Small business owners fret about impact of new Walker County hotel tax

Melissa Tinney shows off the Pigeon Mountain Crossing property she and her husband purchased to make into a retreat several years ago Wednesday, March 27, 2019 in LaFayette, Georgia. Tinney says churches will move their retreats to Tennessee, where they don't have to pay extra for sales tax, instead of booking at Pigeon Mountain Crossing.
Melissa Tinney shows off the Pigeon Mountain Crossing property she and her husband purchased to make into a retreat several years ago Wednesday, March 27, 2019 in LaFayette, Georgia. Tinney says churches will move their retreats to Tennessee, where they don't have to pay extra for sales tax, instead of booking at Pigeon Mountain Crossing.

When a developer announced a $100 million resort and conference center atop Lookout Mountain two years ago, Walker County (Georgia) Commissioner Shannon Whitfield celebrated a new revenue stream.

Not only would visitors pay sales tax at local restaurants and gas stations, but Whitfield said he would create an 8 percent hotel tax. He told residents that visitors - particularly, the type who book rooms at fancy hotels – would supplement the local government.

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Walker County Commissioner Shannon Whitfield will decide at Thursday's 6 p.m. meeting whether to create a business license requirement. Based on the number of employees, annual licenses will cost $50-$150.

"What do rich people want when they get out of town?" Whitfield asked an audience during a June 2017 public meeting about the resort project. "They spend crazy amounts of money. I want to go up and shake their hands and say, 'Welcome to Walker County.'"

Thursday, during his 6 p.m. commission meeting, Whitfield will decide whether to finally implement the hotel tax. But the target has significantly changed. Construction has not started on the McLemore Hotel, and it's unclear where that project sits. Developer Duane Horton did not return a call seeking comment Wednesday.

In fact, county spokesman Joe Legge said, there are no hotels or motels in all of unincorporated Walker County. Instead, the tax will fall on visitors booking short-term vacation rentals through websites like Airbnb or VRBO.

"This is something that would take some pressure off of property taxes," he said. "Also, it would be paid by people from Florida, people from Tennessee, people from Texas, people from Washington, D.C., and Virginia who are coming to visit our community."

But some residents who rent out homes say the move could devastate their income.

"This 8 percent tax that you're talking about very well could be just what puts me out of business," Jon Afman, a Catoosa County school teacher who rents The Lodge of McClemore's Cove, said during a March 14 public hearing. "I have a very thin margin."

Located in the Kensington community off West Cove Road, Afman has owned a 6,000-square-foot, Gatlinburg-chic cabin for 18 years. He went into debt to buy and expand the home, and he has supported the purchase with vacation rentals from the beginning. The property features a pool, hot tub, foosball table, shuffleboard table, arcade machine and deck overlooking the cove.

Far from well-heeled business executives booking a corporate retreat at a mountain bluff resort, he often rents out to family reunions. His guests this week include a high school baseball team that is playing in a tournament at McCallie School. Booking the house next weekend for 10 guests would cost about $2,500, according to Airbnb.

Afman said the extra 8 percent tax will push guests to neighboring counties.

"I get this email all the time," he said. "The thing people care about the most is the bottom line."

Melissa and Chuck Tinney, the owners of Pigeon Mountain Crossing southwest of LaFayette, also said the added burden will make bookings difficult. Located on 80 acres with a large lake in the middle, their site hosts weddings, corporate events and church camps.

They bought the property in 2012 and built a mix-use space, as well as a bunk lodge and a tiny home. In all, they can house 85 people. To make the business work, the Tinneys don't book for groups less than 30, at a rate of $25 a person.

"It's going to probably cost us," Melissa Tinney said. "We will probably have to suck in some of that expense to be able to compete. We're already cheaper than most people out there. I think it's going to cut into what we're making. We're already tight."

Unlike most sales taxes, which are collected by the Georgia Department of Revenue and then remitted to the counties and cities, local governments collect hotel taxes themselves. Counties have discretion on whether to charge short-term vacation rentals, said Tyler Reinagel, the director of planning and research at the Georgia Department of Community Affairs.

Catoosa County Manager Alicia Vaughn said her county doesn't charge short-term vacation rentals. Calhoun doesn't either, said City Administrator Eddie Peterson.

In Tennessee, Airbnb has collected Hamilton County's 8 percent tax and given it back to the county since October.

Under Georgia law, Walker County has to spend most of the money on tourism promotion. Out of $10,000 collected, Legge said, $4,375 would go to the chamber of commerce. Another $1,875 would go to "Tourism Product Development." Legge said the county is considering a welcome center inside the Rock Spring civic center.

The other $3,750 would go to the county's general fund.

Whitfield, meanwhile, has amended his proposal for the tax after meeting with Afman and the Tinneys on Friday. While he initially planned to begin collecting the 8 percent in May, he will push the start date back to October. Legge said some short-term rentals are booked through the summer, and it would be awkward for the homeowners to circle back and charge an extra fee now.

Whitfield also agreed to create a gradual rise to the tax. It will start at 5 percent and increase to 8 percent after a year.

"Certainly not what we wanted," Melissa Tinney said. "But definitely, we've been heard. And it's better than what it was."

Contact staff writer Tyler Jett at 423-757-6476 or tjett@timesfreepress.com. Follow him on Twitter @LetsJett.

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