An effort to make uniform rules across the Tennessee’s eight Tourism Development Zones (TDZ) failed in a joint hearing in Nashville Thursday, creating a loose end on legislation passed earlier this year.
Lawmakers wanted new rules to protect the TDZs, rules that would have pull some authority from local governments. Three of the eight of the TDZs are in Memphis — Downtown, Graceland, and the Liberty Park. To keep the areas safe and friendly for tourists, the new law gave the state authority on closing streets, homelessness, and more allowing the Tennessee Highway Patrol (THP) to make arrests in them and conduct investigations.
Cities ask the Tennessee General Assembly to create these TDZs. In them, cities are allowed to capture a percentage of sales taxes and other fees to pay for major tourism projects.
For example, a 2021 TDZ approved for Liberty Park. That zone includes three-square miles around the old Fairgrounds site, including Cooper-Young, Overton Square, Crosstown Concourse, and more. Funds collected from the zone were to pay for the Memphis Sports & Events Center. But also to pay for a $126 million development that was to include hotels, an indoor arcade, a bowling alley, bars, restaurant, and an indoor mini-golf course. The TDZ there was to cover $70.6 million of the cost, officials announced in 2021.
The new rules would have put a litany of new regulations and reporting recruitments on cities with these zones. Road closures, for example, would be granted by state officials and only if the permit was pulled two weeks in advance of the closure, and came with a traffic survey, pedestrian plan, the OK of local businesses, insurance, and more.
State lawmakers passed the law and then charged the Tennessee Department of Tourism Development (TDTD) figure out how to implement it. The law said “uniform,” meaning they all should be treated the same way across the state.
This idea met resistance from Pigeon Forge and Sevierville, East Tennessee tourism powerhouses with small populations and administrative support.
Dustin Smith, city manager of Sevierville, told a joint session of lawmakers that cities there are “just simply not the same operating environment as large metropolitan entertainment districts that these rules are intended to apply to.”
“So, what I’m hearing you say is that one-size-fits-all statewide is gonna fit nobody,” said state Sen. Janice Bowling (R-Tullahoma).
Smith asked for carve-outs on the rule based on population. TDTD said no, based on the way the law is written.
After review, Senators in the joint committee voted to give the new rules a negative recommendation. A majority House members present approved it but did not have the needed votes to support approval.
If a new rule cannot be passed by the end of January 2027, that part of the law will be nullified.
