Bed and breakfast inns are hoping to win a share of city grants that they help generate through Ashland's lodging tax.

Ashland's Bed and Breakfast Network tried this spring to win a city of Ashland Economic and Cultural Development Grant. The network, which represents about 30 bed and breakfast inns, wanted funding for an ad campaign. But the organization was not eligible for a grant because it does not have 501(c)3 nonprofit status and also needs insurance.

Network members are now working to get nonprofit status, said the group's president, David Runkel.

"We seem to be more logical users of that money than some other groups," he said. "We didn't get to first base this year."

The city of Ashland has a 7 percent lodging tax. The state of Oregon adds another — percent to the tax.

One-third of revenue from that city lodging tax goes for economic and cultural development grants, while the rest funds city services.

The Ashland Chamber of Commerce and Oregon Shakespeare Festival annually receive the lion's share of those grants. The two organizations were awarded a total of $371,770 for the current fiscal year, which started in July.

This spring, 26 groups vied for a share of the remaining $155,749. Requests for funding far exceed the amount available for the smaller groups each year.

Several groups came away empty-handed from the spring budgeting sessions.

The inns that are part of Ashland's Bed and Breakfast Network work together on marketing, operate a toll-free telephone number, take reservations, set inn standards and inspect inns for compliance, according to Runkel.

He said that spending economic and cultural development grant money on a bed and breakfast ad campaign could actually increase lodging tax revenues by drawing visitors to Ashland.

Ashland City Councilor Russ Silbiger said if the network can get nonprofit status, he would encourage them to apply for a grant again next year.

The grants fund economic development, tourism and cultural activities. Many of the groups that have won funding stage cultural events.

"The groups that are geared toward economic development are on the short end. Overall, we're heavily weighted toward cultural groups," Silbiger said.

He said the bed and breakfast network seems like a viable candidate for a city grant.

The Ashland Gallery Association, which wins sizable grants each year, represents gallery businesses in the same way that the bed and breakfast network represents lodging businesses, Silbiger said.

But Councilor Eric Navickas worried about still another group competing for the limited grant funding.

"It seems a little odd considering it's the Transient Occupancy Tax that raises those funds. The more organizations we have requesting funds, the more pressure there is to raise the tax," he said. "But if they are genuinely working on economic development, they have the same right as anyone else to apply."

The Ashland City Council is scheduled to begin discussions in September about possibly raising the lodging tax. City staff plan to present a public outreach strategy to the council at that time, said City Administrator Martha Bennett.

"There will be groups you will want to talk to,"Bennett told councilors at a meeting earlier this week.

In February, Runkel sent a letter to Mayor John Morrison and the City Council outlining the bed and breakfast network's concerns about any lodging tax increase.

A downturn in people staying in Ashland inns would impact other businesses, such as restaurants, art galleries and clothing stores, he said in the letter.

Under state law, local governments that increase their lodging taxes must devote 70 percent of the new revenue to promoting tourism. Since only 30 percent of revenue from a tax increase could be used for city services, an increase would not generate substantial sums for city needs, Runkel said.

Staff writer can be reached at 479-8199 or vlaldous@yahoo.com.