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EUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: Discussion to Consider Creation of Fund to Pay for Ballot Measure 37 Claims Meeting Date: June 13, 2005 Agenda Item Number: C Department: Planning and Development Staff Contact: Susan Muir/Glenn Klein www. cl. eugene, or. us Contact Telephone Number: 682-6077/682-5080 ISSUE STATEMENT Ballot Measure 37 requires that when certain regulations restrict the use of property and reduce its value, the government must pay compensation for such restrictions or waive the regulation. The purpose of this work session is to enable the council to explore whether the City should pursue creation of a tax or charge on "increases in value" - or "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 impact of Measure 37 is to make it more difficult for the City to revise existing regulations and adopt new regulations by requiring payment of compensation (or waiver of the regulations) if the regulations reduce the value of property. Councilor Bettman also noted that while some regulations may reduce the value of some property, other regulations (and other governmental actions) can also have the effect of increasing the value of other property. She asked that the Council hold a work session to explore whether the City should pursue creation of a tax, fee or charge to capture some of the increase in value in order to fund payment of Measure 37 claims. Following a poll of the council, this work session was scheduled. No mechanism currently is in place in Oregon to capture a portion of the increase in fair market value of property that results from actions by government. Therefore, if the council wants to adopt such a mechanism, the City will not be able to adopt something that has been tried elsewhere in Oregon. As the Agenda Item Summary (ALS) discusses below, it appears that the council has the power to adopt such a charge, but there are some limitations upon that authority. In terms of the council's power, the home rule provisions of the Oregon Constitution, including Article XI, section 2, grant to local voters the power to adopt a city charter in which the people can structure their city government and grant powers directly to the city government. Section 4 of the Eugene Charter grants to the council broad powers, which are sufficient to allow the City to tax and create a fund from which Measure 37 claims could be paid. As interpreted by the Oregon Court of Appeals a couple years ago in the Eugene telecommunication cases, a city charter's general grant of power like Eugene's authorizes the City to undertake any activity (authorized by the Charter) that does not violate a federal or state constitutional or statutory provision. L:\CMO\2005 Council Agendas\M050613\S050613C.doc