Letter to the editor: Hotel tax and technical default


Something interesting occurred during the last Centralia City Council meeting, and then something typical happened. 

During a discussion to allow the Oyo Hotel to be a new apartment building, council member Cameron McGee asked a great question. The question is summarized, since they previously voted to allow the Motel 6 location to be remodeled into apartments and since it is the known intention of the OYO Hotel to become apartments, do they have enough tax revenue from the hotel tax from the remaining hotels in Centralia to pay for the bond on the Northwest Sports Hub? The answer? No.

The bond? This is the bond that the City of Centralia sold to bond holders that allowed for the construction of the sports complex. The sports complex brings in visitors who stay at local hotels, the local hotels are taxed and the bond is paid for by this revenue source. These bonds are called revenue bonds.

The City of Centralia, per the meeting minutes, will not have enough income from the hotel tax to pay their bond bill. The city will have to take funds from the general fund, as in taxes that would be used to pay for other things, such as education, street improvements and many other options. Instead, because the Centralia City Council has voted to allow for the redevelopment of long-standing hotels since the bond was originated in 2010, the city knowingly depleted the revenues of this source to a point that is no longer sufficient to pay our bills.

This would otherwise be a technical default of the bond. The repayment source is no longer adequate. However, in the fine print, it allows the city to dip into the general fund. While a great question to ask during the meeting, typically the council overall decided not to make a vote and to delay any vote, potentially until 2025. The 2010 city council committed the city to $1.8 million in debt through revenues that existed at the time and that should have only grown, paying a fixed payment for the next 20 years. The payment hasn’t increased, but the revenues are going away.

The existing Centralia City Council has, not from a pandemic, economic forces, or any outside government interactions, but through their votes, depleted this source of revenues to the point that the city can no longer pay their bills without raiding the pockets of other funds.

There is no direct finger-pointing, but to the whole council. The vote was unanimous. Wait until potentially 2025 to do anything about it. This is a risk to the City bond rating, which at the time was an A rating. 

Is it now? Future borrowing will cost more, but it’ll also cost more as the current city government is not showing the ability to pay their bills on time through their votes.

This entire conversation was discussed and dismissed about hour three of the more than four-hour city council meeting. Mismanagement and misuse of funds? We have to begin to wonder.


Jeremy Ashbeck