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Canby City Council talks about adding new hotel to city's profile, new transient tax

The Canby City Council held a work session on April 4 before their regular meeting to discuss the possibilities of adding a new hotel to the city and a transient hotel tax to boost campaigns to develop a robust tourism program.

Renate Mengelberg, the city's economic development director, discussed a study initiated recently that found about five sites that would be good spots for a hotel serving tourists and business people.

That would boost hotel rooms in the city to between 136 to 156.

"Our goal is to reach out to about six developers to find out if they're interested," said Mengelberg.

The study, conducted by Johnson Economics, found there is demand from several areas, including business. It will take about two years to develop, build and furnish a new hotel.

The Canby Herald.

Most likely, the new hotel will be a boutique hotel that will be flexible for the community. It would be able to weather cycles of tourism and business better than others, said a council member. Even though most demand is seasonal, events would push demand in the summer. It also may be needed for sports, weddings, prom and other activities and events in the area.

The study also determined a boutique hotel could use more labor during specific seasons.

Councilors at the work session gave the go-ahead for staff to pursue the idea. On May 2, the council will hold a public hearing to provide feedback on the hotel and on a transient hotel tax.

"Tourism is increasing dramatically in the valley and now is a good time to pursue both a new hotel and a transient hotel tax," Mengelberg told the Herald.

That tax would strictly be for programs to beef up Canby's tourism -- brochures, tourism related events, the Visit Canby website and a visitor information brochure, for examples.

Canby is one of the few cities in the area that doesn't have such a tax. Cities around Canby, like Wilsonville and Oregon City both charge transient taxes. This would not just be for hotels, it would include AirBnBs, campgrounds and other short term rentals.

Currently, Canby's hotel collects transient taxes for Oregon and Clackamas County. Owners are allowed to keep a small percentage for administration costs. Another percentage for the city wouldn't put an undue hardship on the hotel owners. It would allow an extra percentage to go to them.

"We don't charge sales tax and we do provide public works, police and fire, and Porta-Pottys, all without taxes," said Mayor Brian Hodson.

Looking just at the Motel 6 with 35 rooms, tax rates at 3 percent with occupancy at 35 percent would generate about $9,000 or twice that at a 70 percent occupancy. At a 5 percent tax on the low occupancy it would generate $15,590 and at a high occupancy rate $30,455.

Add in a new hotel at a low occupancy rate and a 3 percent tax comes in at $39,780 with a 70 percent occupancy at 3 percent $79,340. The 5 percent rate, however, at a low occupancy rate would bring in $65,976 while a high rate it brings in $131,934.

The tax provides funds for an important reason without getting it from residents.

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