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Coffee County officials recently discussed levying an occupancy tax at hotels and motels located within Tullahoma and Manchester city limits and using the proceeds to fund the Manchester-Coffee County Conference Center. Both cities already have a hotel-motel tax of their own on the books. However, since the initial discussion, Coffee County Mayor Gary Cordell said state law will likely prohibit the county enacting a tax of its own, although the matter is still being researched. Pictured is Hampton Inn, located at 1922 North Jackson St., Tullahoma.

Stan Teal, a member of the Public Building Authority (PBA), requested Coffee County start charging a hotel-motel tax within the city limits of Manchester and use the money collected to fund the conference center.

However, county officials said it is unlikely that state law would allow the county commission to act on the suggestion.

The PBA owns and operates the conference center, which has been operating in the red since opening its doors, losing $1.5 million in the last four years alone.

Manchester City currently has a 6-percent hotel-motel tax rate.

 The issue came up during the meeting of the Coffee County Budget and Finance Committee on Dec. 11. Levying a county hotel-motel tax within Tullahoma city limits was also discussed.

On behalf of the PBA, Teal proposed the county implement an occupancy tax rate of 3 percent in hotels and motels located in Manchester, with the revenues used for funding the Manchester-Coffee County Conference Center.

Though Coffee County Mayor Gary Cordell was hopeful during the Dec. 11 meeting that the county could enact such a tax within Manchester and Tullahoma city limits, he said on Monday that state laws prohibit the county from levying a hotel-motel tax in the cities.

Coffee County Attorney Robert Huskey is still researching the matter, trying to find a way to adopt such a tax for the county, but it “looks like the door on that is closed,” said Cordell.



“What the PBA wants to do is make a formal request for the county to pursue this,” Teal said.

Teal suggested that a hotel-motel tax could be adopted by the county in the two cities through a private act approved by the state legislature.

“There are counties and cities that do have this in place,” Teal said. “If this was done many years ago, it could have just been done locally, but after May of 1988, this has to go before the state.”

Teal added he had researched the issue extensively and spoken with officials from other municipalities that have gone through the process of adopting a lodging tax.

If a hotel-motel tax is levied by the county, the state would require the revenues to be used for developing tourism and attracting visitors to the area, according to Teal.

That’s why he recommended a 3-percent tax rate collected by the county in Manchester City, with the revenues funding the conference center.

“So the PBA formally requests – after consultation with State Representative Rush Bricken – to change the original funding mechanism of the conference center, [and for the center] to be funded from a hotel-motel tax.”

As the conference center is financed and if there are additional funds accumulated from the tax collection, “the PBA can oversee a county visitor center, and anything that makes our community attractive to people coming to visit,” added Teal.

“What we are proposing is two-thirds of the proceeds generated to go to the operations cost of our conference center, and a third of it be put in a reserve account to take care of maintenance, repairs, all the things that will have to be done.”

This lodging tax of 3 percent “will reduce and, ideally, totally eliminate” any requests from the county’s general fund to cover losses of the conference center going forward, said Teal.


A hotel-motel tax outside of city limits

The county is currently in the process of adopting a lodging tax outside of the city limits.

In June, the Coffee County Commission approved a resolution asking the state legislature to approve a private act that would establish a hotel-motel tax in rural Coffee County, exclusive of Manchester and Tullahoma.

The next phase of the process is a county representative in the General Assembly to introduce the private bill. The county is represented by Sen. Janice Bowling and State Rep. Rush Bricken.

If one of the two introduces the bill, the General Assembly is expected to vote on the private act after the legislative session opens later this month.

If the private act bill passes at the state level, it will become law either upon the signature of the governor, or after being on the governor’s desk without veto for the required 10 calendar days.

To take effect, the private act must again obtain local approval. This step ensures that local officials agree to any legislative changes that might be made to the private act in the General Assembly.

“We don’t have any hotels in the county, so we don’t have a tax in the county,” Cordell said. “But we passed a resolution in June, and we sent a copy of that Janice and Rush. They are aware of that, and they are ready to drop that in the hopper in the next legislative session in January.

“Since then, we have come up with this thought – I am going to suggest that we amend that for the implementation [of lodging tax for the county in the cities],” Cordell said.

“Janice will be willing to get that resolution dropped in the hopper in January,” Cordell added. “And that will be a private act, so that will be done for Coffee County.”

Budget and finance committee members had questions about what the potential revenue for the county would be and if there are laws that direct how the proceeds would be used.

Teal and Cordell said they were still researching the issue and could not provide definitive answers immediately.

“We need to see some numbers of potential revenues,” said member Lynn Sebourn. “I am very open to funding the center through hotel-motel tax; that’s appropriate.”


Can county levy tax in the cities?

According to Public Information Officer for the Tennessee Comptroller of the Treasury John Dunn, the county cannot add a hotel-motel tax in city limits if the city occupancy tax is already in effect unless at least one of a long list of very specific exceptions is met.

Both Manchester and Tullahoma already levy occupancy taxes of their own – 5 percent in Tullahoma, and 6 percent in Manchester.

State law (TCA 67-4-1425) outlines limitations and the exceptions to levying hotel tax, stating “a county shall only levy such on occupancy of hotels located within its boundaries but outside the boundaries of any municipality that has levied a tax on such occupancy prior to the adoption of such tax by the county.”

The law outlines exceptions; however, Coffee County doesn’t seem to fit in any of the excluded categories.

The cities levy their occupancy taxes by ordinance and the counties levy those taxes by private act, said Dunn. 

“Both the city levy by ordinance and the county levy by private act are limited to 5 percent, unless certain exceptions apply,” Dunn said, noting that Manchester has a 6-percent rate in effect, bringing up the question of whether Manchester falls under one of those listed exceptions.

The only way for the county to add a hotel tax in the cities is by meeting the conditions of the exclusions.

“According to the provisions of existing statutes, and since both cities already have levied the tax, it would take falling in one of the exceptions listed in the statute,” Dunn said.

“If the county is authorized to levy a tax based on an exception to the statute, it does not appear that the cities would have to approve it.”

Elena Cawley can be reached by email at