Item C: Measure 37 Givings Tax - Laserfiche WebLink

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1.Should the City obtain the services of a certified appraiser or economist with experience in property appraisal to identify the significance of legislative changes by estimating the resulting typical increase in real market value that may result? 2.Should the tax rate be a flat percentage applied to the estimated change in real market value, or should another rate structure (stepped, discounted, by zone, etc.) be examined? If a flat percentage is used, what percentage should be used for a draft ordinance? RELATED CITY POLICIES Measure 37 may have an impact on the City’s ability to regulate property under its Land Use Code (Eugene Code, Chapter 9). Creation of a fund to pay compensation for Measure 37 claims could assist the City in preserving its regulatory authority in this context. COUNCIL OPTIONS 1.Direct the City Manager to prepare a draft ordinance for Option 1 with a flat tax percentage of [ %] and schedule a public hearing. (Note: Since the tax would also involve changes to Chapter 9 of the Eugene Code, the ordinance would first go to the Planning Commission for a public hearing and recommendation.) 2.Direct the City Manager to prepare a draft ordinance for options 1 and 3, with a flat tax percentage of [ %] and schedule a public hearing. (Note: Since the tax would also involve changes to Chapter 9 of the Eugene Code, the ordinance would first go to the Planning Commission for a public hearing and recommendation.) 3.Direct the City Manager to prepare a draft ordinance for Option 3 with a flat tax percentage of [ %] and schedule a public hearing. 4.Take no action. CITY MANAGER’S RECOMMENDATION The City Manager previously recommended that the council not move forward with a givings tax until after other jurisdictions in Oregon tried and tested such a tax. The council decided that the potential revenue from such a tax (as a way to pay Measure 37 claims) was worth the cost of being first in the state – at least if additional analysis of options 1 and 3 suggested that the options were viable. Based on the additional analysis, it appears that Option 1 is viable and can be implemented in a manner that will develop a revenue source for payment of Measure 37 claims without a significant increase in workload for City staff. The most significant downside of proceeding with Option 1 is the potential litigation cost should someone challenge the legality of the tax. In light of the prior direction by the council and the additional analysis, the City Manager now recommends Option 1 – i.e., that the council direct the manager to prepare a draft ordinance for Option 1 and schedule a public hearing before the Planning Commission and then the council. Depending on the percentage of increased value that the council wants to capture, it is likely that this option could raise several hundred thousand dollars per year, and other than the potential litigation costs, the administrative costs for this option are relatively low. Option 3, on the other hand, would have very high administrative costs and the projected revenue is probably low. L:\CMO\2006 Council Agendas\M060522\S060522C.doc