In 2013, the Village agreed to be a named plaintiff in a proposed class action suit against online travel companies over their failure to pay local hotel taxes for hotel rooms booked using their services. In June 2016, the court found in favor of the defendants and held that the Village's hotel tax provisions did not apply to online travel companies. The court did find that one municipality's provision did apply and, the Village Code was amended to match that language.

The online travel companies appealed and, late last year, the Appellate Court granted summary judgment in favor of the online travel companies and against all of the municipalities. In an effort to avoid further litigation, the online travel companies proposed their willingness to be subject to an appropriately drafted hotel tax, one which clearly sets forth their obligation to pay tax going forward. By adopting this language, all parties avoid further litigation expenses while ensuring the online travel companies' willingness to pay the tax going forward and eliminating any risk that they might have to pay any tax retroactively, if the decision were appealed.

The attached ordinance deletes the existing language related to a hotel tax from Chapter 14 and then establishes a new article in Chapter 7 which contains the hotel tax language that the online travel companies have agreed will apply to them.

RECOMMENDATION

It is recommended that the Village Board adopt the attached Ordinance Amending Chapters 7 and 14 of the Arlington Heights Municipal Code pertaining to a hotel tax.