Clatsop County commissioners have rejected an appeal from the Tolovana Inn to waive penalties totaling more than $190,000 for failure to pay the county’s lodging tax.

Guests pay the lodging tax directly to hotels, vacation rentals and campgrounds, and the lodging providers remit the collected money to the appropriate jurisdiction. In 2018, the county passed an ordinance requiring lodging providers to register, file and remit a 1% room tax every quarter.

Before the ordinance took effect at the start of 2019, the county did public outreach and requested contact information for potential filers from each affected city. The Tolovana Inn was not included on Cannon Beach’s list.

“Tolovana Inn is a very unique property, having individual owners for all of their units,” said Julia Myers, the county’s lodging tax administrator. “They are not a hotel. They are not a motel. I can’t speak to why they weren’t on the city list that was provided, but they choose to operate as a rental pool together.”

The Tolovana Inn — a 90-plus-unit condominium in Cannon Beach managed by Vacation Villages of America Inc. — has always paid city and state lodging taxes, but didn’t register with the county when the new ordinance passed. For the first 18 months, they neglected to collect a county tax. In 2020, they began collecting the 1% tax, but never remitted it to the county.

Doug Nealeigh, president of Vacation Villages of America, said the company never intended to evade the countywide tax.

“I can just tell you we are an ethical organization, I have always ran this company following the letter of the law,” Nealeigh said. “If you were to speak to my clients, they would certainly reiterate the ethical approach that we take to everything in business. And this has been an unfortunate misstep.”

Nealeigh said Vacation Villages of America was not initially aware of the county tax. In 2020, when an on-site general manager realized the Tolovana Inn should be collecting the tax, they didn’t immediately notify corporate management. Due to challenges like the COVID-19 pandemic and staff turnover, he added, it took the company time to determine how best to move forward after the Tolovana Inn began collecting the tax.

“In hindsight, if we could do it over again, we would have jumped much earlier on this,” he said.

In January, Nealeigh anonymously contacted Suzanne Johnson, county assessment and tax director, to inquire how to address the situation and what penalties Tolovana Inn may be subject to. He also inquired whether penalties could be waived for identifying the issue voluntarily.

Vacation Villages of America submitted a registration form, lodging tax filings and partial payment within a month after the initial call. By that point, the company owed hundreds of thousands of dollars in unpaid taxes. Through the determination process, the county found the company was also subject to a late fee and a 25% evasion penalty. Under the county’s ordinance, waivers from the board only apply to assessed penalties — not unpaid taxes or interest.

Nealeigh said he had to take money out of a retirement account to make the payment. While he acknowledged the organization’s shortcomings, he said he doesn’t necessarily find the penalty fair given the amount the organization has already paid in taxes.

“Our intentions were to certainly get this thing resolved, and make sure that we were following proper protocol moving forward,” he said.

Johnson said she believes the county hasn’t made any mistakes in the handling of the registration and determination. Commissioners seemed to agree.

“I do appreciate that you’ve come forward, that you wanted to make things right with the county, that you want to be an honest and ethical business owner,” Commissioner Lianne Thompson, who represents South County, told Nealeigh at a July 10 meeting. “I think you failed. I think your staff failed. I think our ordinance is pretty clear that there are penalties for failures like that.”