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Ashland residents will get chance to vote on meals tax

ASHLAND — Voters here will decide in November whether to renew the city's 5 percent tax on prepared food and beverages.

The City Council voted unanimously Tuesday to put the issue before voters.

"Our function tonight is not to decide whether to keep the tax. It's whether to put it out to voters," Councilman Greg Lemhouse said.

If the tax isn't renewed, it will sunset on Dec. 31.

Most of the tax revenue — 80 percent — is used to pay for past upgrades to Ashland's sewage treatment plant, while 20 percent pays for parkland and open-space purchases.

Council members got an earful at Tuesday's meeting from people in the hotel and restaurant industries who think the meals tax drives away business.

Ashland Springs Hotel General Manager Don Anway, who used to manage the Red Lion Hotel in Medford, said the tax puts the Ashland hotel at a disadvantage against surrounding towns when it tries to compete for large groups such as wedding parties and conventions. The Ashland Springs Hotel provides food as well as lodging.

"This is an obstacle for us when we are out promoting. People do notice it," Anway said of the city's tax on prepared food and beverages.

He said sometimes the hotel will absorb the 5 percent tax rather than passing it on to customers just to attract a large group. For a $10,000 banquet, that means the hotel is having to absorb $500.

Brandon Kirkland, who lives in Talent, said he and his relatives in Grants Pass avoid dining in Ashland. He testified about the effects of the tax even though he said the floral shop he owns in Ashland would have to pay higher sewer bills if the tax is not renewed.

Ashland Finance Director Lee Tuneberg has estimated that sewage bills would have to climb by 60 percent if the tax is not renewed.

The city previously took out a $24 million loan to help pay for sewage treatment plant upgrades to meet tightening Oregon Department of Environmental Quality standards. The city must pay $1.8 million each year until 2024.

Although council members voted to put the issue of whether to renew the tax before voters, there are still details to be worked out.

The Ashland Parks and Recreation Commission would like the parks department to continue receiving 20 percent of revenues if the tax is renewed. However, commissioners would like to broaden the uses for the tax beyond only being able to buy parkland and open space.

Parks Director Don Robertson said the commission also would like to be able to use the money to develop parks and to pay for major rehabilitation projects on existing parks.

Some City Council members said they would like city staff to investigate the possibility of putting a tax cap on catered events for large groups that spend $8,000 or more. That could help Ashland be more competitive in attracting large groups, such as those attending conventions.

The council also must decide the duration of any renewal of the tax it puts before voters. Although the sewage treatment plant upgrade loan will be paid off in 2024, the city faces new DEQ requirements to cool Ashland's sewage effluent.

The city may have to pay more for sewage upgrades if, for example, it has to build a cooling tower, City Administrator Martha Bennett said.

Past sewage plant upgrades allow the city to remove phosphorus from its sewage effluent. Phosphorus as well as warm water temperatures are harmful to fish. Ashland's effluent drains into Bear Creek.

Vickie Aldous is a reporter for the Ashland Daily Tidings. She can be reached at 479-8199 or vlaldous@yahoo.com.