A lawsuit filed this month against the McCurtain County Board of Commissioners challenges the legality of the election last year at which voters approved an increase in the county’s lodging tax, contending the proposal was fundamentally and fatally flawed.
The suit was filed in McCurtain County District Court by Vonderosa Properties, which operates rental property at Hochatown, and Scott Senner of Edmond, senior loan originator with Interlinc Mortgage Services.
Senner has “booked a reservation at a rental property located in Hochatown” for April 4-6, less than a week after the effective date of the lodging tax increase approved during the Nov. 8, 2022, statewide general election, the lawsuit petition relates.
Senner wrote on the internet that he and his team “have been very active in the Hochatown/Broken Bow market in Southeastern Oklahoma for the past several years, and are experts in structuring loans for both second home buyers and seasoned investors.”
A Southwest Ledger reporter placed a call to Senner’s office phone Feb. 21 and left a message on his voicemail, but he never responded.
The Ledger also called the McCurtain County Commissioners on Feb. 22, asking whether they wanted to respond to the lawsuit, but their receptionist said, “We have no comment.”
The commissioners met on Aug. 15, 2022, and adopted a resolution that called for a special election Nov. 8 on a proposed increase in the county’s hotel/lodging tax to raise revenue for the McCurtain County Hospital.
Commission Chairman Mark Jennings signed a proposition that was submitted to county voters, asking, “Shall the existing hotel/lodging tax within McCurtain County … be increased by two percent (2%) effective as of April 1, 2023, for a term of thirty (30) years …”
At the time of the election, the hotel/lodging levy was 3%.
The proposal was approved Nov. 8 by a margin of 65% to 35% among the 8,061 votes cast. That constituted almost half of the 16,146 registered voters in the county as of Feb. 1, 2023.
Vonderosa, Senner challenge validity of lodging tax vote
Vonderosa and Senner contend that for at least six reasons, “An actual controversy exists between Plaintiffs and the County with respect to the validity and enforceability of the Lodging Tax.”
The county commissioners failed to publish a legal notice of the election “at least four weeks in some newspaper published in the county,” as required by state statute. That failure “voids and invalidates the special election,” the plaintiffs maintain.
The proposition did not spell out the “sum desired to be raised” by the tax increase, “[N]othing in the 2022 proposition provides voters with information on how much money the County seeks to raise if the proposition passes,” contrary to a requirement in Section 383 of Title 19 of the state statutes.
The proposition did not advise voters of the penalty for “violation if there be one” for failure to pay the lodging tax, also required by state law.
The proposition did not contain the rate per annum of the proposed tax increase, another requirement in state law.
The proposition did not inform voters of what the existing hotel/lodging tax was or what the new tax amount would be if the proposition passed – another statutory mandate.
Voters were not told what types of lodging would be affected by the tax. In contrast, when the county commissioners attempted to pass a lodging tax hike in 2020, the ballot measure referred to “gross receipts or gross proceeds derived from the service of furnishing rooms by hotel, apartment hotel, or motel and for the furnishing of any other facility for public lodging, except campsites, within McCurtain County …”
“The County’s failure to include all of the statutorily mandated information … invalidates the Lodging Tax,” the plaintiffs assert in their petition.
Title 68 of the Oklahoma Statutes decrees that any lodging tax levied by a county “shall be designated for a particular purpose.” The McCurtain County proposition listed multiple purposes for its tax proceeds:
for “designing, constructing, financing, furnishing, equipping, and providing fixtures for the McCurtain County Hospital.”
“For debt service on any financing.”
“For continuing maintenance expenses related to the new McCurtain Memorial Hospital.”
Additionally, Vonderosa Properties and Senner contend that the wording of the proposition was defective: It didn’t increase the lodging tax to 5%, but rather to 3.06%, since it proposed raising the existing hotel/lodging tax “by two percent (2%) …”
If the court rules that the lodging tax hike is valid, “the amount of the tax increase is 2% of the existing 3% tax, or 0.06%, for a new total Lodging Tax of 3.06%,” the plaintiffs argue.
The two challengers petitioned the district court for a temporary injunction restraining and enjoining the county from “enforcing and collecting the lodging tax increase.” A hearing on that request is set for 1:30 p.m. March 8 before District Judge Emily Maxwell.
Vonderosa and Senner are represented by Oklahoma City attorneys Lysbeth George, Catherine Jeffries and Jana L. Knott.