Contributions Examined

Recently there has been a lot of discussion about funding, or the lack there of, for the Loudon County Visitor's Bureau. The Bureau had even reported that without additional funding they would have to close their doors. Fortunately for them, Lenoir City officials came up with additional funding for this year at least to prevent their closing. 

For the 20 years of the Visitor's Bureau existence, Loudon County has been the primary financial supporter of the Visitor's Bureau designating as much as 50% of the county's hotel/motel tax. As those revenues continued to grow commission eventually put a cap on the level of funding going to the Visitor's Bureau. During this same time period, Lenoir City and Loudon have made no or very small contributions to the Visitor's Bureau. In 2007 Lenoir City officials also passed a 5% hotel/motel tax with the discussion that some of those revenues would go to support the Visitor's Bureau. Unfortunately until now the city has not made any significant contribution.

When city officials were debating the passage of the hotel/motel tax, members of the Visitor's Bureau board came out in strong opposition to the tax fearing it would hurt hotel occupancy. According to Mayor Matt Brookshire, some on council took issue with the Visitor's Bureau board objecting to the tax and then asking for a portion of it after the tax was passed.

From the county side, some commissioners question the county's level of financial commitment given Lenoir City's lack of support. The argument goes, the Visitor's Bureau is located in Lenoir City, Lenoir City is the biggest recipient of the Visitor's Bureau benefits and many of the events and businesses promoted by the Visitor's Bureau are in Lenoir City.

From the city's side, city officials feel that their citizens are also county residents and pay county taxes and thus entitled to county support. The city officials also point out that they provide certain city services to the area businesses and hotels that the county does not have to provide.

The third argument is that the Visitor's Bureau can't really prove that any of their efforts actually generate the tax revenues they claim. After all, the hotels are here, the lakes are here and the businesses are here. Would customers still frequent the area without the Visitor's Bureau's efforts?

All of these questions are matters that elected officials must deal with and reach solutions. And in these extraordinary economic times, all elected officials have to consider every dime.

There was some discussion at the recent Lenoir City Council meeting as to whether the county should do more for the Visitor's Bureau. It was stated that the city and county usually split joint operations 70-30, meaning the county pays 70% and Lenoir city pays 30% of joint operations. The chart below may help in that discussion. The chart shows the county's and city's contributions over the last eight years.

Year Loudon County Lenoir City Loudon
2001 $162,803.00 $0.00 $0.00
2002 $150,323.00 $0.00 $0.00
2003 $121,201.00 $0.00 $0.00
2004 $117,091.00 $0.00 $0.00
2005 $138,995.00 $0.00 $0.00
2006 $135,000.00 $0.00 $0.00
2007 $135,000.00 $5,000.00 $0.00
2008 $135,000.00 $5,000.00 $0.00
Total $1,095,413.00 $10,000.00 $0.00

If the 70-30 plan were in place, the city is about $325,000.00 behind on their contributions for the last eight years.

Past Articles From News Herald To Give Context
Council gives unanimous hotel tax nod
News-Herald 6/27/07
Lenoir City Council unanimously passed an ordinance Monday to implement a 5 percent occupancy tax to hotels and motels within the city limits. This city tax combines with the county tax and other sales tax totaling the overall tax on hotels to 19 percent within the city limits.

A public hearing was held prior to the council meeting allowing some local hotel and motel owners as well as other concerned citizens to voice their concerns.

Alpesh Patel, speaking on behalf of Lenoir City hotel and motel owners, reemphasized his previous statements concerning the tax. "Our overall viewpoint on this is ... in the long term this is going to stunt the growth of the city."

Patel cited several reoccurring events in Knoxville that draw travelers to Lenoir City hotels such at the Honda Hoot, a Honda motorcycle touring rally, as well as the Junior Olympics and University of Tennessee football games.

"We are not a destination market," Patel stressed. "A large portion of our guests don't have to stay in Lenoir City."

Tom Sharp, a local businessman, told the council, "You're playing with fire." Sharp said the new tax could work against the city just as easily as it could work for it. "A lot of travelers are offended by high taxes assessed on their room rates," he said.

Even with the new tax passed, Lenoir City may not have the highest combined tax in the country, as indicated by the Holiday Inn worldwide directory, which was cited in a recent News-Herald story. The directory is updated annually and only represents areas that include a Holiday Inn, according to Anthony Casey, local Holiday Inn Express manager.

Sharp cited information provided through the American Automobile Association (AAA) stating Collierville, just east of Memphis, has the current highest rate in Tennessee at 19.75 percent, not Knoxville at 17.25 percent as reported by the Holiday Inn worldwide directory.

According to Lenoir City Council members, eight of the 11 hotels in Loudon County fall within the city limits of Lenoir City. These hotels all receive support through the city's police, fire and street services.

Lenoir City Mayor Matt Brookshire pointed out Loudon County currently collects a hotel occupancy tax for all 11 hotels but does not provide these services to the eight within Lenoir City. He countered the protest by asking why Lenoir City should not collect a city hotel occupancy tax when it maintains these essential services for the city's hotels.

Brookshire also listed 18 other cities in the state with a 5 percent city hotel occupancy tax, establishing the precedent.

The ordinance passed and goes into effect immediately. This tax is intended to be collected monthly from local hotel operators with proceeds going into the city's general budget fund.

    LC officials ponder hotel tax allocation
News-Herald 8/16/07
Money spent could be money earned depending on the outcome of an ongoing discussion within Lenoir City Council. The allocation of funds generated from the Lenoir City hotel/motel occupancy tax was an area of major discussion at the Aug. 13 council meeting.

Lenoir City Council unanimously passed an ordinance to implement a five percent city occupancy tax to hotels and motels within the city limits at the June 25 meeting. This city tax combines with the county tax and other sales tax totaling the overall tax on hotels to 19 percent within the city limits.
"We always said we would give part of that [revenue] to the visitor's bureau and I want us to be prepared for that when the time comes," said Mayor Matt Brookshire.

City officials indicated any financial contribution to the Loudon County Visitor's Bureau should have a specific designation placed upon it, such as for the wider promotion of Lenoir City to attract new business to the area and other efforts deemed appropriate by city council.

Among the issues discussed concerning the tax revenue, the most prevalent was in relation to how much money should the city contribute to the visitor's bureau. Concerning the county hotel/motel tax, Councilman Gene Hamby asked, "How much did they get from the county for this?" Lenoir City Administrator Dale Hurst said he believed it was originally 50 percent of the tax revenue but since then it has had a total dollar amount cap placed upon it, making the percentage figures less useful.

"I would like to see us move away from a percentage," said council member Eddie Simpson. "We need to really study where this money is going to be spent."

"I think the set dollar amount idea in a good one," Brookshire said, agreeing with Simpson. Despite reaching a semblance of an agreement over the topic of a set dollar amount, no specific amount was discussed during the council meeting.

"This is something we need to accomplish this month," Brookshire said. He also said he added the item to the agenda to begin the discussion process for "drafting a resolution which seeks to provide for the distribution of the tax." The issue is slated to be discussed in further detail at the Lenoir City Council workshop Aug. 20.

The language of the hotel occupancy tax ordinance as it stands designates the revenue for the city's general fund.

Lenoir City officials also noted the city does not currently contribute directly to the Loudon County Visitor's Bureau.

Visitors Bureau seeks help from Lenoir City 
Brandon L. Jones News Herald 7/10/08
Representatives from the Loudon County Visitors Bureau told Lenoir City Council Monday evening that some of their programs may fall by the wayside due to a lack of marketing funds.

The bureau's director, Mary Bryant, said while composing a draft of its 2009 budget the bureau's financial marketing crisis would be inevitable unless they came up with several thousand dollars. 

She said the bureau would lose many of the very items that draw people to this county, such as day trips, dining and shopping, and the Events and Festival brochures would have to be pulled in order to maintain the funds to survive. 

"It's a significant blow . . . at a time when we have a lot to offer," she said. 

Also threatened, she said, were advertisements in the Tennessee Vacation Guide.  She said those in Blue Ridge Parkway had already been cancelled - both of which are year-long magazines that give a heavy boost, she stressed. Online advertising has been cut as well.  "We are going to reach fewer and fewer," she said.

She added this would make the third budget in which the bureau will have to access its reserves in order to stay afloat. 

The bureau's budget is also set up contrary to that of the city's, which both she and council members said makes for difficult lending practices. The bureau is balanced on the calendar year, and the city on the fiscal year.  Bryant implied the bureau may have no reserves if this pattern continues another 18 months.

"I don't see how we can let these things be cut," commented Lenoir City Mayor Matt Brookshire.  He added, funds could be withdrawn from the city's economic development coffer, which he suggested harbored roughly $125,000. 

Bryant said, "to do it well," roughly $22,000 would be needed in order to salvage the bureau's brochure-marketing and magazine advertisement plans, nearly $800 for the county events guide, and another $750 for its dining and shopping advertisements: In all, nearly $23,550 would be required to restore what one man with the bureau said was the county's primary tool in the tourism industry. 

Bryant was asked whether she had contacted Loudon County and the City of Loudon Commissions. She said she had not as of yet. She also noted the hotel/motel monies from the county and city have helped lessen some of the struggle but they need more funding.

"They do a fantastic job," Councilman Tony Aikens said.  Regarding the tourists themselves, he noted that "it's just important that we try to get them up here." 

Bryant said the FLW Fishing Tournament - which the bureau is bidding to bring back to the county next summer as well - brought in something to the tune of a quarter-of-a-million dollars during a four-day course over the summer.  It also brought along international coverage of the county. 

"I think we can help out to some degree," the mayor remarked.  He further noted that the Lenoir City Utility Board, along with the council, must approve of such assistance by vote.  Brookshire added an evaluation of funds would be needed as well before determining precise amounts.