AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 6, relative to sales and use taxes.
HB0397 amends Tennessee’s sales and use tax law to create a special revenue allocation for a narrowly defined stadium project in a county with a 2020 census population between 366,200 and 366,300. Beginning January 1, 2027, state and local sales tax revenue generated from admissions, concessions, merchandise, parking, and related on-site sales at the stadium and certain adjacent ancillary facilities would be apportioned to the designated governing entity. The stadium must be designed to host NCAA Division I FCS football, international and high school soccer, and local and regional events.
The allocated revenue must be used exclusively for stadium capital projects, including debt service, and for operating expenses associated with the stadium. The allocation continues until the debt is retired or July 1, 2056, whichever comes first. The bill also allows a municipality that previously would have received a portion of the revenue under existing law to negotiate annual payments from the stadium entity, with any such agreement expiring June 30, 2032, and requires the entity to provide that agreement to the commissioner of revenue to receive the tax allocation.
The bill creates a targeted exception to the normal distribution of state and local sales tax revenue under Tennessee Code Annotated, Section 67-6-103(d)(1)(A), redirecting tax receipts from a specific stadium-related economic activity to a designated entity. It affects sales tax apportionment, municipal revenue-sharing arrangements, and the use of local tax proceeds for stadium financing and operations, while preserving school-purpose local tax allocations. The measure is highly specific in geography and facility type, effectively functioning as a financing mechanism for one stadium project and any related ancillary facilities.
The bill appears to have been generally supported by lawmakers, as reflected in strong committee recommendations and comfortable floor passage margins. The House Finance, Ways, and Means Subcommittee and full Committee both recommended passage, and the bill ultimately passed the House with substantial majorities after an amended process. The voting history suggests broad acceptance of the bill’s financing structure, with no recorded committee opposition and only limited floor resistance.
The main point of contention is the diversion of sales tax revenue away from the ordinary state/local distribution formula and toward a single stadium entity for a long period of time. Potential concerns include the impact on municipal revenues, the precedent of creating a special tax allocation for one project, and the length of the commitment through debt retirement or 2056. The bill addresses some of that concern by allowing affected municipalities to negotiate replacement payments and by requiring reimbursement to the state for reallocation costs, but those provisions also indicate that revenue-sharing and fiscal fairness were central issues in the bill’s design.