Taxes - As introduced, adds to the definition of a "qualified public use facility" as used in the Local Tourism Development Zone Business Tax Act a mixed-use development containing a performance venue with a seating capacity of at least 2,500; authorizes a municipality or public authority that has financed a qualified public use facility within a tourism development zone and that qualifies for an allocation of sales tax revenue from within that zone under the Convention Center and Tourism Development Financing Act of 1998 and under other provisions of sales tax law to use the revenue for purposes authorized in the act or other law. - Amends TCA Title 7 and Title 67.

114th Regular Session (2025-2026) Introduced by Jessie Seal

Expands Tennessee tourism zones to include mixed-use developments with 2,500+ seat venues as qualified facilities eligible for dedicated sales tax revenue allocation.

Companion House Bill substituted

#taxes

Legislative bill overview

SB 2633 expands Tennessee's Local Tourism Development Zone Business Tax Act by adding mixed-use developments with performance venues (2,500+ seats) to the definition of "qualified public use facilities." It then clarifies that municipalities and public authorities that have financed such facilities can use allocated sales tax revenue from tourism development zones for purposes already authorized under existing state law.

Why is this important

This bill affects how local governments can finance and manage entertainment venues in tourism zones. By broadening what qualifies for tax revenue allocation, the bill could enable municipalities to fund performance venues (theaters, concert halls, sports arenas) using tourism-generated sales tax revenue, potentially supporting economic development in specific zones without requiring new tax authority.

Potential points of contention

Revenue allocation clarity: The bill's language about using revenue for purposes "authorized in the act or other law" may create ambiguity about what specific projects qualify, potentially leading to disputes between municipalities and the state.

Selective tax benefits: Designating certain mixed-use developments as qualified facilities effectively provides preferential tax treatment to specific projects and developers, raising fairness questions about why some entertainment venues receive this benefit while others do not.

Definition threshold concerns: The 2,500-seat requirement may be arbitrary and could exclude smaller performing arts venues from accessing these tax revenues, potentially skewing development toward larger commercial projects.