Deschutes County Circuit Court Case No. 17CV41968

On September 26, 2017, the Oregon Restaurant and Lodging Association, BHG Bend, LLC, and Wall Street Suites, LLC (together, the “Plaintiffs”) filed suit against the City of Bend alleging that the City’s recently enacted Ordinance NS-2291 violated ORS 320.350(3) by impermissibly lowering the amount of room tax revenue expended to fund tourism promotion.  Through their Complaint, the Plaintiffs sought (1) a declaration from the Court that NS-2291 violated ORS 320.350(3), and (2) an injunction preventing the City from enforcing NS-2291 and ordering the City to expend room tax revenue in accordance with ORS 320.350(3).

The City answered, denying that NS-2291 violated ORS 320.350(3).  The City’s sole affirmative defense was that the Plaintiffs each lacked standing to challenge the validity of NS-2291.   After limited discovery was concluded, Plaintiffs and Defendants filed cross-motions for summary judgment.  On May 8, 2018, the parties’ motions were heard by the Hon. Judge Beth Bagley.  Plaintiffs were represented by Josh Newton.  The City was represented by Ian Leitheiser.

On May 23, 2018, Judge Bagley read the Court’s decision from the bench.  The Court found that each of the Plaintiffs had standing to challenge NS-2291.  The Court then found that by enacting NS-2291, the City violated ORS 320.350(3) by lowering the room tax revenue expended on tourism promotion below the rate agreed upon by the City prior to the enactment of ORS 320.350(3).  Karnopp Petersen is in the process of preparing an order and judgment to be entered in the action.

Once the final judgment is entered, the City may appeal the Court’s decision.  The City will have 30 days from the date the final judgment is entered to file its Notice of Appeal. 

ORLA thanks the firm Karnopp Petersen LLP for their excellent representation in this case.

Related News:

• Statewide Hospitality Association Files Suit to Defend Tourism Investments

Oregon Restaurant & Lodging Association Takes Legal Action Against the City of Bend to Protect Lodging Tax Dollars Intended for Tourism Promotion

Update May 23, 2018 -  A Deschutes County judge ruled that the City of Bend broke the law by redirecting restricted lodging tax dollars to street maintenance. As a result of the court hearing, $350,000 that had been reallocated to road repairs will be directed back to tourism promotion. ORLA thanks the firm Karnopp Petersen LLP for their excellent representation in this case.


On May 8, 2018, the Judge heard arguments from the city’s attorney and an attorney representing the Oregon Restaurant & Lodging Association and two local hotels that sued the city in September.

The Oregon Restaurant & Lodging Association (ORLA) filed a lawsuit September 26, 2017, against the City of Bend for diverting the City’s room tax revenues away from tourism promotion and reducing the allocation for tourism promotion below what is required by law. 

ORLA is challenging the validity and implementation of a recent Bend City Ordinance which amends the percentage of room tax revenue the City spends on the promotion of tourism and improperly diverts restricted room tax revenues to road maintenance. 

“Cities must follow the restrictions in place for disbursement of the lodging tax revenues they collect,” said ORLA President & CEO Jason Brandt. “Unfortunately, Ordinance NS-2291 results in Bend being out of compliance with state law. The vast majority of tourism revenues in Bend can already be spent on general fund purposes so we hope our lawsuit results in acknowledgment from the courts that this recent act is in violation of Oregon law and must be undone.”

Bend City Ordinance NS-2291 violates state law (Oregon Revised Statue 320.350) in one or more of the following ways:

a) 9% of the City’s 10.4% city room tax rate has a set of restrictions for appropriate use of those funds. Within the 9% city room tax rate, the City is statutorily required to spend 30 percent on tourism promotion and tourism related facilities.

b) The remaining 1.4% city room tax rate is subject to a statutorily required 70% investment in tourism promotion and tourism related facilities. 

“Lodging operators should be recognized as financial partners of local governments,” said Brandt. “As tourism becomes more successful, so does the tax revenue provided to local governments to invest in the projects important to local residents.” 

A report from Longwoods International shows for every $1 invested in tourism promotion, $237 is generated in economic impact and $11 in tax revenue to the benefit of Oregon residents.  

ORLA is engaged on a state and local level, helping local municipalities realize that shifts in tourism promotion investments can do more harm than good. Brandt argues there is a direct correlation between tourism promotion and a community’s own tax revenue. “Tourism promotion dollars are crucial to keeping Oregon’s visitor destinations top of mind. Local communities stand to lose significant tax dollars for their general funds if tourists choose to travel elsewhere.”

In 2003, the Oregon State Legislature passed HB 2267, mandating 70% of new or increased local lodging taxes be directed to tourism promotion or tourism related facilities. At that time, the City made the commitment to fund tourism promotion with 30% of the initial 9% tax rate in Bend. In 2013, the City’s residents approved Measure 9-94, which increased the City’s room tax rate from 9% to 10.4%. That 1.4% increase in tax rate is subject to the restrictions established in HB 2267. This past May the City passed an ordinance, in violation of the law, changing the allocation of tourism dollars. 

“The City claims their new allocation of lodging tax dollars still follows state law. This is incorrect,” said Brandt. “There is an error in the total investment they are required to make in tourism promotions and/or facilities.”

The hospitality industry sees transportation investments as a crucial contributor to Oregon’s continued economic success. ORLA looks forward to working with Bend and other communities to help identify appropriate revenue streams to fund transportation investments including the unrestricted portion of lodging taxes.

For more information, contact ORLA President & CEO, Jason Brandt, at 971.224.1501.

The Oregon Restaurant & Lodging Association represents approximately 2,500 members, and advocates for over 9,900 foodservice locations and 2,200 lodging establishments in Oregon. The foodservice and lodging industry is responsible for 173,700 jobs bringing in over $10.8 billion in annual sales and generates over 54% of the annual tourism dollars spent in Oregon.
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Related News:

• Summary of Oregon Restaurant and Lodging Association, et. al. v. City of Bend
• Judge: Bend Broke Law by Using Hotel Tax to Fix Roads
• City, Lodging Lobby Clash in Court Over Use of Hotel Tax

Update: Portland Mayor Ted Wheeler’s office recently announced a plan to increase the Portland business tax from 2.2% to 2.6% to pay for an additional 58 officers in the police budget. That number was reduced to 49 new officers, however the City Council agreed to hire 55 officers by the 2019-20 budget year. The tax was something of a surprise to us but does not in any way diminish our commitment to increasing the number of police officers in Portland.

The Portland Business Alliance (PBA) is supporting the increase on business taxes and agreed to step up on this tax increase in order to help address Portland’s top issue of homelessness, which impacts businesses and livability throughout the city. The additional revenue will be targeted toward measurable outcomes. 

Like the Portland Business Alliance, ORLA is supportive of the focused efforts on homelessness, providing community-based policing and targeting measurable outcomes. Visitors to and residents of Portland should feel safe to walk the streets, day or night, and should believe Portland to be a place welcoming their presence and patronage. 

​Support for Portland Policy Bureau's Budget Request
As the City of Portland continues to be a preferred destination for many visitors regionally, nationally and internationally, it’s important they feel safe while staying in our hotels, eating at our restaurants and enjoying all we have to offer in the hospitality industry.

With the 2018-2019 budget season well underway, the Mayor’s Office is encouraging constituents with public safety concerns to give testimony in support of Portland Police Bureau’s budget request for additional officers. 
 
The Portland Police Bureau is struggling to fulfill its mission to serve and protect due to a lack of funding and resources. As both the population of Portland and the number of visitors grows, they are being asked to do more with less. There are the fewer officers in the bureau than there were a decade ago, despite a 10 percent increase in Portland’s population. Consequently, the bureau continues to face challenges in patrol staffing, which has led to declining response times. In the last five years, total 911 call volume has increased by over 22%. These calls include a 97% increase in stolen vehicle calls, 64% increase in unwanted persons calls and a 32% increase in disorder calls.

Mayor Wheeler is proposing adding 93 additional sworn positions and 9 additional non-sworn positions at a cost of $12.3 million and a one-time funding request of $8.8 million which includes $2.6 million for technology replacement and $3.8 million for facilities enhancements. ​This budget request would increase the number of officer positions by approximately 10 percent--on par with Portland’s growth.

Key Points to the Proposal
The Police Bureau's budget requests for additional ongoing resources will advance the bureau’s mission and goals to provide 21st Century Policing services, to support organizational excellence and inclusion, and to rebuild their units to deliver community policing. Priorities include: 

• 21.0 FTE sworn positions to enhance the bureau’s ability to create walking beats and other dedicated, community-based units to address neighborhood problems and livability issues for an ongoing cost of $2.5 million and a one-time cost of $0.8 million. Investment in these functions will address issues such as derelict recreational vehicles (RVs), business owner complaints, and zombie homes before they become a call for service. 
• Re-establish ongoing funding of $1.5 million for the Service Coordination Team to provide supportive housing, drug and alcohol treatment services, and employment readiness support for mostly houseless persons. Ongoing resources were eliminated from this program late in the budget process last fiscal year. This request ensures continuation of the program servicing homeless persons with addictions and criminal history.
• 2.0 FTE sworn positions, 1.0 FTE nonsworn professional position, and contracted services for two clinicians to expand the Behavioral Health Unit (BHU) to serve more individuals in behavioral crisis resulting from known or suspected mental illness and or drug and alcohol addiction for an ongoing cost of $0.5 million and a one-time cost of $82,000.
• 64.0 FTE sworn positions to provide for a consistent rotation of Police Officer trainees who are ready to become fully-deployable officers at a rate that matches the bureau’s average attrition rate.
• 6.0 FTE sworn positions and 2.0 FTE nonsworn professional positions to enhance and support the bureau’s Emergency Management Unit (EMU) to address service delivery to emergency events including natural disasters, demonstrations and permitted events for an ongoing cost of $1.0 million ongoing and a one-time cost of $0.3 million.
  
  

​View the full Portland Police Bureau Budget Request Memo to see additional budget priorities.
Read more on ORLA's engagement in Portland's homeless issues.

​Share Your Testimony
We want to show the Mayor we support his priorities to increase public safety and police accountability to enhance livability. Submit your testimony online or attend a public hearing. If you send an email, please Cc: Astley@OregonRLA.org on your message to the City Budget Office so we can share our industry's collective feedback. 

​Menu Labeling Regulations Effective May 7, 2018
The final rules for menu labeling apply to restaurants and similar retail food establishments if they are part of a chain of 20 or more locations, doing business under the same name, offering for sale substantially the same menu items and offering for sale restaurant-type foods. Read the latest update on guidance for the rule: FDA Finalizes Guidance to Help Food Establishments Meet Menu Labeling Requirements.

The FDA has stated their intention to educate restaurants and foodservice establishments during this first year of implementation without issuing penalties. 

In May 2017, based on comments received, FDA is extending the compliance date for menu labeling requirements from May 5, 2017 to May 7, 2018. This extension allowed for further consideration of what opportunities there may be to reduce costs and enhance the flexibility of these requirements beyond those reflected in the final rule. For more information see, the Federal Register Notice Announcing the May 7, 2018 Compliance Date. 

See also National Restaurant Association's issue paper on Menu Labeling.

​Metro, the agency that manages systems for handling and transporting solid waste, wants to transform how the Portland area handles food waste in an effort to convert our food scraps into renewable energy instead of burying them in a landfill.

• Update: July 19, 2018 Metro Council will consider a proposed ordinance that would require the collection of food scraps from certain types of foodservice businesses in the city of Portland. ORLA had the opportunity to review the updates to the proposed code and draft administrative rules relating to food scraps. While we continue to support the merits of a food waste collection program, we believe any mandate on 'all food-related businesses' will bring with it tremendous responsibility and unforeseen challenges (read ORLA’s comments).
• If the proposed code language is adopted, the largest food service businesses will be required to separate their food scraps from other garbage starting in 2020, and smaller food service businesses will be phased into the policy over the following three years.
  

In 2016, the Metro Council directed staff to investigate ways to do that. In fall 2017, Metro sought public comment on an initial policy proposal to keep more food scraps from restaurants, grocery stores, and other food service businesses out of landfills and put to better use creating energy, compost or other valuable products. The regional government is in the process of seeking a private company to build a plant that breaks down food waste and turns it into biogas, electricity, or compost.

ORLA is engaged in these discussions, anticipating that many restaurant owners will oppose the new mandates that would produce operational challenges.

Metro has developed a guide for businesses to reduce food waste, focusing on prevention, donation, and composting strategies. Learn more about Metro's campaign at FoodWasteStopsWithMe.org.

Read more on Metro's website
Read more in the Portland Tribune