By QUINTON SMITH/YachatsNews
YACHATS – The city of Yachats may be in its strongest financial position in years because of better-than-forecasted revenue from lodging taxes, money from a urban renewal district and lack of spending on many budgeted items or projects for several years.
Now, after two years of inactivity, the city has revived its dormant Finance Committee and is developing a process to prioritize and track capital improvement projects.
That’s the message out of the first nuts-and-bolts session of the newly reconstituted Finance Committee that met Jan. 6 to look at some hard figures and sort out how they will proceed in advising the city council on long-term revenue and spending.
The Finance Committee is a standing committee but was inactive for most of the past two years because of staffing turmoil in city hall and because the city council was focused elsewhere. As one of its last major acts, however, the council late last year passed a resolution reconstituting its membership and appointing four new members. They are:
- John Moore, a past committee member and mayor from 2018-20;
- Viki West, who has a local bookkeeping business;
- Charles Bame-Aldred, a semi-retired university economics and finance professor;
- Tom Lauritzen, a longtime city financial consultant and volunteer;
- City manager Heide Lambert is the fifth committee member and its chair.
The good news
Lauritzen told the committee that lodging taxes are coming in much higher than projected during the city’s budget deliberations last June. Unlike other local governments, the city of Yachats gets the majority of its yearly operating funds from the taxes that visitors pay when they stay at Yachats motels or vacation rentals.
Lodging taxes collected by Yachats are expected to hit $1.45 million by the end of June — $450,000 more than budgeted for fiscal 2022-23. Approximately 61 percent of that can go to the day-to-day operations of the city. The other 39 percent has to be spent on activities related to tourism – anything from trails, to visitor promotion and projects, or parks, for example.
Because of that and little spending on infrastructure and other projects the past two years, the city also has piled up $8.8 million in its reserves – a “savings account” for yearly or long-term projects.
Lauritzen said the continued rise in lodging taxes was because Yachats continues to be a “destination of choice” even as the end of the pandemic gives travelers more options. The city’s income is also helped by the increasing prices charged by motels and vacation rentals.
“The places have been busy,” Lauritzen said. “It’s a significant amount of money.”
The city levies a 9 percent lodging tax; the state also adds a 1.5 percent charge it directs to promotion and projects.
Vacation rentals typically make up 25 percent of all lodging taxes in Yachats, Lauritzen said. But that was down this year as the city failed to issue up to 13 licenses when they became available. City staff are now catching up and authorizing licenses to the limit of 125, Lambert said.
Urban renewal on horizon
The committee also wants to begin discussing and evaluating projects funded by Yachats’ urban renewal district, which was formed in 2006.
Urban renewal districts use property taxes to pay for economic and community development projects. When the Yachats plan was adopted, the assessed property values were frozen and taxes collected on increased property values — say a new house built on an existing lot — made available for specific projects.
But because of the 2008-10 recession, the district did not collect much money. Only now – with the completion of the Koho housing development and 10-15 residential projects a year – the district expected to get more than $400,000 a year.
The previous city councils have used urban renewal money to pay off inter-fund loans used for water projects. Now that those are paid, there should be up to $3.5 million left to collect and use on water master plan projects or other infrastructure needs, Lauritzen told the committee.
In the current urban renewal budget there is also $117,00 for trails projects and $209,000 for parks that could be switched instead to proceeds from lodging taxes, the committee was told. There is also $662,000 remaining from the first phase of the U.S. Highway 101 project that could be used elsewhere.
In addition to advising where the city might allocate its money, the Finance Committee also wants to make recommendations on possibly extending the life of the urban renewal district. The district has an approved life of 20 years, but can be extended by the city council if it does not reach the $7.82 million it intended to collect over that original time period.
Lauritzen said the district has collected $4.08 million since 2006, so can be extended – with council authorization — to collect the rest.
“It’s up to us and the city to manage that process to get to that number,” he said.
Committee members were enthusiastic about the city’s strong financial shape and reports there is money to spend on infrastructure and other projects.
“I love the chance to make some strategic decisions here,” Bame-Aldred said.
Other bits and pieces
Unlike lodging taxes, the city’s 5 percent tax on prepared food and beverages suffered during the pandemic because of restaurant closures. They have started to recover.
Yachats, Ashland and now Cannon Beach are the only cities in Oregon which levy a 5 percent tax on prepared food. The Yachats tax – which reached $400,000 a year before the Covid pandemic but then dropped to $300,000 – goes to pay off debt from the expansion of the wastewater treatment plant.
Lambert told the committee there was at least one restaurant and several food carts in Yachats that have not been paying their taxes quarterly. She said notices and collections were “definitely a priority” for the city’s new code enforcement officer. Lauritzen estimated the late payments total $45,000.
The city also resumed sending money from its reserves to the state-run Local Government Investment Pool, which pays 2.65 percent interest now during the run-up of rates rather than getting virtually no interest in a Washington Federal Bank account. It recently moved $3 million there, which is expected to generate an additional $95,000 a year in interest income.
The city stopped using the state fund when its finances were being handled by contractors from the Oregon Cascades West Council of Governments. The city ended that contract in 2020.
- Quinton Smith is the editor of YachatsNews.com and can be reached at YachatsNews@gmail.com
Good news. Thanks for the excellent report.