Item C: Ordinance Concerning Real Property Value-Added Charge

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ATTACHMENT C Central Services Finance Division Financial Analysis City of Eugene th 100 West 10 Ave, Suite 400 M Eugene, Oregon 97401 EMORANDUM (541) 682-8417 (541) 682-5802 FAX www.ci.eugene.or.us Date: December 11, 2007 To: Mayor Piercy and City Councilors From: Larry Hill, Senior Financial Analyst, 682-5722 Subject: Accuracy of the Real Market Values Assigned to Property, with Regard to a Proposed Ordinance Establishing a Real Property Value-Added Charge. This memo follows up on a question raised at the October 16, 2006 public hearing concerning the accuracy of the Real Market Values. The proposed ordinance directs City staff to identify the Real Market Value of subject property under the property’s current zone/plan designation, and estimate the average A&T Real Market Value for the property under the proposed new zone/plan designation. The Charge would be based on the difference between the two values. Lane County Assessment & Taxation property value data would be used, together with data available through LCOG on property zoning and plan designation. I have asked Lane County Assessment & Taxation (A&T) to describe the accuracy of the Real Market Value (RMV) assigned to property. Deputy Assessor Anette Spickard replied as follows: "We are required by law to set the values of all property in the county to 100% of real market value as of January 1 each year. We conduct mass appraisal and value large groups of similar properties together. We use all three approaches to valuation; income, cost, and market, depending on the type of property. Our data is accurate as of January 1 each year within + or - 10% on an individual property which is the expected standard within the appraisal industry. If an owner disputes our accuracy, they appeal to the Board of Property Tax Appeals and present evidence to show how our value is incorrect. The Department of Revenue validates and confirms the [statistical] accuracy of our real market values each year through the Assessor's Ratio Study.... So, in response to your question "how accurate is our RMV?" my answer is very accurate to the extent that you remember our values are intended to reflect a single point in time, January 1, for property taxation purposes only. Our values are not to be used in lieu of a private fee appraisal for real estate financing, lending, banking or other transaction purposes. Our values are not intended to reflect "real-time" market values of a property. For example when taxpayers receive their tax statements at the end of this month, the RMV listed is as of 1/1/2006, which is already 10 months out of date and was based on market activity from 2005 which was different than the market that is occurring today." In summary, A&T’s RMV for a property will generally lag current RMV by a year or more, and with continuing increases in property values we can generally expect that current RMV will be higher on average than will be reflected in A&T data. Note also that at the time each year’s values are established it is possible that an individual property’s actual RMV may vary by as much as 10% from the RMV assigned by A&T.