Oregon appeals court rejects city of Bend appeal in dispute over use of room taxes

SALEM, Ore. (KTVZ) -- The Oregon Court of Appeals has rejected an appeal by the city of Bend of a lower-court ruling in a years-long dispute with some lodging operators over the use of some transient room tax revenues for purposes other than tourism and tourism promotion, as state law requires.

Asked for a statement or whether the city would appeal to the state Supreme Court, City Manager Eric King told NewsChannel 21 they will be discussing "next steps" with city councilors at their next meeting, on Sept. 1.

Here's the Oregon Restaurant and Lodging Association's news release Thursday on the recent ruling (with a link to the court's opinion):

ORLA, Plaintiffs Prevail in Suit Protecting ‘Restricted-Use’ Lodging Tax Dollars

Wilsonville, OR– The importance of appropriately spending local tourism tax revenue was affirmed on August 11 by the State of Oregon Court of Appeals after a case brought forth by Bend lodging operators and the Oregon Restaurant & Lodging Association (ORLA) against the City of Bend.

The original suit was argued on May 8, 2018, in Deschutes County Circuit Court, with Judge Beth M. Bagley presiding. In the suit, the hospitality industry plaintiffs represented by Josh Newton of Karnopp Petersen LLP argued the city unlawfully redirected restricted Transient Lodging Tax (TLT) revenue, which state law required to be spent on tourism and tourism promotion. The court reasoned that a local ordinance passed in the City of Bend violated ORS 320.350 by decreasing the percentage of total local TLT revenues expended to fund tourism promotion from 35.4 percent to 31.2 percent.

“The affirmation by the Oregon Court of Appeals this month upholding the Deschutes County Circuit Court decision means strong protections remain in place for how local lodging tax dollars can be spent across Oregon,” said Jason Brandt, President & CEO of the Oregon Restaurant & Lodging Association. “Our goals remain the same, which start with the importance of working with local administrators and elected leaders when disagreements arise. Filing a lawsuit against a local government partner is a last resort, and we look forward to turning the page and focusing in on what we can do across Oregon to invest our limited local lodging tax dollars on promotional strategies proven to boost our state’s local tourism economies.”

The August 11 decision and details pertaining to the case can be found here.

In 2003, the Oregon State Legislature passed lodging tax reforms meant to protect a percentage of revenues for hospitality industry reinvestment. As a result of the reforms, lodging tax collections spent by local jurisdictions on tourism promotion and facilities were ‘locked in’ as a percentage based on what a jurisdiction had been spending or agreed to spend as of July 1, 2003. July 2, 2003 represented a new chapter in Oregon whereby any new increase in a local lodging tax rate or any newly established local lodging tax would have to be spent on tourism promotion or tourism-related facilities, with 70 percent of revenue collected. The remaining 30 percent can and is commonly spent however a local jurisdiction sees fit free of any restrictions. You can view a short video created by ORLA which works to explain local lodging tax restrictions here: https://bit.ly/TLTdefined.

“My firm and I are pleased with the decision by the Oregon Court of Appeals affirming Judge Bagley,” said Josh Newton, attorney for ORLA and the Bend lodging operators. “It is important that local governments abide by state law and honor their agreements with local business.”

For more information on the efforts of the Oregon Restaurant & Lodging Association, please visit OregonRLA.org.

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The Oregon Restaurant & Lodging Association is the leading business association for the foodservice and lodging industry in Oregon, which before COVID-19 provided over 180,000 paychecks to working Oregonians. The latest available data from the Oregon Employment Department shows current employment levels in the accommodations and foodservice industry totaling approximately 160,000 people as hospitality like many other industries faces the disruptions caused by COVID-19.