Item C: Measure 37 Givings Tax - Laserfiche WebLink

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Other Jurisdictions “”“ Staff is unaware of any other jurisdiction in Oregon that has adopted a givings or value ” added tax. The Metro Council (Metropolitan Service District) is looking at the possibility of “”“” adopting a windfall tax. The tax being discussed would be imposed on the windfall to property owners when their land is brought inside the UGB. Half of the funds raised would be used to purchase conservation easements on farmland that have valid Measure 37 claims. The other half would be used to pay for public improvements like schools, roads and sewers in the UGB expansion areas. Metrois continuing to examine this idea. Tax Options The proposed “givings tax” would be based upon the marginal additional real market value enjoyed by the user of land as a result of certain governmental actions. As the beneficiary of the value of these governmental actions, the user of the land, upon applying for change in zoning or plan designation (Option 1) or a land use or building permit application utilizing designated legislative changes (Option 3) would be liable to pay the tax. The City’s home rule powers give the council the authority to adopt such a tax and set a tax rate by ordinance. No voter approval would be required, although the tax would be subject to referendum. Current rezoning and plan amendment procedures or land use permit procedures will need to be revised to incorporate the tax. It is difficult to estimate the economic impacts that might result from implementation of a givings tax. If the tax rate is low and the taxing process is not burdensome, it may have very little effect. But if the tax rate is high or the process is burdensome, it could discourage citizen-initiated rezonings, changes in plan designation, or building permit applications. To the extent these activities are discouraged, some economic activity may be lost and some land may remain in a less efficient use that would otherwise be the case. In the end, whether the tax has an economically detrimental effect will depend on the details of its construction and implementation. The City Attorney and staff from Finance and PDD have done further analysis of Option 1 – Tax on “upzonings” and Option 3 – Tax on increase from legislative change. The two options are described below and are summarized in the table in Attachment A. It is important to note that the Givings Tax concept breaks new ground and there are many outstanding questions that remain to be answered as the concept is developed. Option 1 – Tax on Upzonings: Citizens occasionally request the City to change the zoning on property, or the land use designation for property in the Metro Plan or in a refinement plan. Oftentimes, the change in zoning or plan designation will allow more valuable uses and will increase the real market value of the property. Whether an increase will occur and its extent will vary considerably, depending on location, types of uses allowed and the demand for a particular use. While rezoning or change in designation in most cases will increase land real market value, the value of existing improvements on the land may not increase. This is because existing improvements probably will not see a change in use without some new investment, and may not be compatible at all with the uses allowed under the new zone or plan designation. Lane County Assessment and Taxation does not automatically revalue property that has been rezoned or has had a change in plan designation. Instead, property is revalued under the new zone or change in L:\CMO\2006 Council Agendas\M060522\S060522C.doc