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Statesman Journal: City imposes tax on lodging to boost tourism

 

Oregon Garden

Oregon Garden

Revenue will be used to promote Oregon Garden

Download a PDF of this storyBY DANIELLE PETERSON • APPEAL TRIBUNE

September 10, 2008

In an effort to boost tourism, Silverton city officials have decided to impose a tax on local lodging.

The city council approved a 9 percent Transient Occupancy Tax (TOT) at its Monday meeting, which will be effective Oct. 1.

The ordinance grants city officials permission to negotiate a 10-year intergovernmental agreement with Marion County on the disposition of the tourism tax generated by the new Oregon Garden Hotel, which is to open this month.

Silverton City Manager Bryan Cosgrove anticipates the agreement will be signed sometime in October.

Over the years, the county has invested millions to keep The Oregon Garden alive and pays about $552,000 in lottery money yearly to repay debts associated with previous garden ownership.

When the city’s plans to impose the tax were first revealed, county officials expressed concern, worrying that the proposed tax would reduce key royalty payments.

As a compromise, Marion County has requested 100 percent of TOT revenues (of the 70 percent required by state to go toward tourism) generated by the new hotel be dedicated to promoting the garden and that the city enter a 15-year agreement.

Marion County Chief Administrative Officer John Lattimer was unavailable for comment.

Cosgrove said staff is recommending that 90 percent of TOT revenues generated by the new hotel go toward promoting the garden and that the city enter into a 10-year agreement with the county.

He said 10 years is standard for this type of agreement.

“The Oregon Garden is the No. 1 tourist attraction in the city, so even after 10 years that money will be used to promote the Garden,” Cosgrove said.

Any visitor who stays at a Silverton hotel or inn (or any place intended for temporary use, such as an RV park) for less than 30 consecutive days will be required to pay the tax.

Cosgrove said the city anticipates earning about $130,000 per year from the tax, but that’s just a rough estimate.

“Until we implement this and give a year or two it will be hard to tell,” Cosgrove said. “Usually it takes two or three years to get a good solid projection.”

By law, 70 percent of funds raised through the tax are earmarked for tourism efforts. The city plans to use the other 30 percent to help offset increasing debt and operating costs within the city’s sewer fund.

“I think it’s always been on the city’s radar,” Cosgrove said of implementing a TOT. “But until you actually have a hotel in town there is no reason to do it.”

Upon implementation of the tax, the city is also required to form a local tourism promotion board, which will make recommendations to the council in awarding tourism-related grants. The nine-person board will include three representatives from the local lodging industry.

Cosgrove said the goal is to begin forming a committee within the next couple of months and start drafting grant applications.

“The goal is to increase the number of people coming to the community to support local businesses,” he said. “We’re looking to draw overnight guests to the city so that those imposing the tax will benefit from it.”

Mike Whitmore, owner of the Edward Adams House Bed & Breakfast in Silverton, said he believes the tax will negatively affect his business.

“Everybody knows that the economy is down and what we see in this tax is us raising our rates,” Whitmore said. “It will hurt our business.”

Mayor Ken Hector said he isn’t fond of taxes either, but is used to paying a TOT when he travels and expects that those visiting Silverton will feel the same way.

djpeterson@salem.gannett.com

One Response to “Statesman Journal: City imposes tax on lodging to boost tourism”

  1. 8YYkLN doors3.txt;25;55


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