Milton-Freewater is putting a $13,797.18 lien on the only hotel in town, the Morgan Inn.
The city claims the hotel at 104 N. Highway 11 has not paid its transient tax for the past nine months.
Milton-Freewater imposed the 7 percent tax in August 2008. The Morgan Inn is the only hotel within city limits. The Out West Hotel is a mile farther north on Highway 11, but outside city limits.
City Manager Linda Hall said a bed and breakfast in town is only open sporadically. Recreational-vehicle parks have not generated much tax revenue.
As a result, the vast majority of the city fund for economic and community development, including funding the chamber of commerce, came almost exclusively from the Morgan Inn.
In a written statement, Morgan Inn owner Randy Grudzinski called the tax unfair.
We feel the tax is discriminatory,?he said. The tax has caused a financial burden and should be reexamined.
To compensate for the tax, Grudzinski said he had to increase room rates by 10 percent. That drove down business.
He said he offered the city a lower tax rate, but it declined.
Grudzinski also said the hotel helps the area by bringing in visitors.
The Morgan Inn already provides a financial benefit to the community by the money spent in local businesses by our guests,?he said. We also provide a service to local residents by providing accommodations for their family members while in town.
Hall said the Morgan Inn paid the tax on time, with no problems, until nine months ago.
Since then the city calculates $12,744.35 in lost taxes. With fines and penalties, it grew to $13,787.18.
The city calculated the amount from quarterly report forms provided by the hotel, according to city documents.
Hall said the city made many courtesy calls and sent letters to the Morgan Inn. The report is the only response the city has received. Putting a lien on the hotel was the next step, according to city statutes. A lien is a legal claim to ensure payment of debt.
Hall said she hopes the lien will be the action to bring Grudzinski back to the table to work with the city toward a resolution.