the country and that it’s nearing the point of diminishing returns.
“So we’re raising taxes to increase revenue for private corporations and in turn would like the state to revert taxes to private corporations, all on the taxpayers’ backs,” said Rep. Brandon Ogles, R-Franklin, said to Beck. “I understand what you’re doing and you have a great heart, but I will not be supporting this legislation.”
Todd added that he believes the state has better ways to spend $500 million than giving it toward a sports stadium for a private company like the Titans.
“If this is going to be such a big win for them, then why wouldn’t they invest some of their money in this versus getting taxpayer dollars from my taxpayers, my constituents, which are going to come to Nashville for various things?” Todd asked.
This article was originally posted on Tennessee lawmakers question Nashville hotel tax for Titans stadium as bill advances