Roseburg councilors agreed to spend up to $20,000 on a study to see if Roseburg could attract more tourists with a high-end hotel.
At the same meeting Monday night, they agreed to begin evaluating a tax incentive to entice a potential developer.
The moves came as a slap in the face to the Hanna Family, who broke ground last week on a new Hampton Inn on Mulholland Drive. The family owns and operates the Windmill Inn next door.
Construction will soon be underway for the new Hampton Inn on Mulholland Drive in Roseburg.
“We’re investing a large amount of money in a new hotel, which will be very nice,” Windmill Inn manager Alan Pike told councilors. “I think it’s something that’s hard to feel good about now. We just had a groundbreaking on Friday. It’s difficult seeing things like this.”
Hotels in Roseburg collect an 8 percent transient tax from customers, which they give to the city of Roseburg to spend on tourism-related projects. Councilors voted to consider allowing a new high-end hotel to keep part or all of the tax.
“That would seem a little anti-competitive,” Bruce Hanna said Tuesday. “What would happen if all the hotels got their money back? Then there wouldn’t be any money to spend on tourism.”
City staff and The Partnership For Economic Development have spent almost two years and $100,000 of grant dollars working with a consulting firm trying to figure out how Roseburg could attract “high-end tourists.” They ultimately determined that a boutique hotel would do the trick.
A boutique hotel has rooms that cost upwards of $200, City Manager Lance Colley told councilors, and might offer amenities such as a restaurant, wine tasting and various shops.
In order to attract a boutique hotel developer, however, the city may need to create an incentive package, he said.
“Based on the work done to date, it appears that there is interest in the Roseburg community, but we are not currently in a position to support higher end lodging without at least some incentive that could help deliver a better return on investment,” he wrote in the council’s agenda item summary. “The preferred site chosen is at the former Rite-Aid/Safeway property in downtown.”
The preferred location was later changed to what the city is calling the Central Business District.
The Partnership needs an additional $40,000 to complete the remaining scope of work, including mapping out incentive ideas and contacting potential developers. The Partnership requested half of that from the county, and the other half from the city.
“This is a high priority economic opportunity,” Colley wrote.
Councilors voted 5-2 to pull $20,000 out of the city’s economic development fund, where there now remains $140,000. Councilors Steve Kaser and John McDonald voted against the idea. McDonald had the lone vote against looking into the potential tax incentive.
Kaser said he was apprehensive about tax incentives for private businesses. McDonald said his vote was swayed by Pike’s testimony.
“Are we rushing this?” McDonald asked councilors. “Would the money be better spent elsewhere?”
Pike said it does not make financial sense for a business to need an incentive package in order to develop in Roseburg.
“If a private business needs a subsidy in order for it to even be attractive for someone to develop, it may not have a great business model,” he said.
Through colorful murals, themed signage and a boutique hotel, the City of Roseburg Economic …
He added that although he would not mind additional competition, he feared that lack of tourists in the winter months will drive prices down. His hotel rates reach up to $200 in the summer, he said, but prices plummet as vacancy rates drop to 50 percent.
Mayor Larry Rich said that after two years of work, he would like to see where the evaluation project goes.
“We’ve come so far, let’s see the final product,” he said.
Betsy Cunningham, of Roseburg, spoke against the idea. She is part of a group that is aiming to get a grocery store established in the old Safeway building downtown or somewhere in southeast Roseburg.
“Really, are you kidding yourselves? Are you really kidding yourselves?” she said. “That people are going to come to downtown Roseburg and look at the back of the Rodeway Inn, to stay here in a boutique hotel for $200?”