CLARKSVILLE, TN (CLARKSVILLE NOW) – A proposed new 4% privilege tax on lodging would give Clarksville the highest total hotel tax rate out of the nation’s 150 largest cities, according to a recent study.

After the City Council gave initial approval to the new tax at last week’s meeting, the Clarksville-Montgomery County Convention and Visitors Bureau (CVB) met and discussed potential implications of the higher hotel-motel tax. A number of Economic Development Council board members also attended the CVB meeting to speak to their concerns. Both organizations came to the conclusion that the higher tax rate hike would hurt the local community in various ways, including Clarksville being projected to have the highest rate in the nation.

To understand the consequences of the proposed tax rate being passed, HVS, a global consulting firm, pulled information from their 2023 Lodging Tax Report, which lists the total hotel tax rate for those cities, comparing them to Clarksville’s total in if the 4% tax rate were to pass.

Clarksville’s rate would be the highest at 21.5%. Only one other city would have a rate over 20%. The total tax rate includes state and county sales tax (9.5%), the existing hotel tax rate (8%), the proposed additional 4%.

Economic Development Council CEO Buck Dellinger told Clarksville Now this kind of decision would have an everlasting effect on the community. “When you’re that red dot, you don’t recover.”

Executive Director of Visit Clarksville Angie Brady added that if Clarksville were to have the highest total hotel tax rate in the nation, occupancy would drop throughout the city while collections for CVB, Montgomery County and the City of Clarksville would drop as well. “It hurts everybody,” she said.

Affect on military families

The city’s proposed hotel-motel tax rate also affects military families moving to Clarksville.

“When a military soldier moves here, they come on orders,” Dellinger said. “They don’t get to plan their move much. They get orders, maybe get 90 days or maybe six months, but they’re told you need to be at Fort Campbell by this day. So, one third of Fort Campbell turns over every year.

“Let’s call that 8,000 to 9,000 new soldiers come here every year. About 50% of those are families. When they come here, they stay in hotels until they get housing. If group sales and other travelers go away, the Fort Campbell soldier does not have an option but to go to Kentucky. If we want to keep them here, they have to come here and pay that tax.

“This has become a PCS (permanent change of station) tax on the soldiers moving to Fort Campbell and Clarksville. A lot of these hotel-motel taxes are attractive because the people that are being affected by this are not citizens of your community, but that’s not true in this case,” Dellinger said.

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In 2023, of the hotel-motel occupancy tax generated, around 40% were sports, meeting and group related; 30% were business and weekend travelers; and around 30% were military.

Second vote likely to be postponed

The proposal passed the first of two votes at a special-called meeting on Feb. 29, and the second vote is scheduled to take place on at Thursday’s regular session meeting. The CVB and EDC have asked the City Council and Mayor Joe Pitts to pause the current approval process to allow more research to be performed.

When Clarksville Now reached out to Pitts office for comment, he said the proposal will likely be postponed until the April regular session of the City Council on April 4. “We support that postponement to permit further community conversation, as has been requested.”

Tax rate distribution comparison

At the previous council meeting, some incorrect information was discussed. Dellinger gave Clarksville Now a breakdown of how the local sales tax is set up.

Hotel/motel tax

Out of the existing 8% hotel-motel tax rate, Montgomery County receives 50%, the CVB receives 37.5%, and the City of Clarksville receives 12.5%.

In 2023, the hotel-motel tax collected a total of just under $4.8 million, distributing in rounded numbers the following to each party:

  • Montgomery County: $2.4 million.
  • CVB: $1.8 million
  • City of Clarksville: $596,000.

Local sales tax

For the local sales tax, the Clarksville-Montgomery County School System receives 75.27%, the City of Clarksville receives 24.05%, and Montgomery County receives 0.68%.

In 2023, local sales tax collected a total of $112.9 million while distributing the following to each party:

  • CMCSS: $84.5 million
  • City of Clarksville: $27.7 million
  • Montgomery County: $708,000

Dellinger said rising revenue from sales tax will be enough to pay for the Performing Arts Center.

“Just don’t gut hotel-motel taxes and make us the red dot on the chart,” Dellinger said. “If you just show some patience, we’re going to get you there with sales tax because of the wages and the more people we’re attracting to come here. Trust what we’re doing.”

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