A local lodging association is encouraging hotels to continue charging customers a tourism assessment despite the fact that a Tulsa County judge issued a temporary injunction prohibiting the city of Tulsa from assessing or collecting it.
The letter sent July 1 by James Cunningham, president of the Metro Tulsa Hotel & Lodging Association, warns hotels within the Tourism Improvement District that they could be asked to pay back-assessments should the injunction be overturned.
“In other words, a hotel could be responsible for paying the assessments to the city — regardless of whether the hotel actually collected that money from its guests,” Cunningham wrote. “To protect themselves, hotels should continue to collect the assessment and retain those funds pending resolution of this legal issue.”
The city stopped collecting the 3% assessment on hotel stays after Tulsa County District Court Judge Linda Morrissey issued the temporary injunction on June 25. The city has estimated the assessment would raise approximately $2.5 million a year.
Cunningham told the Tulsa World last week that he sent the letter to hoteliers after they asked the lodging and hotel association what it thought about the injunction.
The organization recommended that hotels continue collecting the assessment because “it is likely the Tourism District will be upheld and the property owners will need to pay the assessments out of their own funds if the hotels did not collect the assessments,” Cunningham said.
If what Cunningham described as the “unlikely event that the tourism district is struck down,” each hotel would have to address the question of refunds for customers who paid the assessment.
A July 9 letter from city Finance Director James Wagner to affected hoteliers states that the city plans to fight the injunction and cautions that if the city prevails, and the injunction is lifted, “the city may collect past months’ assessments pursuant to the ordinance adopting the Assessment Role.”
The city of Tulsa and the Tulsa Regional Chamber worked for years to establish the Tourism Improvement District. It was approved by the City Council late last year and signed by the Mayor’s Office in December 2018. The assessment took effect April 1, 2019.
The TID comprises 33 hotels, each with 110 rooms or more. Under state law, the funds raised through the assessment can be used solely to market the city and participating hotels.
The assessment was immediately challenged in court by a group of hoteliers that had presented letters to the City Council and Mayor’s Office they argued showed a majority of affected hotels opposed the TID.
Under state law, if “a majority of the owners of record of property in the assessment area protest, in writing, the creation of the district, the district shall not be created.”
In her ruling, Morrissey found that “17 of the 33 — or 51% — affected hotels still object to the creation of the TID, which is a majority of those affected.”
The case heads back to court Tuesday when Morrissey will consider arguments to increase the bond amount the plaintiff, TOCH LLC, was ordered to pay as part of the terms of the temporary injunction.
The bond was set at $100,000, but the defendants in the case, the city of Tulsa and Tulsa Hotel Partners LLC, have argued in court filings that it should be no less than $1.5 million.
The bond is intended to cover the city’s potential damages should it ultimately prevail in the case.
Morrissey is scheduled to hear the plaintiff’s request for summary judgment on Sept. 5.
TOCH is made up of Brickhugger LLC and investors Neal Bhow, Lee Levinson and Bruce Taylor. Brickhugger principals John and Tori Snyder, along with their daughter, Macy Snyder-Amatucci, redeveloped the historic Mayo Hotel and the Detroit Lofts.
John Snyder was one of the most vocal opponents of the assessment district.
Michelle Brooks, spokeswoman for the Mayor’s Office, said the city collected $217,513 in assessments before the temporary injunction was issued.
“We haven’t billed since and the city hasn’t made any other attempts at collection,” she said.
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