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Let The County Know You Oppose The Room Tax Increase

I rarely (if at all) get into politics on this blog, as politics and the politicians are just a silly waste of time. That being said, this is something that affects quite a bit of Central Oregon, and really needs to be said.

There is talk of putting a measure on the November ballot to raise the transient room tax in Deschutes County by two percent. Needless to say, lodging industry folks are worried and the Bulletin doesn't even like the idea (you may need to be a subscriber to get access to those articles).

As many of you know, I do geek and marketing work for a couple vacation rental companies in Sunriver, and obviously anything that potentially is going to turn away tourists directly affects me (even though I've been pretty vocal of my loathing of some of our visitors, they do pay my paycheck). But what people around here don't realize is how much of this area is directly or indirectly affected by tourism dollars coming into this area. Like it or not, we really don't have another major industry here -- tourism is it. So anything that's going to turn away the tourists affects more than the folks who directly cater to those visitors.

Not only that, but it annoys me that the County has decided to pin their inability to manage their funds onto folks who are visiting the area (who down the road could potentially fall in love with the area, buy a home, and put more money in the County coffers) instead of just fixing the problem.

My boss here -- who has been in this industry locally for over 20 years -- has written a letter to his homeowners that I've edited and he has given me permission to post here. I agree with it 100%. Not because he signs my paycheck, I actually do agree with this. And you really should let your County commissioners and administrators (Dave_Kanner@co.deschutes.or.us, Tammy_Baney@co.deschutes.or.us, Dennis_Luke@co.deschutes.or.us, Mike_Daly@co.deschutes.or.us) know that you do, too. Read on for the full letter...

My name is Larry Browning. I own and operate Discover Sunriver Vacation Rentals in Sunriver. I am writing in hopes of soliciting your support in opposition to a transient room tax increase that is being proposed by Deschutes County

The commissioners’ position is “the increase is bound to pass as the tax would be on tourists and not on residents of the County.” The County’s stated reasons for an increase are:

  • Annual Timber receipts awarded to the County, which amounted to around $3,000,000 will either sunset this year or adjust down over the next few years. The County has been aware of this “Sunset” for at least five years. If they had been paying attention they would have been aware that the timber industry in Central Oregon has been subsiding for the last 20 years. My position: They have been remiss in their duties to plan and budget appropriately for this upcoming shortfall.
  • Revenue from building permits has subsided. My position: What happened to the increase in revenue from the boom Deschutes County experienced over the last five years? And did they really expect Deschutes County to remain as one of the fastest growing counties in the country forever? Again poor planning and budgeting.
  • Maintenance of County Road 45 (the road from Sunriver to Mt Bachelor). Approximately 10 years ago discussions began involving the maintenance of Road 45. The expense for maintaining this road from its opening until now has been borne by Sunriver Resort, the Sunriver Owner’s Association, the rental management companies in Sunriver and the US Forest Service. It was agreed by all parties involved seven years ago that once Road 45 was brought up to County standards (this was paid for by the Forest Service) the County would take over the maintenance of the road. Once again, 10 years notice and no budgeting or planning regarding the transfer.

I do not believe that one industry (Lodging) should be singled out to raise revenue for shortfalls that arose because of broad economic changes. I do not believe that one industry (Lodging) should be singled out to raise revenue for shortfalls that arose because of poor planning and budgeting.

The Commissioners have refused to recognize the contributions second homes make to the region. Our company, Discover Sunriver, manages approximately $90,000,000.00 (200 homes valued at $400,000 each) worth of property in Sunriver. That equates to an annual property tax contribution to the County of approximately $1,214,000.00. These revenues support our schools, our libraries, our fire and Sherriff services and our roads. Discover Sunriver collected approximately $175,000 in transient room tax last year. Keep in mind there are seven other management companies in Sunriver. Also keep in mind that these properties are occupied about one-third of the year on average. You can do the math. Add to that that the roads in Sunriver are maintained by the property owners here and you can begin to see what a cash cow Sunriver and the other Resorts like Eagle Crest, Black Butte and The Inn of the Seventh Mountain are to the County. I really have to question what has been happening with all of these funds and why the county has singled out our industry to make up for the shortfall.

An increase in transient room tax not only affects the Lodging industry, it affects all of the support businesses associated with the lodging industry. This includes contractors, repair businesses, services businesses, computer and advertising firms, office supply business and others in addition businesses such as restaurants, gift shops, hair salons and recreational vendors will experience a down turn in revenue. Think about it: If there is a decrease in revenue will you be more likely or less likely to improve and upgrade your home? Will vacationers be more likely or less likely to dine out? If homeowners realize less revenue because of a tax increase are they more or less likely to schedule improvements to their homes? Or even to take a raft trip? If we have to decrease our rates by two-percent to offset the increase will we be more likely or less likely to maintain benefits for our employees? To staff accordingly for peak seasons? To donate to charities?

Please email our County commissioners and administrators (Dave_Kanner@co.deschutes.or.us, Tammy_Baney@co.deschutes.or.us, Dennis_Luke@co.deschutes.or.us, Mike_Daly@co.deschutes.or.us) with the following talking points:

  1. The slow down in the economy over the past few years is clearly beginning to have an adverse effect on the tourism industry as a whole, and the lodging sector in particular. Smith Travel Research, the lodging industry’s leading information and data provider, closely scrutinizes occupancy rates and trends in the lodging industry.  Smith Travel Research’s analysis shows occupancy growth at zero percent in 2008 nationwide. This flat projection comes on the heels of relatively flat occupancy rates over the past four years. Smith Travel Research shows occupancy at 50.5% in 2004, 51.7% in 2005, 53.3% in 2006 and 52.6% in 2007. Many Central Oregon resort operators predict that the industry is experiencing the worst economy in eight-plus years. These factors indicate that the timing for an increase in the transient occupancy tax is not in the best interest of the Deschutes County tourism economy, including restaurants, gifts shops, lodging facilities, and other businesses that rely on tourism to survive.
  1. A 2003 study titled Room Taxes and Economic Impact of the Lodging Industry, conducted by the American Economics Group Inc. (“AEG”), also sheds some light on the impact that a tax increase may have on the overall tourism industry in Deschutes County. The study suggests that an increase in the lodging tax causes some travelers to stay fewer days, visit less often and/or make other adjustments in their spending (i.e. retail, restaurants, entertainment, etc.). The executive summary to the AEG report states that “Econometric analysis reveals that on average a 2.0% increase in the combined tax on hotel and motel rooms will cause about a 2.4% reduction in sales and associated visitor spending.” While a considerable amount of complex economic data was analyzed to produce this report, the conclusion is clear that an increase in lodging taxes results in a negative impact across a broad spectrum of tourism-related businesses.
  1. The lodging industry should not be singled out to cover shortfalls in the County Budget due to broad economic changes and lack of proper planning.

The County needs to hear from you by Friday August 15th if you cannot make that deadline please get in touch with them by Monday August 18th at the latest.

Thanks for your help!

Larry Browning

President
larry [at] discoversunriver [dot] com
Discover Sunriver Vacation Rentals

Please pass this post and letter on to everybody and anybody in Central Oregon.
Posted by Jake on 08/14/08 @ 02:28 PM
Posted in Local, Rants, Stupid | Permalink



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