Update, Jan. 27: Salem city councilors voted unanimously at their Jan. 26 meeting to move forward a law repealing and refunding a parking tax paid by downtown businesses over the summer. A final repeal would be voted on at a later meeting.

Original story below:

Paid parking downtown has generated over a million dollars for the city in its first six months, prompting Salem city councilors to consider repealing and refunding a parking tax paid by downtown businesses.

If councilors approve that plan, businesses would be refunded by June 30 for any taxes paid since last July.

City spokeswoman Nicole Miller told Salem Reporter in an email that the parking tax on businesses brought $229,624 into city coffers. She said approximately that amount would be refunded to businesses should councilors approve the refund.

On Monday, Jan. 26, the council will move forward on repealing the downtown parking tax, but a final decision on the matter wouldn’t come until a later council meeting, according to a staff report from Kristin Retherford, the city’s community planning and development director. 

Street parking has generated about $1.2 million dollars in revenue in its first six months, another staff report from Retherford said. The city predicted $1.4 million in revenue for the program’s entire first year, which is quickly being outpaced.  

The report also said revenues from parking permits in the city’s three parking garages have increased since paid on-street parking went online. 

Retherford told Salem Reporter in the summer that the city would consider ending the parking tax on businesses after analyzing six months worth of revenue to ensure the program’s success. 

Early parking revenues indicated the city’s new paid parking system would turn out to be a moneymaker. The system brought in nearly as much in its first month as the annual parking tax on downtown business brought in last year.

The switch was intended to generate more money to increase security and cleaning services for downtown Salem, to make it easier and more reliable to park, and to increase parking turnover, according to the city’s website. It was also supposed to free up parking spaces that were often used by employees of downtown businesses to keep them available for customers.

Business groups have called on the city to refund the parking tax as part of a larger effort to reduce city taxes and fees on small businesses.

Salem Area Chamber of Commerce CEO Tom Hoffert said chamber leaders spoke with City Manager Krishna Namburi and Retherford in October and asked for a repeal and refund.

“A windfall of funds were obtained through paid parking,” Hoffert said in an email. “Both said they would take our request into consideration. I was thrilled when City Manager Namburi, at the start of January, shared that this would be coming forward to council.” 

“This will be a good thing for our downtown small business owners and as an organization, we are very supportive of the removal of the assessment and consideration to reimburse back to July 2025,” Hoffert said. 

TJ Sullivan, the president of the Salem Main Street Association, said business owners have shared their thoughts with the city on how to improve the paid parking system, and the perception is largely that the city is listening to their input. The association supported the move to paid downtown parking.

One issue businesses have, Sullivan said, is providing free parking on holidays which can affect business when too many people park downtown and take up spots. Parking was free on Monday for Martin Luther King Jr. Day, a federal holiday. 

“My own advice to the city manager is to be as transparent and as upfront as possible about how you are going to reinvest this money into making downtown a destination,” Sullivan said. “I think it is a great move that they are looking at refunding the past parking taxes. Governments typically don’t send money back to taxpayers. So, I think that is pretty outside the box.”

A recent city survey of about 2,300 people about paid parking showed respondents prioritized using the additional money for enhanced downtown security, sidewalk cleaning, streetscape maintenance, downtown promotions and events, alley sweeping, flower baskets, and banners.

Respondents also indicated they wanted the city to prioritize mitigating homelessness, increasing downtown police patrols, updating the BeepBeep Salem app for paid parking, and to improve bike parking facilities. 

Salem City Councilor Vanessa Nordyke brought up the parking tax at a city council work session in September saying she hoped that businesses that paid the tax would eventually get reimbursed. 

Nordyke brought it up again earlier this month at a chamber-hosted mayoral debate in response to a question about how she would invigorate and incentivize businesses to remain, expand, and invest in Salem. Nordyke is running against Salem Mayor Julie Hoy in the upcoming election in May. 

“Now that the city is making money from paid parking, it doesn’t make sense to double dip,” Nordyke said. “I have called for a refund on the taxes paid by those downtown businesses since paid parking began.” 

Hoy also mentioned the parking tax and possible refund for businesses during the chamber event. 

“The concept of stopping the tax on business for parking was not Councilor Nordyke’s idea. It was all of the council that knew going into this that that would eventually be phased out,” Hoy said. “Paid parking is doing better than anticipated, therefore we will be able to issue a refund to the businesses downtown.”

Contact reporter Joe Siess: [email protected]. 

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