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East Ridge OKs property tax increase, tables hotel tax hike

By: Elizabeth Ryan
(Contact)

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Mike vSteele
Neil Patel

After passing a 21 cent property tax increase on final reading Thursday night, the East Ridge City Council tabled discussion on an ordinance to raise the city hotel-motel tax to 4 percent to pay for maintenance at the Interstate 75 exit and new lighting at Camp Jordan.

Neil Patel, who owns three motels in East Ridge, said the proposed tax would erode his competitive advantage versus motels in Ringgold, Ga., and Ooltewah. He said the recent growth of motels and attractions in Chattanooga also has hurt his business.

“We have to have something in East Ridge that will attract people. And right now our rates are the only thing that we can say that well, we have a competitive edge,” Mr. Patel said.

Mayor Mike Steele pointed out, however, that additional tax revenue would be reinvested to boost area tourism, thereby helping motel owners in the long run.

A 2005 increase on the occupancy tax was used to pay for new soccer fields at Camp Jordan, he said, a renovation that helped the city attract a three-year contract for two state soccer tournaments.

“If we can upgrade the lighting, then we in turn can bid on more tournaments, larger tournaments, and we’ll increase the pie; that is, we’ll bring more people to our exit, staying in our hotels and eating in our restaurants,” he said.

Camp Jordan had an economic impact of $2.4 million in 2007 compared with an impact of about $800,000 in 2005, according to city estimates provided by Mr. Steele.

The proposed increase would put East Ridge on par with Chattanooga, where state and local taxes add 17.25 percent to the room rate, Mr. Steele said.

The City Council plans to meet with East Ridge hotel owners and the East Ridge Merchants Association next week to discuss the issue and gather feedback.

“I don’t think it’s fair to them that we start voting on it until I have that chance (to meet with them),” Mr. Steele said.

Bill Breneman, spokesman for the East Ridge Merchants Association, said the council’s decision to table the ordinance is a step in the right direction.

“The hotel and motel owners are the largest investors in our city and they probably have the most capital investment in our city and probably pay the largest property tax base, so it’s important for them to maintain a competitive edge in doing business.”

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