Item B: Funding Strategies for Transportation System Operations, Maintenance, and Preservation

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Capital Local Option Levy Brief Description A local option levy is a temporary property tax that is levied on all taxable property of Funding within the City limits. A local option levy does not create debt and is not a “bond.” OptionThe City could impose a capital local option levy for up to 10 years, or for other purposes for a maximum of five years. Precedence Temporary property tax levies are used extensively by local governments across the (prior Council United States. The City has used local option levies to pay for library and recreation history, other services. The City has not proposed any capital local option levies in the past. Other jurisdictions Oregon jurisdictions occasionally use capital local option levies, mainly for public = practice, etc.)safety facility projects. Calculation Base The amount of a local option levy depends on the desired level of spending for the and Typical program to be funded with the levy. The levy calculation will take into account Ratesdiscounts and delinquencies in property tax payments, interest earnings on fund balances, and a provision for a two-month Unappropriated Ending Fund Balance, if applicable. The rate will be based on the total levy amount divided by the total taxable assessed value for real and personal property in the City. Individual taxpayers will pay the tax rate times their individual assessed value. There are two ways to structure a local option levy. Under a tax rate levy, the City would impose a pre-determined tax rate each year of the levy and receive whatever amount of revenue that was generated by the assessed value within the City each year. Under a uniform amount levy, the City would impose the same amount of revenue to be generated each year over the term of the levy. The tax rate would change from year to year, based on the amount of total assessed value in the City. Estimated To fund $10 million of pavement preservation capital projects with a 10-year capital Revenue Yield, local option levy (or about $1.1 million per year, after discounts and delinquencies), the Administration/ City would need to levy an average of approximately $0.07 per $1000 of assessed value Enforcement in each year of the 10-year period. This would cost an average of $12 per year for the Costsaverage taxpayer over the 10-year period ($120 total over ten years). Local option levies are subject to the $10 per $1000 of real market value tax rate cap for all general governments under Measure 5. Under Measure 50, local option levies are the first to be reduced in the event of tax rate compression. This means that if the com- bined total tax levy for the overlapping general governments exceeds the Measure 5 cap, any local option levies would be proportionally reduced until the tax rate limit is satisfied. In FY07, the general government tax rate was $9.14 per $1000, and is projected to go down in FY08 when the youth levy expires and the library levy is reduced by half. The rate is expected to go down again in FY11 when the urban renewal special levy to pay for the library bonds is eliminated. Property tax collections are administered by the County. They prepare the tax bills, collect the funds, and remit the appropriate amount to the City on a regular basis. Enforcement is done by both the County and the City in the foreclosure process. 3