Item 1: PH on Ordinance Establishing Real Property Value-Added Charge

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing: An Ordinance Establishing a Real Property Value-Added Charge; Adding Sections 2.100, 2.105, 2.110 and 2.115 to the Eugene Code, 1971; Amending Section 8.005 of that Code; and Adopting a Severability Clause Meeting Date: October 16, 2006 Agenda Item Number: 1 Department: Planning and Development/City Attorney Staff Contact: Susan Muir/Glenn Klein www.eugene-or.gov Contact Telephone Number: 682-6077/682-5080 ISSUE STATEMENT Under Ballot Measure 37, governments must pay compensation or waive regulations when certain regulations restrict the use of property and reduce its value. The measure did not provide any funding with which to pay those Measure 37 claims. The proposed ordinance would establish a real property value-added charge to be paid when certain regulations increase the value of the property. Such a charge would allow the City to create a fund with which to pay valid Measure 37 compensation claims. BACKGROUND On January 25, 2006, the council held a work session to review and discuss four separate options for a possible fee or tax to fund payment of Measure 37 claims. The council directed the City Manager to study Option 1 and a modified version of Option 3 in more detail, including development of an analysis of the amount of the tax and the potential economic consequences of implementation of such an ordinance. In response to the council’s direction, staff provided detailed information on those options at the May 22, 2006, council work session. Based on a financial analysis of Option 1, staff concluded it could be implemented without significant administrative costs, and most of the money raised could be set aside for Measure 37 claims. The cost for implementing Option 3 was more difficult to predict. Using 2005 as an example year for implementation, a charge imposed on the upzoning value reflected for that year would generate $113,000 for each five percent of charge imposed. At the May 22 work session, staff requested further direction from the council on issues such as which actions should be subject to the charge, the timing on when it would become due, how values would be calculated and whether the charge should be a flat rate. After discussion, the council directed the City Manager to bring back to the council for public hearing an ordinance that would impose a charge of 25% of the increase in value when the increase was the result of citizen-initiated requests for zone changes, plan designation changes, or a change in the Urban Growth Boundary (UGB). The charge also would be imposed for those actions when initiated by the City or other governmental entity, but only if the property owner submitted some type of application (for example, building permit application) that could not have been approved without the City’s action making a change in the zoning, Metro Plan, Refinement Plan or UGB. L:\CMO\2006 Council Agendas\M061016\S0610161.doc