TO: Mayor and City Council
THROUGH: Krishna Namburi, City Manager
FROM: Josh Eggleston, Chief Financial Officer
SUBJECT:
title
Proposed amendments and second reading of engrossed Ordinance Bill No. 4-26 amending SRC Chapter 38 - Tourism Promotion Area (TPA) to include short-term rentals (STRs) and accessory short-term rentals (ASTRs) under the TPA.
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Strong and Diverse Economy.
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SUMMARY:
summary
In December 2025, the City Council approved Ordinance Bill No. 4-25 which adjusted the remonstrance (“objection”) procedures for those in the Tourism Promotion Area to be proportionate to the number of units an operator offers for rent.
The additional ordinance change before City Council for consideration would include STR and ASTR operators as part of the TPA and those operators would be required to collect and remit the TPA fee.
Staff have amended (engrossed) the ordinance bill to clarify that hosting platforms are subject to the requirements to collect and remit the TPA fee on behalf of operators. Staff recommending that Council adopt a motion to amend the ordinance bill and proceed to second reading.
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ISSUE:
Shall City Council engross Ordinance Bill No. 4-26 as indicated in the bill and proceed to second reading of the engrossed ordnance bill?
RECOMMENDATION:
recommendation
Engross Ordinance Bill No. 4-26 as indicated in the bill and proceed to second reading of the engrossed ordnance bill.
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FACTS AND FINDINGS:
In December 2025, City Council approved Ordinance 4-25 which adjusted the remonstrance (“objection”) procedures for the TPA to be proportionate to the number of rooms available to rent within the last 60 days prior to the public hearing. For example, a lodging facility with 50 rooms (such as a hotel) would be entitled to 50 votes whereas a lodging facility with one unit (such as a short-term rental) would be entitled to one vote. Ordinance 4-26 would bring STRs and ASTRs into the jurisdiction of the TPA.
Outreach
On February 2, 2026, over 300 letters were sent out to those impacted or potentially impacted by this proposed ordinance change. This included letters to hotels / motels, STRs / ASTRs that are registered or pending registration, and to those potentially operating unregistered STRs / ASTRs. Letters were also sent to those potentially operating long-term rentals to inform them of the ordinance change in case they are also offering short-term rental stays. A public hearing notice was published on the City website and by the Salem Reporter. Communications staff also provided
support with a social media push in late February and early March on various platforms to inform the general community about the public hearing.
As of the conclusion of the March 9, 2026 public hearing, staff heard from over two dozen operators of operators of lodging facilities representing 6.99 percent of the total number of potential rentable units. The TPA is structured as an Economic Improvement District (EID) and since objections totaling more than 33 percent of the total number of potential objections represented by units from eligible operators were not received during the public hearing process, the TPA will not be dissolved.
Staff Support
Staff recognize that if Ordinance 4-26 passes, it would be a change to the operations of those who own short-term and accessory short-term rentals. In order to help ease the impacts of this change, staff is:
• performing outreach to major short-term rental platforms (including AirBnB and VRBO) about collecting and remitting the TPA fee on their operator’s behalf;
• planning training opportunities for short-term rental and accessory short-term rental operators on how to file their monthly reporting form;
• adjusting the effective date of Ordinance 4-26 to May 1, 2026. Starting at the beginning of a month will allow more time for outreach and ease the transition for operators so there is a clear delineation when tracking, reporting, and payment will begin. Reporting and collections are due to the City the end of the following reporting month. For example, for stays occurring in May, those will be reported with collections remitted to the City by June 30, 2026.
Post Public Hearing Ordinance Changes
As mentioned during the Public Hearing and in the staff reports provided to City Council, staff have been working on engaging with hosting platforms most often used by short term and accessory short term rental operators such as VRBO and AirBnB regarding updating their platforms to collect and remit the TPA fee from guests in a similar fashion done with Transient Occupancy Taxes (TOT). While VRBO was amenable to these changes, AirBnB advised staff they “only collects taxes in jurisdictions where there is a mandatory legal obligation to do so,” noting potentially conflicting language in the Code. AirBnB already has an existing agreement with the City for the collection and remittance of TOT.
In order to eliminate any ambiguity and facilitate hosting platforms collecting and remitting the TPA fee on behalf of operators, staff has proposed additional changes to the Code as set forth in the engrossed ordinance. The proposed additional changes are set forth below:
• SRC 38.020, definition of “Operator” “A ‘host’ or ‘hosting platform’ as defined by SRC chapter 37 is not an operator as defined by this section.” Proposed for deletion
• SRC 38.040, edits to clarify that booking agents, such as AirBnB do not have a right to remonstrate (object) to future continuations of the TPA.
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. Of the fee revenue collected, 95% is remitted by to the City’s Destination Marking Organization which is currently Travel Salem. 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
The City conducted a first reading of Ordinance Bill No. 4-26 and Public Hearing on March 9, 2026. During that time, public comment was heard and reviewed by City Council. Upon closing of the Public Hearing, the City Council voted to continue the TPA.
Attachments:
1. Engrossed Ordinance Bill No. 4-26
2. Public Comment