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Bill

H 5538

An Act authorizing the city of Salem to increase the short-term rental community impact fee for the purpose of school and municipal facilities

194th Legislature (2025-2026) Introduced by Manny Cruz

Salem may raise the STR impact fee to up to 6% of rent to fund school and municipal facilities, debt service, and related maintenance via a dedicated special revenue fund.

Senate concurred
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Bill Summary · H 5538

Purpose and intent

  • This bill authorizes the city of Salem to increase the short-term rental (STR) community impact fee from its current level to a rate of up to 6% of the total rent charged for each occupancy.
  • The primary aim is to generate additional revenue dedicated to planning, design, acquisition, construction, renovation, maintenance, furnishing, and equipping of school and municipal facilities in Salem. The revenue can also be used to service debt on bonds or notes issued for these purposes.

Key provisions and changes

  • Section 1: Authorization for Salem to impose a STR community impact fee on:
    • Professionally managed STR units
    • Owner-adjacent STR units
    • Fee rate capped at 6% of the total rent per occupancy
  • Section 2: Allocation of the incremental revenue
    • The revenue increase attributable to raising the rate from 3% (existing) to up to 6% (new) must be deposited into Salem’s special revenue fund.
    • The funds in this special revenue fund may be used exclusively for facilities-related purposes of schools and municipal buildings, including debt service on related bonds or notes.
    • The act explicitly allows Salem to continue pursuing grants and other financial assistance from state, federal, or other sources without penalty or restriction from these provisions.
    • Any year-end fund balance remains in the special revenue fund for ongoing expenditure on the stated purposes (i.e., no automatic reversion to the general fund).
  • Section 3: Effective date
    • The act takes effect upon passage.

Affected parties and entities

  • Local government: City of Salem will administer and collect the STR community impact fee and manage the special revenue fund.
  • Short-term rental operators and hosts in Salem (both professionally managed units and owner-adjacent units) will be subject to the higher fee rate, up to 6% of rent per occupancy.
  • Public facilities: School buildings and municipal facilities in Salem will benefit from improved funding and related debt service for capital projects and maintenance.

Revenue use and fiscal impact

  • Incremental revenue from increasing the fee from 3% to up to 6% is dedicated to a special revenue fund for facilities-related needs.
  • Funds may cover planning, design, construction, renovation, maintenance, and related equipment and furnishings, as well as debt service for bonds/notes issued for these purposes.
  • The bill preserves Salem’s ability to apply for and receive external grants or reimbursements to support the same purposes.

Procedural and timeline aspects

  • The bill was filed on June 22, 2026, by Representative Manny Cruz of Salem.
  • Action history indicates:
    • Referred to the Joint Committee on Revenue (June 25, 2026)
    • Senate concurrence achieved (July 1, 2026)
  • Upon enactment, the act would take effect immediately.

Practical considerations

  • Rate impact: A 3% to 6% increase represents a doubling of the existing STR community impact fee (to the extent the current base rate is 3%).
  • Administrative: Salem would need to implement collection adjustments, ensure compliance across all eligible STR units, and maintain clear accounting for the special revenue fund.
  • Oversight and accountability: The bill emphasizes restricted use for facilities-related needs, with ongoing ability to leverage external funding.

Compiled from official sources — confirm details with the bill’s official record.

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