Tourism is a boon to any community lucky enough to have exquisite natural beauty, fun recreational activities, beaches, or other amenities that entice tourists. It’s often considered a coveted “export,” because it infuses dollars earned elsewhere into the local economy. Vacationers tend to be more affluent than locals and in the mood to splurge, giving their patronage of local restaurants, bars, shops, and artisans an outsized impact.
However, tourism presents a host of challenges. The population of many localities balloons during the tourist season, putting pressure on local public safety agencies, infrastructure, and other critical public services. Also, housing affordability problems emerge as locals are thrust into competition for housing with wealthy vacation home buyers, retirees, and vacation rental operators. Tourist destinations across the world have grappled with these challenges for decades; many communities appreciate the benefits of tourism, but some would rather not share their slice of heaven with hordes of vacationers.
Airbnb, founded in 2008, is credited with sparking a revolution in the tourism industry and spawning a proliferation of vacation rentals throughout the world, which have become a particular focus of policymakers and academic researchers. Vacation rentals are frequently blamed for problems such as illegal parking, excessive partying, noise, and other nuisances. Regulations in Oregon range from complete bans to licensure requirements and other measures aimed at minimizing neighbor conflicts. Vacation rental operators have recently challenged certain local regulatory efforts in court: Clatsop and Lincoln counties are currently in litigation over claims that their moratoria improperly curtail or extinguish non-conforming uses as per ORS 215.130(5). HB 3381 was filed in the 2023 Legislative Session to clarify that vacation rental regulations are business regulations and not land-use regulations, but it didn’t get much traction.
In most states, tourists help pay for public services and infrastructure through gas, sales, and tourist taxes (transient lodging taxes). With no sales, gas, and tourist taxes are the only ways that tourists help pay for their impacts on infrastructure and public services in Oregon. But the lodging industry persuaded the State Legislature to restrict local governments’ use of their tourist tax receipts about 20 years ago: ORS 320.350 dictates that at least 70 percent of tourist tax proceeds must be spent on promoting tourism (i.e. advertising) or tourism-related facilities. Given other state laws constraining local property tax revenue, tourist destinations across Oregon have struggled to afford adequate infrastructure, policing, firefighting, and many other basic public services.
Over the years, the Legislature has considered giving local governments flexibility around how they can spend their tourist tax proceeds, with little success. This session, HB 2494 was introduced, which would have allowed local governments to levy a tourist tax up to three percent, all of which could be directed to public safety services, but the bill is apparently dead. Another bill considered this session was HB 3589; as amended, it would have created a task force to study and recommend legislation to assist local governments with regulation and taxation of short term rentals. That bill is also apparently dead, but House Committee on Housing and Homelessness Chair, Representative Maxine Dexter (D-Portland), has announced plans to convene a work group to consider these issues. AOC hopes to participate, and will continue monitoring related policy developments.
Contributed by: Michael Burdick | Legislative Affairs Manager