By QUINTON SMITH/YachatsNews.com
The Yachats City Council is proposing to tack a percentage point onto the city’s lodging tax to capture more money from increased tourism to help pay for at least three projects and bolster the city’s general fund.
The city’s lodging tax would rise to 10 percent from 9 percent. Together with another 1.75 percent levied by the state, the tax on people who book motel rooms or vacation rentals would total 11.75 percent.
Lincoln County levies a 10 percent tax on motels or vacation rentals outside any city limits. Most other coastal cities’ total lodging taxes are in the 11-12 percent range.
The plan is being pushed by Mayor John Moore, who is trying to bolster the city’s general fund for ongoing operations while also paying for tourism-related projects needing financial help.
The council plans a public hearing on the proposal at its second February meeting, 6 p.m. Wednesday, Feb. 20. It wouldn’t take any action until March.
If approved, the 1 percentage point increase is expected to raise an additional $115,000 a year – 70 percent of which is required to go to tourism-related projects. The remainder can be used for the city’s general operations.
“It would bring us into parity with Waldport, vacation rentals in the county and other cities in our area,” Moore told the city’s Finance Committee on Wednesday, Jan. 9.
Hours later at a special council work session, the council asked staff to develop a resolution that would be the subject of a public hearing.
Much of the city’s operations are paid through the lodging tax. Yachats also has a 5 percent food and beverage tax that almost exclusively helps pay for the sewer treatment plant and which has helped keep water and sewer rates from increasing rapidly. That brought in $375,000 during the 2017-18 fiscal year.
Proceeds from the city’s transient lodging tax have almost doubled in the last five years as tourism and motel rates increased, vacation rentals became more popular – and after the city raised its rate from 7 percent to 9 percent in 2016.
For the 2014-15 fiscal year the city took in $568,000. For the 2017-18 fiscal year the city collected $1.04 million.
Most Oregon cities have some kind of lodging tax. Oregon has a complicated set of requirements on how much can be used on tourism-related projects or general city operations. And a lot depends on when the taxes were started or increased.
In Yachats, the state requires that 30 percent of the first 7 percent of the total lodging tax go to tourism projects. The remaining 70 percent can be used for city operations.
The state changed that proportion several years ago. When Yachats raised its tax by 2 percentage points in 2016 it then had to direct 70 percent of that increase to tourism and 30 percent to its general fund.
In total, however, 39 percent of the city’s total lodging tax goes to tourism projects and 61 percent goes to the general fund, according to Tom Lauritzen, a former finance committee member who has consulted for the city on its financial systems.
Discussion started last fall
Moore was chairman of the finance committee when it took up the lodging tax increase in the fall. The committee endorsed the idea in December and passed it along to the council.
At the first City Council meeting of January, Moore – who was elected mayor in November – said that after talking to a motel owner it would be wise to send the idea back to the finance committee to identify specific projects on which to spend the additional money.
The finance committee took up the issue again Wednesday, Jan. 9, with Moore acting as chairman because city manager Shannon Beaucaire was ill.
During a short discussion, Moore urged the committee to focus on immediate projects like the upcoming repairs of the Little Log Church that the city is struggling to find a way to pay for.
“Museums are definitely a tourist draw,” he said.
Lauritzen urged the committee to be aggressive with the additional money.
“There’s only 400 of us who live here year round, the rest of the activity you see are visitors,” he said.
Lauritzen suggested directing more money to the Yachats Chamber of Commerce to upgrade its operations and effectiveness.
“I see a real opportunity in front of you to really strengthen the chamber,” he said.
The committee voted to direct the tourism portion of the tax increase for repairs to the Little Log Church, to help plan and build a proposed boardwalk along Ocean View Drive along the Yachats River, and to help with the library expansion.
Later, during a workshop meeting later that day, the City Council endorsed the finance committee’s recommendation. A public hearing will be scheduled sometime in February or March.
“Any time you want to raise taxes you should be able to justify what it’s going for,” Moore said. “We have some real needs.”