New county hotel tax to pay for center’s deficit

The Coffee County Budget and Finance Committee voted on May 27 to pay for the additional deficit of the Manchester-Coffee County Conference Center using county hotel tax revenues.

Budget and finance committee member Lynn Sebourn made the motion. Sebourn, Dwight Miller and Bobby Bryan voted to support the motion, and the motion passed with three favorable votes. Joey Hobbs and David Orrick voted against it.

With Coffee County approving $126,000 for the center’s losses in Fiscal Year 2019-2020, county officials had to approve a budget amendment to cover the actual losses, which would exceed the initially approved amount.

Coffee County and Manchester City equally share the costs for the center, and county officials anticipated the total loss this year wouldn’t top $252,000 – the county’s part being half of that, or $126,000.

But according to members of the Public Building Authority, the board that owns and operates the center, the center’s losses will actually be $399,000 – the reason for the extra deficit being the COVID-19 pandemic.

With part of the deficit representing costs for capital improvements, the budget and finance committee had requested Coffee County Attorney Robert Huskey to interpret the contract between Coffee County and Manchester City, and to find out if the county could deny to pay part of the cost. The agreement between Coffee County and Manchester City was signed in 2000 and outlines the relationships between the county and city when it comes to covering losses at the conference center.

Huskey addressed the issue on May 27 in a letter to members to the budget and finance committee. According to Huskey, county officials have no option but to pay.

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“The Mayor requested that I address the issue of the requirement of the County to make up half of the shortfall or excess loss of the PBA (Conference Center) over and above the budget figure that was allotted and to whether or not the County must satisfy one-half of that amount, even though it’s over budget,” Huskey said in the letter.

The agreement between Coffee County and Manchester City signed in 2000 “is the instrument that provides the only guidance in regard to this transaction,” said Huskey.

The key paragraph is paragraph 5, which says, “It is contemplated by the parties that the Public Building Authority shall operate the Conference Center following acquisition. Net profits and losses attributable to the operation of the Conference Center, both in acquisition and operation thereafter, shall be borne equally by the parties hereto.”

Read the full letter here.

Having received the letter prior to the meeting on May 27, budget and finance committee members voted to pay the additional $74,000 for the conference center using county hotel tax revenues. There was no discussion.  

About the hotel tax

The new 2.5% county occupancy tax, also known as hotel or lodging tax, was implemented in 2019. The tax is collected countywide, including in the city limits of Manchester and Tullahoma.

In the two cities, the $2.5 rate was added to the already existing occupancy tax rates – 6% in Manchester and 5% in Tullahoma – resulting in 8.5% for Manchester and 7.5% for Tullahoma.

In rural Coffee County, the hotel tax is applied for the first time. There are currently no hotels in the rural part of the county.