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 Andrew Farmer

Tennessee bill expands tourism tax revenue eligibility to mixed-use developments with 2,500-seat performance venues, enabling municipalities to redirect sales tax for these entertainment facilities.

Received from House, Passed on First Consideration

#taxes

Legislative bill overview

HB 2496 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 authorizes municipalities and public authorities to allocate sales tax revenue collected from tourism development zones toward financing these expanded facility types under existing legal frameworks.

Why is this important

This bill could facilitate public investment in entertainment and mixed-use development projects in designated tourism zones by creating a new revenue mechanism. It affects how local governments allocate tax dollars and may influence economic development patterns in tourism-focused communities, with potential ripple effects on local budgets and private development incentives.

Potential points of contention

Tax revenue allocation debates: Expanding eligible uses for tourism tax revenue may redirect funds away from traditional convention centers or other approved facilities, creating competition for limited resources among different public projects

Private sector concerns: Defining what qualifies as a "mixed-use development" may lack clarity, potentially allowing government favoritism toward certain developers or creating disputes over which projects receive tax support

Municipal fiscal impact: Not all Tennessee municipalities benefit equally from tourism zones; this could concentrate public investment in already-advantaged areas while smaller communities see limited benefit or fiscal burden increases