Fiscal and Economic Impacts of Destination Resorts in Oregon

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Fiscal and Economic Impacts of Destination Resorts in Oregon Fiscal and Economic Impacts of Destination Resorts in Oregon March 2009 Fiscal and Economic Impacts of Destination Resorts in Oregon March 2009 For: Central Oregon LandWatch By: Eben Fodor Eugene, Oregon www.FodorandAssociates.com With research and analysis by David Hinkley Cover photo credit: Sandy Lonsdale Impact of Destination Resorts in Oregon Fodor & Associates March 2009 page 1 Table of Contents Introduction....................................................................................................................... 3 1. Destination Resorts in Oregon .................................................................................... 4 2. The Thornburgh Resort Case Study ......................................................................... 12 3. Thornburgh Fiscal Impact Analysis ......................................................................... 13 4. Revenues from the Thornburgh Resort .................................................................... 17 Property Taxes............................................................................................................. 17 Room Taxes ................................................................................................................. 22 5. Thornburgh Resort Costs........................................................................................... 24 Transportation System Costs ..................................................................................... 27 School Facilities Costs................................................................................................ 40 Fire & EMS System Costs .......................................................................................... 48 Public Safety System Costs......................................................................................... 53 Parks & Rec. System Costs......................................................................................... 59 General Government Facilities.................................................................................. 64 6. Fiscal Impact Summary.............................................................................................. 67 Revenue Summary ...................................................................................................... 67 Costs of Facilities ........................................................................................................ 67 Services Impacts.......................................................................................................... 68 Fiscal Impact Conclusions ......................................................................................... 69 7. Thornburgh Resort’s Economic Impacts.................................................................. 70 Job Creation and Employment Impacts.................................................................... 71 Who Will Fill New Resort Jobs: Locals or Newcomers? ........................................ 76 Housing Impacts of Thornburgh Resort .................................................................. 78 Spending by Destination Resorts .............................................................................. 81 Economic Risks........................................................................................................... 83 Economic Impact Conclusions .................................................................................. 85 8. Implications for Impacts of Destination Resorts in Oregon ................................... 86 Appendices....................................................................................................................... 89 A-1. Property Tax Explanation.................................................................................. 90 A-2. Transient Room Tax Explanation..................................................................... 94 A-3. Population Projection Used in Study................................................................ 98 A-4. Tax Bases for Jurisdictions Used in Study ....................................................... 99 A-5. About the Authors ............................................................................................ 100 Impact of Destination Resorts in Oregon Fodor & Associates March 2009 page 2 Introduction The recent proliferation of destination resorts, and the number of new resorts currently being proposed in Oregon, raises concerns about the potential impacts of these resort on local communities, cities and counties. Based on a literature review performed as part of the research for this study, there are no independent, third- party studies evaluating destination resort impacts. The only readily-available sources of information are the resort developers’ own studies prepared as part of the land-use application materials. This report represents the best effort to date to assess the impact of destination resorts in Oregon. It is a complex task and there are an almost unlimited number of potential impact areas that could be studied. To establish a manageable scope of work within the project budget, the focus of this study is on the fiscal impacts of resorts. Fiscal impacts are those that affect local governments and local taxpayers. They include both the tax revenues that will be generated and the costs to provide the services and infrastructure required to support the development. In addition to fiscal impacts, the economic impact of destination resorts was evaluated in terms of job creation and housing impacts. This study does not address any of the environmental or social impacts associated with residential and recreational development of resorts in the State. Instead this study focuses on the monetary (fiscal and economic) impacts these destination resorts have on the local communities where they are being built. In order to study resort impacts in detail, the proposed Thornburgh Resort in Deschutes County was used as a case study. The Thornburgh Resort is to be located near Redmond and just west of the existing Eagle Crest Resort. The Thornburgh Resort would be a medium-sized resort and was considered to be fairly typical of past and future resorts in the State. This report is intended to be transparent. All sources of information are documented and all the calculations and methodologies are explicit. Where data were not available, reasonable assumptions were made. These assumptions are also clearly stated. In some cases, where good data were not available, alternative scenarios were used to examine a range of possible conditions. Impact of Destination Resorts in Oregon Fodor & Associates March 2009 page 3 1. Destination Resorts in Oregon Destination resorts typically involve 500 to 3000 single-family homes and various recreational amenities, such as golf courses and clubhouses, in an attractive natural setting located away from existing cities and growth centers. The term “destination resort” has a unique legal meaning in Oregon. Special status was given to “Destination Resorts” allowing them outside urban growth boundaries under Goal 8 (Recreational Needs) of the Land Use Planning Program.1 This action appears to be based on the assumption that the tourism benefits would outweigh the costs associated with this form of rural development. In 1987, provisions for destination resorts were enacted into state law and codified in Oregon Revised Statutes (ORS) 197.435 through 197.467. According to ORS 197.440: The Legislative Assembly finds that: (1) It is the policy of this state to promote Oregon as a vacation destination and to encourage tourism as a valuable segment of our state’s economy; (2) There is a growing need to provide year-round destination resort accommodations to attract visitors and encourage them to stay longer. The establishment of destination resorts will provide jobs for Oregonians and contribute to the state’s economic development; (3) It is a difficult and costly process to site and establish destination resorts in rural areas of this state; and (4) The siting of destination resort facilities is an issue of statewide concern. The State Legislature attempted to enforce the tourism aspects of these developments by requiring a certain minimum amount of overnight accommodations and certain visitor-oriented facilities. 2 The intent was apparently that without such requirements, destination resorts would likely be little more than the classic, sprawling rural subdivisions that the Land Use Program was intended to prevent. However it is unclear that resorts are actually meeting their overnight accommodations requirements due to a lack of reporting and enforcement mechanisms. In spite of State requirements, residential lots and private homes outnumber overnight accommodations by more than two to one. Residential lot sales represent the primary feature of existing and proposed destination resorts. Questions remain as to whether the destination resorts are essentially rural subdivisions that are increasingly having adverse impacts on cities, counties and the state that are not 1 Goal 8: Recreational Needs (OAR 660-015-0000(8)). 2 State Law requires that destination resorts permanently allocate one overnight housing unit for every two residential units in Western Oregon and two overnight units for every five residential units in Eastern Oregon (see ORS 197.445(4)). Impact of Destination Resorts in Oregon Fodor & Associates March 2009 page 4 adequately offset by tourism benefits. Our literature review found no studies examining these impacts in
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