Town of Farragut’s proposed Hotel/Motel Tax ordinance failed on second reading when Mayor Ralph McGill switched positions, voting against the tax during Board of Mayor and Aldermen’s regular meeting Thursday, May 10.
The ordinance had to be passed with at least a two-thirds vote, which it did on first reading — with McGill’s vote making it 4-1 during BOMA’s April 26 meeting.
“At this time, I think it is the right thing to do,” McGill, who joined Alderman Robert “Bob” Markli to vote no, said after the May 10 meeting.
“Obviously, there are different opinions, but I saw it as a chance to give us a little more time to discuss it,” he added.
Vice Mayor Ron Pinchok and Aldermen Louise Povlin and Ron Williams voted to enact a 2.5 percent tax.
“I was very encouraged that common sense prevailed,” Markli said. “We were about to make a radical departure from the founding principles of this Town.”
Four Farragut hotel managers and a Greater Knoxville Hospitality Association representative spoke against the tax.
Among them, hotel owner and Farragut resident Dan Patel said, “You should involve us in the process and not rush through it without proper communication.”
Patel said he thought the nine hotels are being singled out with the tax. He also contended the tax would have a “halo” effect, touching not only the hotels but also impacting other businesses.
Alex Bhakla, Holiday Inn Express general manager, also asked to include hotels in the tourism program.
“We’re not totally against levying an occupancy tax to help fund more tourism, but by passing this tax tonight without a well-thought-out plan … will definitely end up with negative consequences for not only the hotels but surrounding businesses, as well as the Town itself,” he said.
“We have not seen or heard of a budget or plan,” Bhakla added. “Hotels are willing to sit down and come up with a plan, but we have never been asked to assist in any real way toward the plan of tourism.”
“I’m glad you guys are now ready to sit down, talk and be on board,” Williams said. When the Economic Development Advisory Committee formed a tourism subcommittee to develop a plan, Williams said he tried to contact the hotels. “Two of you accidentally took my phone call,” he said. “I dropped in on all the hotels to talk with you and nobody would see me. I am so glad now that you are ready to talk. I just wish it had happened before.”
Pinchok said a budget for a tourism program was discussed during an EDAC meeting Aug. 2, 2017.
“Since then, I have heard Sue (Stuhl, Farragut Parks & Leisure Services director), and Karen (Tindal, the Town’s new tourism coordinator), asking for representatives from the hotels to be on a committee,” Pinchok said. “So, we do want your input.”
Bhakla asked other hotel/motel representatives if they had heard from Stuhl or Tindal and heard “no’s” from hotel representatives.
“Karen Tindal [tourism coordinator] has visited every hotel or made an attempt to visit every hotel,” Stuhl said.
“We have not gathered a committee yet,” she said. “That will be later in [August or September].”
“... I’m inclined to pass this tax because the one thing that we hold out that’s always been the sacred thing is property tax,” said Povlin, who made the motion to delay the effective date of the tax until Jan. 1 had it passed. “I never want to see this Board adopt a property tax by ordinance — it should be a referendum that the citizens vote on and it should be because they want expanded services — so to me, everything else should be on the table for negotiations and discussion.”
“We’re talking taxing about a certain segment of our Town,” Markli said. “It’s interesting she said we would only (enact a property tax) with a referendum, but it’s OK to tax you guys.
“We had two former Board members who talked about how careless they were with their employer’s money,” he added. “They talked about how they never considered how much tax was on their rooms.
“Some people do think about how much a room costs and how much tax is.”