HomeMy WebLinkAbout002Gmail - Brinnon Group Comments on DSEIS
5 attachments
qr DSEIS summaryBG 1611227.pdf" 34gK
f!Destination_Reeort_!mpact_Study (f ).pdf
1799K
ffi watelorksGonsultantsUYaterReview (1 ).pdf
61K
&Silver Tip Solutions.pdf
570K
m walmart.pdf
484K
Page2 of3
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Barbara Moore-Lewis < brin nong roup@g mai l. com>
To: David Wayne Johnson <dwjoh nson @co.jefferson.
David,
Fri, Jan 2,2015 at 1 1 :10 AM
.wa.us> ' /
S\tt"
Attached are Brinnon Group comments on the DSEIS. Comments are organized into
. 1) issues in the DSEIS,. 2) mitigation proposed in the DSEIS that is inadequate, and. 3) recommendations for adequate mitigation.
Also attached are supporting documents to our analysis of the DSEIS.
All of the attachments are part of the public record and must appear there entirely
Attached are
. the Brinnon Group summary. The Destination Resort lmpact Study. The UC Berkeley lnstitute for Research on Labor and Employment study on the impact of Walmart
stores. Water Review by Waterworks Consultants. Water Review by Silvertip Solutions
We'd like to state for the record that DCD refused to extend the public comment period despite requests
from a number of citizens, giving the developer 5 1/2 years to prepare the DSEIS and the public 45 days
(with 3 major holidays) to analyze and respond..
The county has a goal of improving tourism revenue in south county. This proposed resort does not meet
that goal.
. lt will pay mainly poverty level wages and will drive down the level of wages in the sunounding
atea.. lt will cost the few taxpayers (many on fixed incomes) in this small county more in taxes for
infrastructure, life safety services, and social services than it returns in revenue.. lt may raise utility rates for south county.. lt degrades the unique environment that is economically important to the whole peninsula.. lt damages or depletes the entire Black Point aquifer.
lf the preferred "no action' alternative is not selected, any approval of this project should be conditioned
upon a complete analysis of the ascertainable and potential economic impact of the proposed MPR during
and after construction.
https://mail.google.com/muUul0l?ui:2&iF8fad170e04&view:pt&search:sent&th:14aa8c... ll2l20l5
.lr_l
I
Gmail - Brinnon Group Comments on DSEIS Page 3 of3
Before construction begins, the developer should be required to
1) deposit the amount of all ascertainable direct and indirect costs regarding services and
infrastructure into a fund available to local government to cover the costs as they are incurred, and
2) furnish a performance bond issued by a highly rated insurer to cover all potential costs that
cannot be ascertained beforehand, including repairing any environmental damage incurred over a
50 year period because of the development and the costs of cleanup and restoration if the project is
started but abandoned.
ln this way, local government willtry to assure no net economic loss to the community
Thank you,
Barbara Moore-Lewis
Secretaryff reasu rer, Brinnon Group
5 attachments
ffi DSEIS summaryBG(G)l 227.pdf
349K
€Destination_Resort_lmpact_Study (f ).pdf
1799K
a watelorksCons u ltantsWaterReview (1 ). pdf
61K
&Silver Tip Solutions.pdf
570K
walmaft.pdf
484K&
David W. Joh nson <djoh nson @co.jefferson.wa. us>
To : Barbara Moore-Lewis <brinnongroup@g mail. com>
Cc: " David W. Joh nson" <djoh nson @co.jefferson.wa. us>
Fri, Jan 2,20'15 at 1 1 :07 AM
Thanks!
From: Ba rba ra Moore-Lewis Ima ilto:brinnong rou p@g m ail. com]
Sent: Friday, January 02,2OL511:11 AM
To: David W. Johnson
Subject: Fwd: Brinnon Group Comments on DSEIS
[Quoted text hidden]
h@s://mail.google.com/muVu/01?ri1&ile8fad170e04&view:pt&search:sent&th:14aa8c... ll2l20l5
BRINNON GROUP
ISSUE SUMMARY
Pleasant Harbor Marina and Golf Resort DSEIS
The DSEIS proposes a Master Planned Resort (MPR) on a 231 acre site. There are 3 options:
1. l8-hole golf course, 890 residential units, 49,772 square feet of commercial space and resort
amenities, 33 acres of natural area, and 2.2 million cubic yards of earth moved.
2. 9-hole-golf course 890 residential units, 52,650 square feet of commercial space and amenities,
80 ac res of natural area, and 1 million cubic yards of earth moved.
3. 3. No action.
We would recommend no action at this time until the following proposed mitigation is accomplished
When appropriate, this summary will break out the plan into issues when construction is in progress and
issues after construction is complete. lssues presented apply to both of the action choices.
Construction for this particular project is projected as being at least a 10 year process! There is
no guarantee that the construction won't last longer, as the approval process for it has stretched out.
Problems during construction include out of town construction workers and contractors, unstable
ground, county and taxpayer debt and increased taxes, traffic bottlenecks, more trucks on the road, and
chemicals and drugs sent into all Black Point wells.
DSEIS ISSUE !NSUFFICIENT DSEIS
MlTIGATION
PROPOSED MITIGATION
ORDINANCE 01-0128-08 lists a
number of conditions about
actions the developer needs to
propose in the DSEIS
It is unclear the way the DSEIS is
written whether the conditions
of the ordinance are being met.
ln several instances, such as
allowing other residents access
to resort wells when there is salt
water intrusion in the private
well, the DSEIS appears not to
meet the conditions.
The developer to prepare a
separate document listing the
conditions from the ordinance
and the ways they are being
addressed in the DSEIS. This will
allow both the public and local
government to track compliance
with the conditions.
I
DSEIS ISSUE INSUFFICIENT DSEIS
MITIGAT!ON
PROPOSED MITIGATION
Although the marina is included
in the MPR area and ordinance,
construction, traffic, water
usage, and waste water
treatment for that site are not
described in this document. The
DSEIS covers 231 acres of the
development and the
Development Agreement covers
256 acres of development,. Local
governments and citizens cannot
understand the entire impact of
the development with only part
of the information about it.
Developing marina under
existing site plan without local
government or citizen review
and input.
Developer to revise DESIS to
include all relevant plans for
marina included in the MPR.
Both local governments and the
public have the right to know the
actual impacts of the additional
development.
There is a "no action" option in
the DSEIS. This option is not
developed in the document in
the way the two options for
building the resort are
developed. lt appears that it is
not actually being considered.
There are insufficient details
about the no action option in the
DSEIS to be able to make a
reasonable comparison of
options.
Developer to prepare DSEIS
document to include full details
of no action option.
ECONOMTC TSSUES
State taxes are9% ofsales. 5.5%
goes to Olympia and25% comes
to Jefferson County. Taxes
received can be spent anywhere
in county, while the brunt of
traffic and fire district costs are
born by south county. We will
pay levies attached to property
taxes for school, fire
department, and sheriff costs.
Fulltax revenue will not be
available until Phase 4 and Full
Build Out, while the costs will be
present during the whole
construction period.
The developer and a few
business owners are the only
ones who will experience
economic benefit. Local
government and all county
taxpayers will experience higher
taxes/fewer services.
Developer does not pay
sufficient taxes to cover costs of
infrastructure and public services
needed by the resort itself,
resort members, and resort
employees.
Development agreement
specifically says that the county
will not ask for more economic
mitigation than is in the MOUs.
Developer to identify true costs
of infrastructure and public
services during and after
construction and arrange to pay
those costs, above what is paid
in taxes, to local and county
government. A study in Oregon
of similar destination resorts
found that the standard model
for a golf-course subdivision-
oriented destination resort
presents local governments and
taxpayers with a substantial net
burden (in the millions of dollars)
that will result in either higher
overall taxes or a decrease in the
quality of basic services.
)
DSEIS ISSUE INSUFFICIENT DSEIS
M!TIGATION
PROPOSED MITIGATION
Construction jobs like this are
done by large companies who
have out of town sub
contractors, and out of county
suppliers. The only jobs typically
available to local people are
minimum wage day laborers.
Profits from the companies and
wages from most of the workers
will leave the county.
Conditions set for the DSEIS
require as much employment of
county residents as possible, as
much use of county contractors
as possible, and sourcing
construction materials from
within the county.
The DSEIS states that 1750jobs
will be created, but this is the
number for all four phases and
many of the jobs will be the
same for all four phases
Set a 20% threshold for contracts
given to county residents and
employment of county residents.
Developer to calculate actual
number of construction jobs
over the 4 phases.
The average median income
(AMl) in Brinnon is 542,679. The
number of direct jobs created at
or below 80%of AMlare 223.
Construction and indirect jobs
with an income of $34,143 equal
342. 83o/o are considered
poverty level by U.S. Department
of Health and Human Services
standards.
o 48 jobs are above AMl,
ranging from 535,000 to
isz,9L4o 108 jobs are St0,593 to
S14,381o 127jobs are from 519,2411o
s28,oo0
2014 Poverty Guideslines of
USDHHS:
o Family of 5: 527,910o Family of 4: 523,850o Family of 3: 519,790o Family of 2: %75,730
Creation of substantial number
of poverty leveljobs in south
county and an increased need
for taxpayer funded health and
social services.
Developer to prepare a report of
the services uses by employees
with wages below the Brinnon
AMland an estimate of the cost
of those services. Developer to
pay for costs of services to these
employees provided by tax
funded entities. A report
prepared of minimum wage jobs
at Walmart estimated that
Walmart costs surrounding
communities S13 million in
economic activity and S14.5
million in lost wages over 20
years.
I
-
DSEIS ISSUE INSUFFICIENT DSEIS
M!TIGATION
PROPOSED MITIGATION
Taxpayers will subsidize life
safety services
ln 201.3 there were 249 EMS calls
for about 800 Brinnon residents.
Add the estimated 2000 resort
residents and there will be about
620 calls a year. The MOU with
the fire department is for
S3,333/month. This is not
enough to hire another EMT.
The inadequate funding can go
for 10 years or more. Also, local
fire department is responsible
for all training costs and upkeep
of used ladder truck Statesman
will provide...all meaning higher
local taxes for fire department.
The developer says if the resort
has trained EMT staff, they will
be available to surrounding
communlty.
For police, the developer will
provide a 500 square foot room
(smaller than a 2 car garage) but
no budget to supply and staff
it...meaning higher taxes for all
county residents.
The Sheriff's Department says no
additional county resources will
be needed if resort has private
security.
Developer to prepare analysis of
true costs of life safety services
and to make provisions to pay
for those services to local
government entities.
Developer to present plan for
trained EMT staff.
Developer needs to describe role
and training of private security
that will replace county sheriff
staff. What will be their
authority? Will they be able to
hand le traffic accidents/fata lities
and other emergences involving
resort residents and/or Brinnon
residents?
Taxpayers will subsidize road
improvement and repair for
heavy equipment
None Developer to prepare analysis of
true costs of road improvement
and repair and make provisions
to pay for those services to state
and local government entities
lnternet service to local area is
inadequate because of volume
of use of existing equipment;
resort use will compound
internet access problems.
None Developer to pay to upgrade
internet infrastructure to the
same speed consumers receive
in the metropolitan areas.
1
DSEIS ISSUE INSUFFICIENT DSEIS
MITIGATION
PROPOSED MITIGATION
280 jobs are projected, with the
majority low income or
minimum wage. lt's not stated
how many of these jobs are part
time.
Developer must build low
income housing or provide land
or money for it.
Developer to state how many
jobs are part time. Developer
subsidize rents for low income
workers in the housing
constructed or present evidence
that wages will allow these
workers to rent this housing. .
Developer to pay for costs of
services to these employees
provided by tax funded entities.
Developer will provide a 500
square foot clinic for use by
medical personnel; use by resort
members only.
Developer to use local medical
and hospital resources but to
provide mitigation only for
resort members.
Developer to prepare analysis of
true costs of life and safety
services and to make provisions
to pay for those services to local
government entities, including
local hospitals and medical
services subsidized by local
taxpayers.
MOU with Brinnon schools
specifies 52 per tee time to go to
schools and scholarships to be
given to Jefferson County school
children.
No estimate of real revenue
from tee times. No dedicated
fund for scholarships; no details
of who will be eligible.
Developer to prepare report on
income to Brinnon schooland on
scholarships to Jefferson County
children. For example, are home
schooled children eligible?
Money needs to be placed in
dedicated account before
construction begins that will
cover scholarships
TRAFFIC
Data used for the traffic study is
totally inadequate. Highway 101
on the east side of the Olympic
Peninsula is the only non toll
direct connection to the l-5
corridor and is used for all major
shipments of goods, as well as
for residential and tourist traffic.
When serious accidents occur,
101 is shut down for long
periods of time, affecting both
commerce and quality of life.
There are serious economic,
health, and safety costs for the
entire Peninsula.
The Loss of Service data is from
2000. The actual car trip count is
from 2006. The data does not
count accidents that do not
occur at intersections (leaving
out collisions with animals,
McDonald Cove, and the tanker
truck that exploded on the
Duckabush hill. Consultants paid
by the developer have
consistently minimized both the
effects of unsafe driving and
unsafe driving conditions on 101
in their reports and in response
to comments on their reports.
The developer to do an up to
date traffic report with data
from 2014 or later. This will
include all accident reports
between Olympia and 104. (The
Peninsula Daily News reports
that tourist trips increased 25o/o
during 2014 and the Olympic
National Park has similar data).
Developer to present adequate
mitigation for current traffic.
Developer to pay for mitigation
for projected additional traffic.
5
-
DSEIS ISSUE INSUFFICIENT DSEIS
MITIGATION
PROPOSED MITIGATION
Heavy equipment on highway,
increasing congestion and
accidents
Developer says earth will be
moved within resort area
because it will be used for
construction materials; no
evidence gravel fits
specifications
Developer to present evidence
that the earth moved from the
site qualifies for construction use
and provides data on the
amount that will be moved on
the site vs what will be moved
on the highway. Developer
proposes mitigation for
increased truck traffic and pays
for mitigation.
Machinery used will be scrapers,
excavators, bu I ldozers, wheeled
front loaders, a portable
screening plant, feed-hopper,
portable gravel crusher, finishing
crusher, water trucks, conveyor
belts systems, and
vi bratory/sheep-foot compactor
rollers. This will be 1200 feet
away from the closest existing
residence.
None Developer to present report on
noise impact on other Black
Point residences and to propose
mitigation. Developer to pay for
mitigation.
There will be up to 4100 added
daily trips from resort traffic on
state and local roads; there was
a 25% increase in tourist traffic
in 2013 alone on the Peninsula;
there will be bottlenecks in
Hoodsport
Buses will run to Seatac and
visitors will take a route to resort
that includes lengthy ferry
waiting and heavy Seattle traffic
instead of the easier ; traffic
volumes calculated with out of
date and incomplete data
Developer to do traffic analysis
with recent data on traffic
volumes and with all accident
data. Developer will calculate
road improvements needed
from accurate traffic data and
make provision to pay for those
improvements. Developer to
hold local meetings discussing
traffic improvements with local
residents before proceed ing.
Developer to provide proof of
estimates of bus usage.
The increased traffic along Hood
Canal will increase the nitrogen
problems and dead zones in the
Canal.
Buses will run to Seatac and
visitors will take a route to resort
that includes lengthy ferry
waiting and heavy Seattle traffic
instead of the easier ; traffic
volumes calculated with out of
date and incomplete data.
Developer to do an analysis of
the environmental impact of the
increased traffic on the health of
Hood Canal, using current
science, and propose mitigation.
a
During construction
After construction
DSEIS ISSUE INSUFFIC!ENT DSEIS
MITIGATION
PROPOSED MlTIGATION
WATER
The water rights were awarded,
but additional wells were never
drilled. A pump test was
attempted on an existing well,
but was aborted after
equipment failure, so draw down
rate and available volume was
never proven. Usage amounts
have not and will not be
determined until full build out,
with the caveat that for each
phase during the 10+ years of
construction adequate water
must be proven.
For each phase during the 10+
years of construction, adequate
water must be proven.
Developer must test the existing
well and provide adequate data
on drawn down rate and
available volume. Developer
must show adequate water
supply not only for resort but for
all Black Point wells, existing and
future. Computer models which
have been used are not
acceptable.
Developer must define what
mitigation will be provided if
volume is not sufficient and the
aquifer is depleted for all wells.
The water supply well is
developed below sea level and
will always be susceptible to salt
water intrusion or cause
intrusion to the wells along the
south and east coasts of Black
Point. This is not a well used for
testing salt water intrusion
Yearly monitoring Require the developer to test
the water supply well monthly
for salt water intrusion and to
submit the reports to the county
health department.
The salt water intrusion samples
are taken from 3 Statesman
wells that are not located where
salt water intrusion is likely to
happen
Yearly monitoring Require the developer to test all
water supply wells monthly for
salt water intrusion and to
submit the reports to the county
health department.
The developer is required by the
ordinance conditions to provide
access to the resort water
system by any neighboring
parcels if saltwater intrusion
comes an issue for them.
Restrictive Neigh borhood Water
Policy that requires 3 years
monitoring of private wells
before a claim can be made and
the developer to decide if claim
is valid.
County health department to
decide if well has salt water
intrusion. lf so, developer gives
access to resort system at
standard county hook up and
monthly usage rates.
7
DSEIS ISSUE INSUFFICIENT DSEIS
MITIGATION
PROPOSED MITIGATION
Statesman's tests for salt water
intrusion are to be collected
quarterly, but to be submitted to
the Department of Ecology once
a year. This means residents
with neighboring wells may have
to wait up to a year to start the
process of proving salt water
intrusion is due to the water use
of the resort.
Yearly monitoring Require the developer to test
the water supply monthly for salt
water intrusion and to submit
the reports to the county health
department
The pumping plan for the supply
well will influence salt water
intrusion
None Require the developer to submit
a pumping plan that will
minimize salt water intrusion in
resort and neighboring wells.
There is one aquifer on Black
Point, recharged by rainwater.
The resort wells could deplete
the aquifer.
Water studies are done by
computer modeling.
Developer to do actual water
studies on the property to be
developed and to prove the
availability of water for all
residents. lnclude wells that
already have salt water intrusion
(not in DSEIS). Require a bond to
compensate other residents if
aquifer is depleted.
Developer to prepare report
about how resort will be
mothballed or environment
restored in case of aquifer
depletion. Developer to provide
a bond to cover costs of
mothballing and/or restoration.
There already is salt water
intrusion in Black Point wells;
resort wells could cause more
salt water intrusion not only in
adjacent wells but in resort wells
as well.
Put up a bond that would cover a
desalinization plant.
It is unclear how much water is
projected to be used. Figures
from 70 to 175 (standard usage)
are in the document.
Forcing waste water down wells
to recharge the aquifer.
Developer to do water plan with
consistent numbers that fits with
historical supply and not
recharging the aquifer in this
way.
fl
During construction
After construction
DSEIS ISSUE INSUFFICIENT DSEIS
MITIGATION
PROPOSED MITIGATION
The aquifer is recharged by
rainwater. There are extensive
changes to the land that will
affect the amount of permeable
land. There is no information on
how low rainfall years would
affect the assumptions of the
water model. Because
everything is based on a
computer model, there is no real
proof that recharge will take
place as described with the
development of the land.
Recharge may be significantly
less.
None Developer to present a plan for
drought years, taking into
account the changes in the
landscape to be made by moving
at least 1 million cubic feet of
dirt and rock. Developer to
demonstrate that recharge rates
will be as projected in DSEIS.
Statesman has put several
restrictive conditions on what an
individual well owner has to do
to prove their potable well water
was lost due to Statesman's
actions.
This is in conflict with the DOE
conditions on the water rights,
including Statesman conditions
that they can demand additional
evidence that they are at fault. lf
the developer does accept fault,
the owner may hook up, at
Statesman's cost, to their water
system and then they will have
to pay for it's use. This is also in
conflict with the conditions DOE
placed.
Developer to rewrite
Neighborhood Water Poliry in
concert with owners of local
wells so that local owers'
concerns are answered. County
health department to facilitate
this rewrite.
The utility district created for the
operation of the Water System
and Sewage Treatment Plant has
to make enough profit to cover
maintenance and future
replacement of deteriorating
equipment.
Sometime in the future the
entire Sewage Treatment Plant
will have to be replaced. Owners
of private wells that are
compromised by the water use
of the resort and want to hook
up to the resort water system
will have to pay unspecified fees.
The developer to clarify fee
structure of utility district,
including hook up fees and
monthly fees for owners of
private wells who use the utility
district system.
?
DSEIS ISSUE INSUFFICIENT DSEIS
MITIGATION
PROPOSED MIT!GATION
WASTE WATER
No Class A water treatment
system removes soluble
chemicals. This means that the
medications people use daily will
not be removed from the water.
Statesman plans to use the
water in irrigation, fire
suppression, and to recharge the
aquifer. The water will be forced
down wells into the aquifer,
where it will contaminate any
water drawn from the single
aquifer.
None Prohibit the developer from
contaminating the aquifer with
chemicals left from the water
treatment or require water
treatment that removes all
chemicals.
OTHER
All stormwater runoff from new
pollution generating impervious
surfaces must be treated before
discharge to on or off site
locations to comply with
Stormwater Management
Manual for Western
Washington.
This does not indicate how they
are going to treat the water.
Mitigation can help with
stormwater runoff, but not
eliminate it. Developer to
prepare report on ways to
mitigate the stormwater runnon
These can include
a
stormwater filters (which go
onto the stormwater
entrances and filter out oils
and other pollutants; they
should not be used by
themselves for they don't
always work),
tarps (which willtrap water
while all the earth is being
moved; this will help keep
the water from running off
and giving the construction
workers time to filtrate the
water into storage
containers to be cleaned).
and
controlling the erosion
(controlling how workers are
move the soil around the
work site may save water
from running off into the
Hood Canal).
a
/0
a
DSEIS ISSUE INSUFFICIENT DSEIS
MITIGATION
PROPOSED MITIGATION
Moving soil releases the stability
of the ground. Moving at least 1
million tons of earth at the site
will affect the stability of the
ground. lt will also affect the
stormwater, all surface waters
from rain and snow. This is
runoff that does not collect in
the ground. The plan to move
stormwater to a retention pond.
fhat pond will let the water sink
into the aquifer, transferring the
pollutants of construction to the
aquifer. Less stability of the site
will cause more stormwater to
run off, be absorbed into the
aquifer, or go in Hood Canal.
Pollutants include oils,
antifreeze, and other liquids
from construction equipment,
pesticides, a nd fertilizers.
Storing stormwater in holding
pond or allowing it to go into the
Canal. Various methods of
treating pollutants in water.
Lack of information on chemicals
(herbicides, pesticides, or
fertilizers) that will be used for
golf course grass maintenance or
any discussion of how the
developer plans to protect
grou ndwater or stormwater
runoff from the use of these
chemicals.
Developer to provide evidence
that plans in the DSEIS treat
stormwater to remove
pollutants are realistic.
The BMPs (Best Management
Plans) for golf course
maintenance needs to be
explained in detail.
Natural wetlands in the resort
area will be cleared and used as
retention ponds. These
wetlands are pollutant removal
systems and clean the ground
water.
Destroying wetlands will destroy
the natural systems now intact
and the wetland will no longer
be able to help in natural
filtration of stormwater.
Wetlands mitigation plan has not
been done.
Developer to revise plan to leave
wetlands as wetlands. The kettle
with the wetland needs to be left
as it is because this will help the
project to clean some of the
stormwater runoff that will be
caused by this project.
Developer to do wetlands
mitigation plan before approval
of DSEIS.
Biosolids will be sent to Shelton
for processing
No proof of agreement about
disposal of biosolids. lnadequate
information on amount of
biosolids. lncreased truck traffic
for the biosolids. Unclear if this
is included in the traffic analysis.
Developer to prepare a report on
biosolids, including proof of a
plan to dispose of them and an
estimate of truck traffic that will
be generated.
Mason County PUD #1 has
agreed to supply power for the
first phase.
Lacking in details about PUD
services to be supplied and how
they will be funded; no mention
of possible rate increase for all
rate payers in PUD #1 from
increased energy usage.
Developer to present agreement
with PUD for public review,
including possibility of rate
increases for all rate payers.
/r
March 2009
Fisca! and Economic Impacts of
Destination Resofts in Oregon
E
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Proposed
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Goreftsetibn
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f J i
Fiscal and Economic
Destination Resorts Iln o
m P acts of
regon
March 2009
For: Central Oregon Land\U7atch
By: Eben Fodor
Fooon & AssocrATES.rc
Community
Planning Consuhi16
Eugene, Oregon
www. FodorandAssociates. com
\[ith research and analysis by
David Hinkley
lmpact of Destination Resorts in Oregon
March 2009
Cover photo credit: Sandy Lonsdale
page I
Fodor & Associates
Table of Contents
Introduction......
l. Destination Resorts in Oregon
2. The Thornburgh Resort Case Study
3. Thornburgh Fiscal Impact Analysis
4. Revenues from the Thornburgh Resort ..................
Property Taxes
Room Taxes
5. Thornburgh Resort Costs.........
Transportation System Costs
School Facilities Costs
Fire & EMS System Costs
Public Safety System Costs
Parks & Rec. System Costs
General Government FaciIities................
6. Fiscal Impact Summary.
Revenue Summary ........
t7
22
24
27
40
48
53
59
64
67
67
67
68
69
70
7l
76
78
8l
83
85
86
89
90
94
98
99
001
Costs of Facilities ................
Services Impacts
Fiscal Impact Conclusions
7. Thornburgh Resort's Economic Impacts
Job Creation and Employment Impacts.
ttrflho !7ill Fill New Resort Jobs: Locals or Newcomers? .
Housing Impacts of Thornburgh Resort
Spending by Destination Resorts ..............
Economic Risks .........
Economic Impact Conclusions ..................
8. Implications for Impacts of Destination Resorts in Oregon
Appendices
A- 1. Property Tax Explanation ..................
A-2. Transient Room Tax Explanation
A-3. Population Projection Used in Study.........
A-4. Tax Bases for Jurisdictions Used in Study
A-5. About the Authors ................
lmpact of Destination Resorts in Oregon
March 2009 page 2
Fodor & Associates
3
lntroduction
The recent proliferation of destination resorts, and the number of new resorts
currently being proposed in Oregon, raises concerns about the potential impacts of
these resort on local communities, cities and counties. Based on a literature review
performed as part of the research for this study, there are no independent, third-
party studies evaluating destination resort impacts. The only readily-available
sources of information are the resort developers' own studies prepared as part of the
land-use application materials.
This report represents the best effort to date to assess the impact of destination
resorts in Oregon. It is a complex task and there are an almost unlimited number of
potential impact areas that could be studied. To establish a manageable scope of
work within the proiect budget, the focus of this study is on the fiscal impacts of
resorts. Fiscal impacts are those that affect local governments and local taxpayers.
They include both the tax revenues that will be generated and the costs to provide
the services and infrastructure required to support the development. In addition to
fiscal impacts, the economic impact of destination resorts was evaluated in terms of
iob creation and housing impacts.
This study does not address any of the environmental or social impacts associated
with residential and recreational development of resorts in the State.Instead this
study focuses on the monetary (fiscal and economic) impacts these destination
resorts have on the local communities where they are being built.
In order to study resort impacts in detail, the proposed Thornburgh Resort in
Deschutes County was used as a case study. The Thornburgh Resort is to be located
near Redmond and iust west of the existing Eagle Crest Resort. The Thornburgh
Resort would be a medium-sized resort and was considered to be fairly typical of
past and future resorts in the State.
This report is intended to be transparent. All sources of information are
documented and all the calculations and methodologies are explicit. lfhere data
were not available, reasonable assumptions were made. These assumptions are also
clearly stated. In some cases, where good data were not available, alternative
scenarios were used to examine a range of possible conditions.
lmpact of Destination Resorts in Oregon
March 2009 page 3
Fodor & Associates
l. Destination Resorts in Oregon
Destination resorts typically involve 500 to 3000 single-family homes and various
recreational amenities, such as golf courses and clubhouses, in an attractive natural
setting located away from existing cities and growth centers.
The term "destination resort" has a unique legal meaning in Oregon. Special status
was given to "Destination Resorts" allowing them outside urban growth boundaries
under Goal 8 (Recreational Needs) of the Land Use Planning Program.t This action
appears to be based on the assumption that the tourism benefits would outweigh the
costs associated with this form of rural development. In 1987, provisions for
destination resorts were enacted into state law and codified in Oregon Revised
Statutes (ORS) 197.435 through 197.467. According to ORS 197.440:
The Legislatioe Assembly finds that:
(1) h is the policy of this state to prornote Oregon as a oacatbn destinaion and to
encourage tourism as a aaluable segmmt of our state's economy;
(2) There is a grmtsing need. to prooi.de year-round destination resofi accornmodations
to atffact oisitors and encourage them to stay longu. The establishrnent of
destination resorr will prooide jobs for Oregonians and contibute to the state's
economic dnelopmmt;
(3) h is a dfficub and costly process to site and establish destination resorts in rural
areas of this state; and
(4) The siting of destination resort facikties is an issue of stateuide concern.
The State Legislature attempted to enforce the tourism aspects of these
developments by requiring a certain minimum amount of overnight
accommodations and certain visitor-oriented facilities.z The intent was apparently
that without such requirements, destination resorts would likely be little more than
the classic, sprawling rural subdivisions that the Land Use Program was intended to
prevent. However it is unclear that resorts are actually meeting their overnight
accommodations requirements due to a lack of reporting and enforcement
mechanisms.
In spite of State requirements, residential lots and private homes outnumber
overnight accommodations by more than two to one. Residential lot sales represent
the primary feature of existing and proposed destination resorts. Questions remain
as to whether the destination resorts are essentially rural subdivisions that are
increasingly having adverse impacts on cities, counties and the state that are not
I Goal 8: Recreational Needs (OAR 660-015-0000(8).
2 State Law requires that destination resorts permanently allocate one overnight housing unit for
every two residential units in Vestern Oregon and two overnight units for every five residential units
in Eastern Oregon (see ORS 197.445(4)).
lmpact of Destination Resorts in Oregon
March 2009 page 4
Fodor & Associates
adequately offset by tourism benefits. Our literature review found no studies
examining these impacts in detail, other than those prepared by the individual
resort developers themselves. So we are left with an inadequate understanding of the
full impacts these development are having across the State.
The Growth of Destination Resorts
Destination resorts have proliferated rapidly in the State and will have increasingly
significant impacts, both positive and negative. At this point, Oregon has eight
existing resorts, most of which are historic or pre-Goal 8 resorts. Another seven are
approved and under construction, and thirteen more have been proposed. Figure l-1
shows these existing, approved and proposed resorts on a map of the State. Central
Oregon shows the highest concentration of resorts in all stages of development.
Southern Oregon and the Coast are also seeing resort development. Deschutes
County has seen far more resort development than any other county, but Crook,
Jefferson and Jackson counties are also seeing a high level of resort development.
Figure 1-1: Destination Resorls in 0regon by Status
Sd@: Toby Bay.rd
lmpact of Destination Resorts in Oregon
March 2009
Wrllowe
Gllllam
umatill.
Chckamar
W!!coPolk
Joftarsont/
Whcclar Bak.r
Linn Grant
CrookD6.chut.r
L!nc
Columbi6
Clat3op
Multnomah
Hood RlvGr
Sherma n
Washington
Tillamook
Yamhlll
Llncoln
Brnton
f errarns
t ndea
Q nor"a.o
E lbsndocd
o
Oougl.3Coor
Curry *r.'*, o*n
Klamrth
o
Lakc Harncy M!lhcur
page 5
Fodor & Associates
Morow
Union
Table l-1 provides a more-detailed summary of destination resorts that are
completed, under construction, and proposed in the State. The land use and housing
unit data from this table is illustrated graphically in Figures l-2 and 1-3. It is
evident that destination resorts are expanding rapidly. If the recently-approved and
proposed resorts are built, Oregon's destination resort capacity will approximately
triple.
The rapid growth in destination resorts raises a number of questions. Is there going
to be a market demand for so much resort capacity? \7ill new resorts compete with
established resorts and undermine their viability? And will the economies of Central
Oregon and other popular resort locations become vulnerable in the event of a
possible downturn or collapse of the resort market?
lmpact of Destination Resorts in Oregon
March 2009 page 6
Fodor & fusociates
Table 1-1
Erislinn Resods
Destination Resorts in 0regon, January 2009fl)
Goal 8?Gounty Acres Homesiles
0vernighl
Units6)TotalUnits
Bandon Dunes
Eagle Crest
Sunriver/Crosswater
Black Butte
lnn of the Seventh Mt.
Running Y Ranch
0tter Crest
Salishan
Goal 2 exception
Yes
No
Pre-Goal
Pre-Goal
Yes
Pre-Goal
Pre-Goal
Coos
Deschutes
Deschutes
Deschutes
Deschutes
Klamath
Lincoln
Lincoln
2,000
1,772
3,310
1,300
310
6,000
35
750
600
891
3,220
1,251
20
896
144
369
750
1,476
4,156
1,676
230
1,201
274
369
150
585
936
425
210
305
130
0
Sublotal:15,477 7,391 2,74'., 10,132
Under Conslruclion
Brasada Ranch
Hidden Canyon
Remington Ranch
Caldera Springs
Pronghom
Tetherow
Paradise Ranch
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Crook
Crook
Crook
Deschutes
Deschutes
Deschutes
1,800 600 300 9003,250 2,450 1,225 3,6752,079 800 400 1,200390 s20 160 480640 430 215 645698 379 298 677320 200 67 267e
Subtolal:9,177 5,179 2,665
Proposed Resorts
Crossing Trails
Pacific Rogue Ranch
Aspen Lakes
Skyline Forest
Thornburg
Heaven's Gate
Hidden Valley RanchG)
Table Rock
Ponderosa Land & Catfle
The Metoliane)
Crescent Creek Ranch
Naples Golf & Beach
Elkhorn Estates
240 730150 650100 4000 950425 1,375
200 400TBD TBD600 1,9001,000 3,500180 630785 2,7500 1,15540 190
Yes
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Crook
Curry
Deschutes
Deschutes
Deschutes
Douglas
Jackson
Jackson
Jefferson
Jefferson
Klamath
Lincoln
Marion
580
592
550
1,500
1,970
500
883
2,100
3,500
640
5,000
576
464
490
500
300
950
950
200
TBD
1,200
2,500
450
1,965
1 ,155
150
18,855 10,810 3,720 14,530
Tolals 43,509 23,380 9,126 32,506
(1 ) Data Compiled by Toby Bayard and C0LW on 2/25109
(2) Dau on number of units not final at his time fiBD is to be determined).
(3) Dwelling units only. Hotel roorns were not incfuded in fie ovemight units when information was available to separate fiem from dwef,ing unils. Where
data for fie number of ovemight units was not available, required Stde minimums were applied to Goal I resorts.
lmpact of Destination Resorts in Oregon
March 2009 pageT
Fodor & Associates
lmpact of Destination Resorts in Oregon
March 2009
Figure 1-2
Figure 1-3
Destination Resofi Acres
Total= 43,509 acres
Under
Construction,
9,177
Existing Resortq
15,477
Proposed, 18,85{i
Destination Resoil Housing Units
(Homes & Overnight Units)
Bisting Resortg
10,132
Under
Construction,
7rW
Proposed, 14,530
page 8
Fodor & Associates
L-
The Destination Resort Controversv
The booming growth in destination resorts has led to increasing concern about their
impacts and more questions than answers. Do we need more destination resorts, or
do we have too many already? Are these resorts beneficial to the local economy, or
are they just generating profits for a few and low-wage iobs for the rest? Are local
governments reaping giant tax windfalls, or are they incurring more costs than they
can recover? Are resorts allowing more Oregonians to vacation in beautiful rural
areas, or are they destroying the beauty of the landscape and rural character
Oregonians currently enioy? Are resorts well-planned developments that are
carefully integrated with the natural environment, or are they iust low-density rural
sprawl and ecological disasters that threaten ground water and destroy habitat?
Regardless of the answers to these questions, opposition to new resorts has grown.
For example, last year residents of conservative, rural Crook County voted 2 to I to
halt the spread of resorts in that county. According to an editorial in The Oregonian
newspaperr'
Crook County opponents hatte some justification in warning that these projects are
essentially large subdioisions under the guise of destination resorts. They will, as
citirs complain, haoe a significant impact on the county's oehicle tffic, water
supply and wildlife habitat.
Pinanille boosters of the nan resorts conectly point out that they connibute heaoily
through proPeny taxes and reate hundreds of jobs. But opponents are equally correct
in noting that the influx of homes will inflate land oalues, putting unwelcome
pressure on farmland and making housing unafforilable for workers who will fill all
those lru-paying nan jobs.
Iobs for Vhom?
In spite of high unemployment in Central Oregon, alarming information was
reported in the Bend Bulletin last year that many of the local resorts were hiring from
outside the U.S. to fill their iobs.a According to the article, instead hiring locally, the
Sunriver Resort actively recruited foreign workers at overseas iob fairs, hiring 85
workers from countries such as Lithuania, Brazil and Mexico. Inn of the Seventh
Mountain hired I I workers from Jamaica and Indonesia. Other resorts may be doing
the same. Even if some resorts are not hiring foreigners, studies show that many of
the new iobs they create will go to newcomers rather than locals.5
3 "Putting the Brakes on Destination Resorts," editorial, Thc OrcgonianrMay 27r2008.
4 "Unemployment might be high, but resorts still struggle to fill some iobs," Tlu Bulletin, May 11,
2008.
5 See: lYla Benefits from Local Job Growth, Migrants m thc Original Residcnts, by Timothy J. Bartik,
Regional Studies,vol.27, No. 4, 1993.
lmpact of Destination Resorts in Oregon
March 2009 page 9
Fodor & Associates
Resort or Rural Subdivision?
It is increasingly clear that the primary incentive for building destination resorts is
the traditional profit resulting from the real estate sales of residential lots.
Developers rarely build more tourism accommodations than they are required to
provide by law. The resort-oriented features appear to be little more than the vehicle
by which the subdivision is allowed. Certainly the golf courses and resort amenities
enhance the value of the residential lots, but developers recognize that the resort
components are marginal, risky and often unprofitable investments.
Meeting the tourism-oriented overnight accommodation requirements of Goal 8 has
been challenging for resort developers. Newer resorts are focused more on
residential lot sales and less on tourism accommodations. There has been an
increased use of smaller, lower-cost units, such as hotels and timeshares, to meet
overnight lodging requirements.6
Resorts that are close to urban areas may end up functioning more like suburbs. The
Eagle Crest Resort, for example, is less than six miles from downtown Redmond,
making urban amenities and jobs iust a l0-minute drive away. Some resorts may
evolve into rural communities or towns of their own. The Hidden Canyon Resort for
example, which will be located in Powell Butte (Crook County), will have a
population roughly equal to that of the City of Madras, if it is fully developed. The
proposed Ponderosa Resort could have a population three times that of the City of
Sisters.
Effects of the National Recession
The dramatic expansion of the destination resort industry in Oregon has been fueled
in part by a booming real estate market that seemed to have no end. Ten years of
unprecedented growth peaked in 2007 and has declined rapidly since. The economic
models for destinations resorts were based on assumptions of continued high land
values, high real estate demand, and rapidly expanding tourism. However, the
ongoing collapse of the inflated national real estate bubble and the ensuing
economic downturn requires that these assumptions be revised.
In the past, the residential lots in a destination resort have been largely purchased
by individuals as second homes and investment properties. The current economic
recession will contract the market for second homes and will reduce the appeal of
real estate investing. Unless the national economy has an unexpected, dramatic
recovery, more and more potential homebuyers will be economically constrained.
Potential tourists are likely to reduce travel and shun expensive vacations to save
6 See: Destination Resort Sirizg, a presentation by Bob Cortright, DLCD in Prineville, October I5,
2008, htto://www.oreeon.eov/LCD/docs/rulemakins:/101508/item4_att_D.odf.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page l0
money.T A Central Oregon economic forecast shows tourism to be "extremely weak"
and contracting through at least the end of 2010.8 Owners of second homes may find
the cost of owning two homes to be too expensive. Under this scenario, it is likely
that more of the lots created in destination resorts will be purchased for primary
residences. \U7e may see a similar shift in existing resorts, with more second homes
and rental properties changing to primary residences. Resort developers may
respond to the weak economy by downscaling homes to make them more affordable
as primary residences.
Infrastructure Needs
The residential component of the destination resort functions much like any
subdivision in a rural area. It is removed from the retail services and amenities
people require. It is lacking adequate infrastructure and services required by an
urban population. Greater travel distances are required for commuting and meeting
daily needs. This generates demand for more roads with more capacity. ![hen traffic
growth is proiected in Central Oregon, including destination resorts,
the funding gap to bring the state highways to standards for traflic congestion is
approximately $750 million over the next 20 years.'
Resorts located close to cities and towns run the risk of becoming more residential,
as residents have access to the nearby urban amenities homeowners desire. The
proposed Thornburgh Resort is to be located approximately seven miles from
Redmond. Such resorts may have the effect of attracting higher-end housing away
from the cities, which undermines the cities'property tax base while increasing their
effective populations and adding to demands for more roads and schools.
Counry and municipal governments will be severely squeezed for financial resources
over the next few years as a result of:o Decreasing property values that reduce property tax revenues;o A weak economic outlook that may reduce other sources of income;o Government costs increasing at rates exceeding Measure 47 and 50 limits on
property tax increases of 3%; and,o Decreasing Federal payments to counties in lieu of timber revenues.
tU[ill the new destination resorts be a golden goose, or the straw that breaks the
camel's back? Fiscal impact analysis can provide the answer.
7 Early reports indicate that maior tourism destinations such as Las Vegas are seeing significantly
lower tourism resulting from the recession. Gaming revenues there are down 25.8%, room rates have
declined 14.3 %, and many construction proiects have been canceled or scaled back, according to the
Los Angeles Times (published in The Register-Guard Newspapeq1212610S).
8 Presentation: United States and Central Oregon Economic Reoia;u and Fmecast, by Dr. Bill Vatkins,
Executive Director, UCSB Economic Forecast Proiect, January 2009, http://www.ucsb-
efp.com/?PT/2009/0R_r0fatki ns.pot.
e Source: Gary Farnsworth (ODOT), Meeting Minutes for Central Oregon Area Commission on
Transportation, COACT, September 13,2007, page 3.
lmpact of Destination Resorts in Oregon
March 2009 page I I
Fodor & Associates
2. The Thornburgh Resort Case Study
In order to examine the impacts of destination resorts in detail, a typical resort was
selected for in-depth analysis. The proposed Thornburgh Resort has a similar profile
to most of the resorts in Oregon. It is typical in terms of its size and mix of
development. It is to be located in Deschutes County, home to more destination
resorts than any other county in the State. Due to its pending application, extensive
current materials are available on the planned resort.
As shown in Table 2-1, the proposed Thornburgh Resort is to have 950 residential
ownership units and 425 overnight units, for a total of 1,375 residential units. The
application proposes a 50-room hotel with restaurant, three golf courses, recreational
facilities, and retail space.
Table 2-1: Thornburgh Resort Profile for Impact Analysis
Metric
Peterson
Economic Report
(1/2005)
Land Use
Application
(2l2oo5l
Used in lmpact
Study
Total acres
Acres open space (incl. Golf)
Residentia! ownership units
Residential overnight units
Hotelrooms
Golf courses (regulation 18-hole)
Golf courses - par 3
Other facilities:o Retai! space. Real Estate Sales otficeo Hotel and restauranto Recreational. Convention facility,
business center
Water system
lmpact of Destination Resorts in Oregon
March 2009
1,980
No info
1,400
Unclear
100
3
1
1,970
1,293
950
425
50
3
0
20,000 ft2
15,000 f2
75,000 ft2
60,000 f2
Unspecified size
6 new wells, 2
reservoirs
2 drain fields
20,000 ft2
15,000 ft2
75,000 ft2
60,000 f2
Assumed part
of hoteUrest.
6 new wells, 2
reservoirs
2 drain fields
Fodor & Associates
1
1,970
,2810
950
425
50
3
0
Sewer
Since the Thornburgh Resort is unbuilt, certain types of data were not available. For
example, the ultimate occupancy rates and vehicle trip generation rates were
unavailable. To reflect the most likely scenario for the Thornburgh Resort at full
buildout, data was used from the nearby Eagle Crest Resort. Eagle Crest appears to have
a similar profile in terms of the mix of uses and relative price ranges for lots and homes.
page 12
3. Thornburgh Fiscal lmpact Analysis
Fiscal impact analysis generally refers to the evaluation of the financial and
budgetary effects of alternative land uses or public policies on local governmental
iurisdictions or other local service providers. These may include cities, counties,
school districts, special-purpose districts, water and wastewater service districts, and
regional authorities. Sometimes state governments are also impacted.
![hile the focus of fiscal impact analysis is on government revenues and costs, the
broader public policy question is: How will this action or decision affect local
taxpayers and the general public? Answers to this broader question allow elected
officials to determine how the proposed action will affect local tax rates or the
qualiry of local services. This question tends to be one of most interesting to local
voters and the public in general.
As shown in Figure 3-1, the fiscal impact analysis compares the changes in revenues
with the changes in costs of a local government entity that result from an action or
decision. Revenues include taxes, fees and other income. Costs include operation
(services) and maintenance (O&M) and new or expanded capital facilities and
equipment.
Figure 3-l: Diagram of fiscal impacts of land development on local government
(Fodor & Associates).
Revenues Costs
Usually local governments must balance their budgets so that costs don't exceed
revenues. lfhile this is true for government services, it is not the case for maior
capital expenditures. Local governments may issue general obligation bonds for new
capital facilities that enable them to carry debt. General obligation debt is a
reasonable way to finance facilities that have a broad public benefit. However, when
the new facilities are constructed primarily to serve new development, an inherent
lmpact of Destination Resorts in Oregon
March 2009
.Property Taxes
.other Taxes
.Other Revenue
(fees, permils, etc.)
Local
Government
(City, County or
SchoolDistric0
.Maintenance
.Capital Facilities &
Equipment
.Operation
page 13
Fodor & Associates
inequity results, and all taxpayers pay to fund facilities that benefit a small segment
of the population.
One solution to this problem is the LID, or local improvement district, that limits
funding of improvements to the beneficiaries. Another is the impact fee, or system
development charge (SDC) in Oregon, that directly recovers some or all of the costs
associate with providing certain facilities to new development. Deschutes County
also uses "Community Service Districts" to assess the costs of some public safety,
fire protection and library services directly to the geographic districts they serve.
Public Infrastructure Required b), Thornbureh Resort Development
Table 3-l below summarizes the categories of infrastructure required by new
development. The costs associated with all onsite facilities and services (such as local
roads and utility lines) are assumed to be borne by the developer. Only the offsite
impacts are examined here. Of these, transportation and schools typically represent
the greatest costs, so much of the analysis work focused on these two categories.
Table 3-l: Basic Public Infrastmcture Required by New Development
AllCategories Evaluated
Transportation System
School Facilities
Fire & EMS Facilities
Police Facilities
Parks & Rec. Facilities
Sanitary Sewer System
Storm Drainage System
Water Service Facilities
Library Facilities
General Gov. Facilities
Solid Waste Facilities
Public 0pen Space
The Deschutes County Codeto requires that the resort developer pay for onsite water
and sewer systems, so it was assumed that the costs associated with these facilities
and services are borne by the resort and its future residents and visitors. The long-
term viability of these onsite water and sewer systems is unclear. For example, the
current plans indicate that the resort's sewer system will rely on drain field disposal
for an indefinite period of time. This method of disposal can contaminate
groundwater and has a limited lifespan. The high water demand from the resort may
r0 Deschutes County Code, Chapter I 8.1 I 3. Destination Resorts Zone - DR.
Yes
Yes
Yes
Yes
Yes
NA
NA
NA
No
Yes
No
No
lmpact of Destination Resorts in Oregon
March 2009 p4ge 14
Fodor & Associates
deplete local groundwater supplies and the resort may be obliged to indemnify
nearby landowners.
Electric power, natural gas, telecommunications, and solid waste disposal services to
the resort are operated by private businesses. These services also require offsite
infrastructure investments. Such costs tend to be added to the utility rates that are
paid by all customers, not iust resort residents. The costs associated with increased
rates for these services rryere not included in the study because they are not public-
sector costs and because it is difficult to obtain the necessary revenue and cost data
from private companies.
Impact Analvsis Methodoloev
In order to evaluate the potential impacts of the Thornburgh Resort, two scenarios
are compared: unbuilt and full buildout. The unbuilt scenario assumes no change in
current land use. The full buildout scenario assumes the resort is entirely built out
(all proposed facilities are built and all lots are developed with homes). In all
likelihood the resort will take many years to build out and may have undeveloped
lots remaining long after most construction is completed.
To simplify the impact analysis, both the unbuilt and full buildout scenarios were
compared for the year 2008. This simplification enables a direct comparison of
before and after costs and revenues and eliminates the time-values of various cash
flows in different years. By comparing built and unbuilt scenarios, the vagaries of
uncertain approval dates and construction schedules are eliminated. It is intuitively
more useful to consider the alternatives of a resort that is either built or unbuilt
under current economic and fiscal conditions than to consider one option today and
the other l2 years in the future.
A destination resort creates both direct and induced impacts. As described in the
Economic Impacts section of this report, a resort induces additional growth and
rr According to Deschutes County Code, DDC 18.113.060(D)(1), "The resort shall have a minimum
of50 percent ofthe total acreage ofthe development dedicated to pennanent open space, excluding
yards, streets and parking areas." Golfcourses are considered open space.
12 Increased use of public lands surrounding resorts by resort residents is common. For example, the
Pronghorn Reson recommended that their propeny owners use adioining BLM land for exercising
dogs in a recent newsletter.
lmpact of Destination Resorts in Oregon
March 2009 page !5
Fodor & Associates
The County has no requirements for offsite stormwater management facilities or
services, so it was assumed that onsite stormwater management will not have offsite
fiscal impacts. These resort developments are contingent on provision of open space
within the development.rr Therefore, additional open space needs may not be
generated by the development.r2 However, any new residential development is likely
to increase demands for certain County parks and recreational facilities, so these
impacts were included in the study.
development beyond its physical boundaries. This is primarily the result of new jobs
created at the resort. Many of these iobs will be filled by newcomers who will require
additional housing and have fiscal impacts of their own. In this study the induced
impacts were evaluated only for schools. All other impact areas reflect only the
direct fiscal impacts of onsite development within the resort. The induced impact on
schools was addressed because student generation will be significantly increased by
influx of new workers at the resort and this information may be useful to school
districts for facilities planning purposes.
All revenue and cost figures are given in 2008 dollars and values. Costs from other
years were adiusted to 2008 values based on the appropriate inflation index or
construction cost index. Tax rates were based on the 2008-09 rates. The most recent
available data was used throughout the analysis.
It is important to note that from an accounting perspective, there are two basic types
of costs and revenues: annual streams that occur every year, and one-time costs or
payments. Tax revenues and service costs represent the former. Infrastructure costs
and any associated System Development Charges are treated as the later. As soon as
a new resort development is completed, the residents and visitors will need adequate
road capacity, classroom space for their children, fire protection, and public safety
services, so these facilities must be in place.
There are a number of standard methods for estimating the demand for new
facilities and infrastructure a new development will generate. Each method has
advantages and drawbacks. The methods used here were selected to yield the best
estimates of demand given the limitations of available data. In most cases the
capacity of services and infrastructure must be adequate to serye peak demands. For
example, police and fire protection capacity must be adequate to meet peak demand
periods, not iust average demand. In such cases, the demand for public facilities was
based on peak season resort occupancy, rather than average occupancy.
The terms "gross" and "net" are used to describe costs and revenues in this report.
In the case of costs, a gross cosr would be the total cost to provide a particular facility
or service, while the net cosr would be the gross cost, minus any payment or revenue
from the resort towards that facility or service. In other words, it is the balance of
costs after any revenues are deducted. Tax revenues are treated as gross revenues
because they are used to pay for government costs. The net revenue for a particular
service, if any, is the surplus left over after the costs of providing the service are
deducted.
The fiscal impact reporting begins by evaluating the revenues the resort is likely to
generate from property taxes and room taxes. Then the costs are addressed. And
finally, the costs are compared with the revenues to determine net impacts.
lmpact of Destination Resorts in Oregon
March 2009 page 16
Fodor & Associates
4. Revenues from the Thornburgh Resort
A significant selling point for new destination resorts has been the tax revenues they
will generate for county governments. As described later, increased tax revenues are
offset by increased costs for public facilities and services required by the resort. In
this analysis, both property tax revenues and transient room tax revenues are
estimated for the proposed Thornburgh Resort.
Property Taxes
The Thornburgh Resort Company LLC submitted a report by Peterson Economics,
of El Cerrito, California, which provided their estimate of property tax revenues, but
made no estimate of room taxes. The property tax revenue estimate provided by the
developer was approximately three times greater than the revenue calculated here.
This was partly due to use of overinflated real estate values that may have seemed
realistic during the2004-2005 boom period, but are out of line with current real
estate prices and the assessed values at the nearby Eagle Crest Resort.t3 The annual
property tax figures by Peterson were also inflated at an annual 3Vo rate over the 12-
year construction phase so that the final annual tax revenues at completion were
given for the year 2016 and are much higher than they would be today. The taxes
calculated here are based on the revenues that would be generated if the resort were
fully completed in 2008 under the 2008-09 tax rates.
Tables 4-1 and 4-2 summarize the estimated property tax revenues from the
residential and commercial properties planned for the Thornburgh Resort. The
combined total property tax revenues are $5.1 million per year based on a total
assessed value of approximately $375 million, as shown in Table 4-3.t4 The $5.1
million tax revenue estimate is about one-third of the amount estimated by the
applicant in the Peterson Report.'5 However the figure calculated here is in line with
data reported by other sources for actual tax revenues from other resorts.'u
In order to determine where tax revenues will go in Deschutes County, the
individual tax rates for each taxing district applicable to the resort were used and the
13 Eagle Crest Resort is considered to be comparable to the proposed Thornburgh Resort in terms of
its real estate values.
ra Assessed values are for tax purposes and not the same as real market values.
tt For comparison purposes, the tax revenues estimated by the applicant in the Peterson Report were
adjusted from the 2016 buildout year back to 2008, resulting in an estimate by Peterson of
$17,500,000 per year.
16 Tax revenues were reported for 2005-06 tax year by Linda Swearingen (a lobbyist and consultant
for destination resorts) for various resorts in a presentation to the League of Vomen Voters,
November 2005. She reported annual tix revenues for Eagle Crest at $4,096,058 and for Black Butte
at $6,315,414.
lmpact of Destination Resorts in Oregon
March 2009 page I 7
Fodor & fusociates
results provided in Table 4-4. Technical details on the methodology used for
property tax calculations are provided in the Appendix to this report.
lmpact of Destination Resorts in Oregon
March 2009 page 18
Fodor & Associates
Property Type
Eslimated Proper$ Tar Revenues lrom Residential Properties at Thornburgh Resort ttxa
(Assumes full buildout and 2008-09 tax rates and property values)
Estinrated Bea! Market Ualue per Unil {r}
l,lumber Lol(a) lmprovemenls Total Assumed AV Propefi Tax Property Tares
ol Units (5) pet Unil (t)(zt Rate (E) $ingle Unil p)
Propefi Tares
lor TYPg tto)
Table 4-l
Residential 0vernighttll)
Resid. Owner-0ccuP.{tet
425
950
$1s0,000
$190,000
000
000
$320,
$320,
$510,000 $250,410
$510,000 $250,410
14.0041 $3,507 $1,445,66514.0041 $3,507 $3,231,485
Total $4,677,150
Notes:
(1) Housing Dah is from fie table on page 22 of the Revised application dated April 21 , 2008. Rtvlv values derived from data 0n DeschuEs County's D.|.A.L sysbm.
(2) This hble includes all single family residential property regardless of ownership or deed restiction.
(3) Real Market Value (RlW) is fie tull appraised value of fie land and/or improvemenB. Whih tracked it is not used to cahulate hxes.
intended to reflect declining prices in real estaG markets. See Property Ta< Mefiodohgy in Appendix lor details.
Crest. Reduction in value is intended to reflect declining prices in real estate markeB. See Property Ta( Methodology in Appendix for details.
calculate the property ta(es due on a parcel.
Assessed Value of a property. The Exception Value Ratio for Resort Properties is 49.1.
(9) Assumed Assessed Value (AV) times Property Tax Bab.
(10) Calculated trom 'Prope$ Taxes Single Unif times 'Number of UniB' times 0.97 (to reflect 3% reduction for on-time payment).
lndividualty+wned Residential Unit Ratio in Deschutes County Code 18.1 13.060 D 2, it has been assumed fiat they will a[ be built
these units, which showed an annual property tar payment of $4,453,593.68.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 19
Table 4-2
Estimated Proper$ Tax Reyenues from Gommonly held and Gommercial Propefi at Thornburgh Resort (tt
(Assumes full buildout and 2008-09 tax rates and property values)
Eslimated Real Ma*et Ualue per Unfl tzl
Property Type
I'lumbel
ol Units
Assessed
value(5X6)
Propefi Tax
Rate F)
Properly Tares
Single Unit
Property
Taxes lor
TYPefloLot(3) lmprovements(a) Total
Hotel and Conference Center(8) 1 $2,169,000 $15,000,000
Golf Club House (s) 2 $578,400 $4,000,000
Gotf Course (10) 3 $1,949,850 $3,000,000
Spa Facility (11) '1 $433,800 $5,000'000
Recreation Center (12) 2 $723,000 $3,000,000
Commerical Developmenl tlq 1 $578,400 $4,000,000
Real Estate 0tfice 0a) 1 $433,800 $3,000,000
$17,169,000
$4,578,400
$4,949,850
$5,433,800
$3,723,000
$4,578,400
$8,429,979
$2,247,994
$2,430,376
$2,667,996
$1,827,993
$2,247,994
$1,685,996
$14.0041
$14.0041
$14.0041
$14.0041
$14.0041
$14.0041
$14.0041
$1 18,054
$31,481
$34,035
$37,363
$25,599
$31,481
$23,611
$114,513
$61,073
$9e,043
$36,242
$49,663
$30,537
$22,903$3,433,800
Total:$41
(1) Data for this table was obtained from fte Thomburgh Application dated 4-21-08, the Deschutes County D.l.A.L system and cited sources.(2) Real Market Value (RlvIY) is fis full appraised value of he land and/or improvements. While facked, it is not used to calculate taxes.
reduction in value is to reflect declining real estate values. See Property Tu Methodology in Appendix for details.
USGA and American Society of Golf Course ArchitecB web sites.
the property taxes due on a parcel.
Assessed Value of a property. The Exception Value Ratio for Resort Properties is 49.1.
been assumed that when Deschutes County Rural Fire Protection Disfict #1 hkes over fire and rescue responsibilities for hose properties $at fiey will changed to Area2404.(8) 75,000 sq ft building on a 150,000 sq ft lot. lncludes Hotel, Restaurant, Bar and Convention Facilities.(9) 20,000 sq ft building on 40, 000 sq ft lot lncludes Locker Rooms, Pro Shop and Food Service Area,
(1 1 ) 25,000 sq ft of buildings on a 50,000 sq ft lot lncludes Fitness Center, Sauna and Steam rooms, Massage area.
(1 2) 1 5,000 sq ft of buildings on a 30,000 foot lot
0 3) 20,000 sq tt of buildings on a 40,000 sq ft bt. lncludes Bank, Florist Shop, Drug Store, Grocery, Dry Cleaner and Art Gallery.
(14) 15,000 sq tt ol buildings on a 30,000 sq ft lot. lncludes Sales Leasing and Property Management 0flices.
(1 5) Taxes reduced by 3% for ontime paymenl
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 20
Table 4-3
Estimated Total Propefi Tar Revenues lrom Thornburgh Resort
(Assumes !u!l bu1[dgut an{2Q0ft09 !u rates and property values)
Property Type Total Assessed Ualue Annual PropefiTaxes
Residentia! Property $344,313,750 $4,677,150
Commercial 30 4 13,973
Totals:'4 817 1
Table 4-4
Distribution ol Propefi Tar Revenues by Taxing Districts lor Thornburgh{l)
(Assumes full buildout and 2008-09 tax rates. Ihornburgh estimated tohl assessed value of $374,788,81 7)
lD Tax District Tax Rate Property TaresP)
001 Deschutes County
007 Jail Bond
010 Fairgrounds Bond
011 County Library
020 Countywide Law Enforcement
021 Rural Law Enforcement
070 Redmond Library
090 CountyExtension/4H
093 91 1
095 91 1 Local Option 2008
202 Rural Fire District #1
351 Redmond Area Park & Rec District
620 School District #2J
626 School #2J Bond 92 & 93
628 School #2JBond2004
651 High Desert ESDG)
670 C0CC(4)
671 C0CC Bond 0.0889 $32,319Total 14.0041 $5,091 ,123
(1 ) Tu rates trom Deschutes County 2008-09 Summary ol Assessment and Tax Roll page 80,
(2) Tu revenues = (AV/1000) x Tax Rate x 0.97. Amountto taxing disticls assuming the property owner takes advantage
of the 3% discount lor payino in full prior to 1 5 November.
(3) High Desert Educational Service District
(4) Cenfd Oregon Community Cofiege.
1.2783
0.1335
0.141
0.55
0.95
1.4
0.0567
0.0224
0.1618
0.23
1.7542
0.3717
5.025'l
0.8307
0.293
0.0964
0.6204
$464,720
$48,533
$51,260
$199,950
$345,368
$508,963
$20,613
$8,143
$58,822
$83,615
$637,731
$135,130
$1,826,851
$301,997
$106,519
$35,046
$225,543
lmpact of Destination Resorts in Oregon
March 2009 page 2l
Fodor & Associates
Room Taxes
Transient Room Tax revenues are generated from hotels and other overnight
lodging facilities in Deschutes County. The tax rate is 7o/o of the total room charge
payable to the County. As shown in Table 4-5, the estimated room tax revenue from
the Thornburgh Resort is $430,296 per year. A complete technical explanation of
room tax calculation is provided in the Appendix to the report. Currently room tax
revenues are allocated to rural law enforcement and tourism, as shown in Table 4-6.
Table 4-5
Estimated Transienl Room Tax Revenues lrom Proposed Thomburgh Resort
(Assumes full buildout and 2008-09 tax rates and rental rates)
Number Daily Estimated Estimatedol Room 0ccupancy Tax Daily Tax Annual Tax
Type ol Unit Units(1) Rate(z) Rateo) Rate6) Revenue(s) _ffsyslgs(s)
HotelRooms
Residential Overnight Unitsr)
50
425
$1 21
$1 62
7Yo
7Yo
29o/o
29Yo
$123 $44,827
$1,399 $409,115
Subtotal: $452,943
Less Collection Reimbursement(8):
Revenue to
Number of as Units is taken from page of the 21, 2008.
2. Estimated Average Room Rate sublect to tre Room Tax. The rate for he Hotel is based on a weighted average of fie rates for Hotels, Motels and lnns
located in fie Greater Redmond Area. The lnn at Eagle Crest showed standard room rates of $95 to $1 26 per night depending on season. The rate for
Residential Overnight Units is fie average of fie daily rate for 39 units in he Greater Redmond oregon Area cunenty listed on fie Vacation Rentals by owner
website for the area- Twenty-eight of fiess were located in Eagle Crest Resort.
3. While the tohl mon$ly Transient Room tax receipts are available, actual occupancy data is exbemely difficult to come by. So an occupancy rate of g0%
was assumed for the monfi of August and fien adiusted for the qther montis based on Tohl Transient Room Taxes paid to fte County for fiat monfi. From
this an average annual occupancy rate of 29% for all rental types was derived. This table was also run assuming an annual occupancy rate of 1 00%, and
50%forbofitypesof units.TheresullingastimatedrevenueforDeschutesCountywas$1,818,010f0r100%and $909,005.13f0r50%annual occupancy
rates.
4. The cunent Tax rate as set by Deschutes County 0rdinance.
5. The number of units times fie occupancy rate, times fie daily room rate, times 7%.
6. The eslimated Daily Tax Revenue times 365 days. For residential units, an 80% repofiing rate for room ta(es was assumed. 1 00% reporting was assumed
for hotel rooms.
7. 425 is fte number of units trat would be subiect to a deed restiction requiring fiat they be available for Short Tem Rental at least 38 weeks a year. lt is
possible that some of he owners of fie ofier 950 housing units in fie resort might also want to rent heir units at least some of the time, so fie actual
number of available rental units could be higher.
L Deschutes County Code 4.08.1 20 requires $e opBrator to bill the transient tor the Room Tax as a separate line item on fie invoice or receipt and allows the
operator to retain a Collection Reimbursement Charge ol up to 5% of all revenues collected. lthile it is possible lor an operator to re,tain less fien fie full 5%
permitted, tor the purposes of fiis estimate a full 5% has been assumed.
lmpact of Destination Resorts in Oregon
March 2009 page22
Fodor & Associates
Table 4-6
Distribution ol Room Tar Hevenues to County
(Assumes full buildout and 2008-09 room tax rates and rental values)Share(l) Amount
For Rural Law Enforcement 73o/o $314,1 1 6
For Tourism-Related Activities 27o/o $116,180
Total Room Tax Revenue 100% $430,296
lmpact of Destination Resorts in Oregon
March 2009 page 23
Fodor & Associates
5. Thornburgh Resort Costs
This section examines the fiscal impacts of the proposed Thornburgh resort on the
following six major service categories:
o TransportationSystem
o Schools
o Fire & EMS
o Public Safety System
o Parks & Recreation System
o General Government
As described previously, costs occur in two basic categories
l. Capital Costs: Initial, one-time costs for the increment of new or expanded
capital (facilities, infrastructure and equipment) necessary to provide
adequate levels ofservice to the resortl and,
2. O&M Costs: Annual costs for operation and maintenance (O&M) of the
services provided to the resort.
The capital costs for expanding facilities, infrastructure and equipment were
calculated for all six of the above service categories. These capital costs tend to be
the greatest costs associated with serving new development. The O&M costs for
providing services were calculated for fire/EMS, public safety, and parks and
recreation. The tax revenues for each of these service areas were also determined, so
that service costs could be compared with revenues.
For transportation and schools, revenues come from multiple sources (County, State
and Federal) and are allocated based on formulas described in the following
sections. Since revenues for these two categories could not be tied directly to the
resort, it was not possible to compare the annual O&M costs with the revenues
resulting from resort development. O&M costs were not calculated for general
government services due to the complexity of assigning service costs to the resort.
The cost impacts the resort will have on these systems may be offset by tax revenues
and impact fees or mitigation fees the resort will pay. The only impact or mitigation
fees identified in this study are related to the transportation system. Deschutes
County enacted transportation SDC (system development charge) in 2008. The
Oregon Department of Transportation (ODOT) is seeking mitigation funding from
the resort for impacts to intersections with state highways. Both of these potential
revenues are computed and deducted from the transportation system costs. The
Counry collects no other impact fees and the Redmond School District collects no
impact fee from new development.
lmpact of Destination Resons in Oregon
March 2009 page 24
Fodor & Associates
The Thornburgh Resort is also credited with future tax payments that could
potentially go towards repaying bonds for the infrastructure needs the resort creates.
A new destination resort will increase the local tax base, which will distribute the
bond repayment cost more widely. For example, if a new resort increases the local
tax base by 5o/o, it will pay for 5% of the bond costs. The remaining 95% will be paid
by the existing community. However, it is the new development that is creating the
demand for new facilities that are calculated in this study, not the existing
community. Therefore, new development will pay for only a fraction of the facility
costs it creates (LD}e in this example). The actual 2008/09 tax bases for each
category of service and the potential contribution of the resort towards future bond
repayments is provide d in the Appendix.
To aid in calculating some costs, an estimate of the number of houses used as
primary residences at the Thornburgh Resort and an occupancy rate of these
residences was developed. Average occupancy per household in Deschutes County
was 2.5 persons per the 2000 Census. The Census data is for all existing housing, and
therefore does not accurately reflect the occupancy of new housing. New housing is
typically larger than the average of exiting housing and typically has more occupants
per unit. TheAmnican Housing Surttryt provides data on new homes for major cities
in the US. The nearest city survey is for Portland where new housing units were
found to have 8.2o/ohigher occupancy levels than for all existing units.'7 This same
adiustment was applied to Deschutes County to produce an estimated household
occupancy rate of 2.7 persons per new house.
The percentage of housing in destination resorts used as primary residences has
been the subiect of some debate. Resort housing could be used for a primary
residence, a second home (or vacation home), or a rental home (overnight unit).
Undoubtedly, the mix of home uses will vary from resort to resort. The nearby Eagle
Crest Resort appears to have a very similar profile to the proposed Thornburgh
Resort and was used to establish a likely percentage of owner-occupied homes
serving as primary residences.
A complete tabulation of residential properties at Eagle Crest was generated by
Deschutes County from County tax assessment data.l8 There were 11538 residential
properties that were developed with homes on the tax rolls. Of these,559 property
owners received tax statements at their Eagle Crest address. Tax satements are
usually sent to the property owner's primary residence, so this is highly indicative of
a primary residence address.
ti Amcican Housing Swoey for tlu Portbnd Metropoliun Area:2002, Issued July 2003, U.S. Department
of Housing and Urban Development.
18 Result from this tabulation were provided in Excel format to COL\7 by Tim Berg, Deschutes
County Community Development Department on February 26,2009.
lmpact of Destination Resofts in Oregon
March 2009 page 25
Fodor & Associates
According to a survey provided to the County by Eagle Crest Resort, an estimated
252 of the single family homes in the resort were being used as overnight units
(rental units) in March of 2008.re Deducting the252 overnight units from the 1,538
total residential units leaves 1r286 owner-occupied units (both primary residences
and second homes). Based on the addresses of the tax statements, the 559 primary
residences represent 43o/o of the 11286 owner-occupied units. The actual percentage
of primary residences will be higher if some resort residents have tax bills sent to a
post o{fice box or to an accountant's address.
re Letter from Alan VanVliet of Jeld-Ven Development to Catherine Morrow providing results of an
annual housing survey, dated March 25r2008.
lmpact of Destination Resons in Oregon
March 2009 page 26
Fodor & Associates
Transportation System Costs
A key issue in destination resort development is the demand they place on the
transportation infrastructure. The new travel demand generated by resorts creates
costs for the required transportation infrastructure. The full cost of the
transportation infrastructure to serve new growth is reflected both in the new
infrastructure that must be built and in the existing capacity that is consumed.
Travel demand is a function of both the number of new vehicle trips generated and
the average trip distance. The combination of the number of daily trips and the
average distance of trips results in the daily "vehicle miles traveled" or VMT. VMT
reflects actual roadway usage, and therefore provides a good measure for allocating
transportation system costs.
Another measure of travel demand is "peak-hour tripsr" which is intended to reflect
demand on the system during the peak period. Peak-hour trips are widely used in
transportation studies because they provide an indication of transportation system
conditions at the busiest time of day. However, as roads become more congested,
travelers shift their travel times to avoid congestion. Instead, they contribute to
congestion at other times. As transportation systems become more and more
overburdened, peak congestion periods extend to multiple hours and can occur
throughout the day.
One deficiency of peak-hour trips is that they only capture those trips generated at
the peak hour (usually 5-6pm weekdays) and miss traffic generation at other times.
Schools, for example generate considerable traffic at other hours. Resorts will also
generate most trips at other hours for golf and other recreational activities. tU7ith this
measure, traffic sources that do not generate peak-hour trips are not counted as
impacting the transportation system, despite increased travel demand. Peak-hour
trips are based on the peak traffic hour of the adiacent roadway, and not the peak for
the source of the trips being studied.
Destination resorts are typically sited in relatively remote locations outside of Urban
Growth Boundaries (UGBs) and away from existing cities and towns. Due to their
remote locations, residents and guests will travel farther to reach common
destinations, such as employment, grocery stores, department stores, etcetera. As a
result, VMT generation will tend to be higher per unit of development than it would
be in an urban location.
Studies show that even in urban areas, the per capita VMT increases by a factor of
two to three, or more on the urban fringe compared with the urban core. Daily per-
capita VMT was found to be two to four times greater in the Atlanta suburbs than in
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page27
the city's core area.'o Similar findings were obtained for Eugene-Springfield in a
1994 travel study by Lane Council of Governments." According to a study in Rhode
Island (1999), rural towns had on average 16.5 miles of local roads per 11000 housing
units, or almost three times as many as urban core communities (6.1 miles per 11000
housing units).22
Figure 5-l: Time of day for trips in rural Oregon (Orcgon Traoel Behaoiot Suruey,
oDoT,2000)
Based on the Oregon Traoel Behaoior Sunsq)r2l Deschutes County's rural households
reported an average of 7.31 daily vehicle trips. This is lower than the 9.57 trips that
would be estimated using the ITE Tip Generation manual.2a Average rural trip time
was 16.52 minutes. \7hile this trip time is comparable to that in urban areas, rural
trips will tend to cover more distance and be at a higher average speed, requiring
2o Source: Atlanta Journal-Constitution, 1219102, based on data from Georgia Regional Transportation
Authority.
2t 1994 Estimated VMT per Capita by ProductionZone,by Lane Council of Governments.
22 The Costs of Suburban Sprawl anil Urban Decay in Rhoile Islnnd, Executive Summary, by Grow Smart
Rhode Island, 1999, Providence, RI, The Rhode lsland Foundation.
23 Orugon Truoel Behaaim Suroey, ODOT, 2000, Table 4.2. According to ODOT, survey data involves
some underreporting, so actual daily trip will be higher than reported (see footnote, page 9 of Orcgon
Traoel Behutior Suley).
2a Institute of Transportation Engineers' reference manual for trip generation, 8'h Edition.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 28
6y'o
57c
41o
37c
27o
19c
09o
i teti€ttttiftttt€eE€r Eres ssssssssss assss sssss sc ss ssssss sss9 s9css sGsss aa s
^i * ..t,ri t r,i \is di € c^ d i 6i * i.l ;{ *,rr g Fi n, 6i ci l;
more road infrastructure.If an average rural speed of 40 mph is assumed, the average
trip distance would be l1 miles and household VMT would be 80.5 miles per day."
The Cost of Transportation Facilities
The "proiection-based" method for estimating transportation system costs uses a
planning estimate or projection of the future system improvements that are needed
as a basis for allocating costs to the new development that will occur over the
planning period. The County has prepared a 2Gyear list of ransportation proiects as
part of its adoption of a new transportation System Development Charge (SDC) in
2008. This list covers all profects in the unincorporated areas of the County that are
anticipated from 2008 to 2028. The total cost of all proiects is $280 million. Profect
costs are funding by a mix of County, State and Federal sources.
Most of these proiects are capacity-increasing and will serve the needs of new growth
in the County. However, a portion of the proiects are maintenance-related and will
not expand the system capacity. Only a very brief description is available to
characterize each proiect on the 2D-year list and no further information was available
from the County. A simplified system was used to allocate individual proiect costs
between capacity expansion and maintenance functions. New roads were allocated
100% to meet the needs of new growth. New bridges were allocated 75o/o to ne'vt
growth. Road "widening and overlays" and "road reconstruction and wideningr"
were allocated 50% to new growth. None of the costs for pedestrian and bike lane
improvements were allocated to growth as they were considered system-wide
upgrades.
Based on this cost allocation, $240 million or 860/o of these costs are growth-related
(capacity increasing), while $39 million,or l4o/o are for maintenance. Table 5-1
provides a summary of the proiect cost allocation. As shown in column 5 of Table 5-
l, Deschutes County will fund less than one-third of growth-related transportation
facilities, while the State will fund rwo-thirds. (The Federal funding is shown as
being fairly small, but Federal transportation funds that are distributed by the State
are listed under the State funding, so the actual Federal contribution is larger than
shown.)
25 The average speed of40 mph was used to reflect overall average trip speed, including stops, starts
and turns on roadways with typical 55 mph speed limits. This was intended to be conservative, as
higher trip speeds would result in longer travel distances and greater road costs.
lmpact of Destination Resorts in Oregon
March 2009 page 29
Fodor & Associates
Table 5-1
20-year Transportation System Proiect List lor Unincorporated Area ol Deschutes Gounty (2008-2028)fl)
1 2
Total Proiect
CostsFunding Entity
3
Percent
ol Total
Gosts
5
Percenl ol
Growth
Gosts
6
Growth
Cost per
c4pI!9
7
Gost per
TypicalNew
House(a)
4
Growth'Related
Proiect Costs
Deschutes County $96,614,339 35%$70,165,71 5 290/o $2,273 $6,'137
State of 0regoptz) $157,500,000 56% $157,500,000 66% $5,'102 $13,775
Federal Gov.(2) $25,431 ,250 9o/o $12,715,625 5o/o $412 $1,1 12
Totals: $279,545,589 100% $240,381 ,340 100% $7 ,787 $21,024
(2) State funding includes funds from he Federal Govemment to the State so this distribution only shows final source ot funds.
(3) Growth+elated costs are divided by fie projected population increase over he same 20-year period.
(4) Costs associated wih new house are based on an occupancy rate of 2.7 persons, as described earlier in ftis section ol the report
The per-capita cost for population growth can be estimated by allocating the growth-
related (capacity increasing) components of the County's total future transportation
system costs for the next 20 years ($240,3811340) to the estimated population
increase for the same period. During this time period the population of the
unincorporated County is projected to grow from 561509 in 2008 to 87,480 in 2028,
an increase of 30,871 people.26 This results in a cost of $7,787 per new person
(column 6 of Table 5-l). The County's share of this cost is $2,273 per person.
The cost per new house can be estimated based on the typical occupancy rxe of 2.7
persons per new house (calculated earlier). At this occupancy rate, the total cost per
new house is $21,024. The County's share of this cost is $0,tlZ per new house.
A new transportation System Development Charge (SDC) was approved by
Deschutes County in July of 2008 to help recover a portion of the County's share of
capacity-increasing transportation costs. Iflhile the State SDC Statute2T allows for a
reimbursement component, the County's fee does not include a reimbursement
component to recover the cost of existing roadway capacity that will be consumed by
future growth. The SDC fee will be phased in gradually up to $3,504 per new peak-
hour vehicle trip by 2011. For a new single-family dwelling, 1.01 peak-hour trips are
generated and the SDC is $3,539 per SFD (not including the $45 administrative
charge allowed by State Statute). Deducting the SDC (full 201I rate) from the
County's gross cost per new house ($6rtfZ; results in a net transportation system
cost to the County of $2,598 per new house for the capacity-increasing components.
26 Based on Deschutes County 200U2025 Coordinated Population Forecast. The forecast was
extended to 2028 using the growth rate for the 2020-2025 period of 2.2o/olyear.
27 ORS 223.297-3t4.
lmpact of Destination Resorts in Oregon
March 2009 page 30
Fodor & Associates
Reimbursement Value of Existinq Transoortation Infrastructure
As noted, the Deschutes County SDC profect list does not address the value of
transportation infrastructure capacity that has already been built that will be
consumed by new development (also referred to as "excess capacity''). If average
roadway congestion levels on existing roads did not increase over the 20-year proiect
timetable, then there would be no loss in mobility (or increase in congestion), and
therefore no "consumption" of existing excess capacity. However, it is unlikely that
the County will be able to build enough new facilities to prevent such congestion
increases. Nationwide the roads have become increasing congested as cities, counties
and states across the country have been unable to keep up with demand.28
To investigate changes in traffic levels on existing roadways, historic traflic count
data must be analyzed. The County's traffic count data reports Average Daily Traffic
(ADT) for 281 roadway segments. " Data was obtained from the County for the 11-
year period, 1998 to 2008. Data was not available for every year for every segment, so
the average of the traffic counts in the first four years (1998-2001) was compared
with average of the last four years (2005-2008). Only the 212 road segments that had
traffic counts in both time periods were analyzed. The results show that raffic
increased from an average ADT per road segment of 1,473 to 1,780, an increased
volume of 20.8o/o on County roads in a roughly seven-year span.'o It is therefore
reasonable to conclude that new development in the County is generating
transportation system demand faster than the County is building new capacity and
that new development is consuming existing excess road capacity.
There is no data on the existing excess capacity of County roads. The County's
Level-of-Service (LOS) standard for rural roads is "D" or better. A LOS of D
represents average daily traffic (ADT) of up to 91600 vehicles for a two-lane road.
Therefore, 9,600 vehicles is the effective capacity of the roadway under the LOS
standard. The County's 1996 Transportation SystemPlaz shows ADT and LOS for
the 36 busiest roadway segments in the County at that time. None of the segments
exceeded a LOS of D and most were rated B or C with 3,000 to 5,000 ADT. Based on
this somewhat dated data, it appears that the County had more than 50% excess
capacity on its main road network in 1996.3r
28 The 2007 Urban Mobility Repart,by the Texas Transportation Institute reporrs that over last 24
years we have built only 4lo/o of the transportation infrastructure necessary to keep up with growing
demand.
2e A sample of this data can be found on the Deschutes County Road Department web site at
htto://www.co.deschutes.or.us/download.cfm?DownloadFile=0D8l35CF-BDBD-57C1-
98378109FA737581. The full data set was used for this study.
3o This increase in traffic occurred over a period ofapproximately seven years, based on using the
midpoint of each of the two periods compared. The period is approximate because traffic count data
was not available for all years.
3r The more-recent County traffic count data referred to earlier shows an average ADT at 212 rcad
locations of 1,780 for the 2005-2008 period. If all of these roadways have a capacity of 9,600 ADT,
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 3 I
The value of the County's excess roadway capacity is significant, however, due to
data limitation there is no direct way to accurately determine either the value of this
capacity or the amount that will be consumed by new development. However, rather
than leave this cost area completely unaddressed, a very rough, but conservative
estimate was developed. To make this estimate, the following rough assumptions
were used:
l. Excess capacity in 2008 is at least 40% of existing roadways.
2. New development over the next 20 years will consume half of the remaining
excess capacity.
3. The value of the excess capacity can be indexed based on its replacement costs
today and the population increase served by the total value of the capacity-
increasing proiects on the SDC project list.
To roughly estimate the replacement value of the existing transportation system it
was assumed that the value could be based on the estimated costs necessary to serve
future population growth. The value of the growth-related (capacity increasing)
proiects in the Z}-year SDC proiect list is $240,381,340. This results in a cost of
$1,787 for each new person proiected in the County over the 2O-year period.
Applying the per-capita cost to the 56,609 persons currently living in the
unincorporated County in 2008 results in an existing system value of $++t million.
This figure is the approximate replacement value for the system required to serve
today's population. The ligure is low, since it does not account for building the
excess capacity that exists today. None-the-less, as a very rough estimate, the value of
excess capacity consumed over the next 20 years is 20o/o of $441 million, or $88
million. Dividing $88 million by the projected population growth over the next 20
years of 30,871 people, results in a reimbursement cost of $2,856 per new person.
Based on an occupancy rate for new homes of 2.7, the reimbursement cost per new
home is $7,711.
Table 5-2 combines the value of new facilities and the value of excess capacity used
to serve new growth in the unincorporated area of the County. As shown, total
transportation system costs (from all funding sources) for new growth are $101637
per person,$28,720 per new house, and $3,929 per daily vehicle trip. Note that the
estimates in Table 5-2 are based on planning proiections and are therefore only as
accurate as the proiections they are based upon.
then there is approximately 80% excess capacity in the road network. However, the data is not
adequate to assess the actual capacity ofeach roadway segment.
lmpact of Destination Resorts in Oregon
March 2009 page 32
Fodor & Associates
Table 5-2
Eslimated Transporlation System Gosts to Serve I'lew Growth lor Unincorporated Area ol Deschutes
County (2008-2028)
Gounty Gosts State Costs(5) Federal Gosts Total Gosts
Value of New Capacity for Future
Growtho)
Total Growth-Related Costs share unknown share unknown share unknown
Cost per Capita lor New Population 0,637
Cost per New House(4) $28,720
Cost per Daily Vehicle Trip(s) $3,929
(1 ) Derived from Deschutes County SDC Proiect List, 2008.
(2) Rough estimate based on estimated excess system capacity consumed by new growth.
(3) Growth+elated costs are divided by the projected population increase over the same 20-year period.
(4) Cost associated wih new house are based on an occupancy rate ot 2.7 persons, as described atfie beginning of tris section.
(5) Based on fie 0regon Tnvel Behavior Suruey, Deschutes County's rural households reported an average of 7.3 1 daily vehicle tips.
(6) State funding includes funds from Federal Govemment to fie State so tris distibution only shows final source ol funds.
Transportation S)rstem Impacts of Thornbureh Resort
Estimating the transportation system impacts associated with a destination resort is
more complex because standardized data on destination resort travel demand is
unavailable and the use has unique characteristics. These resorts contain a variety of
commercial and residential uses. The commercial uses cannot be readily estimated
from the same per-capita basis used for residential land uses. Also, resorts will
accommodate a certain percentage of vehicle trips internally. Internal trips are those
that do not leave the resort, and would include residents visiting the golf course or
resort restaurant. Since the road structure within the resort is funded entirely by the
resort developer, these internal trips do not create an impact on the external public
road system.
There are various estimates for the number of external vehicle trips generated by
resorts. The Thornburgh Resort submitted their own traffic study showing that a
vast majority of vehicle trips would be accommodated internally and that the resort
would generate a total of 517 peak PM hour trips (5-6pm weekdays).32 However, the
"peak PM mips" metric failed to capture the peak trip generation by the resort,
which occurred earlier than for the adiacent roadways. Peak resort traffic occurred
between lpm and 4pm.
32 Trarcpmtation Impact Aaalysis, Revision [I, by Group McKenzie, September 28,2005, Table 98.
Value of Existi Consumed(2)
$70,165,715
share unknown
$157,500,000
share unknown
$12,71 5,625
share unknown
$240,38'1,340
$88 0 000
lmpact of Destination Resorts in Oregon
March 2009 page 33
Fodor & Associates
A study by Kittelson and Associates" measured the traffic generation from the
nearby Eagle Crest Resort by counting trips in and out of the resort for several
weekday periods. The study concluded that 4.4 offsite trips are generated per
residential unit and suggested that this is an appropriate value to use for destination
resorts. These trip counts include all the commercial and recreational activities at
the resort, as well as the residences. Therefore, they are an indication of the total trip
generation by the resort, indexed to the number of residential units.
The Thornburgh Resort has 11375 residential units. Based on the Kittelson Studp
the resort would generate at total of 6,050 daily vehicle trips. These would all be
external, or offsite trips. For comparison purposes, the trips were estimated using
standard trip generation rates for conventional development (see Table 5-3). As a
conventional development, the uses at Thornburgh would generate approximately
17,054 daily vehicle trips. However, since destination resorts are likely to
accommodate more vehicle trips internally than conventional developments, the
empirical data from Kittelson was used instead.
Using the estimate based on the Kittelson Study of 6,050 daily rips and the cost per
vehicle trip of $3,929 from Table 5-2, the total gross transportation system cost
associated with the resort is $23.8 million. To obtain a net cost for the Thornburgh
Resort, SDC payments and developer contributions to the transportation system
must be deducted. That step is done at the conclusion to this section.
Table 5-3
Conventional Trip Generation Estimate lor Thornburgh Destination Resort0)
Description (lTE Gode)Units(2)
Erpected
Units
Expected Daily
Trips
Single Family Homes (210)
Hotel (310)
Health/Fitness Club (493)
General Office (710)
Shopping Center (820)
Ouality Restaurant (931 )
DU
Rooms
TSF Gross
TSF Gross
TSF Gross
TSF Gross
375
50
60
15
20
5
1 13,159
446
1,976
165
859
450
TotalTrips:17,054
(1) Based on lfE Trip Genention manual, 7h Edition.
(2) DU = dwelling units; TSF = trousand square teet of gross floor area.
33 Central Aregon Resor-t Tip Genetation Studyrby Kittelson and Associates, September 12r2006.
lmpact of Destination Resorts in Oregon
March 2009 page 34
Fodor & Associates
Standards-Based Costing Method
The transportation system costs calculated above in Table 5-Z are based on the
proiected population growth of the County and the proiected transportation
infrastructure needs for the next 20 years. Both proiections are estimates for a long
period of time and could involve substantial errors. It is notoriously difficult to
estimate future population growth, but it is even more difficult to anticipate and
accurately estimate all the transportation infrastructure needs for a county 20 years
into the future.
To examine the transportation system costs from another perspective, a standards-
based impact analysis was performed. This method is based on meeting County
level-of-service (LOS) standards. Travel demand was used to determine the number
of new lane-miles of roads that are needed to serve new homes. A roadway cost per-
lane mile was developed and the number of lane-miles required by new development
was used to estimate road costs.
Estimates of new road costs were not available from Deschutes County, so road costs
per lane-mile were compiled from three sources, including the County SDC project
list and ODOT in order to develop a reasonable estimate. Values for rwoJane, rural
roads on flat terrain were selected. As shown in Table 5-4, the average cost per new
lane-mile for all sources is $3.4 million.
The seven new roads on the Deschutes County Transportation SDC Project List
were used to develop one road cost estimate. The average cost of these roads per
lane-mile was $3 million. The cost for one road segment included an overpass, so
that some other roadway costs are included as well. Representative road costs should
include the costs of intersections, signalization, bridges, and other associated system
costs.
For comparison, Table 5-4 shows the road costs for a rural road on flat terrain from
ODOT's Highway Economic Requirement System ($2.7 miltion/lane-mile) and an
estimate for rural roads from the Victoria Transportation Policy Institute ($4.5
million/lane-mile). These figures bracketed the Deschutes County road costs, so the
$3 million per lane-mile figure was used for road costs.
lmpact of Destination Resorts in Oregon
March 2009 page 35
Fodor & Associates
Road Gost Estimates lrom Uarious Sources
(All costs adjusted to 2008 dollars)
Gost per Lane-Mile
Source
Gonstluction
Gost
Land
Acquisition Gost Total Gost
Table 5-4
New Roads in Deschutes Co. SDC Project Listo)
0DOT New HERS lmprovement Costs(2)
Victoria Transportation Policy lnstitute(3)
$2,807,982
$2,461,990
$4,199,040
$240,000
$240,000
$263,340
$3,047,982
$2,701,980
$4,462,380
Average of Sources:$3,404,114
( l ) Average cost for new roads on list Land values based on total road ROW widtr of 80 faet and land acquisition costs of $50,000 per acre.
(2) 0D0T New Highway Economic Requirement System (HERS) lmprovement Costs, lanemile costs for constructing new rural major collector on
flat terrain.
(3) Source: WPI Transportation Cost and Benefit Analysis ll - Roadway Costs, Table 5.6.3-4, January 2009. Value for undivided highways in
oudying areas. Year 2000 doflars were adjusted to 2008 using Oregon Highway Constuction Cost Trends.
As described earlier, the Oregon Traoel Behaoior Suntey provides the best available
travel demand data for rural households in the unincorporated area of Deschutes
County. From this survey data it was estimated that the average daily rural
household VMT is 80.5 miles. To translate this into a lane-mile demand for new
roadways, a level-of-service standard must be assumed. The County's minimum
LOS standard of "D" represents the maximum congestion limits acceptable on
County roads. The ADT at LOS D is 9,600 vehicles. A two-lane roadway operating
at LOS D could accommodate 41800 vehicles per day per lane in each direction. At
this congestion level, the lane-mile distance required to accommodate the 80.5 miles
of daily VMT generated by the typical rural household is 0.017 lane-miles. The cost
of building 0.0l7lane miles at $3 million per lane-mile, is $51,000 per new
household.
To maintain a higher LOS standard of "C" (ADT of 5,700, closer to what County
residents now enioy), requires 0.028 lane miles per new household, or $84,000 in
new road system costs per new household. The costs on a per-trip basis are shown
for both LOS standards in Table 5-5. \7hile costs of $51,000 to $84,000 per
household may seem incredibly high, they should be adiusted even higher to reflect
the higher occupancy rate that can be expected in a new home compared with the
average of existing homes from which the travel survey data was derived. Using the
8% higher occupancy rate of a new house relative to an existing house, the costs
would be $55,000 to $90,700 for LOS of D and C respectively.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 36
Table 5-5
Standards-Based Transportation System Costs per New Vehicle Trip
Cost Per Household Cost Per New Vehicle Trip{t}
Gostto maintain LOS 'D" $51,000 $6,977
Costto maintain LOS 'C" $84,000 $11,491
(1 ) Based on 7.31 trips per household reported for Deschutes County in he Oregon Tnvel Behavior Survey.
These standards-based costs are much higher than the $28,720 per new house cost
estimated by using the County's 2O-year proiections for new road infrastructure and
population growth. One possible reason for the higher standards-based cost is that
the County is not planning enough future road capacity to maintain current LOS
standards and will see roads become increasingly congested in the future. As
mentioned previously, road congestion is increasing nationwide and planned road
construction is inadequate to maintain current standards. The high cost of
maintaining even the County's minimum LOS standard under continuing growth
may be too high for the public to bear. Instead of paying for construction of new
roads, county residents will likely pay indirectly through the travel delays and
increased fuel use associated with growing congestion.
Standards-Based Transportation Svstem Impacts of Thornbureh Resort
As noted previously, a destination resort generates a complex mix of uses and
accommodates many of its vehicle trip onsite. The trip generation estimate from
Kittelson and Associates is a total trip generation rate of 4.4 trips per dwelling unit
that includes all uses in the resort (residential and commercial). For Thornburgh
this would be 6,050 daily vehicle trips. Using the cost per vehicle trip to maintain a
LOS of D of $6,977 from Table 5-5, the cost for building the offsite road capacity for
6,050 new trips is$42.2 million.
Depending on the fiscal impact analysis method employed, the gross transportation
facilities costs for the Thornburgh Resort would range from $23.3 million to $42.2
million (see Table 5-6). \[hile both figures are reasonable estimates, the higher,
standards-based figure probably does a better iob of representing the full cost of
transportation system impacts. This is because the standards-based method assures
that the current minimum LOS standard of D is maintained, while the proiection-
based method does not. It is also worth reiterating that the LOS standard used here
still allows for a considerable increase in average road congestion that is not
included in the $42.2 million cost, and therefore is a conservative (low) estimate.
lmpact of Destination Resorts in Oregon
March 2009 page 37
Fodor & Associates
Table 5-6
Estimated Transportation System Costs lor Thornburgh
Resort
[mpqct 4qrq[Eiq Mellqd Gost
Planning projection-based estimate
Standards-based estimate (L0S=D)
$23.3 million
$42.2 million
Net Transoortation Cost from Thornbureh Resort
To obtain a net cost, SDC payments and developer contributions to the
transportation system must be deducted.
The Thornburgh Resort will pay a Transportation SDC for each development. The
SDC may be based on the standard rate indicated in the SDC adoption resolution, or
an alternative rate based on the applicant's data showing that a reduced number of
vehicle trips will be generated.34 The approximate total SDC payments under both
methods range from $1.8 million to $6.5 million, as shown in Table 5-7.
Table 5-7
Estimated SDG Payments lor Thornburgh Resort - Gonventional Method
(Assumes full rate charged with no trip reductions)ITE Expected PM Trip Gost per FullSDG
Gode SDC Gategory Units Units Rate PM Trips Trlpllt Rate
210 SF Detached
310 Hotel
493 Athletic Club
710 GeneralOtfice
814 Specialty Retail
DU
Rooms
TSF Gross
TSF Gross
TSF Gross
TSF Gross
1388.8
29.5
345.6
22.4
54.2
10.8
$3,504
$3,504
$3,504
$3,504
$3,504
$4,866,180
$103,368
$1 ,210,982
$78,314
$189,917
1 537
50
60
15
20
5
1.0'1
0.s9
5.76
1.49
2.71
2.15931Restaurant
Totals:1851.2 $6,486,430
Allernative Method with Trip Reductions
Resorfs Estimated PM Peak Tri (2)517.0
administrative fees,
Transportation lmpact Analysis, Revision ll, by Group McKenzie, September 28, 2005, Table 98, prepared for Thomburgh Resorl
According to an unsigned "Cooperative Improvement Agreement" between the
Thornburgh Resort and ODOT, the resort will mitigate its immediate, direct
a Deschutes County Resolution #2008-059 establishes the SDC charge, standard rates, and the
allowance for exceptions to the standard rates.
1
lmpact of Destination Resorts in Oregon
March 2009 page 38
Fodor & Associates
impacts on a nearby intersection with the State highway. This mitigation includes
payment of up to $1,125,000 towards improvements at the Cline Falls HwyAJS 20
intersection in Tumalo. The improvement to the Cline Falls HwyAlS 20
intersection is included on the SDC proiect list, so this contribution should be
deducted from the resort's gross transportation system costs. The maximum
potential payment of $1,250,000 is applied.
The increase in State gas tax revenues resulting from the resort should also be
considered. Gas taxes are collected from gasoline sales, but the State distributes
them to counties based on the number of registered vehicles in the county. The
extent to which the resort increases the number of county-wide registered vehicles
will determine the increase in gas tax revenues attributed to the resort. Only
permanent, year-around residents of the resort are likely to register their vehicles
locally. There was no clear method for estimating the increase in the number of
register vehicles resulting from the resort, so this impact could not be computed.
However, the impact would be quite small. For example, if there were 400 additional
registered vehicles, County Road Fund revenue would increase less than $16,000,
which would be insignificant relative to the costs."
The final cost estimate for the transportation system impacts of the Thornburgh
Resort assumes that the resort will apply for trip reductions to lower their SDC
paymenr to a total of $1.8 million. As shown in Table 5-8, the final cost range is
$20.7 million to $39.1 million, depending on the impact method used. The higher
standards-based figure is used in the final impact analysis because it does a better
iob of reflecting the full impacts of this development, as discussed previously.
Table 5-8
Eslimaled Net Transportation System Gosts lor Thornburgh Resort
sDc
Maximum
Developer
GontribulionG)Method
Planning projection-based estimate
Standards-based estimate ltos : o1
Gross Gost
770,450 1,811,568)1,250,000)
fi42,210,850 ($1,811,568) ($1,250,000)
Net Gost
$20,708,892
$39,149,282
(1) Assumes ahemate SDC calculation method witr tip reductions.
(2) Maximum possible contribution towards 0D0T expenses at the Cline Falls HwyIJS 20 intersection.
35 For the 2007-08 fiscal year Deschutes County received $7,963,277 in State Road Funds and had
205,402 registered vehicles, equivalent to $38.77 per registered vehicle (based on Oregon Department
of Transportation, Financial Services, Highway Revenues Apportionment data).
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 39
School Facilities Costs
Destination resorts will generate new K-12 school students and additional demand
for school facilities. This section looks at the likely impacts of the proposed
Thornburgh Resort on the revenues and costs of the Redmond School District. The
resort will generate school students both from the new resort housing and from the
newcomers attracted to fill iobs created by the resort.
According the current \Uflorking Draft of the Deschutes County Comprehmshte Plan:36
Schools
One of the basic problems with larger amounts of resid.entinl deoelopment is that it
rarely pays in fioperty taxes for the sentices that rnust be proaiiled. This is
particularly fiae fm the most expensioe public facility--schools. Additional perm.onent
residences require more facilities and teachers. lVhen this plan was witten, much of
the neut deoelopment had been prooided fm seasonal reueation and was therefore not
likely to require schools. Hoaneoer, the County was realizing that much of the
seasonal danelolment was becoming full-time res'idences. This forced the school
districts to seek additionalfunds for new buildings and more teachers. In addition,
costs tose because many of the new rcsidences were in rural areas and required eon
more expensiae busing.
Student Generation by Resort Housing
The new, private resort homes that are occupied as primary residences will generate
new school students, but the specific level of student generation is unknown. There
is no data that clearly differentiate the student generation rate of a private home in a
destination resort from a typical new home in the same county. If resort homes are
occupied full-time by their owners, they may have a similar demographic profile to
other new houses in the area. If they are used as part-time second homes (or vacation
homes), they will generate few, if any new snrdents. It is assumed that homes built
exclusively for overnight lodging purposes will generate no new students. Therefore,
homes designated for overnight lodging are not included in the following analysis.
As described at the beginning of this section, homes used as primary residences were
found to constitute 43% of owner-occupied (non overnight) units in the nearby
Eagle Crest Resort. This percentage may vary considerably from resort to resort. In
order to examine the potential impacts of the proposed Thornburgh Resort, two
scenarios are used to model the range of potential student generation by the private,
owner occupied homes in the resort:
% Working Draft Deschutes County Compelunsioe Plan, draft of 5-14-08, Page 3-18.
lmpact of Destination Resorts in Oregon
March 2009 pqge 40
Fodor & Associates
Scenario #l: High student generation. Private, owner-occupied homes in the
resort are assumed to generate the same demand as new private homes elsewhere in
the County. (Overnight units are assumed to generate no demand.) This scenario
may become increasing likely if resort homes are purchased and used as primary
residences. The Thornburgh resort has no age limits or household limitations
regarding children, so the market will decide who owns these units and how they are
used. A continued weak national economy may encourage consolidation of home
ownerships, reducing the number of second homes. A weaker economy may also
reduce the sizes and prices of future resort homes, making them more atractive to
families.
Scenario #2: Low student generation. This is the "vacation resort" scenario.
Private, owner-occupied homes in the resort are assumed to be used largely as
retirement homes and as second (vacation) homes and to generate only 25o/o of the
new students generated by new homes elsewhere in the County. This scenario would
be more applicable if expensive, higher-end housing is constructed, which would
favor more-affluent owners and may reduce the number of families with school-age
children and increase the percentage of retirees without school-age children.
If a resort were age-restricted (such as 55 and above), it might generate no students
from the new homes. However, we are not aware of any destination resorts in
Oregon with age restrictions.
In Deschutes County,L6.l% of the population is of K-12 school age,5 through 17
years of age.'7 This is slightly lower than the statewide school-age figure of 16.9% of
the population. Applying the percent of school-age children to the occupancy rate of
2.7 for new homes, yields a school-age generation rate of 0.43 students per new
house.
State Law requires that destination resorts provide a certain amount of overnight
accommodations to assure that they meet their tourism function. In Deschutes
County there must be at least one housing unit available for overnight
accommodations for every two private, owner-occupied housing unit created at a
destination resort. Most resorts build only the minimum number of overnight units,
and therefore adhere closely to this ratio.It is not clear that resorts continue to
adhere to the minimum number of overnight units once construction is completed,
and some overnight units may convert to owner-occupied status.
For the Thornburgh Resort,950 of the 1,375 housing units will be owner-occupied.
A 5O-room hotel will be used to meet the balance of the overnight housing
requirement. There are no age or demographic restrictions on ownership, so the use
37 The most recent US Census estimates for households in Deschutes County are for 2006. This data
includes the incorporated areas of the county.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 4 I
of these homes will be market-driven. These homes may be used either as primary
residences or as second homes (vacation homes).
Table 5-9: Estimated K-12 student generation by residential housing at
Thornburgh Resort.
Scenario #1 Scenario #2
Total owner-occupied housing units
Students generated per housing unit
Students generated by resort housing
950
0.43
409
950
0.11
102
Student Generation from Resort Employment
In addition to student generation from the housing in a destination resort, there is a
secondary demand resulting from the new iobs created at the resort. These new iobs
will attract new households to the area and generate new students. Since the
construction iobs are temporary, the number of new students generated by resort
employment will fluctuate as households move in and out of the area to meet
employment needs.
Employment impacts are addressed in more detail in the Economic lrnpacts section of
this report. The direct and induced employment resulting from the Thornburgh
Resort is estimated to peak in year six at 2,015 jobs and then decline by L,471f obs to
a steady level of 544 jobs from year twelve onward. There is no straightforward
method for estimating school system impacts resulting from short-term
employment. Undoubtedly the students generated by the 1,471 temporary iobs will
significandy impact the school system.
This study evaluates the school impacts resulting from only the permanent iobs
generated by the resort. These employment-related school impacts are included in
order to better account for the full impact resort development has on the local school
district. Based on estimates developed in the Economic Impacts section, 347 new
households will be created by the 408 iobs filled by newcomers.
Table 5-10: Estimated K-12 student generation by newcomers filling pemanent
iobs at Thornburgh Resort.
Total new housing units for resort-related employment
Students generated per housing unit
Students generated by resort employment
347
0.43
149
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page42
Table 5-l I shows total student generation for new resort housing and resort
employment. Under Scenario #1, resort housing will generate a similar number of
new students as other new housing in Deschutes County, resulting in a total of 558
new students. Under Scenario #2, resort housing will generate only 25o/o of the
students of a typical new house in the County, resulting in a total of 253 new
students. These two scenarios provide a reasonable range of 251to 558 new students
generated by the Thornburgh Resort.
Table 5.ll: Total K-f2 student generation by Thornburgh Resort housing and
employment.
Scenario #1 Scenario #2
Students generated by resoil housing
Students generated by resort employment
Total students erated 558 251
409
149
102
149
School Funding in Oreeon
Schools in Oregon are funded primarily by a combination of state and local sources.
The primary local source is property taxes. The State School Fund formula
determines how much state funding a school district gets. The formula bases the
state funding on the number of students served and deducts the local property taxes
going to schools. The state funding is directed to school operations, maintenance,
repairs and transportation needs. Ifthe local property tax revenues increase due to a
new destination resort, the state contribution to local school funding will be reduced
by an equal amount. For new students generated by the resort, the district will
receive the same funding per student as they do for the rest of their students.
Therefore, new developments provide no extra funding to local school districts for
general operations.
New school facilities needed to serve growth are funded primarily through issuance
ofvoter-approved local general obligation bonds that are repaid through local
property taxes. Local property tax revenues for bond repayment are not deducted
from the State's operation funding.
The tax base for the Redmond School District comes from the total assessed values
of the District in both Deschutes County and Jefferson County. Table 5-12 shows
the total tax base is $4,937,455,942 for 2008-09.
lmpact of Destination Resorts in Oregon
March 2009 page 43
Fodor & Associates
Table 5-12: Assessed value for the Redmond School District 2l tax base.
Gounty
Assessed Value Total
2009-0gn)
Deschutes County
Jetferson County
$3,594,082,824
$1 ,343,373,1 1g
Total School District Tax Base:$4,937,455,942
(1) Source: Redmond School District
Assuming that the Thornburgh Resort is fully built out as planned, the estimated
increase in the assessed value of the school district's tax base would be$374r788r817.
At full buildout, Thornburgh would represent 7.1% of the tax base available to the
school district. Based on the estimated increase in the total tax base available to the
Redmond School District that would be created by the Thornburgh Resort, the
resort will pay for approximately 7.lo/o of facility bonds issued for new construction
by the District. This percentage will be deducted from the school facility costs
generated by the resort.
School Facilit), Costs
To estimate the cost of expanding school facilities to increase student capacity, the
total costs for new facilities at all grade levels must be determined. The Redmond
School District passed a bond in May of 2008 for a new high school and new
elementary school. A new middle school was built by the District in 2006. The costs
for these new facilities are added to the land values to obtain a total school facility
cost for each grade level, as shown in Table 5-13 below.
Table 5.13: School facility costs, Redmond School District,2008.
Grade Level Br{lqngqqst land Gosltst
Total School
Facility Cost
High schosltr)
Middle schoole)
Elementary school(1)
$80,000,000
$22,764,955
$20,000,000
$13,600,000 $93,600,000
$3,000,000 $25,764,955
$2,600,000 $22,600,000
Notes:
(1) Building costs based on a bond issue by the Redmond SD approved by voters May 20, 2008 as Measure 9-56.
(2) Building cost based on Elton Gregory Middle Schod completed in 2006 for $20 million. CosB adjusted to 2008 using ENR
Construction Cost lndex tor closest location (Seatue).
(3) Based on actual acreage and a cunent land vdue estimate of $200,000 per acre.
The total school facility cost is divided by the capacity of students for each facility to
calculate at cost per unit of student capacity (see Table 5-14).
lmpact of Destination Resorts in Oregon
March 2009 page 44
Fodor & Associates
Table 5-14: School facility costs per unit student capacitg Redmond School
District,2008.
Grade Level
Total School
Facility Gost
Student
Gapacity(l)
Gost per Unit
Student
Gapacity
High school
Middle school
Elementary school
$93,600,000
$25,764,955
$22,600,000
1 400
804
600
$66,857
$32,046
$37,667
(1 ) Capacity lor each school from Redmond School District.
The "cost per unit of student capacity'' is then distributed across the student
generation rate at each grade level for a typical new house in Deschutes County, as
shown in Table 5-15. Based on facility costs in the Redmond School District, the
total school facilities cost associated with typical new house is $21,542.
Table 5-15: School facility costs per new house, Redmond School Districtr 2008.
Grade Level
Gost per
Unit
Sludent
Gapacity
Percent ol
Total Students
at Grade
Levelfl)
Student
Generation by
Grade Level lor
New House
School
Facility
Gosts per
New House
High school
Middle school
Elementary school
$66,857
$32,046
$37,667
47Yo
2304
30%
0.202
0.098
0.130
$13,507
$3,147
$4,888
Totals:100%0.430 $21 542
0n
Estimated School Facilities Costs for Thornbureh Resort
The Redmond School District does not charge a school excise fee (a development
impact fee authorized by the State Legislature) for new and expanded school
facilities, so development makes no direct conuibution to school facility costs
outside of ordinary property tax payments. If the district were to adopt the fee, it
could collect up to $l per square foot. A new 3,000 square foot house would pay a fee
of up to $3,000.
Based on the high and low student generation rate scenarios (Scenarios #l and #2),
it is possible to estimate the range of total students generated by the destination
resort and the resulting total facility costs. The Thornburgh Resort will generate
costs for new and expanded school facilities ranging from a low estimate of $12.6
million to a high of $27.9 million, as shown in Table 5-16.
lmpact of Destination Resorts in Oregon
March 2009 page 45
Fodor & Associates
Table 5-16: Total facility costs for K-12 student generation by Thornburgh
Resort housing and employment.
Scenario #1 Scenario #2
Number of primary residences in resort(l)950 238
347Number of new households for permanent employees 347
Total new households generating school-age students 1297 585
Total students generated (at 0.43 per house) 558 251
School facility costs per new house $21,542 $21,542
Total school facilities costs (#houses x $/hse): $27,939,974 $12,591,299
Note (1 ) Scenario #1 assumes that 950 owner-occupied resort houses will have similar occupancy to typical new houses in Deschutes
County, while Scenario #2 assumes fiat only 25% of resort houses will be similar and the rest will be second homes fiat generate no
school children.
For the final fiscal impact on school facilities, only the student generation from
Thornburgh Resort housing was included. Impacts from resort employment were
not included in order to be consistent with the rest of the impact study, which did
not include secondary or induced impacts. The costs associated with only the resort
housing range from $5 million to $20 million, as shown in Table 5-17.
Table 5-17: Total facility costs for K-12 student generation by Thornburgh
Resort housing.
Scenario #1 Scenario #2
Number of primary residences in resort(1)
Total students generated (at 0.43 per house)
Schoolfacility costs per new house
Total schoolfacilities costs (#houses x $/hse ):
950
409
$21,542
$20,464,900
238
102
$21,542
$5,116,225
Note (1) Scenario #1 assumes that 950 owner-occupied resort houses will have similar occupancy to typical new houses in Deschutes
County, while Scenario #2 assumes fiat only 25% of resort houses will be similar and the rest will be second homes fiat generate no
school children.
In order to credit the resort for future property tax payments that would potentially
contribute to school construction bonds, the estimatedT.lo/o contribution to the tax
base should be deducted from the school facility costs attributed to the resort (see
previous discussion on this). Therefore the net costs for school facilities attributed
ro rhe resort range from $4.8 million to $19 million, as shown in Table 5-18. To be
conservative, the $+.9 million cost associated with the low-student-generarion-rate
scenario (Scenario #2) was used in the final cost estimates.
lmpact of Destination Resorts in Oregon
March 2009 page 46
Fodor & Associates
Table 5.18: Net K-12 school facilities costs for Thornburgh Resort after
deducting future property tax contributions.
Net School Facilities Gosls
Scenario #1 Scenario #2
Total school facilities costs:
Future property tax contribution (at 7 .1o/o)
$20,464,900
($1,453,008)
$5,116,225
($3os,zsz1
Net school lacilities costs:$19,011,892 $4,752,973
lmpact of Destination Resorts in Oregon
March 2009 page 47
Fodor & Associates
Fire & EMS System Costs
The Thornburgh resort would receive fire and emergency medical service (EMS)
services from the Deschutes County Rural Fire Protection District #l (DC
RFPD#l). Four of the ten existing land parcels that make up the proposed
Thornburgh Resort are located within the boundaries of the Fire District and the
remaining 6 parcels have been recently annexed within the District at the request of
the resort developer.
Deschutes County Rural Fire Protection District #1 does not independently
provide fire and EMS services, but rather has entered into a cooperative agreement
with the City of Redmond to iointly provide Fire Protection and EMS services to
both City and District residents through Redmond Fire and Rescue (RF&R). !(lith
an annual budget of $6,483,074 and,utilizing the services of 40 career and,23
volunteer fire fighters, Redmond Fire and Rescue provides fire and EMS services to
the 42,000 residents of its 145 square mile service area (450 square miles for
ambulance service).3t To do this it operates four fire stations: The Headquarters
Station located within Redmond proper; the Airport Station at Roberts Field; and
the Cline Falls and Terrebonne Fire Stations within DC RFPD#I.
Operational Capacitv
Assessing the capacity of a fire department is a difficult task. First, it is impossible,
for both fiscal and operational reasons, to have a fire department of sufficient size to
meet all possible operational situations. Second, the random nature of emergency
calls makes establishing a reasonable base level of service difficult. In 2007 RF&R
experienced 4,253 dispatched 9-1-l service calls, 2,864 in the city of Redmond and
1,388 rural calls.3e This included 2,894 EMS calls,830 fire calls and 511 medical
transfers. !flhile this averages out to roughly 12 calls per day, or 3 calls per station
per day, these call levels are not consistent. They can come in bunches as well as one
at a time. Several years ago, a single arsonist, starting fires along Highway 97
managed to overtax the fire departments in three Central Oregon counties.4o
The impression from Chief Knorr's report on RF&R operations in the agency's 2007
Annual Report is that of an organization operating within its capabilities. Yet one of
the unfunded budget requests in the FY 2008-09 RF&R Budget was for three
additional firefighter/paramedics to staff a second ambulance to handle non-
emergency medical transfers. Because this went unfunded, the Terrebonne position
38 2Co7 Annual Report, Redmond Fire & Rescue, page tl and data provided by RF&R staff.
" 2007 Annual Report, Redmond Fire & Rescue, page 3.
a0 From phone conversation with Redmond Fire and Rescue staff.
lmpact of Destination Resorts in Oregon
March 2009 page 48
Fodor & Associates
is vacant and they are unable to respond to calls for these transfers.ar It appears that
the Redmond Fire & Rescue has sufficient capacity to provide a reasonable level of
Fire Protection for the 421000 residents living and working within its l45-square
mile area of responsibly. \Thether the RF&R has sufficient un-utilized operational
capacity to provide additional fire protection for the residents of the Thornburgh
Resort is not clear.
Capital Costs
The combined operation provides one fully-equipped fire station for every 101500
residents.a2 In order to apply this current population-based service standard to the
resort, an "effective population" was used that reflects the number of structures at
the resort requiring fire protection. This population figure is the number of people
typically associated with these structures in the County and is not intended to
represent the actual population of the resort at any given time.a3 As shown in Table
5-I9 the Thornburgh Resort would have an effective population for FirelEMS
demand of 3,813. To meet the standard of one station for every 10,500 people, an
additional 36.30/o of a fire station would need to be provided to meet the demand
Thornburgh places on the capacity of Redmond Fire & Rescue.
Table 5-19
Thornburgh Etlective Population Estimate lor Fire/EMS System Demand
Type ol Housinq Unit
l,lumber ol
units
Persons per
unit0)
Persons per
Type@
Hotel
Residential 0vernight Units(3)
Houses
50
425
950
2
2.7
2.7
100
1,148
2,565
Estimated Population:3,813
Notes:
(1 )Hotel room occupancy figure is an estimate. The 2.7 figure used is fie residefiial occupancy rate for new
homes in Deschutes Gounty.
Number of Unib x Persons per Unit
These are fie housing units hat would be subiect to a deed restiction requiring fiat $ey be available for short
term rental at least 38 weeks a year.
ar Section 2, Fire Fund, Cdry of Redmond FY 2008-09 Builget, page 5
a2 It would be preferable to use number of addresses or type or number of structures located within
the district as the main metric in an evaluation of this type, but as Redmond Fire & Rescue does not
have that data we were limited to what is available, which is population data.
a3 In the case of fire protection, all buildings (empty as well as occupied) have the potential of placing
demand on the capacity of the system. "Effective population" was used here to reflect the number of
structures in the resortr relative to those serving the general population. This population figure is
different than the figure used in estimating the demand Thornburgh would place on public safety or
public parks. In the case of public safety or the park system, it is people who place demand on the
capacity of the system.
(2)
(3)
Impact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 49
The Terrebonne Fire Station opened in August of 2007 and is the newest station in
the Redmond Fire and Rescue system. It cost $1.3 million dollars to construct. The
cost of constructing a similar station in 2008 is about $1,362,920.# This station is
staffed 2417 by 6 firefighters and has the equipment listed in Table 5-20.
Table 5-20
Fire Apparatus at Terrebonne Fire Slation
Equipment Typefl)Gost
Light Rescue Truck(2)
Light Brush Truck (l-ype 6 Fire Engine)(3)
Heavy Brush Truck(a)
Fire Enginsts)
Ambulance(s)
$70,000
$80,000
$150,000
$250,000
$150,000
Tolal $700,000
Notes
(l) Equipment list provided by statf at fie Tenebonne Station. ln addttion to fie
apparatrs listed $at station also has a boat to lacilihte access to parts ol Smifi Rock
Park
(2)
the
The cost ligure was estimated using prices for used equipment cunenty listed on
lntemet
The $80,000 is the amount budgeted to purchase fie tuck
The cost figure was eslimated using prices tor used equipment currenty listed on
(3)
(4)
the lntemet
(5) The cost value used was provided by RF&R staff,
The combined cost of constructing a new station and providing it with the same
type and number of apparatus is about $2,062,920.as Based on the estimated need to
provide 36.30/o of a new fire station to serve the Thornburgh Resort, the total capital
cost for providing Fire Protection services to the resort is about $7481840.
Oregon Law does not permit the imposition of System Development Charges or
impact fees to recover the Fire/EMS system capital costs associated with new
development. Therefore, these capital costs for expanding the system will fall on all
of the property owners within the DCRPD#\, not iust those in the Thornburgh
Resort.
One of the proiects RF&R has been undertaking is researching the feasibility of a
fire station in DCRFPD#1's southern area. Due to prudent fiscal planning the
DCRFPD#1 has $840,800 in its building reserve fund and $77,250 in its equipment
4 Adiusted using the ENR Constructian Cost Index for the nearest city (Seattle).
as In addition to the fire house structure and the fire apparatus there are a large number of other items
that are needed for a fully functioning Fire Station. Items such as beds, stove, washer-dryer, hoses,
breathing apparatus, tools, lights, hose nozzles, etcetera, were not included in this cost estimate.
lmpact of Destination Resorts in Oregon
March 2009 page 50
Fodor & fusociates
reserve.46 However, that is much less then the $21062,920 needed to build and equip
an additional fire station in the District's southern operating area, particularly as
those funds would also be needed to cover the eventual replacement of existing
buildings and equipment.
To obtain the final net fire/EMS system costs, estimated future contributions to the
District tax base from the resorts are deducted from the cost above. If fully
developed, the Thornburgh Resort would represent 22o/o of the DCRFPD#I tax
base. Deducting the contribution through future tax payments, leaves a net cost for
fire/EMS facilities of $580,813, as shown in Table 5-21.
Table 5-21: Net fire/EMS facility cost for Thornburgh Resort after deducting
future property tax contributions.
Net Fire/EMS Facilities Gosts
Total fire/EMS facilities cost:
Future property tax contribution (at 22%)
$748,840
($168,027)
Net lire/EMS lacilities cost:$580,813
Operational Costs
Redmond Fire & Rescue has an annual budget of $6,487,876 of which $5,830,680 is
allocated for department operations.o''o' That amount includes the replacement of
the division commander's vehicle and $271000 to replace four ambulance gurneys
and similar operational expenses. For the service district population, this operations
cost amounts to $138.83 per resident per year.
For the estimated 3,813 Thornburgh residents, it should take about $5291359 to
maintain this level of service.It is important to note that l8 of the firefighter
positions in the RF&R are to be filled by volunteers. As such, the value of their
labor is not included in that operational cost.a'At this time, finding individuals with
the interest, ability and commitment necessary to become volunteer firefighters is
not easy.
As reported in the Reaenues section of this report, Thornburgh Resort property
owners will pay an estimated$637,731 in property taxes to the DCRFPD#I. This
exceeds the estimated cost of $529,359 needed to provide the current level of service
46 DCRFPD#1 FY 2008-09 Annual Budget
a7 Section 2, Fire Fund, City of Redmond FY 2008-09 Budget, page 4
48Ibid
ae Section 2, Fire Fund, City of Redmond FY 2008-09 Budget, page 2
lmpact of Destination Resorts in Oregon
March 2009 page 5 I
Fodor & Associates
for those residents. The revenue surplus of $1081372 would not be adequate to meet
the capital costs to build and equip the additional fire station infrastructure
necessary to serve the resort.
There is another non-monetary operational cost that the rest of the District
residents will bear, at least in the short term, because of the development of the
Resort within their District: A reduction in the level of service caused by increased
driving time. The Thornburgh resort is located at the extreme edge of the district's
southwest boundary and, as a result, fire and EMS vehicles going to and coming
from Thornburgh will have longer response times to call in other parts of the
district. The construction of an additional fire station in the southern part of the
DCRFPD#I's operating area should mitigate some of this negative impact.
Additionalln as the proposed Thornburgh Resort is not intended for permanent full
time residents, it is not a likely source of additional volunteer firemen and this
burden will fall on the other full-time residents of the District. So while the property
taxes should adequately cover the day-to-day costs of providing fire protection for
the Thornburgh resort, the need to provide volunteer firefighters and to bear the
maior portion of the capital cost of constructing and equipping an additional station
as well as a reduction in service due to extended travel times until it is built means
that in the final analysis the current residents of the Deschutes County Rural Fire
Protection District #1 would incur net costs if the Resort is constructed.
lmpact of Destination Resons in Oregon
March 2fi)9 page 52
Fodor & Associates
Public Safety System Costs
Public safety involves many different functions, including patrols, prosecution,
incarceration, parole, 9l I services, courts, and others. Some resorts provide their
own onsite security and patrol services. Sunriver, Black Butte and Pronghorn are
examples. Some, such as Eagle Crest provide limited onsite security. These services
lack the police powers of the Sheriffs officers and are therefore a limited substitute
for County public safety services.50 Thornburgh Resort has not indicated that it will
provide any onsite security, so security and patrols are assumed to be provided by
the Sheriffs Department.
To estimate the impacts of the Thornburgh Resort on public safety facilities and
services, data is needed on public safety facility costs and the Sheriffs Department
operating budget. This analysis was complicated by the many different public safety
functions and the lack of usable facility cost data.
There are three Sheriffs substations that serve unincorporated Deschutes County:
Terrebonne, Sisters and La Pine substations. There is no facility cost data for any of
these since two are being leased (Sisters and Terrebonne) and one is part of the
South County Building that contains multiple uses. The service area for the
substation also cannot be determined, since they have no particular boundaries and
overlap coverage. The Thornburgh Resort could be served by either the Sisters or
Terrebonne substation. In addition, the main Sheriffs office in Bend provides
services for the unincorporated area near Bend.
Public safety functions include:t 9l I County Service Districto Adult Parole and Probationo CommunityJustice - Juvenileo District Attorney's Officeo |ustice Courto Sheriffs Officeo Deschutes County Adult Jail
Public safety facilities must be adequate to handle peak demands at the height of
tourist season. There is very little opportunity to adiust or downsize the system for
off-peak periods. For this reason, public safety facilities must have capacity to serve
the resort during peak occupanry.
50 Private security services are limited in their ability to arrest, detain and use force and do not replace
the need for true law enforcement services.
lmpact of Destination Resorts in Oregon
March 2009 page 53
Fodor & fusociates
The Deschutes County Adult Jail was built in 1994 and has a capacity of 228 beds.
According to the Conections Needs Assessment: Deschutes County, Volume One, Master
Plan (January 26,2006),51 the capacity of the jail is currently being exceeded. The
2005 average daily population (ADP) was estimated to be 270 inmates. Modeling of
future iail demand results in a projected ADP of 578 in the year 2015, increasing to
818 in 2025. A two-phased plan is proposed for meeting current and future iail
expansion needs.
Allowing for fluctuations in jail bed demand, the first phase of development would
address proiected corrections needs through year 2015 at 690 beds, with occupancy
of expanded facilities assumed to occur, in the year 2010. A second phase of
development would then address proiected corrections needs through the year 2025
at975 beds, with facility occupancy assumed to occur in the year 2020. The cost for
phase one is $7019891839. Phase two, to be constructed startin g in 2020,will cost
approximately $54 million.
Table 5-22
Deschutes Jail Erpansion Master Planfl)
Year Estimatep)
Existing Jail
Beds ADp(3)
2005 143,053 228 284 3492010 166,572 690 427 5202015 189,443 690 578 6902020 214,145 975 689 8202025 240,81 1 975 818 975
(1) Conections Needs Assessment Deschutes County, Volume 0ne, Master Plan and Volume Two,
Technical Appendices, January 26, 2006.
(2) Based on Deschutes County 2000-2025 Coordinated Population Forecast
(3) ADP is average daily population from page D.3.3 of Corrections Needs Assessment. Cunent values for
ADP are higher than actual to include early releases.
(4) lncludes capacity to handle daily fluctuations (peaking factor).
Based on the estimated population increase of 3,688 people resulting from the peak
occupancy of the Thornburgh Resort (Table 5-23) and the cost for the associated
increase in iail capacity, at $lrl29 per person (Table 5-24), the associated cost for fail
capacity is $4,1631752. Note that iail facility costs are assigned on a population-
weighted basis and do not assume that resort residents will be more or less likely to
be incarcerated than average residents. In principle, all residents benefit equally
from the increased safety that adequate iail facilities provide.
st Corectiotu Needs Assessment: Desclwtes CountyrVolume One, Master Plan and Volume Two,
Technical Appendices, January 26,2006. See http://www.co.deschutes.or.us/eo/obiectid/29B167F2-
BDBD-57C I -9A456F288808D927/index.cfm.
Populalion Jail Beds
Needed({)
lmpact of Destination Resorts in Oregon
March 2009 page 54
Fodor & Associates
Table 5-23
Thornburgh Peak Population Estimate lor Public Salety System Demand
Type ol Housing Unit
Number
ol units
Persons
per unit(l)
Peak
0ccupancy
Ratet2)
Persons per
TYPs trt
Hotel
Residential 0vemight Units (a)
Houses
50
425
950
2
2.7
2.7
90%
90%
100%
90
1,033
2,565
Esltrn4qqlqpq!4lpn:3,688
Notes:
(1 )Hotel room occupancy figure is an estimate. The 2.7 figure is he residential occupancy rate for a new house in Deschutes
County. This occupancy rate is applied to ovemight housing as we[, even though many resort rentals show capacity for 8 to
1 2 persons,
(2) Tho peak occupancy rates used for $e hotel and ovemight unib are $ose used to oenerate te tansient room tax data.
(3) Number of Units x Persons per Unit x occupancy Rate.
(4) These are he housing units hat would be subject to a deed restiction rsquiring fiat $ey be available for short tsrm rental
at least 38 weeks a year.
Table 5-24
Jail Expansion Gosts Associated with Population Growth
Phase One Costo)
lncrease in Beds
Cost per New Bed:
lncrease in Needed Beds,2005-2015
Cost for increase in needed beds,
2005-201 5
Cost per capita for population growtft,
2005-201 5G)
$70,989,839
462
$153,658
341
$52,397,262
$1,129
(1 ) Cost to meet projected needs in 201 5 pet Corrections Needs /4ssessment Desciules
County,Yolume 0ne, Master Plan and Volume Two, Technical Appendices, January 26, 2006.
(2) Population growfi for fiis period was based on fie official population forecast for
Deschutes County provided in the Appendix.
To estimate the costs for other public safety facilities (other than fail facilities), the
2008-09 Deschutes County Capital Asset Query File was used to compile capital
costs. It was impossible to determine values for all facilities because some are shared
facilities that provide multiple functions and there was no way to separate out the
public safety components. These facilities are indicated as zero-values in Table 5-25.
Table 5-25 provides the most complete listing possible from the Capital Asset
database. Each facility cost was adjusted to 2008 building costs using the ENR
Construction Cost Index for the year in which the asset was built or purchased to
obtain an estimated current replacement value. The total estimated replacement
lmpact of Destination Resorts in Oregon
March 2009 p4ge 55
Fodor & Associates
value of public safety facilities is $22.5 million. This total does not include some
shared facilities nor any rented facilities. Land values, patrol cars and Sheriffs
equipment costs were adiusted for inflation to 2008 values.
Table 5-25
Ualue ol Existing Public Salety Facilities (Ercluding Jail)0)
Source: Deschutes County 2008-09 Capital Asset Ouery File
(All buildings and improvements adjusted to 2008 values using ENR Construction Cost lndex)
Dept Gode
(Location Code)Facility/Dept Name
Buildings and
lmprovements
Land
lmprovemenls
Total Facility
Ualue(2)
,266$1 32
21
29
33
34
35
38
39
41
43
75
82
45
70002)
70202)
70302)
Civi/Special Units
Autom otive/Com m u n ic iations
I nvesti g ati o n s/E vi d e n ce
Patrol
Records
Court Security
Emergency Services
Special Services
Training
911 General 0perations
Adult Parole/Probation
Non-DepaftmentalG)
Sheriffs Otfice Building
Juvenile Community Justice Bldg
Regional Conectional Building
Facililies Subtotals:
Patrol Gars (V0+ltor
Sheritf Equipment (Sf lt+r
Land for Public Safety Bldg (LAltar
Total Gapital Ualue:
$o
$o
$7,653
$18,214
$0
$0
$0
$7,819
$o
$200,727
$152,855
$o
$45,536
$o
$o
$o
$o
$o
$0
$o
$45,536
$7,653
$18,214
$0
$o
$o
$7,819
$132,266
$200,727
$223,077
$o
$70,222
45(1
45(1
45(1
$3,863,921
$10,929,783
$3,567,591
$o $3,863,921
$o $10,929,783$0 $3,567,591
170r(**
1 70***
1 701 00
$18,748,562 $248,024 $19,996,596
$1,688,946
$488,409
$1,359,059
$22,532,999
Notes:
(1 ) Three Sherifls Substations were not included because hey are rented or shared facilities. 0her shared facilities also were not included.
(2) Total costs do not include fte values of any shared facilities or facilities used for public salety purposes fiat are rented, such as the Tenebonne
and Sisters Substations.
(3) Only public safety tacilities were included from fiis department code.
(4) Cars, equipment and land costs adiusted lor inflation to 2008 values using the Consumer Price lndex.
To arrive at a per-capita cost for public safety facilities (not including iail cost), the
total of facilities values of $22.5 million (from Table 5-25) were distributed across
the entire County population. The full County 2008 population of 156,733 persons
lmpact of Destination Resorts in Oregon
March 2009 page 56
Fodor & Associates
was used because most of the facilities serve the entire County." The per-capita cost
for these public safety facilities is $144. Based on the demand resulting from the
assumed peak population of the Thornburgh Resort of 3,688 persons (Table 5-23),
the incremental cost for expanding these facilities to serve the resort is $531,072.
As shown in Table 5-26, the total public safety facility costs associated with the
Thornburgh Resort is $41694,824. It is important to note that the cost value is
understated due to the lack of data mentioned previously.
Table 5-26
Total Public Salety Facility Costs lor Thomburgh Resorl
Per l{ew
Person For Resort
Jail Expansion $4,163,752
Other Public Facilities $531
$1,129
$144 2
Total Gost:
To obtain net public safety facility costs, estimated future tax contribution by the
Thornburgh Resort are deducted from the cost in Table 5-26. At full buildout, the
resort would represent 2.2o/o of the County's tax base and would fund the same
percentage of County facility costs. As shown in Table 5-27, the net cost for public
safety facilities is $4,591,181.
Table 5-27: Net public safety facility cost for Thornburgh Resort after deducting
future property tax contributions.
Net Public Salety Facilities Gosts
Total public safety facilities cost:
Future propefi tax contribution (at 2.27d
$4,694,824
($103,643)
Net public salety facilities cost:$4,591,181
s2 Exceptions are the patrol cars and patrol facility cost, which serve primarily the unincorporated
area. These costs are relatively small, so the error is negligible, but the effect is to slightly lower
public safety costs attributed to the resort.
lmpact of Destination Resorts in Oregon
March 2009 page 57
Fodor & Associates
Cost of Public Safety Services
The actual amount spent for the Sheriffs office for the budget year ending June 30,
2008 was $26,844,500.53 This expenditure was allocated to count) tride and rural
service districts as shown in Table 5-28. The cost for each district was divided by the
2008 population for the district to arrive at per-capita costs. Rural unincorporated
residents received service from both districts, so the total per-capita cost is $295 per
year. For the estimated 3,688 peak residents of Thornburgh Resort, the cost to
provide public safety services is approximately $1r087,960 per year.
Table 5-28
Sherifl's Department 2008 0perations Gosts(l)
District Expendilure Served Gost
Per-CapitaPopulation
Countywide District
Rural District
$15,908,322
$10,936,178
156,733
56,609
$1 02
$t ss
Total $26,844,500 $295
( l ) Comprehensive Annual Financial Report, Deschutes County, oregon, For the Fiscal Year
Ended June 30, 2008, pages 63 and 64.
As shown in Table 5-29, the total estimated annual public safety revenues from the
proposed Thornburgh Resort are $1,310,884. This is about $223,000 more than the
estimated costs to serve the resort. The surplus is due to the allocation of 73% of all
room taxes to law enforcement, as described in the Reaenues section.
Table 5-29
Estimated Public Salety Revenues lrom Thornburgh Resort
Revenue Source Revenue(l)
Countywide Law Enforcement
Rural Law Enforcement
911 Service
Share of resort room taxes to law enforcement
$345,368
$508,963
142,437
$314,1 16
Total:$1,310,884
(1 ) From Table 4-4 in Beyenaes section.
53 Comprelunsioe Annual Financial Report, Deschutes Countn Oregon, For the Fiscal Year Ended ]une
30,2008, pages 63 and 64.
lmpact of Destination Resorts in Oregon
March 2009 page 58
Fodor & Associates
Parks & Rec. System Costs
The Thornburgh Resort is within the Boundaries of the Redmond Area Park and
Recreation District (RAPRD). The District is supported through a combination of
user fees and property taxes. The District operates the Cascade Swim Center, with a
25 meter indoor pool, the RAPRD Activity Center with indoor basketball, volley
ball courts and batting cage; and multipurpose activity room; the High Desert
Sports Center with 4 softball fields a BMX track and a Remote Control Airplane
Landing field; Borden Beck tUfildlife Preserve a 26-acre park and nature preserve
located along the Deschutes River, and Historical Tetherow Crossing, an I l-acre
Deschutes River-front park.
The recreational opportunities offered by RAPRD at its swim and activity centers
directly duplicate those that would be available to Thornburgh residents and guests
at Resort-owned and operated facilities. As those facilities are closer and should be
available at little to no out-of-pocket expense, it is likely that Thornburgh residents
and guests would use the resorts facilities rather then driving long distances to a
similar RAPRD facility. Thus it is reasonable to conclude that the Thornburgh
Resort would have no measurable impact on the operation of the RAPRD Aquatics
and Activity Centers.
The facilities provided by the High Desert Sports Center are not duplicated at the
Thornburgh Resort. But as the resort is intended to provide short term rentals, and
vacation or second homes, it is not likely that many of the residents would be
participating in local softball leagues or otherwise using these facilities. The one
possible exception would be out of area teams renting a house or houses to stay in
while participating at a tournament hosted by the High Desert Sports Center or
Cascade swim Center. However, if that should occur, it would be more accurate to
say that the sports complexes were utilizing the short term housing capacity of the
Resort rather than Resort residents utilizing the capacity of the sports complexes.
Thus it is reasonable to conclude that the Thornburgh Resort would have no
significant impact on the operation of the High Desert Sports Center.
!flhile the resort does intend to provide open space for the use of residents and
guests these facilities do not duplicate those provided by Borden Beck \U7ildlife
Preserve and Historical Tetherow Crossing Park. The Deschutes River is one of the
significant tourist attractions in Central Oregon. The Thornburgh Resort does not
have any river frontage and both of these parks include extensive Deschutes River
frontage. For this reason it is reasonable to assume that residents and guests of the
Thornburgh Resort would utilize these two parks.
lmpact of Destination Resorts in Oregon
March 2fi)9 page 59
Fodor & Associates
Capital Costs
The flexible nature of park facilities such as the Borden Beck Wildlife Preserve and
Historical Tetherow Crossing Park makes it difficult to determine the maximum
number of users that could utilize them at a time. Thus making a determination of
whether they are at, over, or below capacity difficult to impossible. It is however,
relatively easy to determine what the current level of service that is being provided
by these two parks to the 321000 residents of the Redmond Area Park and Recreation
District, and from that determine the amount of similar river front park acreage that
would be needed to maintain that level of service.5a Currently RAPRD provides
1.156 acres of open space per 1,000 residents.5s
Table 5-30
Parks and 0pen Space 0perated by RAPRD
Facility Acreage
Borden Beck Wildlife Preserve
Historical Tetherow Cloqsrng P4rk
26
11
Total Acreage 37
Park and recreation facilities receive peak demand in the summer months, the same
time that resort occupancy will peak. The limited data available for the proposed
Thornburgh Resort does not contain any demographic or population figures, but it
is possible to arrive at a peak population estimate for the resort by working from the
number of planned housing units, as shown in Table 5-31. If the advertisements for
vacation rentals in the greater Redmond area are any indicator of the occupancy
rates, the estimate for the occupancy of residential overnight units of 2.7 persons
may be low. Many of these ads indicate that rental homes sleep from 8 to 12 persons.
s Population figure was provided by RAPRD staff.
55 (37 acres/(32000/1000) = 1.156 acres per thousand residents
lmpact of Destination Resorts in Oregon
March 2009 page 50
Fodor & Associates
Table 5-31
Thornburgh Peak Population Estimate lor Park Syslem Demand
Type ol Housing Unit
Number
ol units
Persons
per unit(l)
Peak
0ccupancy
Rate(2)
Persons per
Type 0
Hotel
Residential 0vemight Units (a)
Houses
50
425
9s0
2
2.7
2.7
90%
90%
100%
90
1,033
2,565
Estimated Popqlqllqn:3,688
(1 )Hotel room occupancy figure is an estimate. The 2.7 figure used is for the residential occupancy rate for a new house in
Deschutes County.
(2) The peak occupancy rates used lor fie hotd and ovemight uniB are fie same as fiose used to generate fie tansient
room tax data.
(3) Number of Units x Persons per Unit x Occupancy Rate.
(4) These are fie housing units fiat would be subiect to a deed restriction requiring fiat they be available for short term rental
at least 38 weeks a year.
To meet the current standard of 1.156 acres per 1000 residents, the RAPRD would
need to acquire an additional4.26 Acres of parkland with river frontage for the
estimated 3,688 new Thornburgh residents. At an acquisition cost of $250,000 an
acre,tu that 4.26 acres would cost the district $11065,000.
As RAPRD does not impose a Systems Development Charge for Parks the money
for this land acquisition would need to come from District Reserve Funds, operating
revenues, a Parks Bond or some combination thereof. Given the current political
climate and the funds available to the district it is unlikely that this land acquisition
would happen. So rather than paying to meet this new demand for service, the
existing residents would likely experience a reduction in the level of service. The
new level of service would be lowered to 1.036 acres per 1000 residents.
Crediting the Thornburgh Resort for future property tax contributions (assuming
full buildout), results in a net cost for parks and recreation facilities of $463,562, as
shown in Table 5-32.
56 Replacement Land cost was provided by RAPRD staff.
lmpact of Destination Resorts in Oregon
March 2009 page 6 I
Fodor & Associates
Table 5-32: Net parks and recreation facility cost for Thomburgh Resort after
deducting future property tax contributions.
Net Parks and Recreation Facilities Costs
Total parks and recreation facilities cost.
Future property tax contribution (at 56%)
$1,065,000
($601,438)
Net parks and recreation lacilities cost:$463,562
Operatine Costs
As it is unlikely (for the reasons provided above) that Thornburgh residents would
be utilizing the Cascade Swim Center, the RAPRD Activity Center, or High Desert
Sports Center, there should not be any additional operational costs caused by the
resort's demand on the capacity.
As for the Borden Beck r$Tildlife Preserve and Historical Tetherow Crossing Park,
which are more likely to be utilized by Thornburgh residents, they do not currently
generate General Fund operating expenses. Historic Tetherow Crossing Park is in
the public planning phase of development and the limited operations of the \Tildlife
Preserve are supported by gifts, donations and inter-fund transfers to a special fund.
This year the fund's $4O0-dollar beginning balance was supplemented by a transfer
of $500 from the Disuict's General Fund. On the expenditure side, a total of $500
dollarssT has been budgeted for Materials and Services out of the fund's $900-dollar
balance. The salary and benefits for the minimal Groundskeeper labor are absorbed
into that of the rest of the District's operations. This breaks down to $15.63 per
thousand residents.
Assuming that the per-capita cost generated by new users is equal to the current per-
capita cost, and no new acreage is provided, then the increased operating cost
resulting from the 3688 peak Thornburgh residents is $57.63.
If the additional4.26 acres is added to the park so as to maintain current levels of
service, then an additional $81.91 would be needed to provide the same level of
operations and maintenance expenditures that the Ifildlife Preserve currently
receives.
Conclusion
Thornburgh property owners will be paying taxes toward the Redmond Area Parks
and Recreation District amounting to an estimated $t35,t:O per year. This greatly
57 The actual expenditure for FY 2006-07 was $551 (RAPRD 08-09 Annual Budget).
lmpact of Destination Resons in Oregon
March 2009 page62
Fodor & Associates
exceeds the $57.63 operating cost associated with meeting their demand on parks
capacity.
In terms of level of service, District residents would likely see a small drop from
1.156 acres to 1.036 acres per 1000 residents. There is a limit to how many
development proiects similar to the Thornburgh Resort could be constructed within
the District's boundaries before the cumulative negative impacts caused by
reductions in the level of service are felt by the current population.
lmpact of Destination Resorts in Oregon
March 2009 page 63
Fodor & Associates
General Government Facilities
The costs for expanding Deschutes County's general government facilities to
accommodate the Thornburgh resort are calculated in this section. None of the
infrastructure or facility costs addressed on other sections of this report are included
here, so there is no duplication of costs.
Deschutes County's Capital Asset Data File was used to identify the costs of all
County facilities purchased or built since 1978 (Table 5-33). This database does not
include the road system or facilities operated by independent districts, such as
schools, fire, and parks. Note that the County rents some facilities, so these costs will
not be included here. The costs for each of these facilities were adjusted to reflect
2008 replacement values using the ENR Construction Cost Index and the BLS
Consumer Price Index. Facilities for the Sheriffs Office and the County Jail were
removed from this list, as they were already included in the Public Safay Impacts
section ofthis report.
Table 5-33
Facility
Deschutes Gounty General Government Facilities Costs0)
(All costs adiusted to 2008 values)
Buildings and Land Uehicles,
lmprovements lmprovements Equipment
(BU, Bl) ItD LanL uC oter TolalUalue
All County Facilities $120,614,699 $34,384,960 $18,388,936 $1 15,653,683 $289,042,278
Deduct Sheriff & Jail ($31 ,681 ,617) ($325,792) ($1 ,359,059) ($2,177,355) ($35,543,823)
County-(Sheriff & Jail) $88,933,082 $34,059,169 $17,029,877 $1 13,476,328 $253,498,455
(1 ) lncludes all facilities and equipment purchased since 1 978. Buildings and Land lmprovement values adiusted with CCl. Land and Equipment values inflated witr
CPl. Sheriff and Jail facilites were addressed under Public Safety lmpach.
The new population added by the Thornburgh Resort that would require general
county services was assumed to be limited to the occupants of primary residences.
As previously describe in this report, primary residences were found to comprise
43o/o of the owner-occupied housing at the nearby Eagle Crest Resort, so this figure
was applied to Thornburgh. Other property owners at Thornburgh who have second
homes may also used County services and facilities, but this impact was considered
to be relatively minor. As shown in Table 5-34, the estimated population in primary
residences at Thornburgh is 1,103 persons.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
paSe 64
Table 5-34
Thornburgh Population Estimate lor General Government Facilities Demand
Type ol Housing Unit
Number
ol unils
Persons
pe] unit(1)
Percenl
Primary
Residences(2) Population(3)
0wner-Occupied Houses 950 L7 4304 1,103
Notes:
(1 ) The 2.7 occupancy nte is for a new houses in Deschutes County.
(2) Percent primary residences is based on an analysis of tax records for he Eagle Crest Resorl
(3) Number of Units x Parsons per Unit x % Primary Residences.
Based on the per-capita value of existing County facilities of $l16l7 shown in Table
5-35, the cost of expanding general government facilities in Deschutes County to
accommodate the Thornburgh Resort is estimated to be $11783,984.
Table 5-35
General Government Facilities Gosts Associated with
Thornburgh Resort
Countywide General Government Facilities
Cost (Tbl 5-33)
2008 County Population(1 )
Per-Capita Facilities Cost
Thornburgh Population Estimate ffil 5-34)
General Gov. Facil. Gost:
$253,498,455
156,733
$1,617
1 ,103
$1,783,984
(1 ) From Coordinated Population Forecast
Since the resort will make future tax payments to the County, those payments
should be deducted from the facilities cost in Table 5-35. \Uflhen fully built out,
Thornburgh Resort will represent approximately 2.2o/o of the County's tax base and
will therefore fund 2.2o/o of these facility costs. The net cost for general government
facilities after deducting future tax revenues is $1,744,601, as shown in Table 5-36.
lmpact of Destination Resorts in Oregon
March 2009 page 55
Fodor & Associates
Table 5.36: Net general government facility cost for Thornburgh Resort after
deducting future property tax contributions.
Net General Government Facilities Costs
Total general gov. facilities cost:
Future property tax contribution (at 2.2"/ol
$1,783,984
($39,383)
Net general gov. lacilities cost:$1,744,601
The costs and revenues associated with general government services were not
estimated in this studn as there are many types of services and it would have been
very difficult to determine how much demand for each of these services would be
created by the Thornburgh Resort.
Impact of Destination Resorts in Oregon
March 2009 page 66
Fodor & Associates
6. Fiscal lmpact Summary
The section compares the costs and the revenues calculated in the previous sections
to determine the net fiscal impacts for the proposed Thornburgh Resort.
Revenue Summary
Table 6-l summarizes the total gross annual tax revenues that are estimated for the
Thornburgh Resort. Combined property and room tax revenues total $5,521,419 per
year. These gross revenues go to pay for all of the services and facilities provided by
local government to the resort and therefore do not represent a net windfall. As
shown below, these revenues are more than offset by the infrastructure costs created
by the resort.
Table 6-l: Annual revenue summary for Thornburgh Resort.
Revenue Summary
Revenue Category Revenue
Property Tax Revenue
Total Room Tax Revenue
$5,091,123
$430,296
Total Annual Revenues $5,521,419
Costs of Facilities
As shown in Table 6-2, the total net cost for the five categories of infrastructure
required by the Thornburgh Resort is estimated to be $51,284,705. These are
effectively one-time costs to local governments that are "due" upon completion of
the resort. As noted previously in the text, some of the transportation system costs
will be incurred by the State, so not all of these costs will accrue to Deschutes
County and its various districts.
lmpact of Destination Resorts in Oregon
March 2009 page 67
Fodor & Associates
Table 6-2: Net cost summary for infrastructure required by Thornburgh Resort.
Net Facility Cost Summary
Gategory ol Facility lrlet Gost Estimate(1)
Transportation System
School Facilities€)
Fire & EMS Facilities
Public Safety Facilities
Parks & Rec. Facilities
Gen Gov. Facilities
Total Net Gosl:$51,284,705
(1) Net costs are total gross costs, minus any payments or revenues
from $e resort fiat fund intrastruciure, incfuding fufure tax payments
and SDCs.
(2) The school cost figure is for the lower estimate of student
generation in Scenario #2.
Seryices lmpacts
The costs to provide ongoing services were calculated for three of the six impact
categories and compared with the tax revenues generated for that same category. It
was not practical to calculate comparative values for schools, transportation and
general government, as described previously. Table 6-3 summarizes the revenues
and costs and gives a net impact for each category of service. The net impacts are
positive for each category. The total net impact is a surplus of $466,344 per year.
This accrues to the County and its service districts, since each of these services is
funded exclusively by either the County or the service district.
Table 6-3: Net annual services impact for Thornburgh Resort.
l,lel Annual Services lmpacts lor Thornburgh Resort
Cqlg-qqry.of $qylqq Revenue Estimate Gost Estimate Net lmpact
$39,149,282
$4,752,973
$580,813
$4,591,181
$463,562
$1,744,601
Transportation Systemtl )
School Facilities(1)
Fire & EMS Facilities
Public Safety Facilities
Parks & Rec. Facilities
NA
NA
($s29,359)
($1,087,960)
($oz1
NA
NA
$637,731
$1,310,994
$135,130
NA
NA
$108,372
$222,924
$135,048
Tolals:$2,083,745 ($1,617,401) $466,344
(1 ) Direct revenue and service cosB were not be calculated for fiese categories because they are funded from a
combination of sources (Federal, State and County) and revenues from the resort could not be determined.
lmpact of Destination Resorts in Oregon
March 2009 page 68
Fodor & Associates
Fiscal lmpact Conclusions
The net $51.28 million in infrastructure costs associated with the Thornburgh
Resort greatly overshadow the $4661344 annual surplus for County services.
In order to consider the overall net fiscal impacts of the resort, the annual surplus
for County services was converted to an equivalent amount of capital that could be
financed with this cash flow. The $466,344 surplus could service interest and
principal payments on a 20-year loan
^t60/o
interest for $5.35 million. Assuming this
surplus was used for this purpose, the $51.28 million in infrastructure costs could be
reduced to $45.94 million, as shown in Table 6-4.
Table 6-4
Nel Fiscal lmpact of Thornburgh Resort
Net lnfrastructure Cost $51,284,705
Less Capital Equivalent of Revenue Surplus(1) ($5,348,967)
Igt Fiscallmpact: $45,935,738
(1 ) This is the value of capital facilities fiat could be financed wift a $466,344 annual revenue stream
at 6% intersst over 20 years.
In conclusion, local governments and local taxpayers will be left with a net cost
burden of $45.94 million if the Thornburgh Resort is fully completed as proposed.
This is a net cost after the resort has been credited for all known payments and tax
revenues it will generate. The $45.94 million cost will be externalized and will
ultimately be borne by other taxpayers (not the resort) through some combination of
higher taxes, reduced public services, and lower facility service standards.
Impact of Destination Resorts in Oregon
March 2009 page 69
Fodor & Associates
7. Thornburgh Resort's Economic lmpacts
This section provides a review and analysis of the iobs and housing issues resulting
from destination resorts by examining the proposed Thornburgh Resort as a
representative case study. The resort developer, Thornburgh Resort Company LLC,
maintains that the resort will create many new construction and operations iobs and
will have little impact on housing in the area. To support their position, they have
submitted the following two reports as part of the required application materials:
lmpact of Destination Resorts in Oregon
March 2009
o An Employee Housing Analysis for tfu Thornburgh Destination Resort in Deschutes
Counq4 Orcgon, for Thornburgh Resort Company LLC, by Jon Peterson of
Peterson Economics, August 22, 2005.
These reports are referred to here respectively as the Peterson Economic Report and
the Peterson Housing Report and collectively as the Peterson Report.
The Peterson Economic Report was prepared as part of the required application
materials for the Thornburgh Resort. Deschutes County Code Chapter 18.113(BXl9)
requires the destination resort applicant to provide:
An economic impact and feasibility analysis of the proposed darclopment prepared by
a qualified professional economist(s) or financial analyst(s) shall be prooided which
includes:
a. An analysis which add.resses the econotnic aiability of the proposed
daneloprnent;
b. Fiscal impacts of the oroiect including changes in employment, inneased
tax reoenue, dernands fm new or inreased leoels of public seruices. housing
for employees anil the effeut of loss of resource lands duing tlu life of the
proj ect. I Emphasis added.J
In spite of the Code requirement, the Peterson report lacks a complete analysis of
the fiscal impacts of the proiect and instead focuses on the property tax revenues
that may be generated if the resort is completed. Absent from the report is any
analysis of the demands for new or increase levels of public services. The report also
neglects to report transient room tax revenues from overnight lodging.
The Peterson studyr like many economic impact studies provided by developers,
portrays an unrealistically optimistic and beneficial picture of the development
page 70
Fodor & Associates
o An Economic and Benefit Study for the Thornburgh Destination Resort in Deschutes
County, Orcgon,for Thornburgh Resort Company LLC, by Jon Peterson of
Peterson Economics, ]anuary 21, 2005.
proiect. Tax revenues, for example, are proiected by Peterson to be three times
greater than for comparable resorts located nearby. According to a separate study
comparing projected tax revenues for commercial developments with actual tax
revenues after the developments were completed, proiected revenues were found to
be overstated by an average of 39o/o.s8
The portrayal of resort development as beneficial is also achieved by ignoring the
costs and negative impacts of the proiect. The Peterson Report ignores all external
costs associate with the Thornburgh Resort development. \Ufhile new iobs,
employment compensation and property tax revenues are presented in explicit
detail, there is little to no effort made to address the many costs associated with
providing public services, public infrastructure, or any of the potential adverse
impacts on the community and the environment. In this case, most of the costs are
likely to be borne by the current and future residents of Deschutes County via
increased taxes or declining services, or both. Costs that are externalized by the
developer and shifted onto the local community improve the developer's
profitability at the expense of local residents.
fob Creation and Employment lmpacts
The employment and compensation data in the Peterson Economic Report (as Table
II-l) was revised downward seven months later in the Peterson Housing Report (as
Table l), so the more-recent Housing Report data is used here. The Housing Report
bases projected wages for the Thornburgh Resort on a past projection for an analysis
the company did for the Suncadia Resort in Roslyn, lU[A in 2002 and inflated to
2005 values. By their own figures, almost half of employees (49%) will make less
than $21,000 per year and 670/owill make less than $26,000 per year. As shown in
Table 7-1, Federal guidelines indicate that household incomes below $21,200
represent the poverty level for a family of four. Such households may qualify for
Federal aid from the Food Stamp Program, the National School Lunch Program,
the Low-Income Home Energy Assistance Program, and the Children's Health
Insurance Program.
sa Commercial Deoebpment: Irupact Analysis Before and After Coastntction, by C. Fred DeKay, Ph.D. and
Barbara M. Yates, Ph.D.,Economic Deoeloltment Jounwl,fall 2005,p 7.
lmpact of Destination Resorts in Oregon
March 2009 page 7l
Fodor & Associates
Table 7-l: 2008 US Poverty Guidelines.
Persons
in Family or Household
48 Conliguous
States and D.C.
1
2
3
4
5
6
7
I
$10,400
$14,000
$17,600
$21,200
$24,800
$28,400
$32,000
$35,600
$3,600For each additional person, add:
Source: Federal Register, Vd. 73, No. 1 5, January 23, 2008, pp. 3971-3972
Resorts are notoriously low-paying businesses. The "leisure and hospitality" sector,
that includes destination resorts, peys the lowest of any employment sector in
Deschutes County. This sector paid average annual wages of only $161096, about half
as much as rhe average annual wage in Deschutes County of $31,492 in 2006,
according to the Oregon Employment Department.se
The Peterson Report appears to be considerably overestimating wages for the
proposed Thornburgh Resort. Peterson claims that only 7o/o of iobs will pay less than
$16,000 per year. This contrasts sharply with the $16,096 averase wage in this sector.
Many more than 7o/o of the iobs created at the resort will likely pay minimum wage.
Such jobs include maids, waitresses, dishwashers, groundskeepers,landscape
maintenance workers, janitors, and laborers. Minimum wage in Oregon was $7.25
per hour, or about $141500 in 2005 when the Peterson report was written. In 2008
the State's minimum wage was $7.95 per hour, or approximately $15,900 before
taxes.
According to Aegon's Report on Pooerty 200660 for Deschutes County:
The 2005 aoerage [monthlyJ wage of $2,624, hou:ner, prooed inadequate for single
pdrents. Deschutes County\ 2005 aauage wage could not fund the basic family
budget for a single adult and one child or more. The second lnrgest industry in
Deschutes County, leisure and hospitality, paid an aoerage wage nearly half of the
counry aouage-$l,342 a month. ... Families eaming poauty leoel wages could
afford no more than 40.2 percsnt of basic family expenses in Deschutes County.
5e Oregon Employment Department, 2006, as quoted in 2007 Cental Orugon Area Profile, by Economic
Development for Central Oregon.
@ Oregon Housing and Community Services.
lmpact of Destination Resorts in Oregon
March 2009 page77
Fodor & fusociates
Based on the Peterson Housing Report,u' the median wage offered at Thornburgh
would be about $21,000. Median household income in Deschutes County was
$45,894 in200462,more than twice as much as the resort will pay. Even if two
members of a household worked full time at the Thornburgh Resort, they would
still make less than the median County household income in 2004 and the effect of
the resort will be to depress median wages in the County.
Peterson uses "induced iobs" to enhance the total employment-related
compensation associated with the resort. However, this induced employment works
both ways: increasing jobs when hiring, but decreasing iobs in a similar proportion
when firing. Using Peterson's assumption of 0.5 induced iobs per construction iob
and 0.2 induced iobs per operations job, total employment associated with the resort
will peak at2,0l5 iobs in the sixth year of development. However, when
construction is completed, 1,471 of these iobs will be lost.
The loss of 1,471iobs is roughly equivalent to the closing of Central Oregon's
second largest employer, Les Schwab Tire Centers (1500 employees). It will have an
even greater impact due to the relatively higher salaries paid to construction
workers. The loss of these jobs will have a profound impact on the region as these
households struggle to pay bills and seek to relocate to other areas in search of
employment. The lost jobs are likely to increase local demand for social services and
public assistance and may result in evictions, foreclosures and bankruptcies. The
magnitude of these iob losses could negatively impact the local economy for years
after the resort is completed.
6r Peterson Housing Report, Table 2.
62 According to the US Census Bureau.
lmpact of Destination Resorts in Oregon
March 2009 page 73
Fodor & Associates
Figure 7-l: Direct employment at the proposed Thornburgh Resort estimated by
Peterson (based on Peterson Housing Report, Table 1).
Projected Direct Jobs, Thornburgh Resort
1200
1000
800
600
400
200
0
1234 5678
Prolect Year
9 10 11 12
I Construction Jobs tr Operations Jobs
lmpact of Destination Resons in Oregon
March 2009 page74
Fodor & Associates
il
o
N
+
o {]:(f
)\l+
rfrf !I:
of+
9o+
o
art
Projected Jobs, Thornburgh Resort
2500
2000
1 500
1 000
500
0
12345 67
Project Year
8 9 10 11 12
tr Direct Jobs o lnduced Jobs g Total Jobs
Figure 7-2zTotaldirect and induced employment at the proposed Thornburgh
Resort estimated by Peterson (based on Peterson Housing Report, Table 1).
Figure 7-3: Employment changes resulting from the Thornburgh Resort
development (based on Peterson Housing Report).
lmpact of Destination Resorts in Oregon
March 2009
Annual Changes in Projected Enploynent, Thornburgh Resort
1 000
800
600
400
200
0
-200
-400
-600
185
123456 8 I 't0 11
-490
Project Year
-512
566
-179 -188
page 75
Fodor & fusociates
I
411
49_
EIF
lo!l !
il (a oN
;l.r)l+l
b
Theoretically, the only way to prevent such employment shocks from impacting the
local economy (other than not building the resort in the first place) is to continually
and indefinitely build more resorts at a steady and even pace in Deschutes County.
However, this approach is completely impractical as the County could not sustain
such development over the long term, and it would be impossible to transition
seamlessly from one development to the next for employment purposes.
Who Will Fill New Resoft fobs: Locals or Newcomers?
The Peterson Report claims that "in excess of 90o/o" of employees will live in
Deschutes County. To support this, they cite anecdotal evidence from conversations
with the management of Black Butte and Eagle Crest Resorts that a "vast maiority"
of employees live within the County. \U7ithout additional evidence, Peterson claims
that these employees were also local County residents before their employment at
these resorts.u3 This apparently forms the bases for Peterson's conclusion that only
8o/o to 10% of iobs created at Thornburgh Resort will be filled by newcomers.
However, empirical data and studies indicated that the percentage of newcomers
moving into Deschutes County to fill resort jobs will be much higher.
Recently it came to light it a Bend Bulletin article that not only are resorts filling
some of their iobs from out of the area, they are actively recruiting foreigners.il The
Sunriver Resort filled 85 iobs last year with people from as far away as Lithuania,
Brazil and Mexico.
People may move to a new county for a variety of reasons. Deschutes County has
outstanding recreational opportunities and natural amenities that attract people
from all over the country. A limiting factor to County in-migration is employment.
\U7hile there may be a large number of people who would like to live there, most will
need employment to make such a move successful. Thus, the more iobs created in
the County, the more people will be able to move there.
To a large extent this same phenomenon applies statewide in Oregon. The State is
viewed as offering attractive natural amenities and a desirable quality of life that act
to stimulate in-migration. But the limiting factor to in-migration is the lack of
employment opportunities. As a result of this "pent up" demand, new iobs created in
the State are rapidly absorbed by newcomers and unemployment levels tend to
remain consistently above the national average. This was the case even during the
1990s, a decade of the most rapid economic expansion and fob creation in the State's
history.
53 Job seekers who move to a new location seeking work often obtain a local address to use for iob
applications, so employers may not know if they are hiring new arrivals.
s "Unemployment might be high, but resorts still struggle to fill some iobs," The Bulletin,May I l,
2008.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page76
As shown in Figure 7-4rthe US Census found that "work-related" reasons accounted
for 3l.l% of all intercounty moves.us More specifically,24% of all moves were either
for new iobs/transfers or to look for work. "New iobs and iob transfers" accounted
for the most moves of any category in the Census survey. Clearly, employment is a
maior motivational factor in migration. This factor is amplified when a region offers
additional amenities and quality-of-life benefits as found in Central Oregon.
Figure 7-4: Reasons for moving to another county (US Census).
lntercounty movers
Other reasons l0.l
Family-related reasons 26.9
Work-related reasons 3l.l
Housing-related reasons 31.9
Source: U,S. Census Bur€au, Current Populatlon 5urey, March 200O.
\7hen new iobs are created in a community by a development proiect, its proponents
often claim that the iobs will go to local workers. However, studies show that in the
near term, 40o/o to 60% of new iobs go to newcomers and in the longer term, 60% to
90o/o of these iobs are filled by newcomers.u6 Applying the midpoint estimates to the
Thornburgh Resort, we can assume that construction iobs are shorter-term iobs that
are filled by 50o/o newcomers and operations fobs are longer-term and are filled by
75o/o flewcomers. As shown in Table 7-2rat peak employment, the resort will
generate an estimated net in-migration of 1,150 workers to fill the iobs. This is
considerably more than the 133 newcomers identified in the Peterson report.
65 lVhy People Mwe: Explming tlu March 2000 Curent Population Suruey, Special Studies, US Census
Bureau, March 2001.6 See: lYho Benefits from Local Job Gowth, Migrants or the Original Residents, by Timothy J. Bartik,
Reeional Studies. vol.27, No. d 1993.
lmpact of Destination Resorts in Oregon
March 2009 page77
Fodor & Associates
Table 7-2: Peak In.Migration to Deschutes County Due to Direct and Induced
tobs at Proposed Thornburgh Resort.
Peak
Job Source
Percent Jobs to
l,lewcomers(2)
Jobs lo
Newcomers
Construction
Const. lnduced
0perations
0per. lnduced
Total:
964
482
474
95
50%
50%
7SYo
75o/o
482
241
356
71
2,015
(1) Based on Peterson Housing Report; (2) From Bartik, 1993.
Housing lmpacts of Thornburgh Resoft
Increased demand for housing will tend to increase prices, especially when there is a
relatively fixed supply of housing and a marked increase in demand. Unless housing
is expanded to meet the new demand, prices will increase and housing will become
less affordable in the County. The loss of housing afitordability becomes a regional
cost associated with the resort.
The Peterson Housing Report states that, due to the vacancy rate in Deschutes
County, all housing needs generated by construction and ongoing operations at the
resort will not "pose a problem." This conclusion seems to imply that the resort will
have no significant impacts on the local housing demand or supply in Deschutes
County. To the contrary, we find that the resort will have substantial impacts on the
needs and demands for local housing.
Peterson indicates that additional offsite iob creation will be induced by the onsite
jobs at the resort. However, no consideration is given to the housing demand created
by the induced employment. Peterson reports that induced iobs peak in year six of
the development at577 iobs. Total iobs are estimated to peak at 21015 at that time,
including construction, operations and induced employment. The addition of more
than 2000 new iobs to Deschutes County, many of which are temporary and low-
paying, will have a very significant impact on the local housing market.
This effect on the housing market is aggravated by the fact that most of these jobs
(985 by Peterson's estimate) will be temporary. Temporary demands for a significant
quantity of local housing can create multiple problems. As the demand grows
rapidly, housing prices Bo up, housing availability and affordability decline, and
additional home construction may be stimulated. As the temporary demand comes
to an end, there is a glut of housing with a sharp increase in vacancies and unsold
homes that may leave the housing market in worse shape than before the resort
started.
1,150
lmpact of Destination Resorts in Oregon
March 2009 page 78
Fodor & Associates
Most ongoing jobs will be low-paying groundskeepers, maids, and maintenance
positions. Such jobs may attract workers who will require low income housing
assistance and will increase demand for affordable housing in the County.
Furthermore, many of the lower-paying jobs will be seasonal, or have significant
seasonal variations in employment. Seasonal iobs will further stress households that
are struggling to afford market-rate housing as their employment varies from season
to season. Lower-paid workers will have more difficulty finding affordable housing
near the resort and they will need to travel farther to meet their housing needs. The
additional commuting requirements will further exacerbate their financial stress.
Renters in Deschutes County are currently struggling to meet housing costs.
According to the US Census , 4lyo of the County's renters are paying more than 30%
of their income for rent.uT New destination resorts will increase local housing
demand and push up rental prices forcing more local residents to spend a greater
share of their incomes on housing.
Peterson estimates that during the 11-year period of resort construction, between 37
and 133 housing units will be required to supply the new workers (both construction
and resort operations) and that all of these units can be met from the current
inventory of vacant housing. However, this conclusion is based partly on the
unrealistic assumption that more than 90% of iobs will be filled by local residents
and that only 8-10% will be filled by people moving into the county.
As shown previously, the Thornburgh Resort is likely to attract newcomers to fiIl
1,150 of the peak iobs generated by the resort. Most of these newcomers will create
new households in the County. However, some may live with others or have a spouse
that is also employed by the resort. To estimate new households it was assumed that
30% of the newcomers will either live with others who work at the resort or have a
spouse also working at the resort. These cohabitating workers would reduce demand
for new housing by l5o/o (half of 30Yo). The newcomers will therefore generate a peak
demand for 978 housing units in Deschutes County (Table 7-3).
67 Source: U.S. Census Bureau, 2005 American Comnunity Suraey, Deschutes County
lmpact of Destination Resorts in Oregon
March 2009 page79
Fodor & Associates
Table 7-3: Estimated new households created by peak employment at
Thornburgh Resort.
Jobs & Households Generated Number
Peak jobs at Thornburgh
Peak jobs to newcomers (from Table 7-2)
Newcomers cohabitating (30% assumed)
Households by new cohabitating workers
Households by other new workers
Total new households by newcomers:
2,015
1,150
345
173
805
978
The Peterson Housing Report states that there was "an existing vacancy inventory
of more than 320 rental units in Deschutes County" in order to show that the
County can absorb the modest demand they predict from resort employees without
generating any need for additional housing. However, the Peterson data does not
appear to be accurate and there is no source cited. The Cental Oregon Rental Suntey
Resuhs for 2004 showed 411 vacant units for all of Central Oregon. The most recent
Centtal Oregon Rental Suruey Resuhs for 2007 (l" Quarter) showed 2T0vacancies for
all of Central Oregon with a 6.86Vo vacancy rate. However, this survey provides only
a partial account of vacancies, since the US Census 2005 American Communiry Suruq1t
shows there were 18,552 rental units in Deschutes County in 2005 with a vacancy
rate of 6.4Vo, or about lrl87 vacant units.
Vacancies always exist in the rental housing market and don't necessarily represent
housing availability. Vacancies are a natural part of the rental housing business.
Turnover of rental units tlpically requires a period of vacancy between tenants so
that the unit can be cleaned, marketed and leased. Rental units also require repairs
and improvements during unoccupied periods. Less-desirable, substandard, or
overpriced units may take longer to rent. Rental vacancy rates in 2005 were 9.8%
nationally and 8.3% in Oregon, much higher than the 6.40/o rate in Deschutes
County.
The likely demand for housing resulting from resort employment will be much
greater than Peterson has estimated. Peterson estimated a peak demand of 133
housing units, compared with the estimate here of 978 housing units. It is
unrealistic for the Thornburgh Resort to rely on local rental vacancy rates to meet
the housing needs for the estimated 1,150 peak iobs filled by newcomers.
As shown in Table 7-4,the Thornburgh Resort is proiected to create direct and
induced long-term employment of 544 persons from year 12 of the profect onwards.
An estimatedTSo/o of these iobs will be filled by newcomers. Of the 408 permanent
iobs filled by newcomers, an estimated 347 new households will be created by these
lmpact of Destination Resorcs in Oregon
March 2009 page 80
Fodor & Associates
employees.6s This will result in a permanent demand for 347 new housing units in
the County.
Table 7.4: Newcomers to Deschutes County Filling Permanent Direct and
Induced Jobs at Proposed Thornburgh Resort (year 12 of proiect and onwatds).
Job Source
Permanent Percent Jobs to
Employment(1) Newcomers(2)
Jobs to
Newcomers
0perations
0per. lnduced
Total:
453
91
75o/o
75o/o
340
68
544 408
(1) Based on Peterson Housing Bepofi.
(2) From Bartik, 1993.
Spending by Destination Resolts
The typical economic analysis presented by a developer estimates the total gross
spending in connection with the development as a net benefit to the local
community. The spending estimate is often magnified by use of multiplier-effects to
show even greater benefit to the local community as direct spending ripples through
the local economy. Thus, spending figures typically include both direct and induced
(secondary) spending for wages, construction materials and services.
Such spending figures tend to greatly overstate local benefits. For example,
assumptions are made that 100% of spending for construction, including materials
and supplies, will stay in the local county. However, construction materials such as
lumber, cement, appliances, cabinets, flooring, plumbing fixtures,lighting, doors,
windows, plaster and paint are obtained through a national and international supply
network. It is highly unlikely that a significant portion of these construction
materials will be produced within the county. Therefore, most of this spending
quickly leaves the county.
Many economic studies also assume that other construction-related spending, such
as design, engineering, and construction labor, will stay in the local county.
However, many of the design firms and construction companies are likely to be
based out of the area, or even out of state. Most of the expenditures to firms and
employees based out of the area will leave the local county.
58 Estimate assumes that 30% of employees will share housing with another employee, reducing
household generation by l5 percent.
lmpact of Destination Resorts in Oregon
March 2009 page 8l
Fodor & Associates
Use of "multiplier effects" is a common practice in economic analysis. Multipliers
are used to show how money can be recycled in a community or region and can
significantly inflate the apparent economic benefits. In contrast, empirical studies
show that local growth does not result in real benefits to the community in terms of
increased per-capita income.ue Therefore, it must be assumed that much of the direct
and indirect economic activity flows out of the community and does not
significantly benefit local residents. In this case, "multiplier effects" are likely to be
offset by national builders, national building materials suppliers, and non-local
workers who will take much of the money out of the community. If multipliers are
to be used in impact analysis, they should be applied to cost as well as revenues (see
sidebar on this topic).
In the case of the Peterson Economic Report for the proposed Thornburgh Resort,
compensation is estimated for both direct and induced iobs. tUflhile totaling all the
wages paid for direct and induced employees is straighdorward, it is far less clear
how this spending should be counted in terms of net benefits to Deschutes County.
6e Gottlieb, Paul D., Graa;th Vitluut Gruuth: An Ahernatioe Economic Deaelopment Goal For
Metropolitan Areas, Center for Regional Economic Issues, \Ufeatherhead School of Management, Case
'Western Reserve University, A Discussion Paper Prepared for The Brookings Institution Center on
Urban and Metropolitan Policy, February 2002.
lmpact of Destination Resorts in Oregon
March 2009
Use ol multipliers
An increasingly common method among the building industry and some governments for projecting fiscal
impacts involves the use of multipliers derived from economic models. Using data from the models, an
analyst might take the estimated direct economic activity in dollars associated with a project and 'multiply' it
by a given amount to account also for indirect, secondary impacts. The total measure of economic activity is
then used to estimate revenues for the purpose of determining fiscal impacts.
Such multiplier approaches to fiscal impact analysis suffer from several shortcomings. First, the multipliers
are usually obtained from economic models of large regions or states. Butthey are applied atthe levelof an
individual local jurisdiction that is usually only a fraction of a region's or state's economy. The smaller the
jurisdiction relative to the economic region for which the multipliers have been derived, the less reliable the
muhipliers will be for that jurisdiction.
Furthermore, while the muttipliers are applied to the revenue side of the budget, few such analyses ever apply
a multipliertothe cost side of the localbudget. The implicit (but often wrong) assumption is that local
governments can generate revenue from secondary, induced, or indirect development without incuning
increased costs in providing services to that development. Another shortcoming of the multiplier approach is
its tendency to "double-count' revenues. A muftiplier-based fiscal analysis of a project might credit it with the
additional revenue impacts as derived from '1,000 new jobs elsewhere in the jurisdiction. But, when the
separate fiscal impact analysis ol the development where these lobs are located is (or was) prepared by its
developer, the revenues would also be claimed on behalf of that development.
Source: Developments and Dollars: An lntroduction ta Fiscal lmpact Analysis in Land Use Planning, by
Michael L. Siegel, May 2000, Natural Resources Defense Council.
Page 82
Fodor & Associates
'Wages benefit the individual employee, but he or she must exchange their time and
labor for the wage. Employment is therefore an economic transaction exchanging
labor for money. From the local perspective, existing residents of Deschutes County
will benefit from resort employment if:
I. They are currently unemployed and obtain employment at the resort, or
2. They are working part-time and obtain full-time employment at the resort, or
3. They are currently employed, but are able to obtain higher wages at the resort.
On the other hand, existing residents of Deschutes County will not benefit from
resort employment if newcomers move into the County to fiIl the iobs. Only the
incremental increase in the incomes of existing local residents resulting from resort
employment can be counted as a clear economic benefit. This incremental increase
in income is a fraction of the total compensation figure estimated for the resort and
does not include the 40% to 90o/o of new jobs likely to go to newcomers.
Economic Risks
In addition to considering the likely economic impacts of a successful and
completed resort, there are emerging risks associated with resort development that
could dramatically affect local homebuyers,local government investments, and the
local economy.
The national economic downturn has revealed structural weaknesses in the real
estate markets. Property values became over-inflated and banking institutions lent
too much money to unqualified buyers. The supply of homes grew at record levels
until supply greatly exceeded demand. It may take several years before the real estate
market stabilizes. In the mean time, foreclosures and bankruptcies are at levels not
seen since the Great Depression.
In the past, California provided many of the second home and investment home
buyers in Oregon. Many were able to transfer equity from their California homes to
make these purchases. But California's real estate market has suffered greatly. The
median price of a home in that state dropped.3So/o in December from a year earlier.To
Under any circumstances, a destination resort is a risky business venture. If it goes
well, it is a potential bonanza to investors. But a great deal of investment is required
up front. Typically a hundred million dollars or more must be borrowed and spent
to build these resorts. The Thornburgh Resort estimates the total proiect cost at
$160 million.Tr \Ufhat happens if revenue streams don't match projections? \[hat if
70 December median home prices in California dropped to $249,000 from $402,000 a year earlier the
Associated Press reported January 22,20W.
7' Peterson Economic Report, Table IV-1.
lmpact of Destination Resorts in Oregon
March 2009 page 83
Fodor & Associates
lots don't sell, or prices drop? If one resort fails, how will other resorts in the area be
impacted?
In Deschutes County the Tetherow Resort's golf course was heralded as the "Best
New Course of 2008" by Golf Magazine.Howeverr lot sales have stalled, investors are
unable to make loan payments, and the bank is foreclosing on properties.T2
The large, upscale Tamarack Resort in Idaho made the ll/all Stteet Journal last year
when investor money dried up and the resort went into default on loans.73
Construction of resort facilities stopped and the bank filed for foreclosure.
Homebuyers had already committed more than $500 million for fancy homes,
condos and building sites. The resort village remains unfinished, home sales have
withered and the local economy is suffering. The resort closed on March 4,2009 and
250 employees were fired. Of 21100 planned chalets, condos and town homes, only
250 are completed.To
The Vineyards Resort in Yakima, \U[A declared bankruptcy last year." It was to be a
destination resort in wine country designed as a Tuscan-themed village with 500
acresr 600 homes, an lS-hole golf course, clubhouse, hotel, and recreation center.
They were unable to obtain financing for the $100 million investment needed. The
posh Yellowstone Club resort in Montana is also declaring bankruptcy.T6
According to the lVall Steet Journal article on the Tamarack Resort,
A resort's success was often staked to real-estate sales: As a Tamarack lendn
recounted in recent court filings, the resort had a business model in which "operating
exputses would exceed reuenues and the pimaty source of profit would be genuated
by the sale ofreal estate."
Destination resorts are following the same business model as the rural subdivision:
buy large tracts of cheap rural land to make hundreds, or thousands, of buildable
residential lots for a large profit. The resort elements are often unprofitable, but
make the residential subdivision possible. The Tetherow and Pronghorn Resorts in
Deschutes County have been unable to build the required amount of overnight
housing, which is intended to support tourism. According articles in the Bend
Bulletin,Pronghorn was to have completed a hotel by 2006.77It has received four
time extension from the County and cut its planned hotel expenditure in half.
72 "Tetherow housing lots are entering foreclosurer" Tlu Benil Bulletinrlanuary 15, 2009.
7' lYall StreetJoumalr "In Idaho, Ski Resort's Promise Fadesr" 71712008.
74 "Tamarack Resort closesl employees cut looser" Seanle Post-IntelligencnrMarch 412009.
75 Reported by the Associated Press, November 23, 2008 in the Seattl.e Post-Intelligenur.
76 See http://www.bloomberg.corn/aops/news?oid= 20601 103&sid=ai-VwtVGzHrY&refer=news.
'7 "\trithout financing, Tetherow on hold indefinitely: Hotel won't open in spring 2009 as planned,"
The Bend Bulletin, October 15, 2008.
lmpact of Destination Resorts in Oregon
March 2fi)9
Fodor & Associates
page 84
If Thornburgh Resort is successful, its developer could make $300 million on lot
sales, almost doubling its investment. The lucrative profit potential for developers
creates a formidable incentive for them to pursue resort proiects on Oregon's cheap
rural lands in beautiful natural settings. They can afford to spend liberally to make
their resort projects possible.
Economic Impact Conclusions
o Many of the economic impact studies provided by developers portray an overly
optimistic picture of the development proiect's benefits by ignoring the costs
associated with providing public services, public infrastructure, and the potential
adverse impacts on the community and the environment.o The "leisure and hospitality" sector (that includes destination resorts) paid
average annual wages of only $16,096, the lowest of any employment sector in
Deschutes County and about half as much as the average annual wage in the
County of $31,492 in 2006.o Even if two members of a household worked full time at the Thornburgh Resort,
they would still make less than the median household income in 2004 and the
effect of the resort will be to depress median wages in the County.o Household incomes below $21,200 represent the Federal poverty level for a
family of four.o Most iobs created by the resort will be temporary and when construction is
completed,1,47L iobs will be lost, causing ripple effects in the local economy.o The addition of more than 2000 peak new iobs to Deschutes County will have a
very significant impact on the local housing market, especially when the
temporary jobs are lost.. Low-wage jobs created by the resort will increase demand for affordable housing.o Vhile the Peterson Housing Report estimates a peak of only 133 new households
generated by the resort, it is more realistic that a peak of 978 new households will
need to find housing in Deschutes County.. After the resort is completed, there will be an estimated permanent demand for
347 new housing units in the County.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 85
8. lmplications for lmpacts of Destination Resorts in Oregon
This section considers the potential statewide and regional impacts that may result
from the resorts that are currently under construction and those that are proposed.
In order to examine the potential statewide impacts of destination resorts in Oregon,
total figures for the number of residential units were calculated for all resorts that
are currently planned or under construction. The total number of residential units
was then used as an index for gauging statewide impacts. The impact per residential
unit is based on the impact analysis for the Thornburgh Resort.
As described previously, the Thornburgh Resort is fairly typical of destination
resorts in Oregon in terms of its overall profile (land area, mix of homes and
overnight units, and recreational facilities). Some factors affecting impact will vary
from place to place. For example, sewage treatment, water supply, and stormwater
management may involve offsite public expenses for some resorts, but did not in the
case of Thornburgh. Such cost factors may be governed by county policies and
individual siting issues. The transportation system impacts of the Thornburgh
Resort were partially mitigated by the transportation SDC implemented recently by
Deschutes County. Total estimated transportation SDC payments for the resort were
deducted from the transportation system costs. Most counties in Oregon have no
transportation SDC, so the costs will be higher in those counties. It should also be
noted that no impacts were calculated for Thornburgh Resort for libraries. As a
result of these factors, Thornburgh's fiscal cost impacts may be somewhat less than
for the typical new resort. None-the-less, it serves as the best available gauge at this
time. The net fiscal impact per residential unit for the Thornburgh Resort is a cost
of $33,408.78
Based on the 22,374 residential units in destination resorts that are either under
construction or proposed in Oregon, the total fiscal impact is estimated to be a net
cost of $747 million. As shown graphically in Figure 8-1, almost two-thirds of this
cost will come from the resorts that are proposed. Note that these net infrastructure
costs are the externalized costs from the resorts after all payments and contributions
are deducted.
78 This net cost incorporates the projected revenue surplus from senrices in the form ofthe capital
cost that could be financed with the same annual revenue stream, as described in the Fiscal Impact
Conclusions section.
lmpact of Destination Resorts in Oregon
March 2009 page 86
Fodor & Associates
Figure 8-1
Future Statewide Resort Costs
(Total Net Cost = $747,455,211)
Flesorts Under
Construction,
$262,039,728
Fbsorts Hanned,
$485,415,,183
Destination resorts have regional impacts that often receive little or no
consideration in the resort planning and siting process. Resorts located near cities
tend to create a fundamental fiscal inequity. The counties receive all the tax
revenues, and the nearby cities receive much of the impacts, especially from
increased traffic. Resort residents and visitors will avail themselves of the urban
services and amenities of the city. They may travel to the cities to purchase
necessities, for entertainment, or to commute to work in these cities. They may also
travel through these cities going to and from the resort and to visit other attractions
in the area. Resort employees are likely to find housing in the nearby cities and will
create additional traffi c.
The City of Redmond will be especially impacted by new resort development, as
four new destination resorts are planned nearby: Remington Ranch, Hidden
Canyon, Brasada Ranch, and Thornburg Resort. The Remington Ranch Resort is
iust 5 miles from Redmond and it is estimated that 75o/o of the trips generated by the
resort will use the city's road network. An estimate 35% of the trips from the
proposed Hidden Canyon Resort will be to, or through, Redmond.
According to City of Redmond Public \7orks Director, Chris Doty, the city's growth
is currently constrained by road capacity and by requirements of the State's
Impact of Destination Resorts in Oregon
March 2009 page 87
Fodor & Associates
Transportation Planning Rule.Te Yet resort development can continue to burden
these transportation facilities without having to mitigate their impacts.
Housing needs for resort employees put added pressure on nearby cities to provide
additional affordable housing, as resort workers are among the lowest-paid in the
State.
Impacts of resorts on nearby cities are beyond the cities' control and occur outside of
the cities'planning processes. Redmond, for example, collects a Transportation
System Development Charge on new development within the city, but is unable to
collect such charges from resort development.
Resorts have the potential to function like suburban subdivisions or bedroom
communities, taking advantage of a nearby city's urban amenities, but paying no
taxes to the city. Revenue sharing by the county, or mitigation requirements from
the resort developers, could offset some of these impacts.
7e Letter from Chris Doty regarding Remington Ranch Resort to Bill Zelenka, Crook County
Planning Department, September 7, 20M.
lmpact of Destination Resorts in Oregon
March 2fi)9 page 88
Fodor & Associates
Appendices
lmpact of Destination Resorts in Oregon
March 2009 page 89
Fodor & Associates
A- l. Property Tax Explanation
The single largest revenue source for local governments, school districts and
agencies in Oregon is the property tax. Property subiect to taxation includes all
privately owned real property (land, buildings, and improvements). This tax is
collected by the county tax collector for all agencies within the county. As the
boundaries of the various taxing districts do not align the county is divided into
Code Areas. Each Code Area represents a unique combination of taxing districts.
For the 2008109 tax year, the proposed Thornburgh Resort was located in two
different Code Areas: 2-003, with a total tax rate of $12.2499 per thousand dollars of
Assessed Value; and,2-004 with a total tax rate of $14.0041 thousand dollars of
Assessed Value. The difference being that property in 2-004 is subject to a tax from
Deschutes County Rural Fire Protection District #1.
District
Table A-l
Tar Code Area 2-00380
Total Rate Education Governmenl Non-Limitedld
001 Deschutes County
007 Jail Bond
010 Fairgrounds Bond,
011 County Library
020 Countywide Law Enlorcement
021 Rural Law Enforcement
070 Redmond Library090 County Extension/4h
093 91 1
095 911 Local 0ption 2008
351 Redmond Area Park & Rec District620 SchoolDistrict #2j
626 School #2j Bond 92 & 93
628 School #2j Bond 2004651 High Desert Esd
670 CoCC,
67'l COCGBond
1.2783
0.1335
0.1410
0.5500
0.9500
1.4000
0.0567
0.0224
0.1618
0.2300
0.3717
5.0251
0.8307
0.2930
0.0964
0.6204
0.0889
1.2783
0.5500
0.9500
1.4000
0.0224
0.1618
0.2300
0.3717
0.1 335
0.1410
5.0251
0.0964
0.6204
0.0567
0.8307
0.2930
0.0889
Total 12.2499 5.7419 4.9642
80 Data from Deschutes County 2008-09 Summary of Assessment and Tax Roll page 80.
lmpact of Destination Resorts in Oregon
March 2009
1.5438
page 90
Fodor & fusociates
001 Deschutes County
007 Jail Bond
01 0 Fairgrounds Bond,
011 County Library
020 Countywide Law Enforcement
021 Rural Law Enforcement
070 Redmond Library
090 County Extension/4h
093 9'11
095 91 1 Local 0ption 2008
202 Rural Fire District #1
351 Redmond Area Park & Rec District
620 School District #2j
626 School #2i Bond 92 & 93
628 School #2i Bond 2004
651 High Desert Esd
670 CoCC,
67'1 COCCBond
1.2783
0.1335
0.1410
0.5500
0.9500
1.4000
0.0567
0.0224
0.1618
0.2300
1.7542
0.3717
5.0251
0.8307
0.2930
0.0964
0.6204
0.0889
1.2783
0,5500
0.9500
1.4000
0.0224
0.16'18
0.2300
1.7542
0.3717
0.1335
0.1410
0.0567
0.8307
0.2930
0.0889
5.0251
0.0964
0.6204
ld Dislrict
Table A-2
Tax Gode Area 2-004E1
Total Rate Education Governmenl Non-Limited
Total 14.0041 5.7419 6.7184 1.5{38
Since 199782 the assessed value (AV) of a property, and not its real market value
(RiVlV), is used to calculate the amount of property tax due. This assessed value was
initially established in 1997 by rolling back the RMV of a property to 90% of its 1995
level. As long as the resulting AV is less then the current RMV this value is allowed
to increase by 3o/o annually. For new properties, like the proposed Thornburgh
Resort, the County Tax Assessor's Office appraises the property and sets a RMV for
the land and its improvements. Then, an Exception Value Ratio is applied for the
"property class" of the parcel to arrive at the properties initial RMV. For example,
the AV of a parcel in a property class with a ratio of 0.46 and a RMV of $100,000
would be $46,000. The Exception Value Ratio is calculated annually and is the ratio
between AV and RMV for properties of the same property class. The Current
Exception Value Ratio for resort properties is 0.491.83
Property tax is levied on July I and due on November 15 each year. It can be paid
either in a single payment on or before November 15, in which case a 3% discount
can be taken, or in three payments due on the l5s of November, February and May.
If taxes are not paid within three years the property is subiect to foreclosure.
8l Data from Deschutes County 2008-09 Summary of Assessment and Tax Roll page 80.
82 A relatively detailed history of the Oregon Property Tax system can be found as Appendix B of
Oregon Property Tax Statistics an annual publication of the Oregon Department of Revenue.
83 Deschutes County 2008-09 Summary of Assessment and Tax Roll, page 9.
lmpact of Destination Resorts in Oregon
March 2009
Fodor & Associates
page 9 |
Property Tax Revenue Methodologv
The basic formula for calculating the initial property tax8a on a new development
such as Thornburgh is simple and straight forward. It is:
Property Tax : ((RMV x Exception Value Ratio)/I000) x Tax Rate
The (RNIV x Exception Ratio) establishes the initial AV for a new property. All that
is necessary is to supply values for the RMV, Exception Ratio and Tax Rate. The
"Property Class" for the Thornburgh Resort is "#8 Resort " and the Exception
Value for all properties in the Resort for 2008-09 is 0.491 which was the value used.
As pointed out earlier, the Thornburgh Resort was located in two different Code
Areas (2-003 and 2-004) with different tax rates. But, as those parcels not in Code
Area 2-004 are to be annexed into the Deschutes County Rural Fire Prevention
District #1,85 it was assumed that the $14.0041 tax rate of Code Area 2-004 would
apply to all properties in the resort.
Establishing a RMV for each type of property was difficult as only the briefest of
descriptions was provided in the Thornburgh Resort Application. These
descriptions lacked information as to parcel or lot size, building size, construction
materials to be used, amenities or expected or proposed costs. Three different
methodologies were used to establish a RMV for the various types of properties.
For the 1,375 residential properties8u proposed for the Thornburgh Resort a single
methodology was used. The land-use application for the resort contained very little
information on the characteristics of the residential development, so for calculation
purposes, it was assumed that all the residential units and lot sizes would be similar.
To arrive at a value for these properties, a sample of 49 residential properties located
in the nearby Eagle Crest Resort'7 was obtained by selecting a number of parcels
from each of the tax maps containing part of Eagle Crest. The current RMV for the
land and improvements for each of these parcels was obtained from Deschutes
County's D.I.A.L system.tt Townhouses were excluded from the sample. Average
values were calculated for a sample of 38 lots and 35 houses.
84 In subsequent years the formula is the same as all other property, (AV/1000)*Tax Rate.
85 Letter from Fire Chief Tim Moor of DCRFPD#l to Deschutes County Commissioners dated 25
March 2008.
86 The total includes 425 with deed restrictions that they be available for short term rental and 950
without the deed restrictions.
87 Eagle Crest Resort is an existing Destination Resort similar in concept to and located in close
proximity to the proposed Thornburgh Resort for which property tax records were available.
88 This is an online tax record system.
lmpact of Destination Resorts in Oregon
March 2009 page92
Fodor & Associates
The County RIvIV data from 2008 reflects the peak prices of the real estate bubble
should be adiusted downward to reflect current market conditions. The Standard
and Poor's/Case-Shiller 20-city housing price index fell 18% in October of 2008 from
a year earlier." It appears that this downward trend in real estate values is likely to
continue through 2009 and possibly longer. To reflect the decline in values, average
values from the Eagle Crest sample were reduced by 20o/o to obtain the RMV of the
residential land and improvements in our calculations.
For Commercial and resort-owned propertiesr'total building square footage was
provided in the application. A $200 per square foot construction cost was used to
establish an RMV for the commercial improvements. To determine the RMV of the
land it was assumed that the lot associated with a building would be twice the square
footage of the building (i.e. 50% lot coverage). To reflect declining real estate values,
the value of comparable developed commercial parcels at Eagle Crest were reduce by
20 percent in the same manner as residential property.
For the Golf Courses it was assumed that they would be 150 acres each and would
cost $3 million dollars each to construct.et The land value was obtained by averaging
the cost per acre of 5 Eagle Crest parcels identified as containing significant parts of
a golf course.
89 Year-over-year declines in property values were reported in the Standard and PooCs/Cas+Shiller
20-city housing price index. See Home Prices post 18 percent annual drop in October, by J.$7
Elphinstone, AP, December 30, 2008.
90 Hotel, Recreation Centers, Golf Club Houses, SPA and Retail Center
9l The web sites for the United States Golf Association and American Society of Golf Course
Architects both contain a $1.6 to 4.5 million range for the construction cost of a Golf Course, $3
milllion is roughly the midpoint in that range.
lmpact of Destination Resorts in Oregon
March 2009 page 93
Fodor & Associates
A-2. T ransient Room Tax Explanation
Deschutes County imposes a Transient Room Tax on the guest of any Hotel or short
term rental housinge2 located in an unincorporated part of the county. This tax is in
the amoun t of 7o/o of the full rent charged by the rental manager for the occupancy of
a room. The room tax is not imposed on items separate and independent from the
use of the roome3 nor is it imposed on recreational feesea. If the room is rented as part
of a package deal that includes food and or recreational activities the Hotel operator
is permitted to exclude from the rent the cost of providing the food or activities.
The hotel operator collects this tax on behalf of Deschutes County at the time the
room rate is paid. Monthly, the hotel or rental operator remits the amount of taxes
collected minus a 5% "Collection Reimbursement Charge."
Revenues from the Transient Room Tax are currently being used to fund services
provided by the Sheriffs Oflice and for tourism through the Central Oregon Visitors
Association." By state law the minimum proportion spent on tourism promotion
and tourism-related facilities can not be less then that allocated on I July 2003. The
current division is about 73o/ol27o/o with the maiority going to the Sheriffs Office.'6
In the FY 2008-09 Annual Budget $2135,020 or about 19.6% of the operating funds
devoted to Rural Law Enforcement came from Transient Room Taxes.'7
Room Tax Methodoloev
In its most basic form estimating the amount of revenue raised by the Deschutes
County Room Tax from a hotel is a very straight forward process. The revenue
equals the room rate, times the occupancy rate, times .07, times 365 days, minus 5%
of the total. Making an estimate of a proposed hotel where the only information is
92 The Deschutes County Code (DCC) defines "Hotel" as "...any structure or space, or any portion of
any structure or space which is or intended or designed for Transient Occupancy for 30 days or less,
for dwelling, lodging or sleeping purposes, and includes, but is not limited to any Hotel, inn, tourist
home, tourist accommodation, condominium, motel, studio Hotel, hostel, bachelor Hotel, lodging
house, bed and breakfast, vacation home, vacation rental home, rooming house, apartment house,
public or private dormitory, fraternitS sorority, public or private club, mobile home, R.V. or
trailer park, campgrounds private home, or similar structure or portions thereof so occupied. [DCC
4.08.04s1
93 Items such as Food service, Room Service, Pay for view movies long distance telephone.
94 "Recreation Fee" means a fee charged, assessed, or allocated by a Hotel to a Hotel occupant or
occupants for use of Destination Resort recreation facilities, whether the Hotel charging the
Recreation Fee is a Destination Resort or has a contract or agreement with a Destination Resort for
use by the Hotel's guests of the recreation facilities of the Destination Resort. [DCC4.08.065]
95 Deschutes County Annual Budget for Fiscal Year 2008-09 page iii.
96 Deschutes County Annual Budget for Fiscal Year 2008-09 pages 332 and 370
97 Deschutes County Annual Budget for Fiscal Year 2008-09 page 370
lmpact of Destination Resorts in Oregon
March 2009 page 94
Fodor & Associates
the number of rooms, as is the case here, requires a number of assumptions to be
made.
In order to estimate the average room rate, it was assumed that the Hotel and other
rental units would meet the American Automobile Association's Three-Diamond
Ratinge8 criteria. This rating is the middle of a 5level scale and is typical of the
ratings held by other resorts in Oregon'e. There are 14 Three-Diamond Hotels
operating in Deschutes County of which rate information is available for 12 of them.
The rates range from a low of $89 to a high of $439 per night. Based on the number
of distribution of room types in the AAA Guide, it was assumed that there are four
times as many inexpensive rooms as there are expensive rooms. The weighted
average room rate is $121 per night.
Just as there is little information on the configuration of the hotel there is little
information on the configuration of the 450 houses that will be available for short-
term rental. In order to estimate vacation home rental rates, the assumption was
made that they would resemble those currently on the short term rental market for
the Greater Redmond area. The Vacation Rentals by Owner web site listed 39
vacation homes available for vacation rental in Redmond, Oregon.tm Twenty-eight
of these listings were for rentals in Eagle Crest Resort. The rates for these houses run
from $100 to $300 a night, with an average rate of $162.
The last variable is the occupancy rates for each type of unit. \fhile the total
monthly Transient Room tax receipts paid by all operations subject to Transient
Room Taxes are available, actual occupancy data is extremely difficult to come by.
To develop an annual occupancy rate estimate, a peak occupancy rate of 90% was
assumed for the month of August and then an adjusted occupancy rates for each of
the other months was calculated based on the actual monthly Transient Room Taxes
paid to the County for that month. From this an average annual occupancy rate for
all rental types was derived, as described below.
Occupancv Rates for Room Tax Revenues
Room tax revenues are difficult to estimate for a planned, but unbuilt resort such as
Thornburgh. Occupancy rates and reporting rates (the percent of private rentals for
which room taxes are paid) must be estimated. To estimate occupancy rates, County-
wide room tax revenues'o' were examined and adjusted to reflect the likely seasonal
e8 According to AAA, "Three diamond lodgings offer a distinguished style. Properties are multi-
faceted with marked upgrades in physical attributes, amenities and guest comforts." (AAA Oregon
and Vashington Tour Book, AAA Publishing, Heathrow, Florida, 2008, page 2l)
ee The 2008 AAA Oregon and Vashington Tour book lists 7 Oregon Resorts, one Two-Diamond, five
Three-Diamond and one Four-Diamond.
r00 Data collected on 21 December 2008 from http:www.vrhbo.com/vacation-
rentals/region/usa/O regon/central-oregon.
tor Data from Deschutes County Treasurer Marty \7ynn.
lmpact of Destination Resorts in Oregon
March 2009 page 95
Fodor & Associates
nature of this resort. The County-wide vacancy rate was estimated based on the
assumption that a peak occupancy rate of 90o/o is achieved during the peak month of
August. This may be overly optimistic, as many private rentals will be occupied by
owners during this month. However, this peak occupancy rate was used as a
reference to estimate occupancy rates for the rest of the year (see Figure A-l).
Average annual occupancy for the County was estimated to be 33o/o based on this
method.
Hotels and lodging in Bend, and resorts such as Sunriver and Inn of the Seventh
Mountain, are close to Mt. Bachelor and can maintain modest winter occupancy
rates. However, resorts such as Thornburgh are located too far away to benefit from
skiing. Since Thornburgh would lack off-season appeal, it was assumed that rental
occupancy would drop to an average of 10% from November through April. For the
remainder of the season, County-wide vacancy rates are applied (see Figure A-2).
This results in an average annual occupancy rate at Thornburgh of 29%.
Figure A-l: Deschutes County occupancy rates based on monthly room tax
fevenues.
Estimated Rental Occupancy Rates,
Deschutes County,2007
o
(uE
()c(E
CL
ooo
100%
90%
80%
70/"
60%
50%
40%
30/"
20%
10%
0%5 f; s oL g 5 E P S I g E
lmpact of Destination Resorts in Oregon
March 2009 page96
Fodor & Associates
l
Figure A-2: Occupancy rates used for Thornburgh Resort.
Estimated Rental Occupancy Rates for
Thornburgh Resort
o
lE
E,
(,c(E
o-
ooo
100%
90%
80%
70%
60%
50%
40%
30%
20/"
10%
0/o SfisoigE=EEoBgA
Resort vacation homes that are managed by a property management firm will tend to
fully report room taxes, as the room tax revenues provides compensation to these
firms to offlset administrative and collection costs. However, privately-owned
vacation homes that are owner-managed may not fully report room taxes to the
County. This situation may occur at Eagle Crest Resort, where a recent property
owner survey conducted by Jen-\feld specifically mentioned that survey
respondents would not be reported to the County if they were renting their house.
For Thornburgh, it was assumed that 80% of privately-owned rental homes are fully
reporting room taxes, and that 100% ofhotel room rentals are reported.
lmpact of Destination Resorts in Oregon
March 2009 pqge 97
Fodor & Associates
A-3. Population Projection Used in Study
The population figures used throughout this study are from the Deschutes County
2000-2025 Coordinated Population Forecast. The forecast data for each of the 5-year
increments was interpolated using exponential growth rates to create data for each
year in between, making it possible to examine population changes over any period
of time.In order to create a 2O-year forecast through 2028, the projection data was
expanded beyond 2025 to 2028 using the same growth rate as in the final 5-year
period (2020-2025).
Table A-3
lnterpolated Population Data lor Every Year lo 2028
Based on Deschutes County 2000-2025 Coordinated Population Forecast
Year
Bend Redmond Sisters Unincorp. TotalUGB UGB UGB Gounty Gounty
2005 69,004 19,249 1,768 53,032 143,053
2006 71,294 20,100 1 ,864 54,199 147 ,4752007 73,661 20,989 1,966 55,391 152,033
2009 76,106 21,916 2,074 56,609 156,733
2009 78,632 22,885 2,187 57,854 161,578
2010 81,242 23,897 2,306 59,127 166,572
201 1 83,135 24,953 2,379 60,428 170,914
2012 85,072 26,056 2,454 61,757 175,369
2013 87,054 27 ,208 2,532 63,1 16 179,940
2014 89,082 28,411 2,611 64,505 184,630
2015 91,158 29,667 2,694 65,924 189,443
2016 g2,gg1 30,979 2,782 67 ,374 194,144
2017 94,841 32,348 2,874 68,857 198,962
2019 96,739 33,778 2,968 70,372 203,900
2019 98,673 35,272 3,065 71,920 208,959
2020 100,646 36,831 3,166 73,502 214,145
2021 102,337 38,459 3,275 75,1 19 219,231
2022 104,056 40,159 3,387 76,772 224,437
2023 105,804 41,935 3,503 78,461 229,768
2024 107,582 43,788 3,623 90,197 235,225
2025 109,389 45,724 3,747 81,951 240,911
2026 111,227 47 ,745 3,875 93,754 246,530
2427 113,095 49,856 4,008 85,597 252,385
2028 1 14,995 52,060 4,146 87,480 ?58,379
Data from County (population for intermediate years are added).
Added poections based on previous S-year growth rates.
lmpact of Destination Resorts in Oregon
March 2009 Page 98
Fodor & Associates
A-4. Tax Bases for f urisdictions Used in Study
The total assessed values of the tax base for each of the local iurisdictions used in
this study are provide in Table A-4. The final column of the table shows the
percentage of each tax base that would be represented by the Thornburgh Resort if
fully developed. This percentage was treated as the potential future contribution by
the resort towards repayment of bonds associated with the infrastructures costs
generated.
Table A-4
Potential Contribution to lnlrastructure Gosts Through Future Tax Paymenls
Assessed Value
ol Tax Base(l)
Percent ol
Future Taxes
Paid by
ol lnlrastructure Jurisdiclion
Transportation System Deschutes County
Redmond School Dist.
DCRFPD#1
Deschutes County
RAPRD
lqqqlqteq Couq$t
Tho
School Facilities
Fire & EMS Facilities
Public Safety Facilities
Parks and Rec. Facilities
Gen Gov. Facilities
NA
$4,937,455,942
$1,295,518,889
$16,602,476,500
$288,870,875
$16,602,476,500
NA
7.10h
22.4o/o
2.2%
56.5%
2.21o
(1 ) Data from fie 2008-09 Distict Summary Table on page 1 6 of the 2008-09 Summary of Assessmenl and Tu RoX published by he
Deschutes County Assassors oftice. Assessed vafue of school districl trom Redmond School Disfict
(2) The percent of fie total fuilre tax base represented by the resort based on a fully{eveloped resort with a total assessed tax value ot
$374,788,8 t 7.
(3) Transpofiation system is not tunded by property taxos.
lmpact of Destination Resorts in Orqgon
March 2009 pqge 99
Fodor & Associates
A-5. About the Authors
Eben Fodor, Principal Author
Mr. Fodor is Founder and Principal of Fodor & Associates, a consulting firm based
in Eugene, Oregon since 1993. The firm specializes in community planning and
land use consulting, including fiscal impact analysis, growth management,land-use
planning, economic forecasting, and research and analysis. He is an expert in
development impact analysis. He created a development impact model for the City
of San Diego that quickly estimates infrastructure and service costs for new
developments of any size and mix of uses. He has examined the fiscal impacts of
development proposals in \Washington, Oregon, Maryland and rU7yoming for various
clients. He conducted statewide assessments of infrastructure impacts of residential
development in Oregon and \Tashington.
Mr. Fodor holds a Masters in Urban and Regional Planning and a M.S. degree in
Environmental Studies, both from the University of Oregon. He holds a B.S. degree
in Mechanical Engineering from the University of t$(risconsin - Madison.
David Hinkley, Research and Analysis
Mr. Hinkley has worked since 1996 providing public policy research, analysis and
advocacy services to lobbyists, candidates, businesses and individuals. Areas of
expertise include land use codes, government budgeting, tax increment financing,
development impacts, state land use programs, systems development charges,
transportation issues, disability issues, bottle bills, campaign contributions, and
liquor laws. He served 8 years on the City of Eugene's Public !7orks Rates Advisory
Committee helping to revise the City's System Development Charge methodologies
for transportation, waste water and parks systems.
Mr. Hinkley holds a Bachelors of Arts degree in History from the University of San
Francisco and a B.S. degree with Honors in Criminal Justice Administration from
San Jose State University.
lmpact of Destination Resorts in Oregon
March 2009 page 100
Fodor & Associates
UC BERKELEY UC BenxELEy CEnren ron Lneon ResrnRcH AND EoucnnontTABON
CENTER
December 2OOl ReseARcH Bnrer
A DOWNWARD PUSH:
Tur Iupncr oF WAL-Mnnr Srones oN
Rerrul Wncrs AND BerurFrrs
Arindrajit Dube
UC Berkeley lnstitute for Research on Labor and Employment
T. William Lester
UC Berkeley Department of City and Regional Planning
Barry Eidlin
UC Berkeley Department of Sociology
EXECUTIVE SUMMARY
Empirical evidence suggests that employees at Wal-Mart eam lower average wages and receive less
generous benefits than workers employed by many other large retailers. But controversy has persist-
ed on the question of Wal-Mart's effect on local pay scales. Our research finds that Wal-Mart store
openings lead to the replacement of better paying jobs with jobs that pay less. Wal-Mart's entry also
drives wages down for workers in competing industry segments such as grocery stores.
Looking at the period between 1992 and 2000, we find that the opening of a single Wal-Mart store in
a county lowered average retail wages in that county by between 0.5 and 0.9 percent. In the general
merchandise sectoq wages fell by I percent for each newWal-Mart. And for grocery store employees,
the effect of a single new Wal-Mart was a 1.5 percent reduction in earnings.
When Wal-Mart entered a county, the total wage bill declined along with the average wage. Factoring
in both the impact on wages and jobs, the total amount of retail earnings in a county fell by 1.5
percent for every newWal-Mart store. Similar effects appeared at the state level.
With an average of 50 Wal-Mart stores per state, the average wages for retail workers were 10 percent
lower, and their iob-based health coverage rate was 5 percentage points less than they would have
been without Wal-Mart's presence. Nationally, the retail wage bill in 2000 was estimated to be $4.5
billion less in nominal terms due to Wal-Mart's presence.
The study addressed a number of methodological issues that have plagued previous attempts to
assess the effect of Wal-Mart on local labor markets. A less sophisticated statistical model risks con-
founding the effects of Wal-Mart openings with unobserved economic factors (positive or negative)
that might have drawn the retailer to specific locations. We use the spatial pattern of Wal-Mart's
growth (radiating out of Arkansas over time) to identiffWal-Mart store openings that are not driven
by local economic conditions. This helps ensure we are measuring the results of store openings, not
preexisting conditions.
Furtheq, we investigate (and reject) the possibility that wage declines were an artifact of changes in
demographics of the retailworkforce.If Wal-Mart jobs bringmore minorities, women, youngpeople
or workers with lower educational attainment into the retail work force, the wage decline could be
accounted for by the lower eaming potential of these groups. But controlling for age, gender,
ethnicity and education did not change the results. Overall, the results strongly support the hypoth-
esis that Wal-Mart entry lowers wages and benefits of retail workers.
WAL.MART WAGES
Wal-Mart's size and growth over the past two decades, and its contribJtion to reshaping retailing in
America, means that it may be an important force in shaping wages for low-end workers. Existing
evidence suggests that Wal-Mart pays lower wages and benefits than other large retailers. In 2005, the
company reported an average hourly wage of $9.68 per hour.I An earlier study of pay scales in
California found that Wal-Mart employees earned 26 percent less than workers in comparable jobs,
defined as retail firms with 1,000 or more workers.2 A national study found a 25 percent earnings gap
with retailers overall, and 28 percent with large retailers, though wages did not look significantly
different from those paid by other discount stores.3
There are two general problems with comparing Wal-Mart workers' wages with those of other
retailers. Wal-Mart started and has its greatest presence in lower-wage and more rural areas, which
will account for some part of the wage differential. Second, Wal-Mart makes up a large share of
general merchandise workers, giving it a significant impact on the average wage of these workers. Its
employees account for 55 percent of all general merchandise workers, and 7l percent of employees
who work for large general merchandise companies in the country. To get a valid comparison with
other general merchandisers, we adjusted retail wages in the Current Population Survey to match
Wal-Mart's location and adjusted for Wal-Mart's contribution to the average general merchandise
wage.
I Wal-Mart Stores, Inc. 2005. http://wwwwalmardacts.com/associates/defaullaspx#a41.
2 Drbe, Arindrajit and Ken Iacobs, 2OO4. Hifun Cost of Wal-Mart Jobs: Ilse of Safety Net hograms by Wal-Mart Workcrs in
California.University of California-Berkeley, Center for Labor Research and Education.
3 Bernhardt, Annette, Anmol Chaddha and Siobhan McGrath, 2OO5. Wt at Do We Know About Wal-Mart? New York
University Brennan Center for Justice.
2 RESEARCH BRIEF I n Downward Push: The lmpact of Wal-Mart Stores on Retail Wages and Benefits
The results still found a sizeable wage gap between Wd-Mart and other general merchandising
employers: 17.4 percent. The gap is smallerwhen compared to all groceryworkers (7.5 percent) but
larger when compared to large grocers (tZ.S percent). In the area of large general merchandise
companies, meaning businesses with more than 1,000 employees, Wal-Mart employees eamed more
than 25 percent less than workers in competing stores.a
RESEARCH METHODS
Anecdotal evidence suggests that competitors perceive the need to lower wages and reduce benefits
to compete with Wal-Mart. tn 2003, as Southern Califomia unions negotiated their contracts with
grocery chains, competition with Wal-Mart came up repeatedly as a rationale for lowering wages and
cutting benefits.s Although such anecdotal accounts are common and reported often in the media,
there is not much in the way of rigorous academic research on this question. We sought to test the
hlpothesis that Wal-Mart store openings depress local wages and benefits. Our research investigat-
ed the effect that a newWal-Mart store had on the economy of the surrounding county and state by
comparing how wages for retail workers, especially grocery and general merchandise employees,
changed over time in response to a store opening.
Any effort to estimate the impact of individual store openings in a credible way encounters a
fundamental methodological obstacle: Wal-Mart does not randomly choose where to expand. In
deciding where to open a new store, management may take into account several factors, including
the cost of labor. If the company selects areas where wages are already falling in order to minimize
competition for employees, the results might artificially indicate that Wal-Mart's arrival in a county
caused wages to fall. Alternatively, and more important in reality, Wal-Mart may choose sites with
strong economic prospects to take advantage of a healthy consumer market. Such local booms
usually lead to an uptick in workers'wages. When Wal-Mart store openings are correlated with local
economic booms, the results would mistakenly indicate that Wal-Mart raised wages or had no effect
on local wages-euen when its entry caused wages to be lower than they would lnue been.In either
case, there is the danger of confusing the factors enticing Wal-Mart to open a particular store with the
effects of the store's arrival in the local economy. This problem is what economists call selection bias.
ln order to resolve this problem, our research began with the fact thatWal-Mart has spread out over
time from its initial headquarters. The first Wal-Mart store in 1962 was in Rogerg Arkansas. Since
then, new stores have sprung up at increasing distances from the cente[ like a circular ripple
spreading away from a drop of water. The farther a county is from Benton County, Arkansas (ground
zero for Wal-Mart), the later it experienced the Wal-Mart growth spurt (see Figure I on page a). This
pattem of expansion allowed the company to take frrll advantage of distribution networks and lower
the overall costs of expansion.o
a Dube, Arindrajit and Steve Wertheim, 2ffi5. Wal-Mart and Job Quality: What Do We Know, and Should We Care?
University ofCalifornia-Berkeley, Center for Iabor Research and Education.
s Goldmun, Abigail and Nanry Cleeland, 2003. "An Empire Built on Bargains Remakes the Working Worldi' Los Angeles
Tr'rnes (November 23, 2fi)3). Pearlstein, Stwen,2003. 'Wd-Mart's Hidden Costsi Washington Posf (October 29, 2003).
6 Graff, Thomas O., 1998, "Ihe Locations of Wal-Mart and Kmart Supercenters: Contrasting Corporate Strategies," The
Professional Geographer 50 (f): a6-57. Holmeq Thomas I. 2005. Thc Difiision of Wal-Mart and Ecorwmia of Density.
Unpublished manuscript.
Dube, Lester and Eidlin I DECEMBER 2OO7 3
Figure l. Wal-Mart store locations 1992, 1996 and 2000
Map l: Store
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Number of Wal-lvlart stores
. 1-2
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. 7-12
o 13-19
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Map 3: Store 2000
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4 RESEARCH BRIEF
_'::----
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I n Downward Push: The lmpact of Wal-Mart Stores on Retail Wages and Benefits
By following the ripple of store openings across the country and over time, we are able to test whether
retail wages fell in its wake. Looking at store openings based on both how far the county is from
Wal-Mart's "ground zero" and the year in question, our estimates avoid the selection bias that can be
a problem for similar studies. We also subject our results to a number of different tests of intemal and
external validity, which all indicate that our methodology is robust.
Our study uses two sources for data on wages: the Quarterly Census of Employment and Wages,
employed by the US Bureau of Labor Statistics, which provides county-level information; and the
March Supplement to the Current Population Survey, which provides greater detail about wages and
benefits, but only at the state level.
WAL-MART'S NATIONAL EXPANSION
The study focuses on the period 1992-2000, the time period when Wal-Mart expanded outside the
South and exploded into major metropolitan areas. During this time, Wal-Mart grew from 1,800 US
stores to 2,500, an increase of almost 40 percent. During the 1990s, the corporation expanded from
the South to the Midwest, and then to the West and Northeast. By the end of the I990s, more than
half the counties in America had a Wal-Mart in them, and some had many more.
In 1992, half the Wal-Mart stores were in rural counties. But during the next eight years, three-
quarters of new stores were in metropolitan counties, as Wal-Mart expanded from its rural starting
point.
WAL-MART OPENINGS PUT DOWNWARD PRESSURE ON COUNW WAGES
When Wal-Mart's timing of expansion is taken into account, we find strong evidence that each new
Wal-Mart lowered retail wages (see Table l). Opening a single Wal-Mart store lowers the average
retail wage in the surrounding county between 0.5 and 0.9 percent. In the category of general
merchandise, wages fell about I percent for each new store, while workers in grocery stores saw aver-
age wages decline about 1.5 percent. As we would expect there was no noticeable effect on wages in
other low-paying economic sectors that did not compete with Wal-Mart. Restaurant workers, for
example, saw no change in their take-home pay as a result of big box entry into their county.
Table 1. County-level effecG fiom the entry of a single Wa!-It art store
Average Wage Aggregate Wage Bill
Retail workers:
General merchandise
workers
Grocery employees:
0.5-0.9% lower
1% lower
1.5% lower
Retail sector: 1.5% lower
DECEMBER 2OO7 5Dube, Lester and Eidlin I
WAL.MART AND
SUPERMARKET EMPLOYEES
Wal-Marfs effect on earnings of gro-
cery workerc is particularly striking.
The opening of a slngle Wal-Mart
store lowered grocery wages by 1.5
percent. This is ln large part because
supermarkets Upically pay higher
wages and have higher rates of union-
ization than other retail businesses. ln
2@5, the unionization rate in super-
markets was 2l percent, compared to
5 percent in general merchandlsing
and 6 percent in retail overall. Wages
of unionized supermarket workerc are
27 percent higher than their non-
union counGrparts, as compared to a
6 percent union wage premium for
general merchandise and 8 percent
for all retail workers.T Because of
higher wages and the greater advan-
tage to union membership, competi-
tion with a large low-wage, non-union
employer like Wal-Mart is pardcularly
significant in the grocery sector.
Wal-Mart sells groceries and com-
petes wtth gnocery stores, but its
workerc are categorized as general
merchandise employees, not grocery
workers. The average wages for gro-
cery workers does not include Wal-
Mart workers. Hence, the decline in
gnocery worker wages found in tre
research r€suJts must be due to a
decline in wages among Wal-Marts
competitorc in the grocery industry.
7 Current Population Survey, 2005.
Several independent factors explain the fall in wages associated with
Wal-Mart openings. First is the substitution effect: a new Wal-Mart
store replaces better paylng jobs with lower-paying ones. Since
Wal-Mart workers account for more than half of general merchan-
dising employees, mixing lower-paid Wal-Mart jobs in with higher-
paid jobs reduces average wages noticeably. A second factor is
competition: Wal-Mart pushes down wages in competing
businesses. This is most evident for grocery stores, where the effect
on wages is purely a result of competitors cutting costs in response
to Wal-Mart (see sidebar.)
Some research suggests that Wal-Mart may be responsible for a
small net increase in jobs.8 Our study demonstrates that the opening
of new Wal-Mart stores produces a decline not just in average wages
but in the total wage bill of a county. Every new Wal-Mart in a
county reduced the combined or aggregate earnings of retail
workers by around 1.5 percent. Given that the fall in total wages was
greater than the decline in average wages, it is highly unlikely that
there is compensating positive employment growth associated with
a Wal-Mart store opening. This is consistent with research by
Neumark et al.,e who find that once the timing of store openings is
taken into account, there is no evidence of job gains.
At the national level, our study concludes that in 2000, total earnings
of retail workers nationwide were reduced by $4.5 billion due to
Wal-Mart's presence, and these losses were concentrated in metro-
politan areas.Io
WAL-MART OPENINGS REDUCED STATE-LEVEL
EARNINGS AND BENEFITS POTENTIAL IMPACT ON
FIRMS' COSTS
We also perform a state-level analysis of Wal-Mart's impact. By the
year 2000, there were 2,500 Wal-Mart stores in the US, an average of
50 per state. Our study finds that each new Wal-Mart lowered the
average hourly wage of retail workers in the surrounding state by
two-tenths of a percent (see Table 2). Fifty new Wal-Mart stores
would mean a I0 percent average wage reduction.
I Baske$ Emek, 2005. "Job Creation or Desffuction: Labor Market Effects of
Wal-Mart E:pansion," Review of Econornics and Stafrsfr'cs 87(l): 174-f 83.
e Neumark, David, Junfu Zhan and Stephen Ciccarella, 2005. "The Effects of
Wal-Mart on Local Iabor Markets," NBER WorkingPaper No. 11782. .
r0 On ave.age, a single store reduced the retail wage bill by 1 percent in a metro
county, In 2000, metro counties had an average of 1.5 Wal-Mart stores, and had a
total retail wage bill of $300 billion. This produced an annual reduction in the
nominalwage bill by$a.5 billion.
6 RESEARCH BRIEF I n Downward Push: The lmpact of Wal-Mart Stores on Retail Wages and Benefits
Table 2. State-level effects of Wal-Mart openings on retail workers
The study was also able to measure the effect of Wal-Mart stores on healthcare benefits using the
Current Population Survey. While employees in the retail sector typically do not enjoy good health-
care benefits, anecdotal evidence suggests that Wal-Mart employees receive employer-sponsored
health insurance at a lower level than workers in competing businesses. Our data indicates
Wal-Mart's iob-based coverage rate was higher than retailers in general, but lower than large
retailers, including large general merchandisers and large glocery stores.Il
Just as Wal-Mart's low wages depressed wages in competing businesses, we found similar effects on
the rate of health insurance. The research demonstrates that 10 new Wal-Mart store openings in a
state translated to a I percentage point reduction in the proportion of retail workers who received
health insurance from their employer.
EFFECT ON METROPOLITAN COUNTIES
Wal-Mart's effect on countywages appeared onlyin metropolitan statistical areas. The strong decline
in eamings that was evident in metropolitan counties did not show up in rural counties. This result
is consistent with other research that shows that rural areas are more likely to have low-wage firms.r2
Where wages are low to begin with, the arrival of the retail chain is less significant. This is especially
true because the minimum wage becomes binding at low wage levels, which is more likely in rural
areas. In metro areaswith better-paying jobs and a higherrate of unionization, Wal-Mart's entrywas
more likely to have an impact on the labor market. This is particularly important since the large
majority of newWal-Mart stores are located in meuo areas. This also explains the greater resistance
to Wal-Mart store locations in metropolitan compared to rural areas, since workers and unions have
more to lose in urban settings.
lr Dub" and Wertheim, 2005.
12 Anderrson, Fredrik, Harry Holzer and Julia l-ane, 2OO2. "The lnteraction of Workers and Firms in the Low-Wage Labor
Market," LEHD Working Paper.
Effects of a single store
opening
Average Retail
Wages
0.2 percent lower
Employer-Sponsored
Health Insurance
0.1 percentage point lower
Effects of 10 store
openings
2 percent lower I percentage point lower
Effects of 50 Wal-Marts
(the average number
per state)
10 percent lower 5 percentage points lower
Dube, Lester and Eidlin DECEMBER 2OO7 7
CONTROLLING FOR DEMOGRAPHICS
One possible explanation for the apparent reduction in wages is a change in the mix of the worKorce.
If Wal-Mart hires more minorities, women and young-people than its competitors, then the wage
difference could be explained by the lower earnings of these groups, regardless of where they work.
A related possibility could be a change in hours of work, skills of workers and fringe benefits. If
Wal-Mart hires disproportionately more part-time workers or less skilled workers, for example, then
the apparent decline in average wages might not result from a reduction in wages for comparable
employees.
In order to investigate this possibility, we use the Current Population Survey data (from the Annual
Demographic Supplement), which provides details on individual worker characteristics. We look at
the impact of Wal-Mart expansion in a state on the average hourly wages for retail workers (as
opposed to earnings per worker in our other dataset, the QCEW), and control for the demographics
of the worKorce, i.e., gender, age, education and race, as well as the average wage of workers without
a college education.l3 Controlling for these factors does not change the overall conclusion.
Wal-Mart's effects on wages in surrounding areas created lower wages for a set of retail workers, not
a change in who was working retail.
CONCLUSIONS
Until now there have been few studies documenting the effects on compensation from Wal-Mart's
entry into a new labor market. The few studies that do address the question focus on a small set of
counties in primarilyrural states. Because of methodological limitations, none are able to distinguish
the effects of Wal-Mart's arrival from the particular conditions that attracted the retailer to open in a
given area in the first place.
The new research strongly suggests that Wal-Maft entry lowers wages for employees in competing
businesses, and the effect can be seen at both the county and state levels. Controlling for
demographic or skill mix of the worKorce cannot explain the results. Wal-Mart openings depress
average and aggregate wages and reduce the proportion of the worKorce that is covered by
employer-sponsored health insurance.
Of course, Wal-Mart's presence is also likely to bring lower prices. Existing research shows big-box
stores like Wal-Mart can use their distribution systems and leverage with suppliers to produce
substantial savings to consumers.Ia Howevel to the extent that competing on cost produces negative
effects on low-wage workers, this is an important consideration when deciding the "rules of the
game" that big-box retailers need to abide by. And since wage and benefit savings are not the main
part of the cost advantage for a company like Wal-Mart, it could continue to pass on most of these
savings while paying higher wages and benefits. These factors should be taken into account by
policy makers in their decision-making on economic development.
13 To b" sure, whether or not lower wages bring in more disadvantaged groups does not change the fact that wages are
reduced for retail jobs. Our analysis further shows that this cannot "explain" the fall in wages.
14 Hausman, Ierry and Ephraim Leibtag, 2005. "Consumer Benefits from Increased Competition in Shopping Outlets:
Measuring the Effect of Wal-Mart," NBER Working Paper No. 11809.
8 RESEARCH BRIEF I n Downward Push: The lmpact of Wal-Mart Stores on Retail Wages and Benefits
Institute for Research on labor and Employment
University of Califomia-Berkeley
252r ChanningWay
Berkeley, CA 94720-5555
(510) 642-6432
http : / /laborcenter. berkeley.edu
An afiliatc of thc University of Califurnia
Miguel Contreras Labor Program
UC Berkeley Center for Labor
Research and Education
The Center for Labor Research and Education (Labor
Center) is a public service project of the UC Berkeley
Institute for Research on Labor and Employment that links
academic resources with working people. Since 1964, the
Labor Center has produced research, tainings and
curricula that deepen understanding of employment
conditions and develop diverse new generations of
leaders.
Acknowledgments
We would like to thank Iudith Barrish for support in writing and
editing this brief. We also appreciate the helpfrrl comments and
reviews we received from Emek Baskel Jared Bernstein,
Oeindrila Dube, David Fairris, Michael Hicks, Ken Jacobs, Ethan
Kaplan, Alexandre Mas, Suresh Naidu, and seminar participants
at IIES (University of Stockholm), University of Uppsala,
University of California-Berkeley, University of California-
Riverside, Center for American Progress, Economic Policy
Institute, American Enterprise Institute, and the Annual
Conference of the American Sociological Association.
We also wish to thank General Service Foundation, which
provided partial funding of this research.
Thc uicwse.ryressedin this policy brief are those of tltc autlarsanddo not
necessartly represent thc RegenB of the Uniuersity of California, UC
Berkcley lrustitute for Research on Labor and Employment, General
Seruice Foundatiob or collaborating organim,tiorc or funders.
€-
Watenrorks Gonsultants
4017 Willowbrook Lane
Bellingham, WA 98229
360-296-8084
Memo
To: Gerald Steel
From: Llyn Doremus
Date: July 17,2009
Re: Technical review of: Water Supply and Groundwater lmpact Analysis
Pleasant Harbor Marina and Golf Resort - November 20,2008 (SDEIS)
Recommendations for Additional Hydrogeologic Testing at Black Point
Background
The Pleasant Harbor Marina and Golf Resort is planned for construction on the
Black Point Peninsula in Hood Cana!. The peninsula is surrounded by salt water
for more than 75% of it's shoreline. At least 15 wells are located along the Black
Point eastern and northern shorelines that are at risk of seawater intrusion.
Hood Canal is known to have a serious problem with depleted dissolved oxygen
conbnt, which has resulted in what has been termed a "dead zone". The dead
zone creates conditions where a wide range of sea life that requires dissolved
oxygen in the waters of their environment cannot survive. The depleted oxygen
condition is known to result from enhanced activi$ of bacteria and algae that is
promoted by discharge of nutrients (nitrogen and phosphorus) dissolved in
surface and groundwater to Hood Canal. The two conditions: seawater
surrounding the Black Point Peninsula and the potentialfor seawater intrusion to
degrade water quality in shoreline wells, and extreme sensitivity of Hood Canal
biologic health to the release of nutrients generate a very delicately balanced
hydrogeologic environment in which the Resort is proposed for construction.
The Resortwater supply for residential, commercial and irrigation purposes has
been proposed through a combination of rainwater capture, reuse, reclamation,
infiltration, and groundwater withdrawal processes. While the genera! scheme of
the supply system has been outlined in previous documents, the specifics of how
each of the components willoperate has not yet been accurately defined. The
potentia! for negative impacts of the various supply system components on the
delicately balanced hydrogeologic environment is high. A sophisticated
understanding of the Black Point hydrogeologic system is mandated to assess
potential for degradation from the proposed water supply scheme to dissolved
oxygen levels in Hood Canal, to seawater intrusion into the Black Point aquifer,
and for the design, maintenance and operation of that system to function without
degrading the Black Point aquifer and Hood Canal.
These comments address the hydrogeologic characterization presented in the
report: Water Supply and Groundwater lmpact Analysis, Pleasant Harbor Marina
and Golf Resorf by Subsurface Group, LLC. November 20, 2008 (Report) with
respect to the information necessary for characterization, design and operation of
a water supply system that does not degrade the Black Point aquifer. The
accuracy and completeness of the Report assumptions, information and
conclusions are assessed, and recommendations for additional testing to fill in
the information gaps in the Report are listed.
Hydrogeologic System
Groundwater moves through the sediments and rock, which, along with the other
water moving through the system, defines the hydrolgeologic system of a specific
site. Sediment tends to form in layens, which can be visualized as a "layer cake"
type configuration. Sediments and rock layers with a large percentage of void
spaces typically transmit water more quickly, which is termed a high permeability
hydrogeologic unit. Sediment layers that are more dense, with tiny void spaces
are termed "low permeability" or'impermeable". Low permeability sediment
layers impede downward migration (infiltration) of groundwater, and tend to
accumulate water on their upper surface. This is normally how unconfined
aquifers form. The permeability of an aquifer is usually determined by
conducting a pump test. With the exception of the single pump test of the
American Campground well, and the marginal data generated from that test,
there is no data presented on the aquifer properties of the various hydrogeologic
units on the Black Point Peninsula.
RECOMMENDATION FOR ADDITIONAL TESTING
The Report describes results from a pump test conducted in the American
Campground well for 48 hours to assess the permeability and other aquifer
properties in the wellvicinity. The data generated by the test was found to
be insufficient to assess the aquifer properties, because the drawdown in
Water Supply and Groundwater lmpact Analysis, Pleasant Harbor Marina and Golf Resort
Technical Review and Recommendations 2
the monitoring wells was almost undetectable. Pump testing should be
conducted in all of the wells that are proposed for water supply purposes.
The pumping rate used should be equivalent to the rate at which water is
proposed for withdrawal for the water supply needs of the resort (at a
minimum 75 gallons per minute to provide the 121 acre feet annual use
projection), because of the likelihood that individual wells may be relied
upon for the full volume for the resort water demand when problems with
water level drawdown and seawater intrusion o@ur. The tests should be
run for sufficient duration (minimum 72 hours) to derive measurable
drawdown curye in at least one of the monitoring wells, so that reliable
aquifer properties can be calculated.
The direction of groundwater movement is defined by the groundwater gradient.
Groundwater moves from locations of high water elevation level to low elevation
discharging eventually to lower-elevation surface water bodies. The groundwater
elevation pattern often mimics the ground surface topographic elevation pattern.
Downgradient (lower groundwater elevation) locations manifest the affects of
groundwater movement and withdrawal in higher elevation locations. lt is
important to understand the directions of groundwater movement in order to
assess the magnitude and distribution of ground water level decreases
associated with groundwaterwithdrawal (pumping from wells). ln particular,
reduction in the groundwater levels in shoreline areas increases the risk of
seawater intrusion into water supply wells.
The Report presents an interpretation of groundwater flow direction towards the
center of the peninsula and then to the east (discharging into Hood Canal). The
groundwater surface elevation contours are illustrated in Figure 4 of the Report,
and suggest that a groundwater high point (at MW-2) dominates groundwater
flow direction on the entire peninsula. That single data point (MW-2 water level
elevation) is disproportionally valued in interpreting the groundwater flow
directions.
RECOMMENDATION FOR ADDITIONAL TESTING
Groundwater levels should be measured in every accessible Black Point
Peninsula well on the same date, so that a groundwater elevation contour
level map can be constructed that is reliable for use in interpreting the
direction(s) of groundwater movement. A better understanding of the
direction of groundwater movement will support a better interpretation of the
groundwater withdrawal impacts to private wells on the Black Point
Peninsula and seawater intrusion risk.
Water Supply and Groundwater lmpact Analysis, Pleasant Harbor Marina and Golf Resort
Technical Review and Recommendations 3
Diagrams of the Black Point Peninsula hydrogeologic system are presented in
the Report Figures 11, 12 and 13. Much of the site is covered with dense, low
permeability till. About one third of the site has additional sediments deposited
on top of the till that are higher in permeability and allow water to migrate more
quickly through them. Water that migrates downward through these higher
permeability sediments might slow down and accumulate in a 'perched" aquifer
upon encountering the underlying low-permeability till. There is no evidence of
perched conditions at this site presented in the Report.
Basalt bedrock is shown in Figures 13 in wells located on the northern part of the
site. The contribution of groundwater flow transmitted through bedrock to the
Black Point aquifer is not well characterized in the Report, nor is the bedrock
permeability, or the hydraulic connection between bedrock and the overlying
unconsolidated sediments. With the exception of the single pump test of the
American Campground well, and the marginal data generated from that test,
there is no data presented on the aquifer properties of the bedrock or
unconsolidated sediment hydrogeologic units on the Black Point Peninsula, or on
the hydraulic continuity between unconsolidated sediment units and the bedrock
underlying them. Further pump testing (as previously described) is necessary to
better define aquifer properties of the hydrogeologic units and the hydraulic
continuity with bedrock on the site.
Water Budget
A water budget uses estimates or measurements of each component of the
hydrologic cycle to assess the entire movement of water through a specific
hydrologic system annually. For the purposes of characterizing the impact of the
proposed water management scheme on the the Black Point Peninsula aquifer
and hydrogeology, the water budget should encompass the entire Peninsula. To
prevent or at least minimize detrimentalimpacts it is essentialthat the
components of the water budget are defined as accurately as possible.
A typical equation for a water balance is as follows.
Ppt=E+Q+dSg+dQ
Where:
Ppt = annual precipitation
E = annual evaporation plus transpiration (evapotranspiration)
Q = stream flow or surface water runoff
d$ = the change in quantity that is stored as surface water for the year
(negative for a decrease in the water quantity in surface storage)
Water Supply and Groundraeter lmpact Analysis, Pleasant Harbor Marina and Gotf Resort
Technical Review and Recommendations 4
dSs = the change in the water quantity that is stored as groundwater for
the year (negative for a decrease in the groundwater storage, indicating a
drop in groundwater levels)
Surface Water Flow
Although surface water is not flowing onto the proposed Pleasant Harbor Resort
site, the quantity of water discharged from Black Point Peninsula as stream flow
impacts the water budget for the Peninsula. Accurate stream flow
measurements help reduce uncertainty in other portions of the hydrologic budget
that are more difficult to estimate. Stream flow emitting from the lake in the
eastem-central portion of Black Point Peninsula, as well as any other stream flow
on the Peninsula needs accurate assessment in order to calculate its contribution
to the water budget, and its influence on the other components of the budget.
RECOMMENDATION FOR ADDITIONAL TESTING (Q)
Stream flow emifting from the lake on the easterncentral margin of the
Peninsula, and flowing to the east shoreline should be monitored to assess
the rate of surface water runoff from the Peninsula.
Sufface Water Sforage
Surface water is $pically stored in lakes and wetlands. To better understand the
changes in surface water storage that are ongoing under current conditions
(dSs), and that may be expected from the proposed use of kettles as water
storage facilities, the water sbred in Lake (on the eastern margin of the
Peninsula) should be monitored for changes in lake elevation. lt is likely that the
lake is in hydraulic continuity with groundwater, and receives groundwater
discharge. A better delineation of lake level variations, and their relationship to
precipitation quantities and timing, and groundwater levels will improve the
understanding of how groundwater moves through the Peninsula hydrogeologic
system.
RECOMMENDATION FOR ADDITIONAL TESTING (dSs)
Monitor lake leve! elevation over the period of a year (concurrent with other
monitoring data collected).
Prccipitation
Precipitation provides water that supports the various water uses and hydrologic
components. Annual precipitation at this site is poorly understood because of the
variability in precipitation along the north south extent of Hood Canal, and the
lack of monitored data collected in the Black Point Peninsula or Brinnon vicinity.
Water Supply and Groundvvater lmpact Analysis, Pleasant Harbor Marina and Golf Resort
Technical Review and Recommendations 5
RECOMMENDATION FOR ADDITIONAL TESTING (Ppt)
Precipitation should be monitored on the Black Point Peninsula for an entire
year. ln addition, the data available from the NOAA approved weather
station at location A5461 on the west side of Hwy. 101 across from
Pleasant Harbor should be analyzed. See Attachment t hereto.
Groundwater Storage
Groundwater that is stored in an aquifer is the amount of water that is added to
the aquifer over the course of the year (termed recharge) minus the amount
withdrawn or discharged from the aquifer. Recharge to an aquifer derives from
precipitation that infiltrates into the ground. Discharge from an aquifer typically
goes to stream flow (Q), or it may be pumped for water supply or irrigation
purposes, or, in this mse, includes flow into Hood Canal to diminish salt water
intrusion into the fresh water supply. The difference between the amount
recharged and the amount discharged is the change in storage (dsg).
Quantification of recharge is an important factor in assessing the storage
changes in groundwater, as is quantification of the discharge.
Recharge of an aquifer results from vertical infiltration of precipitation that falls on
the ground surface overlying the aquifer. Aquifers are more rapidly recharged
when the sediment overlying the aquifer is of "high permeability" and when there
is high annual precipitation. Consider if the precipitation that infiltrates to
recharge the aquifer is half (50%), the standard assumption when data is not
available to calculate actual recharge rates. For this site the annual precipitation
rate is not well known, which makes the annual recharge rate even more difficult
to assess. Table 3 lists 55 inches for annua! precipitation in Quilcene (the
closest site monitored). Half of this is 27 inches, or 2.3 feet. For this 220 acre
site, this provides an annual recharge of 504 acre feet (significantly less than the
783 acre feet claimed in the Report on page 17). The presence of low
permeability till will slow down groundwater infiltration, and likely reduce the rate
of groundwater recharge to the aquifer even further than estimated using these
assumptions.
There will be substantial additional evapotranspiration caused by the watering of
the golf course and other vegetation in the hot months of the year. This has not
been adequately considered.
RECOMMENDATION FOR ADDITIONAL TESTING (dSg)
Groundwater levels in the three monitoring wells (MW-1, MW-2 and MW-3)
should be monitored for at least one year, to determine the variation in
groundwater elevation. Precipitation should be monitored on the site for at
Water Supply and Groundwater lmpact Analysis, Pleasant Harbor Marina and Golf Resort
Technical Review and Recommendations 6
least one year to determine the actual precipitation received annually
(concurrently with other monitoring data collected). Analyses of recharge
quantities and rates should be done using monitored data, and presented in
the calculation of the water budget for the site. A separate set of
calculations should be done assuming serious drought conditions - perhaps
an estimated 500-year drought.
Quantification of groundwater discharge is calculated using measurements of
changes in groundwater elevation, stream florrtr measurements, pumped
quantities from the aquifer, and precipitation measurements. lt is important to
delineate the groundwater flow direction and to delineate locations of
groundwater discharge, to more accurately assess the annual amount of
groundwater discharging from the aquifer. The change in groundwater storage
calculated amount (dsg) relies upon an accurate estimation of annual
groundwater discharge and its relative value with respect to the annual recharge
amount. Additionally, discharge of groundwater from beneath the proposed
resort to Hood Canal, that contains contaminated landscaping chemicals
(especially nitrate and phosphorus) poses a significant risk to the environmental
health of Hood Canal.
Evapotranspiration
The information presented in the Report on estimations of evapotranspiration
(24.1 or 24.2 inches per year), need to be presented with data, formulas, tables,
and assumptions used in those calculations, as part of the comprehensive water
budget estimation.
Water Supply and Groundraater lmpact Analysis, Pleasant Harbor Marina and Golf Resort
Technical Review and Recommendations 7
Summary of Recommendations for Additional Testing
To better understand the hydrogeologic response to the proposed water supply
management scheme in this relatively sensitive groundwater environment, each
of the components of the hydrologic cycle should be more accurately quantified.
ln addition, the aquifer properties must be better defined to design a supply
system that does not overstress the aquifer. The following tests are
recommended in order to gather that information.
Aquifer propedies
Aquifer testing - pump tests should be conducted for a minimum of 72 hours in
any wells that might be proposed for water supply purposes (American
Campground Well, Pleasant Tides Coop Well(Sam Boling Water System/Black
Point Water Company) and MW-2). Pump tests should be conducted for long
enough to generate a measurable drawdown in at least two monitoring wells in
the vicinity. Pumping rate at the Pleasant Tides Coop Well should include the
300 gpm for existing water rights plus the proposed new withdrawal.
. Pump testing at MW-2 should include installation of a monitoring well, at a
location that is as close as existing wells are to the eastern shoreline, in
line with the MW-2 well. Chloride testing of water pumped from the
aquifer should be done when the MW-2 is pump tested.
o Pump testing at the Pleasant Times Coop Well should include monitoring
for water level drawdown and for chloride at the other Black Point Water
Company wells, the Babare well, the Tudor well and the other Pleasant
Harbor Beach Tract Owners wells.
Seawater intusion
Chloride content in groundwater should be determined in samples collected from
wells pumped adjacent to the marine shoreline over the duration of the pump
tests. At a minimum one sample should be collected prior to initiation of
pumping, another after at least 12 hours of pumping and a third shortly before
pumping is stopped. More samples provide more confidence in the data
collected, and the interpretations derived from that data. Chloride concentrations
between 100 and 200 mg/l indicate wells at moderate risk for seawater intrusion,
with 200 mg/l being the trigger for high risk, according to lsland County's
Seawater lntrusion Policy (a copy is included with these comments as
Attachment 2).
Groundwater movement
Groundwater levels should be measured in every accessible well on the same
date, so that a groundwater elevation contour level map can be constructed that
is reliable for interpreting the direction(s) of groundwater movement. A better
understanding of the direction of groundwater movement will support a better
interpretation of the groundwater withdrawal impacts to private wells on the Black
Point Peninsula and seawater intrusion risk.
Water Budget
The presentation of the water budget in the Report makes it impossible to assess
the individualcomponents of the water budget, their relationship to each other,
and what data was used to derive them. A comprehensive explanation of the
water balance calculations must be provided. This should include:
o water budget equation used
. Values for each component the equation
Water Supply and Groundwater lmpact Analysis, Pleasant Harbor Marina and Golf Resort
Technical Review and Recommendations 8
. data, calculations and assumptions used to derive each value
ln particular the following components need better delineation.
Precipitation
Precipitation should be monitored on the Black Point Peninsula site for the
duration of a year (concurrent with other monitoring data collection).
Recharge
Groundwater levels should be monitored with continuous electronic logs in the
three monitoring wells, and reported for the duration of a year to assess the
range of groundwater Ievel variation, and the recharge resulting from
precipitation events. Precipitation monitoring should coincide with groundwater
level monitoring periods. Precipitation should be used to evaluate the changes in
groundwater levels associated with precipitation events (i.e. recharge)
Evapotranspiration
Evapotranspiration calculations, and the data and assumptions used in those
calculations needs to be presented in report form.
Streamflow
Stream flow emitting from the lake on the eastern margin of the Peninsula, and
flowing to the east shoreline should be monitored to assess the rate of surface
water runoff from the Peninsula.
Water Supply and Groundwater lmpact Analysis, Pleasant Harbor Marina and Golf Resort
Technical Review and Recommendations I
Lake Level
Monitor lake (located in the central-eastern portion of Black Point Peninsula)
level elevation over the period of a year concurrent with other monitoring data
collected.
SILVER TIP
SOLUTIONS
Water budget analysis for Black Point
Peninsula and the proposed Pleesant Harbor
Marlna end Golf Course
June 3, 2010
Dr. Christlne J. Banderagoda
f-{2S50f-4191
ch rlstln a@sllvertlpsol.com
Llyn Doremus
Waterworks Consultants
36r|-29&8084
llynedele@gmail.com
I
Executive Summary
The Pleasant Harbor Resort and Marina is proposed for construction on Black
Point Peninsula; the 220 acre facility would dramatically change the land surface of the
710 acre peninsula located in Hood Canal. A data-based water budget was calculated for
the Black Point for current forested conditions and for the changed land cover and water
usage conditions proposed for the Resort. With the construction and operation of the
Resort, 60 acres will be converted to irrigated golf course, 37 acres to buildings and
paved impervious surfaces, 17 acres to lined inigation pond water storage, 60 acres will
remain in native forest cover, and we assume the remainder of the 46 acrts will be used
for bioretention or rain garrdens.. The changed land cover will modiff the existing water
balance ttrat distributes annual precipitation to the processes of evapotranspiration and
groundwater infilration. Evaporanspiration (ET) was calculated for daily timesteps
rsing climate conditions (monitored at Quilcene) and limited by the available water
(precipitation and ponded surface water). Water ponded in wetlands, bogs and fens at
the ground surface infilrates to recharge groundwater at a rate limited by the soil
infiltration capacity of ttre Black Point till sediments after the daily ET demand is met.
With Resort developmenf imFervious surface and landscaped areas will generate
surface water runoff. The water budget we calculate, based on the Environmental ImFact
Statement (EIS) and Resort project plans, includes strrface water nrnoff, changes to the
wapotranspiration rates and the affects of groundwater pumping. The removal of trees
from 160 acres of the site will modifr evapotranspiration rates, causing ET increases in
suruner months and decreases in winter months. To supply the cornmercial and domestic
water needs and the landscaped areas water deman( groundwater will be pumped from
the aquifer. We estimate that groundwater recharge will be reduced by as much as 50%
as a consequence of: the groundwater pumping (for inigation and human consumption),
changes to the evapotranspiration rates and generation of surface water runofffrom
impervious surfaces landscaped areas. With the decrease in recharge to the groundwater,
we orpect the aquifer to be steadily depleted, gren the proposed devclopment plans.
Any decrease in aquifer recharge increases the potential for seawater intnrsion along the
shorelines of the Black Point Peninsula. The EIS and dwelopment plans do not use a
realistic value for infilhation, which results in an underestimate of surface nrnoffand
overestimate of aquifer recharge. We estimate that the annual amount of surface water
could be over 400 acre-ft with the proposed land cover 6hengesl twice as much as what
could be ssntaingd in a 60,000,000 gallon lined pond. Any untreated surface water
nrnofffrom landscaped surfaces can be expected to transport nuhients to Hood Canal,
degrading the already depleted dissolved oxygen conditions.
2
1.0 Introducdon
Black Point Peninsula borders Hood Canal within Water Resource lnventory Area
16 ft\fRIAl6; Sections l5 and 22 of T25N, R2W). Pleasant Harbor Marina and Golf
Resort is proposed for development on 220 actes of the peninzula- This constitutes
approximately one-third of Black Point, which is currently moderately or undeveloped
mature forest. Black Point is within the coastal Seawater Intrusion Protection Zone of
Jefferson County, WA and is designated as a Critical Aquifer Recharge Area-
This water budget analysis explores the two following questions about the
proposed development:
How much surfoce ntnoffquantity can be upectedfrom land uses that may require woter
quality treatmmt?
How does the aquifer recharge and drawdown change with the proposed development
compared to cltrrent recharge?
Using plans and estimates from previous studies (Subsurface Group, 20A6;2020
Engineering,2007) as well as daily climate data, we analyze the potential water supply
and dernand for the proposed resort devclopmant as a function of seasonal weather
conditions, in order to estimate changes to Black Point peninsula hydrology given the
proposed development. This work addresses the insufficient scope of recent studies
(Subsurface Group, LLC,2N6;2020 Engineering,2007) to l) accurately calculate
Evapotranspiration, a major component of the overall water balance which controls
current and potential futurt water supply 2) the seasonal effects of groundwaterpumping
for irrigation requirements, 8nd to 3) present a refined waterbudget estimate for cunent
and proposed resort development land cover conditions. An imFortant difference between
our estimates and other studies (Subsurface Croup, LLC,2006;2020 Engineering,2007)
are related to the limitation of the annsxl recharge to23 nlyeatr plus four inches of soil
moisture holding capacity (Morgan and Jones, 1999). This value has also been used by
the USGSr for regional aquifer s),rstem analysis of Puget Sound (Vaccaro, et al., l99E)-
By comparing the current forested conditions water budget with the modifications
to the water budget from the proposed development, calculated on a daily timestep using
climate data collected in the Black Point vicinity, we show that the water budget
estimated by Subsurface Group LLC (2006), developed using annual arrerages, does not
account for the decrease in recharge and increase in surface runoffexpected with the
proposed land cover change. The current or undeveloped water budget can be expected
3
I United Statcs Gcological Sunrcy
to change dramatically under the proposed developed conditions. The mature forest land
cover water use is zubject to seasonal limits of water supply, and produces minimal
surface water runoff. [n contrast the planned irrigated landscaping atificially alters the
water budget by providing unlimited water supply to the landscaped vegetation demands
via grouudwater pumping, and the developed impeniious and landscaped surfaces
produces surface runoffin excess of what can be controlled by engineered ponds and
bioretention gardens.
2.7 The CunentWater Budget
The curent water budget (mWB) can be assumed to be in balance (changes in
WB on an annual average equal 0), since the dernands on the system have developed
depmdent on the available water resources and infiltration capacity. We use an infinity
sign to signr& the long-temr balance that has developed for the natural system, in
contrast to an altered or developed land surface. There is no excess surface water nrnoff,
because there is no s&enm or cteek which conveys surface water runoff or channelization
that has evolved on the land surface. The annual average water budget for the curent
system is therefore defined as:
-WB = Rainfall- Evapotranspiration - Groundwater recharge (1)
ln Equation l, the amount of rainfall either cycles back into the atrrosphcre
through evaporative and vegetation use, collectively referred to as Evapotranspiration, or
the rainfall infiltrates through the soil to recharge groundwater. On a monthly timescale,
there is a potential for high rainfall winter months to create surplus water that is ponded
on the ground surface in wetlands, bogs, and fens and then slowly infilrates (or
evaporates). Equation 2 describes the adjustment to the water balance in the winter
caused by an increase in rainfall. There is a decrease in evaporanspiration due to cooler
temperatures, and increase to groundwater recharge at the manimum rate defined by the
4
2.0 The Water Budget
The water budget, or water balance, is important for rurderstanding how changes
to one component ofthe hydrologic cycle will affect other components in the system. In
all systems, when more resources are available than are used, there is a stuplus; when
more resources are needed than is available, there is a deficit. In natural systems,
vegetation develops over long time scales in balance with the available resources.
Engineered hydrologic systems are generally developed to overcome a deficit of water
during dry summer- high demand srmuner months. The long-term effects of the changes
are subject to a range of urcertainties. But by definition, land development and the
associated land cover change, alters the water balance by changing the seasonality of
supply and demand.
soils infiltration capacity (Groundwater recharge,,-.). lncreases and decreases in each of
the components of the water budget are shown with up and down arrows (respectively),
with a positive (+) water balance (or surplus) shown for the winter. Equation 3 depicts the
summer water balance as defined by a decrease in rainfall. There is an increase in
wapotranspiration due to wann€r daily temperatures, a groundwater recharge rate limited
by the soil infiltration capacity and the available water (Crroundwater rechargenaxavrihbb).
A negative (-) water balance or deficit is shown for thc srunm€r. Summer water dcficits
result in unmet water demand by the vegetation, since both evapotranspiration and
recharge are limited by the available water.
+-WB winter = Rainfall t - Evapotranspiration O - Groundwater recharge.o (2)
--WB rummcr = Rainfall O - Evapotranspiration f - Groundwater recharg€mrxrvarraue (3)
Taken together, winter and summer water budget @quations 2 &3) are in an
annual balance @quation 1), where the annual precipitation, the capacity of the land
surface to hold excess water in wetlands, the water use by vegetation, and the
groundwater recharge function together to balance the system.
2,2 Water Budgetfor the Proposed Resort Detrelopment
The water budget ( AWB) estimated for the dweloped resort will depend on
change to the land cover and water use. Here we use the delta symbol to signiff a change
to the annual waterbudget compared to Equation l. The dernands on the current watsr
budget depend on alteration of the land surface due to resort development, which will
modiff water ponding, or sahrated surface water holding, infiltration to groundwater,
and surface runoffquantity. The natural undisturbed soil surfaces, with high ponding
capacity, are proposed to be reduced from 220 acres of mature forest to 60 acres of
mature forest Additional bioretention gardens wittr high infiltration capacity are also
proposed, but we arc not aware of the exact plan and number of acres of bioretention
gardens and their planned capacity. Impen ious surfaces (planned for 37 acres of the
resort) will generate surface runoff. The addition of this Surface Runoffvariable to the
water budget (Equation l) is shown in Equation 4.
AWB = Rainfall - Evapotranspiration - Groundwater recharge - Surface Runoff
(4)
Evapotranspiration from the developed resort is expected to be reduced in the
winter with less forest transpiration, and increased in the swnmer with more grass
evapotanspiration than current forested conditions. This is explored further as shown
conc€phnlly in Equations 5 and 6. The decrease in winter evapotranspiration will result
in an increase in surface runoff. Simultaneously, the groundwater recharge will be
5
reduced because ofthe change in land cover and the associated reduction in surface water
holding capacity compared to urdisturbed soils of the mature forest. In the winter, we
can expect a water surplus due to reduced evapotranspiration and reduced soil moisture
capacity (Equation 5) compared to the current conditions @uation 2). An increase in
summer evapotranspiration supported by irrigation pumphg will be used to zupply the
full potential evapotranspiration water demand of the landscaped grass. Because of the
increased evapotranspiratim demand, less water will be available for groundwater
recharge in the summer, and impervious surfaces will continue to generate surface runoff
during rain even6. ln the summer, we can expect a water deficit due to the increase in
evapotranspiration" runoffand associated groundwater pumping @quation 6) compared
to the curr€nt conditions @quation 3).
The annual average water budget for the proposed system in the winter aad
surlmer is defined as:
++AWB winter = Rainfall t - Evapotranspiration $O - Groundwater rechargerrr.t,
+ Surface Runoff t (5)
-AWB summer= RainfallJ - Ewpotranspiration tf-Groundwater recharge..rararbbh0
+ Surface Runoff f (6)
Equations I through 6 provide the conceptual framework for how land use
changes af;[ect multiple variables simultaneously. The best way to understand how these
variables operate in concert, is to use observed climate data to estimate average values for
each component of the orr€nt and developed water budget. In the following sections, we
estimate on a daily timestep, and then average by month, how the land cover changes due
to the proposed resort development will increase the winter surplus, and increase the
summer deficit. This level of detail is required to understand whether tlre proposed
changes to the peninsula water budget will be adequately addressed by the proposed
engineering solutions to protect the Black Point aquifer from drawdown and the risla of
saltwater intrusion, as well as protect Hood Canal from increased surface water runoff
and the associated water quality degradation &om of the surface runoff.
3.0 Evapotranspiradon
Evapotranspiration is a key element of the water balance whereby water is
converted from liquid to vaporphase. Evapotranspiration (ET) is the combination of soil
and vegetation processes where water is removed from the ground surface and
transmitted to the atmosphere. Depending on the land cover and stage of vegetation
growth, water is removed from soil and water surfaces by evaporation as well as
transpired by trees or crops. Potential ET is the amount of water that can be evaporated
and transpired given an unlimited supply of water. Nonnally ET is limited in summer
months by the water availability, which is termed Actual ET. Actual ET is affected by
6
climate conditions of rain (or irrigation water), temperature, wind speed, humidity, air
pressure, and solar radiation.
Evapotranspiration estimates presented in this report were calculated using the
ASCE2 standardized Penman-Monteith ET equation (Jensen et al, 1990). The available
weather daa used for calculation of evapotranspiration includes l) daily total solar
radiation, 2) average wind speed, 3) minimum daily temperature, 4) maximum daily
temperature, 5) minimum daily relative humidity, 6) ma:rimum daily relative humidity,
and 7) precipitation recorded in Quilcene starting in 2006 and continuing to present day
(for this report, analysis ended March 31, 2010). Solar radiation is a required input
parameter for the ASCE standardized Penman-Monteith ET equation. This method for
calculated ET was recommended by the 1999/2000 ASCE Task Committee on
Standardization of ET (Walter et al., 2000). The FAO Penman Monteith methods (Allen
et al, 1998) used in the Environmental Impact Statement (Subsurface Group, LLC,2006)
to calculate ET predate the ten year old ASCE recommendation. Although climate data
has been collected at the Quilcene station since 2001, solar radiation data was only
available for 2005-2010. This five-year dataset provides the parameters necessary to
more accurately estimate the water balance variable of ET, used in Equations I through 6.
The evapotranspiration rate of approximately 24 inches per year reported in the
EIS (Subsurface Group, LLC, 2006) and Water Supply Bulletin No. 54 (Grimstad and
Carson, 1981), represents the ET ofa grass land covered surface. It does not account for
the seasonal differences in water demand (transpiration) of forested land cover that are
currently rnm€t in the summer. In this study, the Eanspiration of mature forest was
estimated using the observed transpiration of a mature Douglas-fir forest in a maritime
climate (Boweld and Bouten, 2001), where they reported a minimum transpiration rate
for nighttime and dry conditions and a maximum peak daytime and wet transpiration rate
that equates to an annual transpiration range of 20-50 h/)rl. The soils used in developing
this reference transpiration estimate were well-drained on ice-pushed sandy loam and
loamy saod texttred river ssdimsnts (Tlpic Distocrepts), similar to those present on
Black Point Peninzula. About 90% of the fine root length can be expected to be found in
the topsoil to a depth of l6 inches (Olsthoorn, l99l).
Figure I illustrates how the annual average rainfall and ET varies under current
forested conditions and developed grass-covered conditions throughout the year. The x-
2 American Society of Civil Engincers
3 Thcse values for watcr usc by Douglas-Fir forcst was confirmed by author of the refererped article, Fred
Bosvcld, pcrsonal corrcspondcncc, 05/l 0/201 0.
7
axis begins in July so that the winter months are centered in the plot. Using the Quilcene
dataset (2005-2010), the average monthly rainfall (Figure l, blue line) ranges benreen I I
inches /month in the winter and I incb/month in the summer. The potential forest
transpiration (Figure 1, solid dark green line) demand is consistently between 2-3
inches/month. ln the surlmer, water demand is partially met by available surface water
stored in wetlands near the surface. But once the ground surface dries out, there would
not be enough water available to meet the forest transpiration demand; instead, the Actual
forest ET is the estimated water dsmand (Figure l, dashed dark green line). In the
winter, 2 incheVmonth is consistently used by the forested vegetation, whereas the
Iandscaped grass demand (Figure l, solid light green line) is close to 0.
This difference in the seasonal water demand between the forest ET and the
landscaped grass ET has implications for generation of surface water nrnoff The
reduced grass ET demand in the winter contributes to a change in land cover from forest
to grass increases the surface water nrnoff(or water budget surplus) in the winter. The
summer water demand for the inigated landscaped grass (Figure 1, solid light green line)
peaks at a monthly average of 4 incheVmonth. Unlike the deficit water availability ttrat
causes the difference between potential and achul ET for forested conditions, we can
assume that the landscaped grass potential ET, the maximum deman( will be met by
irrigation. The difference between the peak demand in July of grass (4 incheJmonth),
compared to the minimum water availability from rainfall (at less than I inch/month), we
assume will be met by the surface water stored in the planned l7-acre lined pond and
supplemented by groundwater pumping. Using the Quilcene dataset (2005-2010), the
average aonual rainfall estimate for the Black Point Peninsula is 47.5 inches/yr. Of this
nnnual average, 24 inches/yr is consumed by forest ET (actual)- The annual water
demand for grass ET would be 19 inches/yr . Whether the surplus rainfall, or rainfall in
excess of ET deman4 will recharge the groundwater or become surface water runofr,
depends on the developed land cover conditions of the proposed Pleasant Harbor Resort
and Golf Course and the infiltration mte of the underlying soils.
8
t2
10
8
6
4
2
0
-
ft3lp
-Grass
ET
-
Potential Forest ET
- - Actual Forest ET
789101112123455
Month
Figure l. The average monthly change in available rainfall, matureforest transpiration
and grasis evapotranspiration demand.
4.0 Groundwater Recharge and Surface Water Ponding
ln order to estimate the effects of removal of mature forest from the proposed
development site and replacement with cultivated grass, irrigated landscaping, and
impervious surface, the EIS (Subsurface Group, LLC, 2006) presents an estimate of
aquifer recharge derived by subtacting annual ET and change in groundwater storage
from annual precipitation. If it is assrrmed that the water budget balances betweelr annual
precipiation and the water qtuntities consumed via ET, zurface water runoffand
groundwater recharge Equation 4 can be expressed as:
A Groundwater recharge = Rainfall - ET- Surface Runoff (7)
A positive change in grouadwater storage, implies that excess rain is recharging
the groundwater aquifer. A negative change in groundwater storage would be expected
to lower the water table.
Missing from the EIS water budget analysis is the surface water storage effects of
ponding on groundwater recharge, which occurs when the precipitation accumulated at
the gound surface exceeds the morimum soil infiltration capacity. Equations 8 (current
water balance) and 9 (developed site water balance) depict adjustnents to Equation 7 to
account for the surface wat€r storage ponding affecE. Rainfall and ponded surface water
9
accumulate at the ground surface under cunent soil conditions of the undeveloped site
(U) (expressed in Equation 8 as Surface Storageu) when the quantity of ponded surface
water exceeds the arnount that infiltates at the maximum annual groundwater infiltration
rate of 23 idyr, or 0.063 nlday (Morgan and Jones, 1999; Vaccaro et al. 1998). This
rate is also used as the annual rate for surface water infilration through bioretention
gardens designed for high infilration capacity. Because there is no surface water runoff
occurring from the site under current forested conditions, we have assumed that the
ponded surface water storage capacity of the undeveloped site is sufficient to store all
accumulated surface water until it is either evapotranspired or infiltrated. For the
developed resort site @) conditions, the soil ponding capacity is assumed to be less than
ttrat of the current forested conditions due to grading and filling; this is represented in
Equation 9 as Surface Storagep. With the decreased soil infiltration capacity from ttre
resort development a greater amount of water accumulates at the grcund surface,
exceeding the surface water storage capacity. As a consequence, surface water ruooffis
generated, and is included in in Equation 9.
- Groundwater recharge = Rainfall + Surface Storageu - ET (8)
A Groundwater recharge = Rainfal! + Surface Storagee - ET - Surface Runoff
(s)
To incorporate thc af[ects of surface water storage (ponding) into our water
budget, each of the components of the water balance was calculated on a daily timeste,p
for the entire year using groundwater recharge estimated as the amount of water that
infilnated daily from the available surface water storage (rainfall and ponding) after the
ET water demand was subtracted. The maximum infiltration rate was set at 23 idyear
for mature forest (Morgan and Jones, 1999; Vaccaro et al., 1998). Water that ponded at
the ground surface in excess of the soil infiltration capacity for the daily timesetep was
carried over to the next day's timestep calculation. If the amount of surface water storage
present exceeded the nent day's daily ET uptake, water infiltrated to recharge
groundwater for that day.
For the current forested conditions, the surface water storage Aom ponding
estimated to be held in bogs, wetlands, or kettles ranged from 0-5 inches in the surnmer,
and from l0 to 35 inches in the winter (illustrated by the blue line; Figure 2). For
landscaped grass, the ponrling raoges from 0 to 2 inches yearround- A significant
component of the ET dernand for the landscaped grass is assumed to be met by irrigation,
which is intensively rnanaged to minimize surface water ponding.
Our groundwater recharge estimates are geater than those presented in the EIS
for the currcnt forested conditions because we account for the high infiltration capacity of
the forest soils (Morgan and Jones, 1999; Vaccaro et al., 1998), as well as the capacity of
10
ponds and wetlands to store and infiltrate zurface water. Correspondingly, the impacts to
groundwater fiom the conversion offorest to landscaped grass cover generate a greater
groundwater deficit than presented in the EIS, due to the rduction in groundwater
recharge associated with the groundwater pumping required to irrigate grass in sufiuner
months and the reduction in ponding capacity.
ctJs
-
Forest Ponding
_Grass Ponding
/rc
35
30
25
20
15
10
5
o
c* "o-. co co "rc c*
Figure 2. Forest and landscaped grass ponding depths.
Figure 3 shows the monthly annual average recharge in unis of acre-ft per month
comparing recharge ruder the current conditions of 220 acres of mature forest (Figrre 3;
blue line), and recharge for the proposed resort development conditions with land use
modifications as listed in Table I (Figure 3; teal line). With 60 acres of forest rcmaining
untouched, 60 acres ofdeveloped golfcourse, and 37 acres ofimpervious surface, there
is only 46 acres remaining that we assumed would be developed into the bioretention
gardens required for the planned management of the stormwater generated from the
impervious surfaces.
ll
T
E
Table I. Resort land cover areas
Acres Land Use
60
60
37
L7
46
Golf Course
Mature Forest
lmpervious surface
Lined Pond
Bioretention (assumed)
220 fotol Proposed Development
The maximum available land surface is 46 acres that could be engineered for
managmg the 146 acre-ft of average annual water that will precipitate on 37 acres of
impervious surfaces, based on the planned areas for the resort golfcourse, foresl
impervious surface and lined pond areas (as listed in Table l). With a 23 inches/year rate
infiltration rate, 46 acres of bioretention gardens would have the capacity to infiltrate 72
acre feet of water annually (or a maximum of 7.5 acrr feet of water per month giveo 12
inches of ponding, and minimum values of 2.5 acre-ft in August and Septembet 2020
Engineering estimated that rainwater harvesting fum the 37 acres of impervious area
would generate 132 acrc feet of surface water annually (glven the 55 inches average
annual precipitation recorded at Quilcene). We have estimated 146 acre feet average
using 2005-2010 rainfall data.
If the entire impervious area runoffof 146 acre-ft was to be directed to
bioretention gardens, in addition to 182 acre-ft of rain falling directly on bioretention
gardens, there would a total surface water input of 328 acre-ft of water. Of this total
surface water input, only 74 acre-ft are used by ET, xnd,72 acre-ft can recharge given an
nndrained filhation capacity limited by the underlying soils (23 inlyr) and a 12 inch
ponding capacity. For the 83 acres of impervious zurface and bioretention gardens, this
leaves a rernainder of 182 acre-ft of annual surface runoffoccurring primarily between
October and March, that is not addressed by the current plans. Figure 3 shows the
average rnonthly rainfall on 37 actes of impervious surfaces (blue line), the bioretention
garden recharge capacity assuming 46 acres of bioretention gardens with a maximum
capacity of 7.5 acre-ft (green [ine), and the resulting surface runoffof rainfall in excess of
the bioretention recharge capacity (brown line). The annual average surface runofffrom
impenrious surfaces totals 146 acre-ft which will need to be captured and treated to
avoid contaurinated surface water runoffto Hood Canal . Bioretention capacity, if used
in the development, will be limited by the rain falling directly on the gardens. Without
t2
filtration and drainage systems, there wi[ be no excess capacity to capture and store
runoff from impervious surfaces..
80
70
60
+s0g40u
20
10
0
\\
-V!/3tg1
Input
-
Bioretention recharge
Surface Runoff
789101112L23456
Momh
Figure 3. The average monthly estimated groundwater recharge of bioretention
estimatedfor managing the rainfall on 37 acres of imperttiotu sudacesfor the
proposed development land cover.
Figure 4 compares the monthly average goundwater recharge for the existing
conditions of 220 acres of mature forest with recharge for the developed site mixed land
use (as listed in Table l). For the existing forested site, groundwater recharge ranges
between 22 and 35 acre-ft per month, for a total of 351 acre feet per year recharge. For
the developed conditions, monthly average recharge rate ranges between lG25 acre-ft
given ttre mix of land uses, for a total of 230 acre-ft per year. Subtracting 69 acre-ft of
commercial and domestic groundwater demanda, results in an annual recharge balance of
160 acre-ft. Table 2 lists sources of recharge from the proposed developed mixed land
use where 99 acre-ft recharges from the forested lan{ 69 acre-ft from the landscaped
area, and 72 acre-feet recharges through the bioretention areas. Comparing the current
recharge rate of between 300-350 acre feet/year, with the data-based estimates for
developed conditions, 150-200 acre feeUyear, shows that the recharge for the developed
resort will be 45% of the current recharge.
a Irrigation watcr demand is assumed to be taken primarily fiom lined pond storage. Tlre actual
dcmand is explorcd in the next section.
l3
40 T-*-
3s +_
-orTcntGroundwater
rechrrgr
-Proposcd
Recharge
(For6t +Golf
Courie +
Blorctcntion)
I 2 3 4 5 6 7 I 9 101112
nonttr
Figure 4. The average monthly estimated groundwater recharge under crnentforested
conditions exceeds the estimated rechargefor the proposed development land
coverfor every month ofthe year.
Table 2. Annual groundwater we estimates and groundwater rechargefor the da,eloped
resort land cover
Groundwater Source or Use water+
(acre-ft)
Water -
(acre-ft)
(acre-ft)
Recharge from forested land
cover
96
Recharge from landscaped
areas
64
Max recharge from
bioretention gardens
69
Commercial & Dom. Pumping 69
Totol Rechorge 7ffi
Subsurface Group, LLC (2006) interprets the connection between ground water
level and precipitation to generate a significant rise in groundwater elevation with
precipitation eventss. Grorurdwater elevation increases occurring one to two dap after
precipitation events leads the authors to the conclusion that oflsite water (such as the
30
25
20
15
10
5
0
'Page 7 of 19 in EIS.
l4
t€
Duckabush River or drainage from the mainland) are the source for the groundwater level
increases, as rainwater cannot be expected to infiltrate 100 vertical feet in a 24-48 hor:r
time period. This orplanation assumes an unsaturated or dry soil profile, and that all
precipitation events could be expected to have the seme response. Altemate explanations
that merit firther evaluation include the presence of perched water tables or saturated soil
profiles, with groundwater response based on wet versus dry antecedent conditions. If
the water level response is linked to water held at intermediate levels in the soil profile,
the effect of land cover change and seasonal changes in water level response would be
more extreme than is currently observed.
5.0 Water Use Estimation
The difference between surface water availability and water demand can be
expected to vary on a year to year basis depending on the annual rainfall. Figure I shows
the average monthly water demand for forest and grass evapotanspiration which in
reality varies from year to year, and throughout the year, as shown in Figure 4. Most
rainfall occurs in the winter months (Figure 4; blue line) and the peak ET water demand
(Figure 4; red line) occurs in the summer months. fls fiming and the magnitude of the
variations in rainfall and evapotanspiration also change from year to year. Figure 4
shows the rainfall and ET variations for the sixty acres of landscaping planned for the
developed resort. Using the 2005-2010 Quilcene weather data, the 60 acres of irrigated
landscaping would rcquire an amount of water rcpresentcd by the difference between the
rainfall (blue) and the ET (red),when the ET rate exceeds the amount of precipitation
received per month (the red line has a higher value than the blue line). If there is
insufficient water available to meet the landscaped grass ET demand (the periods when
the red line has a higher value than the blue line) the difference is zupplied by the
irrigation requirement (Figure 4; green [ine), which is at a peak every year around July.
l5
25
20
15
10
5
Et,g
0
lD 10 rD lo rI, rD F t\ F F t\ F O OO OO O 6 CO Ot Oi Or Or Or gr9999?C99999?9?9Q99CQ?999
E S gE a'! E g gE,s'E E S g= SE E S gE,g' !
-Rain -Potentlal
Grass reference ET lrrigation requirement
Figure 4. Monthly time series of obserted rainfall, calcalated ET, and the resulting
pumping requirement givenfouryear of observed weather data (2006-2009)
To calculate the daily inigation requirement shown in Figure 4, the precipitation
amount and evapokanspiration demand were estimated on a daily timeste,p. An 85%
sprinkler irrigation efficiency was assumed for the 60 inigated landscaped acres, which
resulted in an annual average estimate for irigated wat€r use of 62 acre-ft (rangng
between 44 nd 74 acre-ft per year), depending on the weather (rain, temperatue, and
solar radiation). If 59 acre-ft of reclaimed water (from the 65 acre-ft of commercial and
domestic water available from groundwater pumping) is stored in a lined pond, an
additional 10-20 acre-ft per year may need to be pumped from groundwater to supply
irrigation demand during low precipitation (non-average) years. This is less than the 108
acre-ft annual inigation estimate by 2020 Engineering for the Golf Course and the
FireSmart programt.
To estimate the amount of domestic pumping for each month we used the2020
Engineering (2007) assumptions of 890 units with 32 gaVday water usage per person,
with 85% occupancy in the peak season, 50% occupancy in the mid season, and 30%
occupancy in the low season. The 28 acre-ft annual estimated commercial usage was
divided evenly throughout the year.
6 It is rurclcar which acres will be trcatcd with thc Fircsmart program; so fiis additional dcnrand
w8s not included. Itey may be inigating &e 6,0 acres of nrature forest, or irrigating the 47 acres of what
wc arc assuming to bc 0rc biorctation gardan footprint rcquircd to capturc impcrrrious surface nmoff.
l6
Figure 5 shows ttre monthly averages for groundwater recharge and pumping for
current and developed land cover (also shown in Figure 3), along with the pumping
allocated to supply the irrigation demand, and the cumulative impacts to the groundwater
aquifer from the resort development and operation. Monthly pumped amounts (to zupply
irigation deman4 commercial and domestic consumption) are shown to illushate the
relationship benveen monthly average estimates of the groundwater pumping requirement
(Figure 5; red line) and groundwater recharge. The combined impact to the groundwater
aquifer from pumping and reduced groundu,aterrecharge due to the changes in the land
cover and associated resort landscaping is illustrated by the thicker navy blue line
(recharge-pumping) . Note that the surnmer aquiferbalance is in deficit grvem the higher
commercial and irrigation demands during those months. Comparing the existing
groundwater recharge under current conditions (royal blue line) with the groundwater
recharge predicted under the dwelo@ site conditions (light blue line) reveals that the
combined resort developm€Nrt land cover and water use will g€nerate a significant
reduction in groundwater recharge to the aquifo for wery month of the year.
recharge
-
Propo.cd Rr3h.rge
Forcst +
Land*epe +
lmpv.Surfacc)
1234S 9101112 -$7qu6dsils7
Pumphg (lrr &
Comm & Dom.
Demand -
Redelmed)
-RechaqerPumping
month
Figure 5. The monthly average water budget variables afecting groundwater recharge in
the proposed development, compared to the estimated current groundwater
recharge.
Table 3 lists the average monthly rainfall and corresponding rainfall harvesting
from 37 acres of impervious surface, and l7 acres of direct rainfall to the lincd pond.
2020 Engineering( 2007) estimated 60 acre-ft of water supply from direct rainfall on the
pond and our total is sligfitly higher at 67 acre-ft. The pond storage from direct rainfall
(67 acre-ft) plus the 59 acre-ft of reclaimed water makes a total of 126 acre feet or
approxirnately 4l million gallons on average needed for annual storage or treament
t7
40
35
30
253E20Ers+10
a,usri
0
-s
-10
-15
Groundwater-Cumnt
7
I
capacity. This 4l million gallon storage capacity is based on an annual average rainfall
of 47 inches/yr; but a pond designed to capture surface runoffshould be sized large
enough to retain more than the average rainfall amount each year. For example, in 2006,
the annual rainfall was 6l inches. A pond sized at 60 million gallons would be
inadequate for capture and storage of the rainfall and reclaimed water for that year, aod
for other years ofhigher than average rainfall.
Table 3. Monthly average rainfall and the resulting total volumes of impentious sudace
runof and direct rainfull inputs to pond.
lmpeMous
Surface Pond
Raln 37 acres 17 acres
Month inlmonth acre-ft acre-ft
1 7.O 21.5 9.9
2 3.3 10.3 4.7
3 4.L 12.6 5.8
4 3.1 9.6 4.4
5 2.8 8.5 3.9
6 1.7 5.3 2.4
7 0.7 2.3 1.1
8 1.O 3.2 1.5
9 1.1 3.5 1.5
10 3.2 9.8 4.5
11 10.3 31.8 14.6
L2 9.1 28.0 L2.9
Totol /yr 47.s 716.5 67.3
6.0 Comparison of Currentand Developed ResortWater Budget
To evaluate the changes to the Black Point Peninsula hydrology that may result
from the development of the Pleasant Harbor Resort and Marina, we compared the water
balance for the existing Black Point Peninsula (mahre forest conditions) with the
developed and inigated land cover (proposed for the resort development) using climate
data collected at Quilcene, starting from when the solar radiation data was available
(March 2005- March 2010). The diffcrence between rainfall and ET demand was
calculated for current site conditions using a seven day running average where the ET
l8
was limited to the available rainfall. The developed site golf course grass water balance
estimates include ET calculated for grass and adds groundwater pumping for irrigation
required to meet grass water demand; grass potential ET ranges between 0.1 to 4
inches/month. The mature forest water demand (for the j66xining 60 forested acres)
ranges betweeir a minimum of 1.5 to 2.5 inches/month. Available water rqnnining 6ftsr
meeting evapotranspiration dernands was treated as recharge up to a maximum
infilnation rate equivalent to 23 inches/yr (0.063 inches/day). If additional water was
lg6nining after recharge, this water was added to surface storage ponding in the forested
condition. The storage that accumulated was the sum of excess surface water
accumulationT plus the storage available from the previous day. The surface storage
ponding was limited to two inches on the 60 acres of golf course grass.
Figure 6 shows how the monthly average rainfall is cune,otly divided between
forest transpiration" and groundwater r€charge for the 220 acres in the current forested
condition. About half of the available water evaporates, while the other half infiltrates
and recharges the aquifer. There is a seasonal shift where there is more ET and less
recharge in the zummer, and more recharge and less ET in the winter. Witr the curent
land cover, there is an annual average of35lE acre-ft ofaverage annual recharge.
Figure 7 shows the resulting increase in surface runoff and decrease in recharge
with the development land cover condition of 60 acres of mahre forest, 103 acres of
landscapedgrass(golfcourseplusbioretention), lTacresofpond"and3Tacresof
impernious surface (Table l). With this land cover, we estimate a total annual average
recharge of 160e acre-ft after commercial and domestic pumping, and supplementary
irigation pumping.
7 Excess surfrce accumulation is the sum of water available after mecting ET demands and afler
infilfating to the maximunr daily infiltration capacity.
t35l acrc-ftisthcannualavcragcusingdatafromwatcryean2006-2009(10/l/2005-9/302009).
362 acrc-ft is the annual sum of the monthly average usiog data from 3123nO05-313112010.
e 160 acre-ft is the annual averagc using data from water years 2006-2009 (10/l/2005-9/302009).
I72 acre-ft is the annual zum of the monthly avcragc using data ftom 3t23DO05-3Bln0l0.
l9
100%
90,95
8@6
70r$
5096
5()96
4o,i
30x
2@6
1096
@i
I Current Forest
Demand
! Current
Groundwater
recharge
1234567891011t2
month
Figure 6., The distribution by month of rainfall used to meet ET demand and recharge
gtoundwater in mature fores t conditions.
100,6
90%
80x
7W$
6016
50%
40r$
3096
20%
1()96
w
I Surface Runoff
I GrassET
lForest ET
A Estimated Recharge
L234S 67
montt
891011t2
L
Figure 7. The monthly water distribution between the water balance components is
shownfor the resort development land cover scheme of: 60 acres of mature
forest, 103 acres oflandscapedgrass, l7 acres ofpond, and 37 acres of
imperttious sudace.
20
With the developed site land cover, considering impervious surfaces and
landscaped grass, there is less surface ponding capacity and increased surface water
runoffduing the high rainfall winter months. This surface water runoffreduces the
annual average recharge as it drains overland from the site instead of infilrating to
recharge the aquifer. We estimate that the surface nrnofffrom landscaped grass is190
acre-ft annually, which will require watcr treafinent for rernoval of herbicides and
fertilizers. The surface runofffrom impervious surfaces generated is 146 acre-ft. Surface
nrnofffrom impewious surfaces (in excess of bioretention capacity assuming 47 acres of
built gardens) and surface runofffrom landscaped grass, totals 330 acre-ft per year on
average. This surface runoffoccurs primarily in the winter months. Depending on
storm pattems, the monthly surface runoffmay range between I acre-fly'month in the
summer to 64 acre-fl/month in the winter. The total amount of water requiring
matragement in the development is shown in Table 4.
Table 4. Ilolumes ofwater requiring surface water management or treatment in the
proposed development.
acre-ft gallons
Landscaped grass surface runoff 155 50,553,247
Surface Runoff from impewious
surfaces and direct rain on 6ardens in
excess of capacity
139 45,146,516
Lined pond size requirement to
contain direct rain and reclaimed
water
L27 41,289,398
Total quantlty requlrlnt ruater
requirlrg management 42 136,999,161
2l
Table 5 summarizes the water budget for the current conditions of 220 acres of
mature forest. The annual average rainfall volume Aom 2005-1010 was 743 acre-ft; 435
acre-ft was used to me€t ET deman4 and the 66ainisg water volume recharged the
groundwater. Depending on the timing of rainfall throughout the year, the result of using
a daily data-based approach show the current aquifer recharge may range betrneen 300-
350 acre-ft per year.
Table 5. Water Budget resultsfor current conditions 2006-2010.
Acres Land Use
22O Mature Forest
ln their resort plans, 2020 Engineering (2007) prcsents a watcr balance summary
(in Figure 2-3 Water Cycle concept flow diagram) that calculates an average aonual
rainfall of I 03 I acre feet per year; 491 acre feet of which is allocated to groundwater
infiltration. An additional 136 of the accumulated surface water runoff, precipitation
onto storage ponds and reclaimed water is stored at the ground surface (257 acre feet) in
storage ponds. The pond storage capacity described in the 2020 Engineering report is
125 acre feet, leaving approximately 132 acre feet of surface water generated annually
beyond the planned storage capacity. Given the water uses listed for the 257 rcre feet of
surface water storage (golf course inigation, 90 acre feet, fire smart irigation l8 acre
feet; evaporation from the storage rcservoir, 13 acre feet; and aquiferrecharge, 136 acre
feet of excess surface water proposed to recharge groundwatet. These values are listed
by land use and water source in Table 6a as the EIS water budget.
The very low infilration rates ofthe till sediments below the proposed Resort site
make the achnl mechanism for tansport of this quantity of surface water into the
ground unrealistic. Figure 2-3 of the 2020 Engineering report shows this 136 acre feet
as recharging groundwater through a "box" extending from the ground surface to the
ground watcr that is supplied by overflow from the storage reservoir. In addition, the
estimate of 491 acre feet of groundwater infiltration for the site, is also unrealistic and
beyond the till sediment infiltration capacity. Surface water cannot actually be infiltratd
into the ground through a box; the low infiltation capacity of the till sediments (23
inches/ yr) maudates that an area of approximately 65 acre feet of grormd surface is
required for infilnating this quantity. The current resort configuration does not include
land designated for surface infiltration only. Without a realistic means of groundwater
infiltration, o(cess surface water will runoff, with the potential to transmit contaminants
to the surrounding surface waters of Hood Canal.
The estimate of high quantities of surface runoffare supported by the data-based
water budget shown in Table 6b using nnnual averages of the daily data and calculations
described earlier in this report. The annual average recharge by infiltration with the
proposed land use (Table 1) would be approximately 229 acre-ft. To give a comparable
22
Rain ET Recharac
743 435 308
annual rainfall amount to the EIS, we also show results in Table 6c using the same data-
based methods, but for 2ffJ6, a year with rainfall similar to the long-term annual rainfall
estimate. Using 2006 rainfall, the annual recharge would be approximately 259 acre-ft.
In Table 6a, the EIS estimate and development plans, the total surface water input
is the sum of I 13 I acre-ft ofrainfall, 90 acre-ft ofirrigation for golfcourse grass, and 1 8
acre-ft for the Firesmart program; the total is 1249 acre-ft. In Table 6b, the daa-based
surface water input is the sum of 743 acre-ft of rainfall, 59 acre-ft of irrigation water
plus 18 acre-ft for the Firesmart program; the total is 820 acre-ft. ln Table 6c, the
surface water input using 2006 data totals l06E acre-ft. Although there was higher
rainfall in 2006 compared to the average, it fell p,rimarily in the winter. An additional 4
acre-ft would have becn required for golf-course irrigation based on surlmer rainfall
amounts and temperatures.
Table 6a, 6b, 6c. Water Budget Comparison between estimotes presented in this report
and in the EIS (Subsurface Science LLC, 2006)- The unaccountedfor surplrc in both the
cttrrent and darcloped stte EIS water budgets indicates that unaccountedfor water
storage is occurring in the water management scheme.
Table 6a. EIS Water budget
Acres Land Use
Total Source
Golf Course (irrigation)
Mature Forest (Firesmart)
impervious surface
Lined Pond
Bioretention
Total Proposed
22O Development
60
60
37
L7
46
Rain ET Recharge
Ground
water
Pumplng
Pond
Pumping
Pond
Containment
1131 508 491 65
90 90
18 18
t32
13
1239 521 491 65 108 t32
23
Toble 6b. Data-based Water ktdget
Aoes Land Use
Total Source
50 GolfCourse
60 Mature Forest
37 impervious surface
L7 Lined Pond
46 Bioretention
Total Proposed
22O Development
Table 6c. Data-bosed Vater budget (this rqort)for 2006, a water year with comporable
rain as the EIS annual rainfall estimate
Acres Land Use
Total Source
60 GolfCourse
60 Mature Forest
37 impervious surface
17 Lined Pond
46 Bloretentlon
Total Proposed
22O Development
The summary results of the water budget using data from Table 6 are shown in
Table 7 for annual surface runoff, annual increasc to pond storage, total excess water
requiring management and estimated addition to aquifer. Using the EIS and
dwelopment plan water source and use values, thcre is 192 acre-ft of annual surface
ruaoffthat is not addrcssed in their plans. This is derived using an unrealistic infiltration
rate and uuexplained excess recharge into a box discussed earlier in this report. Using
data-based values (2005-2010), the annual average surface runofffor the proposcd
development may be 330 acre-ft or up to 520 acre-ft on a high rainfall year (i.e. 2006).
24
Rain
ET
(total)Recharge
6round
water
Pumping
Pond
Pumping
Pond
Containment
743 55
s9 101 64 59
18 119 96 18
0 0 146
29 0
77 59
820 ?26 229 65 TI 146
Rain
ET
(total)Recharge
Ground
water
Pumping
Pond
Pumping
Pond
Containment
987 65
63 104 59 63
18 t47 115 18
0 0 t6
30 0
80 74
1068 355 259 55 81 t6
AII methods and assumptions show that there will be annual increases to pond
storage, not a long-term balance. Management ofpond overflow is not discussed in
developmentplans. The total excess waterrequiring management will be 203 acre-ft per
year using development plan values, but will likely be in the range of 370-555 acre-ft
per year. Inigation requirernurts can be met, for the most part, using the volume of
water expected to be reclaimed by domestic aod commercial use. The rainfall excess
expected to generate surface water runoffon the proposed Resort has not been given
adequate study or planning.
Table 5 and the related discussion show that the curreot necharge is likely ranges
between 300-350 acre-ft per year. The EIS and development plan wat€r source and use
values, when looked at with the waterbudget approach, show that they expect to
recharge ttre aquifer more than cwrent conditions, 426 acre-ft after pumping
requirements. This demonsbates that the infiltation rates they assume are unreasonable,
as they have not proposed any engineering solutions that are expected to increase the
overall infiltration and recharge capacity of the 220 acrts compared to current
conditions. It is more likely, giveir the 23 inlyt infilhation and recharge capacity
((Morgan and Jones, 1999; Vaccaro, et al., 1998) and a data-based water budget
approach, that the proposed dwelopment will reduce the annud rccharge to betw'een
160-200 acre-ft per year. This represents more than a SWo decrease in annual recharge.
Table 7. Water Budget Comparison between estimates presented in this report and in the
EIS (Subsuface Science LLC, 2006). The unaccountedfor surplus in both the
c-urrent and developed site EIS water budgets indicates that unaccountedfor
watet storage is occarring in the water management scheme.
Ers
Data-
based
lnputs
2005-
10
Data-
based
lnputs
2m6 from Table 5Water
192 330 520
Rain-ET - Recharge +
PumpingAnnual surface runoff
11 41 36 Contai nment-Pum ping-ETAnnual increase to pond storage
Total excess water to manage 203 37t 555 Runoff + Pond Overflow
426 1il 194 Recharge - PumpingEstimated addition to aquifer
25
7.0 Conclusions
The Pleasant Harbor Resort and Golf Course consultant reports (Subsurface
Group, LLC,2N6;2020 Engineering, 2007) describe that storm water and sewage
effluent from the dwelopment will by contained in closed systems. Water demand
scenarios divide the220 acre dwelopment into 123 acres of landscaped grass (and
assumed bioreteirtion), 37 acres of impervious surface, and 60 acres of mature forest
(Table l). From the 37 acres of impervious surfaces, water is proposed to be collected
and reintroduced to the aquifer, primarily through the use of bioretention or rain gardens.
Irrigation demand is proposed to be met primarily by a lined 17 acrepond which will
hold direct rainfalt and reclaimed water. Evapotranspiration losses Arom the pond surface
are estimated at less than I percent of the annual pre-development water budget (3
percent by 2020 F.ngrngsring,2007), and recharge is assuned to be maintained over the
yeat.
Using daily calculations of waterbudget variables based on local climate
observations (2005-2010), we used a data-based approach to calculate a watcr budget that
accounts for the seasonal dishibution of rainfall and associated supply and demands of
the cure,nt forested land cover and proposed mixed use land cover. By directly
calculating the evapotranspiration demands, and limiting the infiltration based on a
appropriate soil infiltration capacity rate, we were able to more directly estimate not only
the recharge, but the surface runoff. Surface water quality degradation in the waters
surrounding Black Point will result from water ruDning offof landscaped
surfaces,containing fertilizers and landscaping chemicals, if it is not captured and reated.
Ofthe annual average ofsurface runoff, 155 acre-ft from landscaped grass that
may require treatuent for fcrtilizers and pesticides and 139 acre-ft from impervious
surfaces which will also rquire trcatment. This represe,nts water in excess of bioretention
garden capacity (assuming highly permeable landscaping is built). A 17 acre lined pond
is proposed to be used to contain on-pond rainfall and teated domestic waste water. This
lined pond is planned for a storage capacity of40,000,000 gallons in an average year and
upwards of 60,000,000 gallons for higher than average precipitation yeas to prevent
overflow of reclaimed water given maximum annual rainfall conditions. The average
annual surface runoff has not been addressed by the proposed development plans. We
estimate that a total of 140,000,000 gallons (420 acre-ft) will need to be managed
annually.
The annual average groundwater recharge is, for the curent forested land use,
approximately 30G350 acre-ft. The recharge estimated for the pr',oposed development
site plan for the Pleasant Harbor Resort and Golf Course is appoximately 16G200 acre-
ft. This represents 45-50% of the current groundwater recharge compared to current
26
conditions. The development plan estimate of 426 acre-ft is based on unrealistic
infiltration and recharge mtes. Because the proposed dorelopment plans do not
adequately account for the seasonal variation ofannual rainfall, the resulting seasonal
changes in surface runoffand recharge and not adequately addre.ssed. If the drawdown of
the local aquifer or discharge of tmtreated stormwater or wastewater into Hood Canal is
unacceptable, tlren the proposed design fails to meet environmental protection and
restoration goalslo. With the continued long-terrr reduction in aquifer recharge, the
groundwater levels can be expected to drop and salt water intnrsion to occur in wells
located along the Black Point Peninsula shorelines.
l0 Z02O Enginecring, January 31,2007,'"lYater Resourcc Managcment: A Sustrinable Water
Rcsource Managcrncnt Plam", Prcpared for Statcsroan Corporation. Pagc 5.
27
Use of this report
Silver Tip Solutions, LLC. has prepared this me,mo for Gerald Steele and his
agents for use in the rmderstanding of the hydrologic conditions of Black Point Peninsula.
The scope of our work does not include services related to construction or design of
water engineering systems. The results presentcd in this report relate to the probability of
hydrologic conditions only on the Black Point Peninsula and not any other watershed or
systern. There are possible variations in hydrologic conditions that may not be
represented in this work. Our report, conclusions, and interpretations should not be
consfiued as a waranty ofhydrologic conditions. We recommend that Gerald Steel and
his agents continue to support the collection of data and consultation services to erraluate
whether futrue conditions differ from those anticipated. lncorporation of updated
climate, steamflow, groundwater, and water use daa into the water budget and
hydrologic modeling system used in this wort may result in different results, conclwions
and interpretations than are presented in this report.
28
References
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