9/26/2017 11:20:46 AM

17CV41968

1 Josh Newton, OSB# 983087

jn@karnopp.com
2 Benjamin C. Seiken, OSB# 124505
bcs@karnopp.com
J
KARNOPP PETERSEN LLP
4 360 SV/ Bond Street, Suite 400
Bend, Oregon 97702
5 TEL: (541) 382-3011
FAX: (541) 383-3073
6 Of Attorneys for Plaintiff
7

9
IN THE CIRCUIT COURT OF THE STATE OF OREGON
10

l1 FOR THE COUNTY OF DESCHUTES

l2 OREGON RESTAURANT AND LODGING

ASSOCIATION, an Oregon nonprofit Case No.
13 corporation, BHG BEND, LLC, an Oregon
limited liability company, and WALL STREET
COMPLAINT (Declaratory Judgment;
I4 Injunction)
SUITES LLC, an Oregon limited liability
15 company, (NOT SUBJECT TO MANDATORY
ARBITRATION)
t6 Plaintiffs,
Filing Fee Subject to ORS 21.135(2)(a)
l7 V.

18 CITY OF BEND, an Oregon municipality,

I9 Defendant.

20

2l
For their Complaint, Plaintiffs allege
22

ZJ

24 Plaintiff Oregon Restaurant and Lodging Association ("ORLA") is an Oregon nonprofit

25 corporation with its principal place of business located in V/ilsonville, Oregon. ORLA is a trade

26 organization for the foodservice and lodging industry in Oregon. ORLA is formed for the

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 I purposes of promoting the common business interests of its membership and to improve business

2 conditions of the foodservice and lodging industry. ORLA has approximately 2,500 members,

J including about eighty-nine (89) members located in Bend, Deschutes County, Oregon.

4 2.

5 Plaintiff BHG Bend, LLC ("BHG Bend") is an Oregon limited liability company with its

6 principal place of business in Bend, Oregon. BHG Bend owns a hotel in Bend, Deschutes

7 County, Oregon. BHG Bend is a member of ORLA.

8 3.

9 Plaintiff Wall Street Suites LLC ("Wall Street Suites," and together with ORLA and

10 BHG Bend, "Plaintiffs") is an Oregon limited liability company with its principal place of

11 business in Bend, Oregon. Wall Street Suites owns a hotel in Bend, Oregon. V/all Street Suites

I2 is a member of ORLA.

13 4.

T4 Defendant City of Bend ("Defendant" or "City") is an Oregon municipal corporation

15 located in Deschutes County, Oregon.

r6 5.

t7 In 2001, the Bend City Council increased the City's room tax fromT to 9 percent.

18 The City also entered into an agreement with members of the local lodging industry to expend

I9 30 percent of the City's 9 percent room tax rate on tourism promotion. The City agreed to phase

20 in the increased tourism promotion expenditure over time.

2I 6.

22 In2003,the Oregon Legislature passed House Bill2267, Or Laws 2003, ch 818 $ 11,

23 codified at ORS 320305. The statute imposed certain conditions upon the City with respect to

24 the imposition of room taxes and the expenditure of the revenues generated by those taxes. The

25 statute required the City to fulfill its agreement to expend 30 percent of the City's 9 percent room

26

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 1 tax rate on tourism promotion. Once fully phased in at 30 percent, the statute prohibited the City

2 from decreasing the amount of 9 percent room tax used to fund tourism promotion'

J 7.

4 Beginning in January 2007,the agreement was fully phased in to expend 30 percent on

5 tourism promotion of the revenue received from the City's 9 percent room tax rate.

6 8.

7 ln2013,the City's residents approved Measure 9-94, which increased the City's room

8 tax rate from 9 percent to 10.4 percent. ORS 320.350 requires 70 percent of the revenue

9 received from the increased room tax rate to be used for tourism-related purposes authorized by

l0 the statute; the remaining 30 percent can be used to fund other City services.

11 9.

t2 The City codified Measure 9-94 inBend Code 12.05.080. Before May 3, 2017,Bend

13 Code 12.05.080 provided, in part: "Thirty percent of the room tax rate of nine percent and

70 percent of the proceeds from any increment above nine percent

{' l' {< shall be * * * used for
T4

l5 tourism promotion." That code provision was consistent with ORS 320.350 and the City's

t6 agreement with the local lodging industry.

I7 10.

l8 Before May 3, 2017,the City used its room tax proceeds allocated to tourism promotion

t9 to, among other things, fund VisitBend, an Oregon nonprofit corporation. The City created,

20 empowered, and funded VisitBend to develop and build Bend's tourism industry.

2l ll.
22 On May 3,2017,the Bend City Council adopted Ordinance NS-2291, which amends

23 Bend Code 12.05.080 (collectively, "Ordinance NS-2291"). The code amendment provides that

24 'othirty-one and one-fifth percent of total room tax revenues will be used to fund tourism

25 promotion." The remaining 68.8 percent of the City's room tax revenues are authorized to be

26 used for other non-tourism promotion purposes.

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17239-001\1202280]
 I CLAIM FOR RELIEF

2 (Declaratory Judgment, ORS chapter 28)

J t2.

4 Plaintiffs re-allege paragraphs 1. through I 1.

5 13.

6 ORLA has standing to bring this action because Ordinance NS-2291 affects ORLA's

7 rights, status or legal relations. ORLA has a corporate purpose and a legally recognized interest

8 in promoting the common business interests of its membership. Ordinance NS-2291 affects

9 ORLA's legally recognized interest in promoting the common business interests of its members

l0 located in Bend because it improperly diverts the City's room tax revenues from tourism

l1 promotion in violation of state law. ORLA's alleged harm is real and probable, because ORLA

12 anticipates that the City will implement (or has implemented) Ordinance NS-2291 and reduce its
13 funding of tourism promotion. A decision by this Court will have a practical effect on the rights

T4 that ORLA has been formed to protect and advance.

t5 14.

t6 BHG Bend and Wall Street Suites have standing to bring this action because Ordinance

t7 NS 2201 affects their rights, status or legal relations. BHG Bend and Wall Street Suites own

18 hotels in Bend. As hotel owners in Bend, BHG Bend and Wall Street Suites have a pecuniary

19 interest in the promotion and increase of tourism in Bend. Ordinance NS-2291 improperly

20 diverts the City's room tax revenues from tourism promotion in violation of state law, decreasing

2I the amount spent on tourism promotion and which could negatively affect patronage of BHG

22 Bend's and V/all Street Suites' hotels. BHG Bend's and Wall Street Suites' harm is real and

23 probable, because BHG Bend and V/all Street Suites anticipate that the City will implement (or
24 has implemented) Ordinance NS-2291 and reduce its funding of tourism promotion. A decision

25 by this Court will have a practical effect on the rights that BHG Bend and Wall Street Suites are

26 seeking to vindicate.

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 1 15.

2 Ordinance NS-2291 violates ORS 320.350 in one or more of the following particulars:

J (a) By decreasing to below the agreed-upon and statutorily required 30 percent, the

4 percentage of the revenues generated by the City's 9 percent room tax rate

5 allocated to tourism promotion; andlor

6 (b) By decreasing to below the statutorily required 70 percent, the percentage of the

7 revenues generated by the City's 1.4 percent room tax allocated to tourism

8 promotion.

9 16.

l0 Pursuant to ORS 28.020, Plaintiffs are entitled to a judgment declaring that

t1 Ordinance NS-2291, including Bend Code 12.05.080, violates ORS 320.350. Pursuant to

I2 ORS 28.080, Plaintiffs are also entitled supplemental relief in the form of a permanent injunction

13 enjoining the City from enforcing Ordinance NS-2291, including Bend Code 12.05.080, and

l4 ordering Defendant to expend its room tax revenues in accordance with ORS 320.350.

l5 V/HEREFORE, Plaintiffs pray for judgment against Defendant as follows:

t6 l. Declaring that NS-2291, including Bend Code 12.05.080, violates ORS 320.350;

t7 2. Enjoining Defendant from enforcing NS-2291, including Bend Code 12.05.080,

18 and ordering Defendant to expend its room tax revenues in accordance with ORS 320.350; and

T9 3. For any other relief the Court may deem equitable and just.

20 DATED this 26th day of September ,2017 .

2I KARNOPP PETERSEN LLP

22
/S/ Josh Newton
23 Josh Newton, OSB# 983087
Benjamin C. Seiken, OSB# 124505
24 Of Attorneys for Plaintiffs
25

26

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