The hotels have been fixtures in the Hood River lodging landscape for generations. Now, they will become official members of the City of Hood River.
During the May 13 City Council meeting, the Vagabond Lodge and the Columbia Gorge Hotel, along with a remaining unincorporated sliver of Westcliff Drive, were annexed into city boundaries. A total of 16.5 acres will now fall under full, city jurisdiction.
The action was the result of an expansion request proffered by the Vagabond Lodge, who has planning commission approved plans to add 15 new rooms to its facility. The expansion would necessitate increased sewer use. That higher-grade utility use and the related expansion of city services for fire, road maintenance and ambulance services, all impact the city budget and trigger the required annexation.
State law requires that both facilities be annexed at the same time to avoid creating “islands” of non-annexed properties.
Annexation will increase property tax rates for both facilities and trigger a shift of Transient Room Tax dollars away from county coffers to the city’s and will reduce the amount of TRT dollars distributed to the Visitors Council’s tourism promotion budget.
The City’s TRT tax split – which is set at 75 percent to the city general fund and 25 percent to council – will result in a significant reduction of more than $100,000 to the Visitors Council annual revenue. The county’s TRT split was set at 90 percent to the Visitor’s Council and 10 percent to the county general fund.
Grant Polson, owner of the Vagabond Hotel presented his position on the annexation, stating that though he was not opposed to annexation, he was also not there to advocate for it. He voiced concern about the loss of the TRT funds for the Visitor’s Council, a tourism marketing agency under the Chamber of Commerce.
“The Chamber markets on a scale that none of us can do individually,” said Polson. “If there is a lowering of TRT to the Chamber of Commerce, that will decrease marketing around the world.”
Paul Robinson, manager of the Columbia Gorge Hotel spoke out against the annexation, citing concerns that the additional tax burden from city property tax rates would “not be financially feasible” for the hotel at this time.
According to city staff estimates of the increased property tax revenue, the impact to the Columbia Gorge Hotel would be close to $12,000 per year. The increase to the Vagabond is just over $5,000 per year.
Both the Vagabond and Columbia Gorge Hotel owners signed consent agreements in 1979 with the City in exchange for receiving city utility services to their sites. That consent, according to City Attorney Dan Kearns, provided a clear, legal option to annex both properties onto city tax rolls when expansions would be sought.
Robinson attempted to sway the council members against annexation. He cited a previous Oregon Land Use Board of Appeals case ruling which appeared to indicate that consent agreements signed prior to 1991 could not be enforced by jurisdictions if there was no specific “annexation plan” in place at the time of the signing.
City Attorney Kearns read through the cited case and advised council that the language of the ruling did not preclude the city from enacting their right to annex. Rather, he stated, the LUBA case simply provided an avenue to add conditions on to existing consent agreements.
The city, through the annexation process, will, though gaining tax revenue, also incur costs. With the Hood River Fire and EMS District assuming fire protection duties for the properties, the city will be required to compensate West Side Rural Fire District for five-years of lost tax revenue. That cost is $23,824, to be paid to Westside over a five-year period.
When asked if the Columbia Gorge Hotel plans to appeal the planning commission and City Council decisions, Robinson said, “Certainly we do. We are filing the appeal: one is due today (Tuesday) for the planning commission decision. We’ll file that with the city by 5 p.m. And, we will appeal the next piece of that with the Council.
“I would just hope that the city would look at the individual businesses and be a little more friendly to businesses in the community. I’d hope that they would think more long term in their planning – not so short term in simply addressing their budget woes.
“We’ll wait for letter from the city and file an appeal through LUBA. We’ll take the next steps.”
“It’s not only the problem of the property taxes: It’s the difference of giving the TRT dollars away from the Visitor’s Council and how that loss in tourism promotion will trickle down and affect every business in this community.
“This community survives on a four-month period. A loss of $100,000 in marketing will affect every business in one way or another and everyone who works here,” said Robinson.
According to City Mayor Arthur Babitz, state laws restrict changes to the TRT and jurisdiction distribution formulas. However, he also noted that he expects a proposal from the Chamber of Commerce and the Visitor’s Council that would suggest potential legislative changes to that funding model.
“No one has made up their mind on the City Council about these funds,” said Babitz. “We will review this with an open mind. We must comply with state laws, but I am hoping we can sit down and talk this through.”