Nashville tourism zone bill moves through Tennessee Legislature

A state-controlled board designed to direct Nashville’s tourist tax dollars to multiple projects will work under the direction of the Tennessee Comptroller’s Office, according to legislation moving through the legislature.

House Bill 2085 sets up a nine-member joint capital tourism board to oversee $30 million in excess revenue generated by the development zone and $300 million in surplus funds held by the Nashville Convention Center Authority. 

The new nine-member board would be majority-appointed by the state. The governor and House and Senate speakers would each get two appointees. Then the Nashville mayor, the Metro Nashville Convention Center Authority president and Nashville Convention and Visitor’s Corp. would each get one appointee.

Comptroller Jason Mumpower told lawmakers Tuesday that 70% of the money generated by the Nashville Convention Center Authority in downtown Nashville’s tourism development zone is state funds and 30% belongs to Metro.

“That’s why the board is structured the way it is, and Metro was hand in hand when the structure of the board was created,” Mumpower said.

Top Republicans push creation of a new state board to oversee Nashville tourism tax revenues

Mumpower explained that the board will operate through the Comptroller’s Office similarly to other agencies the office staffs, such as the State Funding Board, the Tennessee State School Bond Authority and the Tennessee Local Development Agency. The office can take on the duty without needing extra state funding, he added.

The House Government Operations Committee unanimously approved the bill Tuesday. The Senate finance committee delayed the measure until Wednesday, and the House finance subcommittee postponed consideration until the legislature adopts a budget. The bill has an estimated cost of $19,000.

Republican state Rep. Clark Boyd of Lebanon, who is carrying the measure for House Speaker Cameron Sexton, said the bill came together through the state’s Economic and Community Development Department, Metro Nashville and the House and Senate speakers.

The new capital tourism board would serve as an intermediary between the East Bank Authority and Convention Center Boards with the state having ultimate control.

State lawmakers, including House Speaker Cameron Sexton, want more authority over the tourist taxes after approving $500 million for the new Tennessee Titans stadium and $500 million to move the Tennessee Performing Arts Center to the East Bank. Sexton also sits on the East Bank Authority and is trying to take on a bigger role in that position.

The excess money is to be used for projects such as a major expansion of the Music City Center south of Broadway, attracting and promoting businesses through a “mega-events fund,” funding public safety and public space cleanliness in the tourism development zone and building infrastructure for the East Bank and Oracle campus site on the other side of the Cumberland River, Boyd said.

Officials also have discussed using the funds to make bailouts to downtown bars to pay property taxes that increased dramatically following a Metro reappraisal. The bars have been hampered by “triple-net leases” their operators signed years ago that require them to pay the property taxes instead of the building owners.

In addition to making property tax relief grants, the board will be allowed to oversee payments to cover events such as a future Super Bowl to be held at the new Tennessee Titans stadium.

Democratic state Rep. John Ray Clemmons of Nashville voted for the bill, saying he expects the board to help with expanding the convention center and attracting events, but questioned why the mayor’s office appointee won’t serve as the board chairman. Under the legislation, that position is to be held by the governor’s appointee.

“I do just have problems relinquishing a lot of say and control over this authority that’s directly impacting the citizens of Nashville to someone else who we don’t even know who that individual is right now,” Clemmons said.

Boyd said that Metro Nashville was involved in the board’s formation but noted he wasn’t certain how the hierarchy was determined.

Asked why the board will be attached to the Comptroller’s Office, Boyd explained that the comptroller sat on the former Convention Center Authority and would be best at keeping tabs on the finances and making sure the money is handled properly.

Nashville’s Tourism Development Zone was set up in 2009 and put hotel and sales taxes in the downtown area toward the convention center’s construction. First considered a risky investment, the convention center wound up producing a surplus of nearly $170 million by 2025.

Besides creating the board, the legislation shifts that surplus into a state-controlled fund. Ultimately the money could revert to Metro and the state in 2039, if it isn’t used, leading to a potential multibillion-dollar payout.

Adam Friedman contributed reporting to this story.