The Klamath Falls City School Board Monday rejected a request by Klamath County Economic Development Association to forgive $5,000 in excise construction tax for the development of a hotel under construction in the downtown area.
Previously, KCEDA had asked for the tax to be forgiven — $16,000 of the total $32,000 tax — for development of a 92-room Fairfield Inn & Suites in the TimberMill Shores area. That number was reduced to $5,000 when school board members voted it down 4-2 on Monday.
The tax is earmarked by law for capital construction improvements that the school district collects from new construction, according to board chairman Bill Jennings. To date for the year, the school district collected $119,000, which can only be used for capital improvements, according to Daymond Monteith, operations manager at the district.
Board members Mike Moore and Don Ambers urged fellow council members to consider the larger picture.
“My thought and strategy was that our board to make some kind of concession as a token … as a gesture to work with KCEDA, and hoping that they would work with us to develop housing developments inside our district,” said Mike Moore, one of two “yes” votes on the request. “So that we could attract more families to our district.”
“I didn’t want this to be precedent-setting,” Moore added. “My goal was to have a one-and-only-time kind of a gesture.”
Ambers, who earlier in the meeting was honored for serving a four-year term on the board, agreed with moving forward with the request.
“It’s very important that the city (school district) try to cooperate with future development within Klamath County,” Ambers said.
“I think this is a way for us to say, ‘look, we’re in favor of future development in Klamath Falls,’ and there’s been too many times that that’s not been spoken of.”
The $13.7 million hotel development is a division of Marriott and is being built on waterfront property along Lake Ewauna.
School board chairman Bill Jennings was among four board members to vote no on the request, joined by Lori Theros, Trina Perez, and Mychal Amos.
Jennings said he agreed with Moore and Ambers on a desire to improve development and growth in Klamath Falls, but disagrees with using school funds that are earmarked for capital improvements for the schools.
“For us as a school district, our way of promoting growth in our community is showing strong schools,” Jennings said. “If we have strong schools, we’re supporting development.
“I think we make a stronger statement by having strong schools than by offering tax rewards for people to come. And if we were to offer tax rewards for people to come, how do we decide which is the project? … I appreciate that they wanted to ask for that and propose one project for that. But, whether we don’t want it to become precedent-setting or not, it becomes precedent-setting.”
Board members previously tabled the request in March and decided to bring it up again at Monday’s meeting. Jennings cast the tie-breaking vote to table the request during that meeting.
KCEDA representatives were not present at the Monday meeting but first pitched the request in a February in front of the school board.
Randy Cox, chief executive officer of KCEDA, was unavailable to comment about the action as of press time on Tuesday afternoon.
But in March following the board’s tabling of the request, Cox provided comment on the situation.
“Unless we get construction and get businesses to come to town, the excise tax is not of very much value to the school board or to the community,” Cox said during the March meeting. “What we’re trying to do is stimulate an area ... that’s been vacant for 15 years.”
As an alternative to forgiveness of an excise tax, board members discussed upping their contribution to KCEDA from their current $500 membership level as a way to increase their cooperation with the pay-to-play model of economic development. No action, however, was taken on the concept at this time.