Will The Tourism Industry Pitch In?
Commissioners Bill Hall (Lincoln County), AOC President, and Bill Baertlein (Tillamook County) brought the reality of extreme affordable housing shortages on the coast to the House Committee on Revenue April 12th, which was hearing House Bill (HB) 3260. HB 3260 would authorize a coastal county to refer to voters a local transient lodging tax on residential short-term vacation rental property of not more than five percent with proceeds dedicated strictly to affordable housing in coastal communities.
The commissioners made these points among others:
- The average age of a person in Lincoln County earning minimum wage is 31 years old.
- More than 14 percent of the total school-age population in Lincoln County is homeless; statewide average is four percent.
- In Lincoln City 40 percent of the homes are primary residences, 30 percent are vacation rentals, and 30 percent are part-time residences. Employers report that housing price and availability is their number one barrier to employee recruitment and retention.
- As an example, a developer advertised the availability of 30 rental apartments and received 400 applications.
- Tillamook County employers experience great difficulty recruiting employees due to lack of affordable housing available for their managers, teachers, nurses, and even transitional housing for doctors.
- Tillamook County has over 1,100 short-term vacation rentals, almost all owned by people residing outside of the county. These vacation rentals generate approximately $26 million in rent each year, $24 million of it leaves the county.
- An assessment study found that there are 2,266 residents of Tillamook County earning an average annual wage of $20,000, but only 239 units within their rental price range.
AOC presented background about the transient lodging tax (TLT), and why this is the appropriate funding mechanism for HB 3260.
Fifteen counties have local TLTs. Until 2003, the transient lodging tax had always been local, managed by locally elected officials. Local communities had been perfectly able to shape and approve the TLT that best fit local circumstances. All county TLTs used at least a share of proceeds for economic development and tourism.
HB 2267 (2003) imposed a new one percent state TLT continuously appropriated to the Oregon Tourism Commission. But the bill did not stop there. It imposed requirements and limitations on local TLTs, under rigid definitions, directing specific purposes of the local tax for the benefit of a particular industry. In spite of the effort of supporters of the bill to seize 100 percent of any increased or new local TLT for its own purposes, cities and counties were able to retain traditional local control over a mere 30 percent.
The result was that after July 1, 2003, a county may increase its existing TLT or adopt a new one only under the following limitations.
- An increased TLT may not decrease the percentage of revenues actually expended to fund “tourism promotion” or “tourism-related facilities.”
- At least 70 percent of net revenue shall be used to fund “tourism promotion” or “tourism-related facilities;” or to finance/refinance debt of “tourism-related facilities” and pay administrative costs incurred.
- Not more than 30 percent of net revenue shall be used to fund general county services.
- “Tourism promotion” means:
- Advertising, publishing, or distributing information to attract “tourists.” A “tourist” travels more than 50 miles from the community of residence or stays overnight.
- Strategic planning and research.
- Operating “tourism promotion agencies,” which includes a nonprofit organization or governmental unit responsible for year-round promotion; a nonprofit entity that manages tourism-related economic development plans, programs and projects; and a regional or statewide tourism-related business association.
- Marketing special events and festivals designed to attract tourists.
- “Tourism-related facility” means:
- “Conference center,” which meets the membership criteria of the International Association of Conference Centers.
- “Convention center” with statutorily specified rooms, spaces, and ownership.
- “Visitor information center,” a building or portion of a building for the main purpose of distributing information to tourists.
- “Other improved real property that has a useful life of 10 or more years and has a substantial purpose of supporting tourism or accommodating tourist activities.”
HB 3260 addresses the growing imbalance created since 2003 of the increasing major investment in promotion of the tourism industry – for calendar year 2015, nearly $18 million statewide (Transient Lodging Tax Work Group Report, page 5) – versus the communities means to manage the impacts of the industry. For example, according to the Transient Lodging Tax Work Group Report (December 2016), at page 6: “Although the industry generates a large number of jobs that are geographically dispersed around the state, the *wages are relatively low in that industry*” (emphasis added).
If you look at the means at hand of some of the communities to provide public services needed as a result of the industry, the imbalance can be striking: Lincoln City property tax revenue, including bonds, $7.3 million, versus restricted revenue from lodging taxes, $5 million (Work Group Report, pg. 6).
HB 3260 would permit the voters of a coastal county to impose a local TLT on residential short-term vacation rental property of up to five percent of the consideration rendered, strictly for the purpose of funding affordable housing within the county’s coastal communities. Affordable housing – the type of housing needed by employees of the tourism industry.
AOC asked the tourism industry and its supporters to relax their rigid stance and acknowledge that they have a very real role to play in the grander picture of tourism as an industry and the communities it effects.
HB 3260 is a positive tool to round out the overall benefits provided by the industry.
The Oregon Restaurant and Lodging Association testified against the bill, because it singled out an industry to provide funding.
The Oregon Opportunity Network joined AOC in support of HB 3260, noting that this is a local control issue.
No action has yet been scheduled by the House Committee on Revenue.
AOC is sharing information on HB 3260 with the legislative Coastal Caucus.
Contributed by: Gil Riddell | AOC policy director