April 2007: Feature
Focus On: The resort
industry
Destination: Unknown
Driven by housing demands, Destination resorts want looser
regulations on their rental property. Land-use groups are
crying foul, and a showdown in Salem looks inevitable.
By Abraham Hyatt
Erik Kancler is driving through the tidy streets of Eagle Crest
resort, looking for a view of the mountains. He’s been
told there’s a road that climbs up the side of the butte
that the resort — about 15 miles north of Bend in
Deschutes County — is built around. But he’s never
been here before. He’s a little lost.
His Mini Cooper zips around corners and past whimsically named
streets: Bunk House Lane, Sage Country Court, Desert Sky Loop.
Kancler’s a tall, easy-going 33-year-old with shaggy hair
and a neatly trimmed beard. He’s the executive director
of Central Oregon LandWatch, a nonprofit land-use group
that’s highly critical of a new proposal that would allow
destination resorts, which provide a major tax base for
counties, to have more full-time residential units.
Deschutes County has the largest number of existing and
proposed resorts in the state: eight. Last year, three of
those resorts — Eagle Crest, Sunriver and Pronghorn
— asked the county to relax some of its land-use laws.
Some of their proposals asked for procedural changes. Others,
such as increasing the number of residential units, would give
them more freedom to respond to changes in the real estate
market.
Kancler’s group and 1,000 Friends of Oregon, another
land-use group, say that allowing more residential units would
go against the intent of the state law, which mandates resorts
not be full-time residential communities.
The county probably won’t provide any answers in the
debate. While the resorts argue that increasing the number of
units clarifies an existing ambiguity in state regulations,
county commissioners say they’re hesitant to make major
changes for fear of overstepping the law.
Which means the state Legislature will have to make the
ultimate decision. Changing the state law will require a new
bill — something that Central Oregon legislators
can’t say much about since a bill doesn’t exist as
of yet. But as the number of proposed destination resorts both
inside and outside of Central Oregon increases, it’s an
issue that everyone involved says is inexorably destined for
the statehouse.
And for heated public debate. The argument over resorts is,
like Measure 37, a 21st-century facet in Oregon’s long
and emotional debate over land use. These new arguments are
part of a growing public awareness of the economic forces
knocking on the door of a once quiet, timber-dependent state:
new jobs, new sources of money, new faces looking for new
places to live. The question is: How will the state’s
decades-old land use laws change as the future unfolds?
FINALLY ON THE RIGHT ROAD, Kancler’s Mini climbs up the
butte, past newly constructed homes, yellow backhoes and piles
of dirt before crunching off the pavement and onto a gravel
road. Next to an unbuilt lot, he climbs out and looks west to
the Cascades. It’s a stunning panorama of the high desert
and every peak from Mount Bachelor to Mount Hood — and of
the Thornburgh Resort, a newly approved 2,000-acre, 950-home,
three-golf-course development.
Kancler talks about his concerns over the impacts new resorts
will have on traffic, water and wildlife. With the cold wind
tousling his hair, he looks over the roofs of Eagle Crest homes
to the juniper and brush that will one day be the Thornburgh
Resort.
“They want the view; they want the wilderness,” he
says of the people who buy property in the resorts. “But
it’s hard to feel unique when you’re surrounded by
a lot of resorts just like your own.”
DESTINATION RESORTS HAVE ALWAYS been intended to play a simple
role: stimulate economic development in rural areas of the
state. In 1983, state legislators specifically mentioned that
goal in a new law that made it easier for developers to build
resorts outside of urban growth boundaries.
But that freedom came with conditions: 50% of the resort must
be open space. They must pay for their own roads, sewers and
water. Most importantly, they must maintain a 2:1 ratio of
residential units — homes, town homes and condos —
to temporary lodging — timeshares and rentals.
“Destination resorts,” a legislative subcommittee
wrote, “must provide primarily visitor-oriented
accommodations to assure that they are not built as or evolve
into full time residential communities.”
Before the law went into effect, a traveler could count the
state’s resorts, including Black Butte and Sunriver in
Deschutes County, on one hand. Today, the county has seven
resorts and recently approved another, Thornburgh. In Crook
County, Brasada Ranch has sold 40% of its available lots and
two other resorts have been proposed. In Jackson County, three
different groups are developing plans for resorts. Rumors of
resort ideas in other counties abound.
There’s little doubt they have had a major economic
impact. In Deschutes County, destination resorts make up three
of the county’s top 10 largest taxpayers. They —
not counting their residents — paid more than $1.6
million in taxes in 2006. The same year, residents of the top
four resorts paid nearly $26 million in property taxes.
According to Linda Swearingen, a consultant and lobbyist for
the industry, resorts employ more than 1,700 seasonal workers.
She cites an economic report by Peterson Economics — a
Washington-based real estate economics consulting firm
that’s worked with several Central Oregon resorts —
which predicts the construction of Thornburgh will create more
than 1,400 full-time jobs over the next 10 years. When it opens
in 2016, it will pay nearly $70 million in employee
compensation each year.
 Pronghorn rental units
are regulated by land-use laws that are being
contested.
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BUT AS THE NUMBER OF RESORTS HAS GROWN, the market for
overnight lodging has changed. According to those in the
industry, that’s due to an increase in places to stay in
nearby cities like Bend and a change in how people travel.
Swearingen says more people now want to buy vacation homes
rather than rent places to stay.
According to Eagle Crest CEO Jerry Andres, his resort only
fills about 50% of its rentals a year. Pronghorn reported to
the county that it’s only filling 30% of its units.
(Pronghorn developer Scott Denney could not be reached for
comment.)
And so, last December, Sunriver, Eagle Crest and Pronghorn
asked the county, which has the same regulations as the state,
to relax the ratio to 2.5:1, and to modify several
overnight-lodging restrictions. Some changes would relax
current laws; others would make it easier for the resorts to
meet that ratio.
It’s unknown how much money the county might lose in
overnight accommodation taxes if those changes were made.
Overnight taxes from resorts made up nearly 50% of the $3.2
million Deschutes County collected in the last fiscal year. But
those in the industry say the county would collect far more in
property taxes with an increase in full-time residents.
The implications of more full-time residents goes beyond
Deschutes County’s finances. However, associate county
planner Terry Paine, who’s been working on the
resorts’ proposals, says it’s difficult to say what
impact it would have on traffic and water since the resorts
aren’t required to provide that type of an analysis, and
the county has neither the staff nor funding to do studies of
that magnitude.
Land-use groups such as Central Oregon LandWatch and 1,000
Friends of Oregon would like to know more about the impacts,
too. Kancler and others don’t deny the economic benefits
of the resorts. Instead, they question whether increasing the
number of full-time residents in a resort is what the 1983 law
intended. They use a common, critical description of what they
see resorts becoming: “sagebrush subdivisions.” In
other words, housing developments that found a loophole in the
land-use laws and now sit in the virgin high desert, far from
urban centers.
Those in the resort industry object to that description.
Thornburgh developer Kameron DeLashmutt gives a deep sigh at
the mention of it. He — like Andres or Steve Cartmill,
general manager at Crook County’s Brasada Ranch —
maintain that relaxing the overnight unit requirements is in
keeping with the intent of the law but would allow developers
flexibility in the face of a changing economy.
THE DAY BEFORE KANCLER’S DRIVE through Eagle Crest,
Gregg Brandt from the resort’s marketing department, gave
his own tour. Brandt, a tanned, relaxed golfer and snowboarder,
is the master of the soft sell.
He starts the tour on the tall cliffs that overlook the
Deschutes River, which borders the resort, and tells
fly-fishing stories. Driving through neighborhoods of homes and
condos painted in high desert colors — subdued greens and
tans — he muses on the investment potential of the
properties. He talks a lot about the golf courses.
More than 1.3 million people came to golf in Central Oregon in
2005, according to Swearingen’s figures. In a
presentation she made earlier this year to Jackson County
officials, she talked about the rising demand for houses, and
how 11% of all the lots sold in Deschutes County in 2005 were
in resorts.
That rate is unlikely to change. And newly begun resorts like
Thornburgh and Brasada Ranch are planning on building according
to the original ratio requirements. DeLashmutt and Cartmill say
they’re taking a wait-and-see approach to what the county
decides. That’s probably wise. County commissioner Mike
Daly said his board would likely vote against the ratio change
because of how it might conflict with state law.
There’s no question that state and county laws
don’t reflect the demand for housing in Oregon’s
growing number of resorts. But as Kancler asks, how do
Oregonians balance economic gain with what’s good for a
community, economic development with environmental issues?
Answers to that can’t be found at the state level just
yet. A bill that would prevent resorts from being built along
the Metolius River in Jefferson County is currently under
consideration in Salem. But since no other bill has been
brought to the legislative table, lawmakers in-cluding Sen. Ben
Westlund (D-Tumalo) are hesitant to talk about changing
existing regulations.
Rep. Gene Whisnant, a Republican from Sunriver, says
he’s keeping an open mind. “It’s an industry
that’s good for the state and area we live in. If they
find that what they have is unacceptable, I’d be willing
to hear what they have to suggest,” he says.
Until that suggestion is made, all sides in the debate —
like those waiting for other new land-use issues that loom on
the horizon — are looking to Salem, waiting for an
answer.
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