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The council was joined for the item by Assistant City Manager Jim Carlson, Mr. Ruffler, Fred <br />McVey of Public Works Engineering, City Attorney Jerry Lidz, and Larry Hill of the Central <br />Services Department. Mr. Carlson reminded the council that the discussion was part of its efforts <br />related to the goal of fair, stable, and adequate revenues. <br /> <br />Mr. Carlson characterized special districts as an alternative to the property tax, saying they offer an <br />opportunity for the creation of a more adequate and stable revenue source for particular urban <br />services. He reminded the council of the existing Oregon property tax system, which limits growth <br />of property tax revenues to three percent on existing taxable development. No matter how fast <br />real market values increased, the City could only expect a minimum three-percent increase in <br />property tax revenue; the only exception was the additional value of new taxable development. <br />Mr. Carlson said the other way of increasing property tax revenues was through the annexation of <br />developed areas. He noted that, currently, the City had a passive annexation policy. <br /> <br />Mr. Carlson briefly noted the changes made to the property tax system through the adoption of <br />amendments to the Oregon Constitution in the form of Ballot Measure 5 and Ballot Measure <br />47/50. <br /> <br />Mr. Carlson discussed the advantages and disadvantages of special districts, saying district <br />formation or annexation to a special district was a way to generate additional permanent revenue <br />to fund urban services. While the Eugene-Springfield Metropolitan Area General Plan assumed <br />that cities are the most appropriate provider of urban services, it was written before the passage of <br />the tax limitation measures. The plan's current provisions preclude the use of special districts to a <br />large degree, so the use of such districts would likely require a plan amendment. Other advantages <br />include that the use of such districts relies on property taxes, which is familiar to the voters; it can <br />create a new permanent rate; it potentially releases existing General Fund resources by removing <br />services that compete for those dollars now; the district can focus on a single service, suggesting <br />improved service delivery; and the district can provide regional services outside the urban growth <br />boundary. <br /> <br />Mr. Carlson said that disadvantages to special districts include the fact that districts are a property <br />tax-based solution, and special districts with permanent property tax rate limits would utilize part <br />of the measure 5 general government limits, which could lead to compression; a special district <br />would provide competition for local operating levies and bonded indebtedness; the single service <br />focus of a special district did not have to balance competing priorities as did a city; and the City <br />may no longer be providing a service that enhances its image. Further, Mr. Carlson said, formation <br />of a special district would require a vote, and such districts would be the peer of the City, outside <br />of its control. He suggested the services that were the most likely candidates for special districts <br />included library services, parks and recreation services (where the potential for annexation to an <br />already formed district existed), and fire suppression services. <br /> <br />Mr. Carlson invited comments and questions. <br /> <br /> MINUTES--Eugene City Council November 13, 2001 Page 10 <br /> Work Session <br /> <br /> <br />