Council sets hearing for transient lodging tax proposal

A proposal to implement a transient lodging tax that had been put on the back burner over the past several months because of the pandemic resurfaced at Monday night’s Philomath City Council meeting with plans to hold a public hearing.

The proposal calls for a 9% tax on visitors who lodge in Philomath, which currently includes only a small motel. That property alone would not net much income for the city, but an approved RV park project that will bring up to 175 spaces into the fold prompted the discussion.

TLTs can be imposed on visitors that stay in hotels, motels, resorts, inns, bed-and-breakfasts, cabins, lodges, RV sites, campgrounds, vacation rental houses and various other services, such as Airbnb, VRBO and HomeAway.

City Manager Chris Workman said in a February committee meeting that estimates could run $30,000 to $40,000 in annual income through a TLT.

State law dictates that 70% of the revenue must be used for tourism-related promotions, facilities or financing debt related to a facility that would fall in that category. The city would be able to use the remaining 30% for any purpose and it could go straight into the general fund.

The businesses that collect the tax from their customers would keep 5% of the amount for their own overhead purposes.

Workman suggested the 9% TLT on nightly stays based on what municipal neighbors have set for rates.

“It’s what our surrounding jurisdictions are charging, so I didn’t want it to seem extreme one way or the other,” Workman told councilors. “I didn’t want to charge a whole lot more or a whole lot less, so I just went with what our neighbors were charging at the 9%.”

There had been some confusion if the TLT should be a flat fee or based on a percentage.

“If you’re staying in a more expensive place, at 9% you’re going to pay a little bit more. If you’re staying in a less expensive place at 9%, you’re going to pay a little bit less,” Workman said.

In 2019, Benton County adopted a 3% transient lodging tax. The county agreed to share part of that revenue with Philomath, Monroe and Adair Village.

Workman had argued in favor of the county doling out some money to the smaller cities because they do hold events that draw in visitors. Accommodations are scarce in those communities, so they stay in Corvallis, for example, and the Benton County TLT is on the lodging bill.

Philomath received this fiscal year $5,000 from the Benton County transient lodging tax. He will suggest that Philomath continue to receive payments moving forward.

“I wouldn’t make the assumption that it would go away,” Workman said. “I think we still make a valid argument that we still bring tourists to the area and there’s not enough overnight stays in Philomath to house everybody and they are going to go to Corvallis and they are going to pay that countywide transient lodging tax and the city should be able to receive some of that.”

In February, the Oregon Department of Revenue announced that it was set up to collect TLTs for cities and counties. The matter went through the city’s Finance and Administration Committee last month with the outcome being to set a public hearing date on the proposed ordinance.

City Councilor Ruth Causey said she believes a number of cities waive TLTs for members of federally-recognized tribes and asked if that is something that could be considered in Philomath. Mayor Chas Jones also expressed interest in that possibility.

Workman said he would research the issue and bring it back before the public hearing.

If the ordinance passes, the city plans to enter into an agreement with the Department of Revenue to collect the tax. The state takes a 5% administrative fee on money collected on the city’s behalf.

Workman said the Galaxie Motel and the RV park developer will be notified about the hearing.

“Those are really the two stakeholders — this would have a direct impact on them and their future business,” Workman said.

In other stories out of the March 8 meeting:

• After an extended discussion, councilors voted 5-2 (Catherine Biscoe, Jessica Andrade nay) to approve the 2021-22 capital improvement plan.

• A proposal on 1.13% inflation-only increase to water and sewer rates, a $4 per month increase to the street utility fee (from $4 to $8) and a $1 per month increase to the storm drain fee ($2 to $3) led to a detailed debate among councilors. In the end, the utility rates proposal passed on a 5-1-1 vote (Andrade nay, Biscoe abstained).

• The council approved to reduce the general fund fee from $5 to $4 per month. The fee is scheduled to sunset next year.

• The council voted to create a subcommittee to take a close look at the city’s social media policy with plans to revisit the issue at a future work session.

• Jones asked for a moment of silence in recognition of the Rath family tragedy that occurred on Sunday.

VOTING RECORD
Following is a list of votes taken by the Philomath City Council at its March 8 meeting:
• To approve a consent agenda that included the Feb. 8 City Council meeting and works session minutes. Motion: Causey. Seconded: Low. Vote: Passes 7-0 (Yes—Andrade, Biscoe, Causey, Jones, Lehman, Low, Nielson).
• To approve the 2021-22 Capital Improvement Plan as presented. Motion: Jones. Seconded: Low. Vote: Passes 5-2 (Yes—Causey, Jones, Lehman, Low, Nielson; No—Andrade, Biscoe).
• To approve the utility rates and fees as presented beginning July 1, 2021. Motion: Low. Seconded: Lehman. Vote: Passes 5-1-1 (Yes—Causey, Jones, Lehman, Low, Nielson; No—Andrade; Abstained—Biscoe).
• To approve the general fund fee of $4 per household for fiscal year 2021-22. Motion: Low. Seconded: Causey. Vote: Passes 7-0 (Yes—Andrade, Biscoe, Causey, Jones, Lehman, Low, Nielson).
• To direct staff to set a public hearing for May 10 to consider an ordinance implementing a 9% transient lodging tax. Motion: Jones. Seconded: Low. Vote: Passes 7-0 (Yes—Andrade, Biscoe, Causey, Jones, Lehman, Low, Nielson).
• To create a subcommittee to develop an agenda and discussion items on the city’s social media policy to be the topic of a future work session. Motion: Causey. Seconded: Andrade. Vote: Passes 5-2 (Yes—Andrade, Biscoe, Causey, Jones, Low; No—Lehman, Nielson).
• To table the social media policy until comments could be received from councilors and a legal review performed. Motion: Causey. Seconded: Jones. Following discussion, the motion was withdrawn.
• To reverse the subject matter of March 22 and April 12 work sessions. Motion: Causey. Seconded: Lehman. Vote: Fails 4-2-1 (Yes—Causey, Nielson; No—Biscoe, Jones, Lehman, Low; Abstained—Andrade).
• To adjourn the meeting. Motion: Jones. Seconded: Causey. Vote: Passes 7-0 (Yes—Andrade, Biscoe, Causey, Jones, Lehman, Low, Nielson).
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