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Council approves first reading to allow city to use state to collect transient lodging tax
Summary
Council approved a first reading of an ordinance that would amend Sweet Home Municipal Code chapter 3.24 to permit an intergovernmental agreement with the Oregon Department of Revenue for collection of the city's transient lodging tax; staff estimated current receipts and provided illustrative fee and revenue figures.
Councilors approved a first reading of an ordinance to amend Sweet Home Municipal Code chapter 3.24 so the city could enter an intergovernmental agreement (IGA) with the Oregon Department of Revenue to collect the city's 6% transient lodging tax on behalf of the city.
Staff told council the change would not itself enter the IGA but would allow the city to contract with the Department of Revenue in the future to streamline collection and improve compliance, particularly among short‑term rental platforms such as Airbnb. Staff said more than two dozen Oregon cities and counties already use the Department of Revenue for lodging tax collection and that the approach typically increases compliance even after administrative fees.
Finance staff presented example fee calculations and recent local returns. Staff described a potential administrative cost allocation based on statewide operator counts (an illustrative $5,940 statewide admin fee apportioned by each jurisdiction's share of operators), a capped per‑operator business fee that in the example could total about $4,375 annually for 25 operators, and other special‑service charges billed separately. Staff estimated a sample cost to the city in that scenario of about $4,500 per year. Staff also said the Department of Revenue withholds 4% of amounts collected upfront and reconciles annually.
Last year the city reported $38,626 in transient lodging tax receipts; staff said they believed additional tax revenue from short‑term rentals was not currently being captured. Councilors asked for clarification that the ordinance only authorizes the city to enter an IGA and does not obligate the city to do so; staff confirmed that further steps would be required before the state would begin collection.
Council voted unanimously to approve the first reading. Council later voted to read the ordinance by title only for the second reading and set the third reading for the June 24 meeting. No immediate contract with the Department of Revenue was executed at this meeting.
