TO: Mayor and City Council
THROUGH: Krishna Namburi, City Manager
FROM: Josh Eggleston, Chief Financial Officer
SUBJECT:
title
First Reading of Ordinance No. 7-26 amending SRC Chapter 38 - Tourism Promotion Area
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): All Result Areas
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SUMMARY:
summary
On March 23, 2026, the City Council approved changes to the Salem Revised Code (SRC) concerning the Tourism Promotion Area (TPA) which included bringing short-term and accessory short-term rentals into the TPA. Since that time, the City has communicated with AirBnB regarding their ability and responsibility to collect and remit the TPA fee for hosts who use their platform. Due to the current wording of SRC, AirBnB has been unwilling to perform this action. This code change will require AirBnB and any other similar platform to collect, remit, and report the TPA.
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ISSUE:
Shall City Council advance Ordinance Bill No. 7-26 to second reading?
RECOMMENDATION:
recommendation
Advance Ordinance Bill No. 7-26 to second reading.
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FACTS AND FINDINGS:
Since the approval of changes to the SRC in the early spring, City staff have been in communication with AirBnB regarding the collection, remittance, and reporting of the TPA for those who use their platform. During a meeting between Finance staff and AirBnB, their legal counsel pointed to current SRC language which states that any platform “…shall also provide an operator the option for the Booking Agent or transient lodging intermediary to collect and remit the fee imposed by this chapter”. (SRC 38.080 (f)). AirBnB has interpreted this language to mean that since they provide on their platform the option for a host to collect and remit the fee themselves, they are not under an obligation to do so on their behalf of hosts like they do with the Transient Occupancy Tax. AirBnB has relied on this interpretation notwithstanding language in the TPA code that defines booking agents, like AirBnB, to collect and remit the TPA. To move forward efficiently, staff is proposing the ordinance change to eliminate any ambiguity for AirBnB’s obligation to collect and remit the TPA fee on behalf of hosts.
These changes would be effective on September 1, 2026. During the interim period, operators who use AirBnB or any other hosting platform not collecting the TPA will need to collect and remit the TPA fee themselves. Staff have communicated with hosts regarding these requirements and have worked with AirBnB staff who said they would also communicate to hosts. Finance Department staff will be available to help those who have questions about their duties, how to fill out the required reporting forms or how to make a payment during this transition period.
BACKGROUND:
In 2019, the City Council approved an Economic Improvement District (EID) for the Tourism Promotion Area in Salem. As an EID, the TPA is required to be renewed every five years which last occurred in 2024. The TPA established a 2% fee on overnight stays in Salem hotels and motels, including stays booked through booking agents like Expedia. In 2026, the City Council extended the TPA to include stays in short-term and accessory short-term rentals.
The City’s Destination Marketing Organization, currently Travel Salem, receives 95% of the TPA fee revenue collected. These funds are to be used to benefit those in the TPA by promoting overnight tourism and the lodging business environment through advertising, branding efforts, promotions, sponsorship of special events, and other programs that increase overnight transient lodging stays. Up to 5% is retained by the City to cover costs like staff time administering the program, banking and investment fees, and credit card processing fees.
Attachments:
1. Ordinance Bill No. 7-26