City, Chamber, face dillema over annexation

August 20, 2011

The Hood River County Chamber of Commerce may be a victim of its own success.

In recent years the county has plowed funds from the room tax (TRT) it receives from local hotels into its marketing and tourism budgets. The efforts have paid off.

"Last year we had 12,000 people come through the visitors center the whole year," said Chamber Director Kerry Cobb. "This year we have had that many already."

However, while the chamber has been ramping up tourism efforts, a complex situation involving city sewer service may take away a large part of its revenue unless it can come to an agreement with the city.

Due to the tourism influx, one of the area's popular lodging destinations, Vagabond Lodge, is in the early planning stages of a 24-unit expansion at its location on Westcliff Drive.

In order to make the expansions, the Lodge would have to expand its sewer services, as well.

According to a consent to annexation agreement filed with the city by the Vagabond Lodge (as well as several other properties on Westcliff), any significant increase in city services would trigger that property's annexation into the city.

In this case that annexation would include the Columbia Gorge Hotel, which would otherwise be sitting on an island of county property on a city sewer line between the city limits and the city annexed property at the Vagabond.

That annexation would move the TRT funds from the two hotels from the county to the city, and that is where things get sticky for the chamber.

The chamber currently receives 90 percent of TRT funds through the county. From taxes generated in the city it only gets a 25 percent cut.

Currently the tax funds one full-time staff member and portions of the salary of Nancy Carlson and Cobb, and also helps pay for part of the chamber's rent at the visitors center. It also helped pay for the chamber's remodeled website and its social media efforts.

Hood River City Manager Bob Francis said the county, city and the chamber have sat down to discuss how to handle the issue and the city council is sympathetic to the chamber's needs.

"The chamber is our main tourism and marketing branch," Francis said. "When (the annexation) does happen we'll take it to the city council. They have been partners with the chamber and want to help."

The Vagabond has been considering an expansion for nearly a decade, according to owner Grant Polson, but with some improvements out of the way, he has recently started looking at the idea again.

Polson said the Vagabond has limited space to grow but would like to make use of it. They have not yet filed expansion plans with the city.

As for the potential annexation: "We'll cross that bridge when we come to it."

Cindy Walbridge, the Hood River City Planning director, said any plans for expansion at Vagabond - and any annexation plans - are still in their preliminary phases.

"They have just done some initial requests on it about what they would need to with the city or the county," she said.

If the city and chamber don't reach a compromise on the number, it would mean a $100,000-$110,000 drop in the chamber's budget - roughly a third of its visitor council funding.

"I think they will be annexed - it's just a matter of time," Cobb said. "So we are looking at the whole budget."

Francis agreed that is a matter of when, not if, the Vagabond and Columbia Gorge Hotel get annexed; and the city would work to keep all the affected parties in the loop.

"This has been something on the back burner and in everyone's mind for awhile," he said.

Cobb is hopeful that the city can reach a compromise with the chamber on the TRT funds it receives and lessen the budget blow.

"I'm hoping to work out a happy medium with the city," she said.

Francis was optimistic that something could be worked out; that even if it didn't meet the chamber's current funding, would avoid a massive cut.

"When the state law about this went into effect, it said you cannot provide less than the funds you currently are," Francis said, adding that nothing legally prevents the city from increasing the amount of TRT funds it provides to the city.

He said that the city would also gain revenue through the annexation through annexation costs and increased property taxes.

Cobb is hopeful something can be worked out, because otherwise she fears the momentum the chamber has built up will be lost.

"It's a substantial hit and we'll have to decide what to do with it," Cobb said. "It's unfortunate because we are really on a roll.

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