CC Minutes - 02/28/07 Work Session

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Ms. Taylor determined from Russ Brink of Downtown Eugene, Inc. (DEI) that DEI charged business owners .16 cents per occupied square foot for the downtown service district through an agreement with the City of Eugene. It was possible the collection of a fee on unoccupied buildings could be contracted out to such an entity. Responding to a question from Ms. Taylor, Mr. Weinman suggested that a marginal use depended on one’s point of view, but he cited as a possible example a plasma donation center that operated in the Shafer building in the past. It was a very active use and profitable for the building owner, but it created a street atmosphere that was not very positive in terms of its contribution to the long-term development of downtown. Ms. Taylor suggested the council could make the fee high enough to motivate property owners. She asked about administration of the fees. Mr. Weinman said that was undetermined at this time. Ms. Taylor asked about the reference in the Agenda Item Summary (AIS) to an absorption vacancy. Mr. Weinman posited the example of a new five-story office building where it could take a while for the vacancies to fill. He said the council might need to answer the question of how long a space must be vacant before a fee was charged. Ms. Taylor clarified that staff was suggesting such a fee might discourage new construction in downtown. Mr. Weinman concurred. Ms. Taylor noted that the AIS indicated the fee might encourage higher density, but she did not think the Cit was encouraging that now by leaving all those buildings vacant. Ms. Taylor noted that the AIS suggested the fees and penalties might discourage development, but she thought that was a matter of opinion as the opposite might occur. She recalled hearing a photographer say he would love to locate in downtown but could not afford the rent. She thought it would be very attractive to have a photographer or artists occupying downtown space and placing photographs and art in the windows. Responding to a question from Ms. Taylor about the council’s ability to impose such a fee as it related to property tax law, Mr. Weinman said staff did not have an answer to that question. City Attorney Glenn Klein said that generally, the council could do anything not prohibited by State or local law. The City would have to work within the existing limitations created by ballot measures 5, 47, and 50. He was sure, however, that he could craft something within those limitations. He said the council could call such an assessment a fee or a tax or whatever it wanted; the courts would examine the characteristics of the assessment. He suggested the issue was more of a political than a legal one. Responding to a question from Ms. Taylor, Mr. Klein said the downtown occupancy fee was imposed by the City but the City contracted with DEI to collect it. Ms. Taylor suggested that a fee on unoccupied buildings would not be any more of a tax on unoccupied buildings. Mr. Klein said one difference was that the rationale for the fee on occupied properties was that occupied properties created more of a burden on the City than unoccupied property. However, he said, “that was a long time ago,” and if clarification of that information was important, he would get back to the council. Ms. Solomon believed the concept of charging unoccupied properties a fee was unproductive, punitive, and inconsistent with the City’s downtown planning. She said it was not entirely the fault of property owners that their businesses were not occupied, given the atmosphere that currently existed downtown. There was MINUTES—Eugene City Council February 28, 2007 Page 2 Work Session