Farragut Board of Mayor and Aldermen voted 4-1 on first reading to enact the Hotel/Motel Tax.
While Mayor Ralph McGill, Vice Mayor Ron Pinchok and Aldermen Ron Williams and Louise Povlin voted in favor of levying a 2.5 percent tax, Alderman Bob Markli voted against it during the Board’s meeting Thursday, April 26.
Markli cited various concerns about the tax during the meeting. and made the following points:
• All nine Town hotels, which oppose the tax, are in his North Ward ... • “our citizens have not been educated to all the potential ramifications” of the new tax ... • Town revenues continue to “trend upward” with “no debt” and a “healthy surplus” without the tax. ... • “This board has not been adequately educated to all the potential ramifications.”
His other concerns included • “TACIR Report of Jan. 6, 2016, which is ambiguous, lengthy and complex ...” • no Town committee, or Farragut West Knox Chamber of Commerce, has adequately studied the tax’s impact … • anticipating a hotel room sales decline, the tax “will also impact collateral Town businesses such as Cracker Barrel … Pilot, Weigel’s.”
Markli concluded with comments including • how the tax “represents a radical departure from the founding principles of this Town” and “is manifestly discriminatory singling out one class of citizens.”
On the other side, Pinchok said, “I was for the 4 percent (the state allows).”
Pinchok said when he was elected in 2014, he was surprised the Town did not have a Hotel/Motel Tax. “I found very few people opposing it,” he said. “I found most people thought we had it or wants it.”
Board members heard mixed public reactions to the tax.
“From what I received in e-mails from the hotel owners and managers — there have been many — they state there are no tourism attractions in our town and no reason for a hotel tax,” Alderman Ron Williams said. “I have to disagree with that.”
Darren Tallent, general manager of Hampton Suites in Farragut, asked the Board to vote against the Hotel/Motel Tax.
Tallent explained when corporate customers see an increase on their total bill, they will question the increase and their decision to stay at that hotel.
“We are all about tourism, but what we’re not for, right now is we haven’t seen a plan that will create us revenue … it’s going to take a lot more than a few soccer tournaments to really bring us more revenue,” he said.
Still, he added, the hotels would be behind the tax if they could see a plan that would help tourism. He suggested including representatives from the nine hotels on committees so they could be involved.
Jeff Elliott, a former Board member and 29-year Farragut resident, also supported the tax.
“I see this as a very straight-forward funding opportunity, as we’re losing several hundred thousand dollars from the Hall Tax,” he said. “This lodging tax is a good way to recoup these dollars and to continue moving forward with our tourism and economic development issues, as we will now have a dedicated stream of dollars from this lodging tax.”
Elliott pointed out the Hotel/Motel Tax does not come from Farragut residents or businesses.
“It comes from people who are visiting this area and spending money in our area,” he added. “The lodging tax is all around us, and I simply do not believe anyone would be changing accommodations based on whether a lodging tax is imposed.”
Tom Rosseel, who also is a former Board member, said he also supported levying the tax.
“I travel for business and personal reasons probably 20 to 25 times a year,” Rosseel said. “I never look at the Hotel/Motel Tax when I make a decision. It’s based on location, location, location. That’s the primary thing, and I think anything that will help the town with its tourism is a great thing.”
David Smoak, town administrator, said the tax issue has been part of the Board’s strategic plan since 2010. “The proceeds from the tax would go straight toward tourism development,” he said. “Recently, the staff hired a town tourism coordinator.”
Two Tennessee General Assembly actions have impacted municipalities such as Farragut: phasing out the Hall Income Tax; and the Improve Act, which “puts pressure on cities all across the state to relocate funding from the our general fund,” Smoak said.
However, state legislators recently approval a Town request allowing them to levy the tax, with Gov. Bill Haslam signing that bill into law April 12.
The tax may not exceed 4 percent of the rate charged to the customer by the hotel operator.
Among other business items, BOMA approved unanimously:
• Adding $521,607 to its State Street Aid Fund’s budget of $983,000 to resurface roads this year.
According to the 2017 Tennessee Department of Tourism report, he said some of the attractions include Farragut Museum, sporting events in the town’s parks, water recreation on nearby lakes, historic sites, restaurants, shopping in Turkey Creek and visiting friends and relatives.
The town will develop a separate tourism revenue fund from the tax proceeds, Smoak said.
• Special event signage for the Knoxville Open Golf Tournament, which will be taking place 6 p.m. Thursday, May 7, through Sunday, May 13, at Fox Den Country Club, and benefits the Boys and Girls Clubs of Tennessee Valley.
• An agreement to pay Benchmark Associates Inc. for survey services at Campbell Station Inn as part of the stabilization work being done on the property at the corner of North Campbell Station and Kingston Pike. The staff asked for, and the Board approved, an additional $2,500.
Prior to the regular meeting, the Board heard from Judy Robinson with Tennessee Dance Ensemble of Knoxville, who is asking for funding from the town’s community grants funds. No action was taken.