News Story - Idaho State Journal

jbulger@journalnet.com

POCATELLO -- Despite an Idaho Supreme Court decision that struck down the Pocatello-Chubbuck Auditorium District's ability to market local events and tourism by the collection of a 2 percent room tax, money is still being collected and the legal wrangling has continued.

The parties were in court Monday, arguing the latest motion by AmeriTel Inns, asking that the district be enjoined from spending any money it has collected or from collecting any additional room tax. AmeriTel also requested the return of room tax money the district has collected since the July 23, 2008, decision.

The district has countered that the Supreme Court's decision did not disband the district, but only ruled it could not expend the money it collects for promotion of local events and tourism. The district has continued to collect the 2 percent tax since the July 23 decision.

The district was approved by voters in 1998 and incorporated in 2002 to market the Pocatello/Chubbuck Lodging Association. In addition to the 2 percent room tax, the district derives funds from the Idaho Tourism Commission.

AmeriTel filed suit in 2005, challenging the district's right to levy the tax. AmeriTel argued that the statutory authority creating the district did not allow for the taxing and expenditure of funds without the construction of a public facility.

The high court sided with AmeriTel, ruling that the district must be engaged in construction and operation of public facilities, such as auditoriums, exhibition halls, convention centers and sports arenas. The district has not constructed any facilities and had made no plans to do so when the suit was brought. The Supreme Court decision was not retroactive, meaning the district is not required to return any funds collected prior to the ruling.

Counsel for the district, Lowell Hawkes, stated in court documents that the high court's decision does not bar the district from collecting the room tax or from paying its operational expense. He said the district is in compliance with the high court's directive, and is now mulling over options for a facility.

"On my direction, all room tax moneys have been kept separate from previously collected funds and a 'capital asset' account has been created for those moneys," Hawkes wrote.

Hawkes said all contractual obligations incurred prior to the ruling are continuing to be honored and are paid solely from those funds collected prior to July 23.

"It will require time to consider and evaluate the many proposals that have been made to the CVB for a facility that would fit the resources and purposes of the CVB's existence as well as accumulate the funds for any complying 'public facility,'" Hawkes wrote.

Rebecca Satter, the Convention and Visitors Bureau's executive director, said several groups have approached the district about obtaining an existing facility or building one. As an example, she said the Bannock County Commission and the Fair Board have inquired about the district leasing some land and doing an adjacent cover-all building at the fairgrounds next to the new equine center.

"That one that they have right there is just an equine facility," she said. "The other one would have flooring and heating and would be more multi-purpose use.

"Another one is the multipurpose building that's going out in Chubbuck. The hockey association's been trying to build a building out there."

Satter said other legal questions will likely need ruling on by McDermott, including whether the district can partner with another entity or must act on its own, as well as how a facility might be acquired.

"Do we have to build from square one? Can we buy an existing building? Can we lease? It's just a matter of how he's going to define that (statute)," Satter said.

The district has also taken issue with AmeriTel's request that the room tax it has collected from the business since July 23 be returned.

Hawkes wrote that AmeriTel would "pocket for itself the room tax money collected from hotel guests."

McDermott has taken the injunction request under advisement and will issue a written opinion.

By John Bulger

This document was originally published online on Thursday, October 30, 2008

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