Can a Tennessee county legislative body send hotel-motel tax money to a Convention & Visitors Bureau, or does it have to go to a Tourist Development Agency?

Plain-English summary

Sen. Todd Gardenhire asked AG Slatery a Hamilton County / Chattanooga budgeting question: when the county collects the hotel-motel occupancy tax under the 1980 private act, must the legislative body send the tourism-promotion piece of the proceeds to a Tourist Development Agency (TDA), or can it send the money instead to the Chattanooga Convention and Visitors Bureau (CVB)?

The answer is that the county chooses. Both the TDA and the CVB are authorized recipients under the Act. Neither is mandatory.

Chapter 905 of the Public Acts of 1980, as amended by Chapters 444 of 1983 and 918 of 1988, is what the opinion calls a "public act of special application": it applies to the eligible county and is not codified in the regular Tennessee Code. It lets the county levy up to a 4% privilege tax on hotel occupancy. The proceeds are funneled in priority order:

1. Debt service on the sports arena-coliseum facility. Act, § 10(b).
2. Specific projects identified in the Act. Act, § 10(d).
3. At least $800,000 annually for tourism promotion. Act, § 10(e). This appropriation may go to the CVB or "a similar agency performing the promotional purposes."
4. After all bonded indebtedness is paid off, remaining tax revenue is "budgeted for tourism related activities by the county legislative body," including capital expenditures and other tourism-related uses authorized under Tenn. Code Ann. tit. 5, ch. 9, pt. 2. Act, § 10(f).

Section 11-12 of the Act creates the Tourist Development Agency (TDA). Section 13(a)(1) says that if hotel-motel tax revenues are appropriated to the TDA, at least 75% of the appropriated funds "shall be utilized for those sorts of programs and projects provided for in Section 12 of this Act." But the appropriation to the TDA is discretionary, not mandatory.

This pattern matches Tenn. Code Ann. § 5-9-202, the general statute on county tourism appropriations. That statute lets the county direct funds "by such agency or agencies as [the county] shall prescribe, and under such rules and regulations as they see fit."

So the county legislative body has full discretion within the Act's framework: keep the tourism-promotion appropriation flowing to the CVB, redirect it to the TDA, or split it between both.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Does this opinion apply to every Tennessee county?
A: No. Chapter 905 of the Public Acts of 1980 is a public act of special application that, by its terms, applies to the eligible county (the one whose Convention and Visitors Bureau is the Chattanooga CVB). Other Tennessee counties have their own special-application or private hotel-motel tax acts or operate under general law (Tenn. Code Ann. § 5-9-201 et seq.). The general statute follows the same pattern: counties choose the agency that receives appropriated funds.

Q: What does "tourism promotion" actually cover?
A: The Act ties it to Section 12, which lists the programs and projects the TDA may run. The reproduced opinion text does not enumerate the Section 12 list, so check the Act itself for the specifics. The 75% rule in § 13(a)(1) channels TDA funds toward those Section 12 categories.

Q: Can the county skip the $800,000 minimum?
A: No. Section 10(e) makes that figure a floor, not a ceiling. The county must appropriate at least $800,000 annually for tourism promotion. The choice is which agency receives the appropriation.

Q: What if the CVB and TDA have overlapping missions?
A: That is the practical reason this question arose. Both bodies promote tourism. The Act does not pick a winner. The county may divide the appropriation, fund one and not the other, or shift between them year over year.

Q: Is Chapter 905 published the same way as regular code sections?
A: No. As the opinion notes, this public act of special application is not codified in Tenn. Code Annotated. It appears in the bound session laws, so practitioners typically rely on the official session-law publications and on county clerks for working copies.

Q: Could a future legislature mandate one recipient?
A: The General Assembly can amend the Act through subsequent legislation. As written, the opinion reads the Act to leave the choice of recipient with the county; it does not address how a future amendment would have to be structured.

Background and statutory framework

Tennessee's hotel-motel occupancy tax framework is a patchwork. General law in Tenn. Code Ann. § 67-4-1401 et seq. authorizes occupancy taxes by counties and municipalities. Many counties operate under private acts tailored to local needs, particularly in urban counties with substantial convention and visitor industries.

Chapter 905 of the Public Acts of 1980 was the original act for the eligible county, focused on financing a sports arena-coliseum facility. Chapters 444 (1983) and 918 (1988) layered on amendments, including the tourism-promotion appropriation requirement and the establishment of the Tourist Development Agency.

The general state-level rule for county tourism funding is Tenn. Code Ann. §§ 5-9-201, -202. Subsection 5-9-202 is the source of the broad agency-choice principle: appropriations may be expended through "such agency or agencies as [the county] shall prescribe, and under such rules and regulations as they see fit." This opinion treats that statute as a parallel authority confirming the discretionary structure of the private act.

Citations

• Tenn. Code Ann. § 5-9-201(b)
• Tenn. Code Ann. § 5-9-202
• Chapter 905 of the Public Acts of 1980, §§ 2, 3, 10(b), 10(d), 10(e), 10(f), 11-12, 13(a)(1)
• Chapter 444 of the Public Acts of 1983
• Chapter 918 of the Public Acts of 1988

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2018/op18-24.pdf

Original opinion text

June 1, 2018
Opinion No. 18-24

County's Appropriation of Hotel-Motel Tax Revenue for Tourism Promotion

Question
May a county legislative body appropriate the hotel-motel tax revenue collected pursuant to Chapter 905 of the Public Acts of 1980 for the purpose of promoting tourism to a Convention Visitors Bureau or must the tax revenue be appropriated to a Tourist Development Agency?

Opinion
Under Chapter 905 of the Public Acts of 1980, as amended by Chapter 444 of the Public Acts of 1983 and Chapter 918 of the Public Acts of 1988, a county has discretion to appropriate hotel-motel tax revenues for the purpose of promoting tourism to a Convention Visitors Bureau or to a Tourist Development Agency.

ANALYSIS

Chapter 905 of the Public Acts of 1980, as amended by Chapter 444 of the Public Acts of 1983 and Chapter 918 of the Public Acts of 1988 (collectively, the "Act"), is a public act of special application and is not codified in Tennessee Code Annotated. The Act allows an eligible county to assess "a privilege tax upon the privilege of occupancy in any hotel of each transient in an amount not to exceed four percent (4%) of the consideration charged by the operator" (the "hotel-motel tax") to fund a sports arena-coliseum facility, certain specified projects, and tourism promotion. Act, § 2. Taxes collected by a hotel pursuant to the Act must be remitted directly to the county. Act, § 3.

Section 10 of the Act directs how the hotel-motel tax revenues are to be allocated. The tax revenues must first be allocated to meet any debt service for the construction of a sports arena-coliseum facility. Act, § 10(b). After the debt service for the sports arena-coliseum facility is satisfied, the tax revenues are allocated to specific projects identified in the Act. Act, § 10(b). Section 10(d) identifies seven projects that are to be funded by the hotel-motel tax revenue collected and the required allocation for each one. Section 10(e) provides that "[t]he county legislative body shall appropriate annually at least eight hundred thousand dollars ($800,000) from the revenues of this act for the purpose of promoting tourism." Section 10(e) further provides that the county may make the appropriation required in Section 10(e) to the Chattanooga Convention and Visitors Bureau ("CCVB") or a similar agency performing the promotional purposes performed by the CCVB. Finally, once all of the indebtedness for any bonds issued to finance the sports arena-coliseum facility and the specified projects have been funded, the hotel-motel tax revenue "shall be budgeted for tourism related activities by the county legislative body, including capital expenditures, [and] all other expenditures allowed to counties relating to tourism related activities, including but not limited to the provision of Tennessee Code Annotated, Title 5, Chapter 9, Part 2." Act, § 10(f).

For the purpose of promoting tourism, the Act also creates an agency known as the Tourist Development Agency ("TDA"). Act, §§ 11-12. The county legislative body is authorized, but not required, to make appropriations from the hotel-motel tax to the TDA for the purpose of promoting tourism. If any hotel-motel tax revenues are appropriated to the TDA, "[n]ot less than seventy-five percent (75%) of the funds appropriated for tourism shall be utilized for those sorts of programs and projects provided for in Section 12 of this Act." Act, § 13(a)(1).

Thus, in allocating hotel-motel tax revenue for tourism promotion, the county legislative body in a county covered by the Act has discretion to appropriate, within certain limits, the revenues to a Convention Visitors Bureau or to a Tourist Development Agency. That is, under the Act, both the TDA and the CCVB are authorized to receive hotel-motel tax revenue for tourism promotion, but the Act does not mandate that either agency receive any funding from the tax revenue. This is similarly mirrored in Tenn. Code Ann. § 5-9-202, which addresses a county's general authority to appropriate funds for tourism promotion and which provides that such funds may be used and expended "by such agency or agencies as [the county] shall prescribe, and under such rules and regulations as they see fit." (Emphasis added.)

[Footnote 1: Pursuant to Tenn. Code Ann. § 5-9-201(b), a county legislative body or other governing body is authorized to appropriate monies from the county's general fund for tourist promotion. Any funds appropriated under Tenn. Code Ann. § 5-9-201 "shall be used and expended under the direction and control of the county legislative bodies so appropriating the funds, or through such agency or agencies as they shall prescribe, and under such rules and regulations as they see fit." Tenn. Code Ann. § 5-9-202.]

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

RYAN A. LEE
Assistant Attorney General

Requested by:
Senator Todd Gardenhire
425 5th Avenue North, Suite 732
Nashville Tennessee 37243-0215