11-30-16 Council Agenda Packet - amended

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CE,O|CFFS|M2016 ITY OF UGENEREGON ONSERVATION INANCE EASIBILITY TUDY AY maximum assessed value for each property in 1997 equal to 90 percent of the 1995-96 real market value and placed a cap on assessed value (AV) growth of 3 percent annually, except for new construction, subdivision, remodeling, rezoning, loss of special assessment or exemption. Because assessed values were initially established at levels below real marketvalues, and because the real estate market has appreciated at a rate of more than three percent in most years since Ballot Measure 50 passed, the assessed values of many properties are substantially lower than their real market values. This means that assessed values may continue to increase even though the real market value of a property can be falling as a result of current market conditions. When the total of a local government (non-school) tax rates on a property for all purposes except payment of general obligation bonds exceed $10 per $1,000 of real market value, the property is said to be in compression. All property tax levies except levies for general obligation bonds are subject to compression. Local option levies are subject to “special compression.” This means that local option levies are reduced (to zero if necessary) before other levies are reduced to bring the total tax on the property down to the Measure 5 limit. Compression is calculated separately for each property, so it is possible for one property to be in compression, and for the neighboring property not to be. A city may determine through the budget process that it needs additional funds to operate. State law allows for local option levies, either for a specific or general purpose.Local option levies for operating purposes may only extend for five years. Levies for capital purposes may extend for ten years or the useful life of the project, whichever is shorter. Levy authority can be expressed as a target total dollar amount or as a rate per thousand. Local option levies can be structured as either a fixed dollar amount per year for the term of the levy or as a fixed rate per thousand dollars of assessed value. There are pros and cons to each approach and a government should carefully weigh these as they decide what to put forth to the voters. Eugene has used both approaches in past levies, and the library local option levy recently approved by voters was structured as a fixed dollar levy. Since 1996, twojurisdictions in Oregon have passed local option levies for parks and land acquisition.The City of Eugene has passed two recreation property tax levies: On November 7, 2000, Eugene voters passed Ballot Measure 20-37, a two-year, $3.5 million local option tax levy, to fund youth activities. The levy expired on June 30, 2003. On November 5, 2002, Eugene voters passed Ballot Measure 20-67, a four year, $0.86 per $1,000 of assessed value local option levy expected to raise approximately $8 million. Of this amount, 7 percent was retained by the city to directly provide youth services, and the remaining 93 percent was split between the 4J and Bethel school districts based upon their relative share of assessed value within the City of Eugene (83 percent to 4J and 17 percent to Bethel). These school district funds were used to provide five categories of services historically supported by the city. See Appendix C for examples of local option levyballot language. TTPL::CFD17 HE RUST FOR UBLIC AND ONSERVATION INANCE EPARTMENT