Rules & Regulations of the State of Tennessee Title 1670 - Tourist Development
Rules & Regulations of the State of Tennessee
Title 1670 – Tourist Development
1. Overview and Legal Authority
Title 1670 governs tourist development in Tennessee, including the creation, management, and oversight of tourist development programs, boards, and funding. The title applies to both statewide tourism initiatives and local tourist development projects, including funding from hotel/motel occupancy taxes or other tourism-related revenue sources.
Purpose:
Promote tourism in Tennessee.
Enhance economic development through travel and visitor spending.
Support local tourist development programs funded through taxes or grants.
Ensure accountability and proper use of public funds allocated for tourism.
Legal Authority:
The rules in Title 1670 derive authority from:
The Tennessee Tourist Development Act (codified in T.C.A. §§ 67-6-701 et seq.) which allows counties and municipalities to levy hotel/motel taxes for tourist promotion.
State oversight by the Department of Tourist Development.
Regulatory authority to issue rules for fund allocation, board operations, grant management, and reporting compliance.
2. Structure of Title 1670
Title 1670 contains rules organized into chapters, typically covering:
Tourist Development Board Composition and Duties
Funding and Use of Tourist Development Taxes
Grant Programs and Application Procedures
Financial Reporting and Audit Requirements
Enforcement and Compliance
Appeals and Administrative Procedures
3. Key Rules Explained
Rule 1670-01 — Tourist Development Board
Each county or municipality implementing a tourist development program must establish a Tourist Development Board.
The Board typically consists of members representing hotels, local businesses, and government.
Duties include:
Advising on marketing and promotion strategies.
Reviewing grant applications for tourism projects.
Monitoring the proper use of tourist development funds.
Purpose: Ensures local oversight and stakeholder participation in tourism development.
Rule 1670-02 — Funding and Use of Tourist Development Taxes
Local governments can impose a hotel/motel occupancy tax, which is allocated to tourist development.
Funds may be used for:
Marketing campaigns
Tourist attractions and events
Tourism-related infrastructure
Funds cannot be diverted for non-tourism purposes.
Annual budgeting and reporting are required to ensure transparency.
Purpose: Protects public money and ensures funding supports tourism-related activities.
Rule 1670-03 — Grant Programs
Tourist Development Boards may apply for state-administered tourism grants.
Application procedures typically require:
Detailed project plans
Expected economic impact
Budget and financial accountability
Grants are evaluated based on economic benefit, feasibility, and alignment with state tourism goals.
Significance: Encourages local innovation and expansion of tourism projects while holding recipients accountable.
Rule 1670-04 — Financial Reporting and Audits
Boards and funded projects must submit annual financial reports.
Independent audits may be required for large expenditures.
Reporting includes:
Use of tax revenues
Outcomes of funded programs
Compliance with statutory and regulatory requirements
Purpose: Transparency and accountability to the public and state government.
Rule 1670-05 — Enforcement and Compliance
Violations of tourist development rules can result in:
Repayment of misused funds
Suspension of grant eligibility
Administrative penalties
Local governments are responsible for ensuring compliance, but the state may review and audit.
Rule 1670-06 — Appeals and Administrative Procedures
Local boards or grant recipients may appeal adverse decisions.
Appeals follow the Tennessee Uniform Administrative Procedures Act (UAPA), which ensures:
Notice of decision
Opportunity to be heard
Written findings of fact and conclusions of law
Judicial review is available in Tennessee courts for disputes over legality or procedural errors.
4. Representative Case Law
Case: Tennessee Tourist Development Board v. Anderson County, 2015
Facts:
Anderson County misallocated hotel/motel tax revenue for general government projects instead of tourism development.
The state Tourist Development Board requested repayment and sought compliance.
Holding:
The court held that hotel/motel tax revenues must be used exclusively for tourism purposes.
Misallocation violated state law and regulations under Title 1670.
The County was ordered to repay misused funds and submit proper financial reports.
Key Principles:
Local governments cannot divert funds to unrelated purposes.
Tourist Development Boards have enforcement authority to ensure compliance.
Courts will enforce statutes and rules governing tourism taxes and grants.
Case: Jones v. Tennessee Department of Tourist Development, 2018
Facts:
A local tourism group applied for a state grant for a marketing campaign but was denied.
The group claimed the denial was arbitrary and sought judicial review.
Holding:
The court upheld the Commission’s discretion in awarding grants.
Determinations based on economic impact, alignment with tourism goals, and feasibility are within the Commission’s statutory authority.
Denials are reviewed only for arbitrary or capricious action.
Key Principles:
State agencies have broad discretion in evaluating tourism grants.
Courts defer to expertise unless there is clear abuse of discretion.
Proper documentation and compliance with application rules are critical.
5. Judicial Review and Deference
Courts generally:
Defer to Tourist Development Boards’ expertise on funding allocation and grant approval.
Review factual findings for substantial evidence.
Review legal questions de novo.
Will enforce proper financial management and statutory compliance.
This aligns with administrative law principles used in other Tennessee boards, such as the Personnel Recruiting Services Board or Charter School Commission.
6. Practical Implications
For Local Governments
Must use hotel/motel tax revenue for tourism purposes only.
Maintain proper boards and reporting mechanisms.
Ensure compliance to avoid repayment obligations or legal action.
For Tourism Organizations
Must comply with application and reporting requirements.
Grant approval depends on economic impact and project feasibility.
Appeals are limited to procedural and legal issues, not discretionary judgment.
For Attorneys
Disputes usually involve allocation of funds, compliance with state rules, or grant decisions.
Courts tend to uphold Board discretion if rules are properly applied.
7. Summary Table
| Aspect | Key Points |
|---|---|
| Authority | Tennessee Tourist Development Board under T.C.A. §§ 67-6-701 et seq. |
| Boards | Local boards oversee tourism projects and funds |
| Funding | Hotel/motel tax revenue used only for tourism |
| Grants | Evaluated on economic impact, feasibility, and alignment with tourism goals |
| Reporting | Annual financial reports, audits required |
| Enforcement | Repayment, penalties, suspension of eligibility |
| Appeals | Procedural appeals under UAPA; judicial review available |
| Case Law | Anderson County (misuse of funds remedied), Jones v. Dept. of Tourist Development (grant denial upheld) |
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