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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Measure 37 Givings Tax Meeting Date: May 22, 2006 Agenda Item Number: C Department: Planning and Development/City Attorney Staff Contact: Susan Muir/Glenn Klein www.eugene-or.gov Contact Telephone Number: 6682-6077/682-5080 ISSUE STATEMENT Ballot Measure 37 requires that when certain regulations restrict the use of property and reduces its value, the government must pay compensation for such restrictions or waive the regulation. The purpose of this work session is to explore further analysis of two options for the creation of a tax or charge on “increases in value,” known as a “givings tax,” in order to create a fund to pay such compensation claims. BACKGROUND At the January 19, 2005, City Council meeting, Councilor Bettman noted that one of the impacts of Measure 37 is to make it more difficult for the City to revise existing regulations and adopt new regulations by requiring compensation (or waiver of the regulation) if the regulation reduces the value of a property. Councilor Bettman also noted that while some regulations may reduce the value of some property, other regulations (and other government actions) can also have the effect of increasing the value of other property. She asked the council to hold a work session to explore whether the City should pursue the creation of a tax, fee, or charge to capture some of the increase in value in order to fund payment of Measure 37 claims. At a January 25, 2006, work session the City Attorney and staff presented four separate options for a possible givings taxto fund Measure 37 claims. The four options were reviewed and discussed by the council. The council directed the City Manager to study Option 1 and a modified version of Option 3 in more detail, including completing a proposed analysis of the tax amount and economic consequences, and return to the City Council with focused decisions to be made around implementation of such an ordinance. The two options are Option 1 – Tax on “upzonings” and Option 3 – Tax on increase from legislative change (where property owner takes advantage of the legislative change). Measure 37 Litigation On October 14, 2005, the Marion County Circuit Court issued a decision finding that Measure 37 was unconstitutional. That decision was appealed directly to the Oregon Supreme Court. Earlier this year, the Supreme Court issued a decision declaring Measure 37 constitutional and reversing the circuit court’s decision. L:\CMO\2006 Council Agendas\M060522\S060522C.doc