adopted resolution

Complete periodic sunset review of the Tourism Improvement District one percent Tourism and Hospitality Recovery Surcharge license fee

economic development
resolution

Introduced by: Former Mayor Ted Wheeler Former Commissioner Carmen Rubio
Status: Adopted

Impact statement

Purpose & background

During 2026 and each 5 th year thereafter, City Code (Section 6.05.130) requires the City Council to conduct a sunset review by holding a public hearing or hearings to determine whether the 1% Tourism and Hospitality Recovery Surcharge should be terminated. This Resolution completes the required sunset review, presents data indicating the success of the Tourism and Hospitality Recovery Surcharge, provides support from the tourism and hospitality industry for continuance of the fee and concludes the fee should not be terminated. A companion Ordinance that will be heard by Council at the same time proposes amendments to the regulations of the TID (PCC Chapter 6.05) to: 1) eliminate the sunset review requirement and the Tourism and Hospitality Recovery Surcharge and 2) establish the TID fee at 3% to provide stable funding in support of the recovery of Portland’s travel, tourism and lodging industry.

Financial impacts

The funds generated by the TID 2% fee and 1% Tourism and Hospitality Recovery Surcharge are used to promote Portland as a travel destination for leisure, business and convention visitors with the intent of booking overnight stays at hotels and short term rentals. These stays generate transient lodging taxes, including 5% that goes directly to the City General Fund. The impacts to the tourism and hospitality economic sectors from the global pandemic and other Portland specific circumstances, such as homelessness and gun violence, have been severe and long lasting. The road to recovery continues to be uncertain and challenging. Continuing the Tourism and Hospitality Recovery Surcharge fee will be critically important to the recovery of jobs and spending in the tourism and hospitality industry and to overcome the reputational difficulties facing Portland with the traveling public. Other than continuing to support the flow of transient loading taxes to the General Fund, there are no specific budget impacts from this Resolution.

Community impacts

Representatives of the tourism and hospitality industry have concluded that the Tourism and Hospitality Recovery Surcharge 1% fee is meeting its intended goals and that the fee should continue. Travel Portland Board and staff will present their case to City Council.

▸ Full text (the legislation as adopted)

WHEREAS, on June 20, 2012, City Council passed Ordinance 185443 which established a Portland Tourism Improvement District (TID) to increase the investment in marketing and promotion of Portland as a premiere travel destination and to remain competitive and not lose market share with other US cities. WHEREAS, the Tourism Improvement District provides that any person engaged in hotel management activities is assessed a license fee of two percent (2%), the base rate, which based upon taxable room rents as reported to the Revenue Division. WHEREAS, on March 10, 2021, City Council passed Ordinance 190318 which established a one percent (1%) Tourism and Hospitality Recovery Surcharge license fee, in addition to the base rate, to aid in the post-pandemic recovery of the travel and tourism industry and required that surcharge be reviewed every five years beginning in 2026. WHEREAS, City Code Section 6.05.130 requires a sunset review to occur in 2026 and every five years thereafter to determine if the one percent (1%) Tourism and Hospitality Recovery Surcharge license fee should be terminated. WHEREAS, Travel Portland, an Oregon non-profit corporation, is the comprehensive destination marketing organization operating in Portland selected as the TID Management Corporation. Travel Portland’s TID Board includes representatives of the tourism and hospitality industry and provides strategic direction and oversight of the use of TID funds. WHEREAS, recent data on the recovery of the travel and tourism industry shows Portland is lagging well behind initial recovery rate forecasts and is also well behind the recovery occurring in many comparable cities. Data on hotels stays during August 2023, particularly in the downtown area, show a year over year reduction on all metrics and committed bookings for conventions in the coming years are also well below levels needed to reverse this trend. WHEREAS, convention planners indicate the reasons meeting attendees as unwilling to come to Portland relate to concerns about personal safety stemming from problems of visible street camping, drug use and reports of gun violence. These long-term challenges are being addressed by the City of Portland, Multnomah County and Metro but are expected to take many years to resolve and Portland’s reputation as a safe place to visit will take even longer to return. WHEREAS, Travel Portland, through its Board, and the tourism industry, through Travel Portland’s TID Board, have concluded that continuation of the Tourism and Hospitality Recovery Surcharge is vital to the recovery of travel and tourism in Portland and that the one percent (1%) license fee should be continued. NOW, THEREFORE, BE IT RESOLVED that the Tourism and Hospitality Recovery Surcharge one percent (1%) license fee shall not be terminated by the 2026 sunset review process.

Tally

5 yea 0 nay