CLARKSVILLE, TN (CLARKSVILLE NOW) – After postposing an ordinance to add a 4% privilege tax to local hotel-motel charges, the City Council has now announced plans to go forward with the tax but at a lower rate.

During the City Council’s meeting this past Thursday, Mayor Joe Pitts said he plans to bring forth an amendment that will do two things:

“First of all, it will reduce the (tax) percentage from 4% to 2.75%, and it’ll also make the effective date for the ordinance Jan. 1, 2025,” Pitts said. “After meetings with hoteliers, they ask that the delay be put in place to allow them to fulfill the contracts they have in place for calendar year 2024.”

The mayor’s office is proposing the new tax to help pay for the renovation of the Roxy Regional Theatre into a Performing Arts Center.

The amendment comes after the Clarksville-Montgomery County Convention and Visitors Bureau (CVB), and a number of Economic Development Council (EDC) board members objected that the higher tax rate hike would hurt the local community in various ways, including that Clarksville would have the highest hotel tax rate in the nation.

Previously, EDC CEO Buck Dellinger said the new tax would also affect military families moving to Clarksville. However, the mayor and the City Council have pushed back on this.

Are soldiers affected by hotel tax rate?

At Thursday’s meeting, Pitts said the city’s occupancy tax allows federal employees to be tax exempt, because it’s considered a state tax, according to state law.

However, according to the Private Acts of 1979, a proposal exempting military personnel from the hotel-motel occupancy tax was voted down locally and did not become effective. Clarksville Now reached out to Montgomery County Trustee Kimberly Wiggins to verify the information in the act.

“There is a possible exemption that did not pass for Montgomery County back in … what it looks like is 1979 or 1980,” Wiggins said. “Everyone pays the hotel-motel occupancy tax, but here’s the caveat: If someone stays more than 31 days, they become exempt on the 31st day. It is up to the hotel whether they will refund the first 30 days or give the occupant a credit on their stay for those first, uninterrupted 30 days.”

When asked about the Private Acts of 1979, Pitts said the act does not apply to the city’s proposed tax, and city CFO Laurie Matta has the exemption details. Clarksville Now has requested to see those details through a public records request.

Council members address concerns

Meanwhile, Councilperson Brian Zacharias said he’s received a number of emails on how this tax will hurt soldiers and their families coming to Clarksville, and he wanted to share some information.

“I’m not going to accuse anybody of intentionally misrepresenting anything, it could just be (they’re) not in position to know, but when a solider stays at a hotel on TDY or as part of a PCS, there is a rate, which is $107, I just looked it up for here in Clarksville,” Zacharias said. “When that soldier files that travel voucher, any taxes do not count against that rate that they are reimbursed for. … So, an increase in the hotel-motel tax is not going to price soldiers out of being able to stay where their travel per diem allows them to stay.”

Councilperson Deanna McLaughlin added that there are a lot of hotels across the country that observe the government rate even if you’re not on orders.

“If somebody is coming to Clarksville and they happen to be a government employee or soldier, they are, in a lot of cases, allowed that same government rate. I agree it was misinformation, and I’m glad that it was verified.”

Limitations of Temporary Lodging Expenses

After the councils’ comments, Dellinger, former chief of staff of the 101st Airborne Division and garrison commander of Fort Campbell, remained adamant that the tax will have an impact on military families and shared information with Clarksville Now from the U.S. Department of Defense website.

The Army allows a Temporary Lodging Expense (TLE), which is “an allowance intended to partially pay soldiers for lodging/meal expenses incurred by a soldier or their dependent while occupying temporary lodging in the continental US in association with a Permanent Change of Station (PCS) move.”

Dellinger pointed out that TLE is limited to 14 days, and Fort Campbell is not eligible for TLE extensions. The 14 days also include any lodging at the originating station as well as the destination.

“So, if a soldier PCS’s from Alaska and is in a hotel in Alaska for four days before they depart, then travels, they only have reimbursement for 10 days upon arrival at Fort Campbell,” Dellinger told Clarksville Now. “Finding housing in less than 14 days is a challenge. After 14 days, the soldier is reliant on Basic Allowance for Housing (BAH) to cover costs of lodging, meals and taxes.”

Dellinger said hotel taxes are reimbursed for a 14-day period, but only if the total reimbursement is less than the maximum cap for the day ($290) for the soldier family unit, which includes meals per diem for the sponsor and their family members.

“In most cases, for Fort Campbell, the maximum will not be reached. That said, while we certainly hope that government rate rooms are available, there is a finite number available in the market,” Dellinger said.

EDC comments

Additionally, the EDC sent the following statement to Clarksville Now: “We recognize the government/military impact of the hotel-motel taxes is complex and that each military or military-affiliated family travel situation is unique, so the imposition of an additional HOT (hotel occupancy tax) on this group will have varying impacts based on how quickly a military family can complete their PCS move.”

The EDC also said they support the downtown development, and the Roxy project would be a nice addition to the downtown core. However, the 2.75% tax increase would still make the community the highest taxed municipality in the state of Tennessee, which will challenge the ability to recruit additional events, full-service hotels and conferences.

The council is expected to hold its second and final vote on the new hotel/motel tax on Thursday, May 2, at 6 p.m. at City Hall.