Crook looking to resort property tax revenue

Officials debate how 3 planned destination projects would benefit schools, other services

By Rachael Scarborough King / The Bulletin
Published: March 28. 2007 5:00AM PST

With thousands of multimillion-dollar homes in the works in its destination resort zone, Crook County is looking to reap the benefits in property tax revenues.

But resort homeowners will also benefit from the relatively low rate at which the county assesses property. The assessor’s office taxes property owners on 48 percent of market value, meaning that someone who pays $1 million for a new house would only be taxed on $480,000.

Even with the potential negative impacts to neighboring farms and roads, county officials say the main reason they approved a destination resort overlay zone more than four years ago was for the economic boost: diversifying the area’s economy and, secondarily, increasing the tax base.

“It doesn’t generate the dollars everyone thinks, but it certainly generates some significant dollars, and those dollars are spread out across every tax district in which the destination resort lies,” Crook County Judge Scott Cooper said.

Two resorts have already been approved for Crook County and a third is in the application process. Altogether, they could eventually add more than 3,850 houses and 1,925 overnight stay units in the Powell Butte area.

The county’s destination resort zone falls under a rate that taxes owners $12.3973 for every $1,000 of a home’s assessed value, according to the tax assessment summary for 2006-07. That means that someone whose house is assessed at $1 million would pay $12,397.30 a year in property taxes.

That money is mostly split between the county and the school district, with smaller percentages going to other local agencies.

The county assesses property at a low rate because of statewide ballot measures in the 1990s that imposed limits on property taxes.

Not everyone thinks that adding destination resorts is a boon for the existing citizens in a community.

Carol Macbeth, Central Oregon advocate with 1000 Friends of Oregon, said she thinks that buyers would be drawn to Prineville and Crook County whether the resorts were there or not.

“In a way it’s sucking revenue from the cities and giving it (to) the counties, because these same people who may want high-end homes in gated communities would be spending that money and the tax revenues would be going to the cities in the region,” Macbeth said.

Looking into the crystal ball

Although the county assessor’s office does not have long-term projections for the potential tax revenues from the destination resorts, several properties within Brasada Ranch are already on the tax rolls.

Brasada was the first destination resort approved for Crook County and has started construction on 12 of its eventual 600 homes. Some of the 300 overnight units are already renting on the 1,800-acre property, which developer Eagle Crest bought for about $6 million.

The county collected about $644,000 on a total of 319 lots in Brasada Ranch in the 2006-07 fiscal year, according to Chief Appraiser Brian Huber. Huber added that 55 of the lots were still owned by Brasada, which paid a total of $394,053 in taxes for the lots, golf course and sales building.

By comparison, Crook County took in $19.6 million overall in property taxes last year, according to the yearly summary.

Brett Hudson, Brasada Ranch’s project manager, said homes there will start at about $750,000. At Remington Ranch, a second resort in the Powell Butte area, house prices will average about $3 million to $4 million, Project Manager Chris Pippin said.

A third destination resort, Hidden Canyon, is under consideration by the Crook County Planning Commission. Developers for the Pahlisch Homes-owned resort could not be reached for comment.

Pippin said the tax bill for the 2,200 acres of undeveloped farmland Remington Ranch now sits on was a few thousand dollars a year before developers bought it. With 800 single-family residences and 400 overnight rental units planned, the property’s value “could be a couple hundred times what it was before we purchased the property,” he said.

“So if our property taxes were in the thousands of dollars, they could be hundreds of thousands of dollars, and I could expect them to go up from there,” he said.

Cooper said that developing the destination resort zone, which dictates where resorts can be built, was a strategy to improve the area’s economy, which has been in flux since the last of Prineville’s lumber mills shut down in 2001.

“We were very aware when we adopted (the overlay zone) that the presence of destination resorts is a powerful engine for bringing the attention of potential business relocations to our community,” Cooper said.

But he added that the property tax revenue will mostly benefit county offices such as the road department. The taxes would not significantly help the school district because more money generated locally ends up reducing the state’s contribution, he said.

“It helps the statewide pot but it doesn’t help local schools,” he said.

If the current tax rates for the destination resort zone continue, about 31 percent of the property tax collected from destination resorts would go to the county, according to the 2006-07 tax summary. Another 39 percent would go to the Crook County School District, and 13 percent would be for Crook County Fire and Rescue. The remaining 18 percent would be split up in small increments between items such as the county cemetery, Central Oregon Community College, library and school bonds, and Oregon State University’s Extension Service in Crook County.

Overnight guests at the resorts also pay a room tax, which is currently at about 9 percent, Cooper said. The room tax revenues primarily go toward the Crook County Fairgrounds, the A.R. Bowman Memorial Museum and the Prineville-Crook County Chamber of Commerce, he said.

County Assessor Tom Green said that it is difficult to make projections on how much tax the county could collect from resorts in the future.

“We don’t know necessarily when they’re going to come in, how fast they will sell – (there are) a lot of unknowns with it,” Green said. “As far as the actual dollars that are going to be coming in that are going to get divided, that’s a crystal ball thing; that’s pretty hazy right now.”

Adding value

In Deschutes County, whose destination resort market is much more mature, many resort properties are already on the tax rolls. Unlike in Crook County, the resorts are not all taxed at the same rate, but the rate for the Pronghorn resort is at $13.3804 per $1,000 of assessed value, according to the assessor’s office. Pronghorn lies close to the border with Crook County on the Powell Butte Highway.

Dave Lilley, deputy tax collector with Deschutes County, said that Pronghorn Investors LLC, the company that owns the high-end resort, is one of the top 10 taxpayers in the county. He added that the county collected about $750,000 in property taxes from the resort in the 2006-07 fiscal year.

Pippin, Remington Ranch’s project manager, said that destination resorts add value to land that would otherwise not offer much to the county. “Destination resorts are only sited in areas with extremely low-value farmland,” he said. “That is taking farmland that currently does not have a lot of value and is not generating a lot of tax, and turning it into the biggest tax-generating property in the county.”

Cooper added that most of the properties in destination resorts tend to be second homes, which reduces their impact on the surrounding area.

“I think that’s been the experience of every other destination resort in the area – the types of people that go to destination resorts don’t tend to need to call the sheriff for services, destination resorts don’t tend to burn down, they’re not there long enough to require ambulances, and they don’t have a lot of kids to send to schools,” he said.

But 1000 Friends of Oregon’s Macbeth disagreed, calling the depiction of destination resorts as cash cows for the county “disingenuous.”

“There’s a net loss when you build in rural areas – studies show that it costs more (in services),” she said. “People will be coming into the cities daily and using the library, and if they fell ill they’d be using ambulances and police, so they’re using city services anyway, but they’re not paying for them.”

She added that she thinks many destination resorts will look more like residential subdivisions, rather than “self-contained development(s) providing visitor-oriented accommodations and developed recreational facilities,” as described in the Crook County Comprehensive Plan.

“The percentage of people who are using them year-round increases every year, and eventually they will become full-time residences for many of them,” she said.

Pam Hardy, staff attorney for Central Oregon LandWatch, agreed, saying that many destination resorts “end up being nothing but rural subdivisions.”

“The real question … is what does it cost the taxpayers that put in the infrastructure for these resorts?” Hardy said. “Because only looking at the tax revenues is like looking at the world through rose-colored glasses. It’s only looking at the gross profits, not looking at the net profits.”

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