[wmm] Reminder: Tomorrow's Zoom WMM 8am 02Jun2021

Tue Jun 1 18:46:41 CDT 2021

Here is the log-in for tomorrow's 8am Zoom Wednesday Morning Meeting - the
same log-in we always use unless Hannah is out of town.

Date/Time: June 2, 2021 08:00 AM Join Zoom Meeting at
https://us02web.zoom.us/j/3843649054

By Phone, dial
253-215-8782
Meeting ID: 384 364 9054

*TO: Cannon Beach Residents*

*FROM: Bruce St.Denis, City Manager*

*DATE: May 31, 2021*

*SUBJECT:  Information regarding alternative funding sources *

People have asked me to provide accurate information regarding the current
discussions regarding potential funding sources for the Cannon Beach Rural
Fire District and the City’s major projects.

What I am providing here is an advance look of an article that will go into
tomorrow’s edition of the City’s newsletter, The Bulletin.

*Executive summary*

If I had to summarize it I would say that the city is at a historically
important point where the possibility exists to significantly increase the
capabilities of our Fire District and develop a survivable city hall/police
station that can function as an EOC if nature hands us a really bad
situation. The most important point is that all these things can
potentially be funded by visitors who, unless they are staying in lodging
accommodations, currently pay nothing.

If you review the real alternatives below, it appears the best options
tends to be a Food and Beverage Tax and that is the primary option being
considered at this point.

If a Food and Beverage Tax is not approved, then the logical funding source
for both of those needs would be Property Taxes.

*Introduction*

This is my attempt to bring many of the pieces together to try to provide
accurate information about what has been happening regarding alternative
funding sources at the City Council level. If I am at least partly
successful in doing so it is hoped we can have a meaningful, collective
conversation about many things that are important to our community.

There have been several discussions about funding options, but few
decisions have been made. That’s why there is so much confusion in the
community and especially on social media. That lack of available specifics
is what makes writing about this subject hard. I can only talk about what
is being discussed but not what has been decided.

What follows are only my thoughts and impressions so it is important to
ZOOM in on the Council meetings or go to the city’s website where you can
find them on YouTube to get the latest information. An important discussion
will happen at the Tuesday, June 1st at 6:00 City Council meeting so please
tune in. Click on this link to join via ZOOM.

https://zoom.us/j/99261084699?pwd=TkpjbGcxS0pCOGlMOCtSbSsxVWFMZz09

A short while back the Cannon Beach Rural Fire District (FD) approached the
city for help in identifying an on-going, unrestricted funding source that
would help them accomplish what their available funding sources could not.
They explained that 77% of calls are for visitors (others than residents or
second homeowners) and those folks pay nothing towards the service.

The District’s major funding source comes from property taxes. The FD’s
current tax rate is $0.89 per $1,000 in assessed valuation. For comparison,
the average tax rate for fire districts in this area is $1.35 per $1,000. I
strongly recommend that you go to the FD website, cbfire.com, to get
specifics about how they plan to use the additional funding should it
become available.

The city also has some important public safety needs and would prefer to
find a funding source other than property taxes to meet those needs. Please
note that there has not been a decision what, if any projects will receive
funding from this effort.

*An analysis of viable funding options*

*Property Tax *

It appears that even if the city were to sponsor a referral (a vote) giving
residents the option to increase their city taxes to support the CBRFD, the
City would not actually have the ability of forwarding the funding to the
Fire District, so this is not a viable option for that specific plan.

However, it would be possible for both the City and the Fire District to
hold separate referrals for property tax increases to address their needs.
In the case of the Fire District, it would be a levy that could be in place
for up to 5 years if approved and a new levy would eventually be required
to continue that funding. They currently have one levy in place.

The City could also schedule a referral for a specific purpose. For
example, the voters could vote on an increase in their property taxes to
fund debt service for a new facility or infrastructure project. In these
examples, the funds would come from additional costs to taxpayers.

*Tourist Lodging Tax (TLT) *

TLT funds are collected *from tourists* as a tax on the cost for each
lodging night. The collections are forwarded quarterly by the lodging
establishments. They keep 5% of what they have collected as a servicing
fee.

Some simple math:

Based on 2019 data, each 1% TLT increase would raise: $572,570

70% *is required* to be spent for tourism related purposes:      $400,799

*30% discretionary revenue available to the city: $171,771*

The city anticipates that the debt service on a new CH/PD could be up to
$700,000 per year. This means that the TLT would need to be raised an
additional 4 % to come close to that level of revenue.

If the CBRFD is to receive a similar amount, the city would have to raise
the TLT an additional 4% to provide their funding for a total TLT increase
of 8%.

8% is the total levy the city currently imposes on an annual basis.
Essentially we would have to double this tax on folks staying in hotels,
etc.,

If this option were chosen only visitors staying in hotels or short-term
rentals would pay a tax. People visiting for the day would pay nothing.

*Food and Beverage Tax *

*A food and Beverage Tax is a tax paid by the diner, not the restaurant.*
It is a pass-through tax collected in a similar method as is used with the
TLT. Discussions to this point tend to favor a 5% servicing fee for the
collecting restaurant but that has not yet been decided.

In order to determine the potential income from a Food and Beverage Tax the
Fire District and City jointly commissioned a study prepared by
ECONorthwest. A copy of the ECONorthwest Report is available on both the
City and Fire District websites. Bob Whelan, who developed the report for
ECONorthwest, presented his methodology at

the May 18th City Council meeting. You can see that presentation by going
to the city’s website.

The ECONorthwest report estimates that each 1% of a Food and Beverage Tax
imposed could generate $431,590. It is important to note that this
information is very preliminary, and the actual revenues will be impacted
by many factors.

If the ECONorthwest estimate is accurate then a 4% F & B tax would generate
approximately $863,180 each for both the City and Fire District. The
ECONorthwest report estimates that 96% of the Food and Beverage tax would
be collected from tourists and 4% from locals dining out.

Several years ago, the City’s Finance Department did a study that was less
sophisticated than the one completed by ECONorthwest that estimated F & B
revenues would come in at $851,625 based on a 4% levy. This is
approximately half of the ECONorthwest estimate.

*Summary comments and other thoughts that will be expanded upon in later
articles*

A Food and Beverage Tax is paid by people consuming the food, not the
restaurant. The restaurant is paid to collect the tax.

The earliest that I have heard suggested for the implementation date is
January 1, 2022.

If a smaller operation needs to buy a system to keep track of the tax it
will cost between $1,300 and $1,400. The City Council is exploring ways to
assist with that purchase.

There are industry trade organizations that will fight the efforts of local
communities (that means you) to stop them from spreading the burden of the
cost of government services to visitors who currently get the services for
free. They feel that is advantageous to their constituents even though it
means that city residents will be forced to fund the bill for the visitors.

The recent push to have the City Council approve the F&B tax quickly was to
make sure that the food and lodging trade group could not lobby the state
legislature to preclude the voters of Cannon Beach from voting on a Food
and Beverage Tax in November. That possibility may still exist.

Other funding sources such as parking fees have been suggested. If the city
were to make $10 per vehicle we would need to collect from 160,000 cars to
match what has been projected from Food and Beverage Tax. A parking fee is
certainly a viable funding source but probably for smaller projects.

*The city manager’s rant about the city hall/police station. (Included
because there is a lot of misinformation out there)*

The reader’s digest version of *my* concerns is that because of the
construction materials (hollow block) and age of the current building (+ 70
years) it is possible the facility will not survive a small to medium
seismic event. (Can that really happen? In the last year southern Oregon
experienced between a 5.9 and a 6.3 earthquake located 190 miles offshore.
The tremors were felt in Eugene, 280 miles from the epicenter.)

If the City Hall/Police Station  were to fail we would lose our ability to
communicate with the outside world, much of our information resources and
equipment, a place to centralize information gathering about the event, our
ability to develop/coordinate rescue locations and priorities, to deploy
resources as they became available, assess damage to our utilities and to
plan for water and wastewater restoration.

*A new City Hall/Police Station is not about the comfort or convenience of
staff.*

*I strongly suggest that the degree to which we equip our team should be in
proportion to our expectations of their performance when it comes time to
manage an emergency.  *

You will be hearing more about the City Hall/Police Station in future
Bulletin articles.

Thanks for your attention and I look forward to our future discussions.

George Vetter
503-739-1415
GeorgeVetterPhotography <https://gvfa.smugmug.com>
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