A recent story in East Ridge News Online revealed that for 15 years the City Council and staff suffered under a delusion that according to city ordinance all hotel/motel taxes must be spent on parks/recreation and tourism.
Hundreds of thousands of dollars each year are collected by the city from this tax. Over the course of 15 years, millions of dollars in revenue – it was believed – had to be spent to service debt (pay back borrowed money) for improvements to Camp Jordan Park.
How in the world did this happen?
I’ll tell you one thing, it’s convenient, isn’t it? What’s better than to have a funding source that’s perceived to be devoted exclusively to Camp Jordan Park, otherwise known as “the jewel of East Ridge.”
The hotel motel tax was first adopted in January 2005 when Vince Dean was Vice Mayor, David Mays was City Manger and Cris Helton was City Attorney.
The language in Ordinance 779 has all the “Whereas” pomp in it, like every other ordinance. “Whereas, The City of East Ridge is desirous of gaining all potential revenue for the betterment of citizens of East Ridge,” it begins.
“Whereas, The City of East Ridge is authorized by TCA 67-4-102 to levy a privilege tax upon the privilege of occupancy in any hotel,” it continues.
“Whereas, the levy of this privilege tax will enable the City to finance various public improvements and generally pay for the costs of the City,” it says.
Then it gets down to business: the tax is five percent on hotel/motel rooms.
Nowhere in the document are the words “parks,” “recreation,” or “tourism” written.
On Feb. 10, 2005, one month after adopting the ordinance, the City Council promptly repealed the whole thing.
“Whereas, it is necessary and desirable to repeal Ordinance 779 in its entirety at this time so that the issue can be studied further prior to any adoption of an occupancy tax on hotels and motels,” reads Ordinance 781.
Hmmmm. Maybe that hotel/motel tax was not such a good idea.
It took a whole five days for the issue to be “studied further.” On Feb. 15, 2005, the city held a workshop to discuss the hotel/motel tax. The minutes of this meeting state that “Vice Mayor Dean wanted to make sure the Council was supplied with all the information possible in order to make a decision.”
The big information coming out of this meeting was the idea of creating a soccer complex. This meeting, in my opinion, was the genesis of our city’s obsession with soccer.
Mike Steele, then President of the Regional Youth Soccer Authority (RYSA) and later a two-term mayor of East Ridge, introduced members of the authority, including David Roden. According to the minutes of the workshop, Roden said a stadium had been built (presumably the Weldon Osborne Stadium) and that “quality grade lighting for TV has been installed on some of the fields.” He said plans have been made to light all the fields and connect those fields with handicap accessible walkways.
“(Roden) stated that when complete it will be the best soccer complex this side of Memphis to the East Coast,” according to the minutes. The complex could host 100 to 150 teams at a time, which would increase revenues for the city’s hotels, motels and restaurants.
Steele got back to the big picture: RYSA was charged with building a world-class soccer complex “for the purpose of economic impact for the community,” according to the minutes of the meeting. He proposed a four percent (not five) hotel/motel tax was “one way of doing this.”
The tax, Steele said, would (at the time) generate $240,000 annually. RYSA needed $1.4 million to complete 14 fields plus $300,000 to maintain the fields. Steele said if the city borrowed the money it would be paid back out of the hotel/motel tax, not affect the general fund and would not require a property tax increase.
During the meeting, hotel/motel owners balked at the five percent occupancy tax. Tim Haynes of the Holiday Inn Express spoke during the workshop and said that the hotels and motels in the city were struggling with declining occupancy. East Ridge hotels would suffer and not be able to compete with those in Ringgold and Cleveland.
Another hotel owner, a Mr. Patel (no first name given in the minutes), told the council that other businesses, like restaurants, should shoulder some of the burden. That idea was dismissed, as Vice Mayor Dean said the city was only looking at hotel/motel taxes because “that is what is available to us.”
On March 10, 2005, Ordinance 782 was passed with the exact same wording as the repealed Ordinance 779. There was one change. The five percent levy on hotel/motel rooms was adjusted to two percent.
Once again, the words “parks,” “recreation,” or “tourism” is nowhere to be found in the document.
Fast forward to March 8, 2012 and Ordinance 911. In this amended ordinance, the same language is present, the only change being the occupancy tax is increased to four percent. It’s done under Mayor Brent Lambert, City Manager Tim Gobble and City Attorney John Anderson.
Now that the current Mayor and City Council are aware that the money from the hotel/motel tax may be spent to service the debt of anything the city wishes to borrow money and pay for, what will they do?
Will they amend Ordinance 911 and use it to finance debt exclusively for improvements to Camp Jordan Park? Or will they do nothing and dip into the funds that are available (according to city officials about $1 million) to finance other public improvements or “generally pay for the costs of the City,” as the existing language states?
Your guess is as good as mine.