Item A: Measure 37 Givings Tax - Laserfiche WebLink

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increase a percentage of the increase, and then impose a tax on the remainder (for example, 25%). The tax rate determination is a policy decision based on the public interest, fairness, etc. The council also would need to decide whether collection of the tax would occur at the time of the amendment, or alternatively, would be delayed until the property is transferred. Delaying the collection of the tax until the property transfers would provide the owner with a source of funds from which to pay the tax. However, the delay would also postpone the City’s receipt of that revenue, and it would be unavailable until the transfer to pay Measure 37 claims. Second, a series of administrative determinations would need to be made. For each amendment to the land use code, Metro Plan or refinement plan, the City would need to determine whether the amendment was likely to increase the fair market value of property. If so, the City then would need to determine which properties actually increased in value. For those properties where the fair market value increased, the City would need to determine for each individual property the amount of that increase. And finally, the City would need to calculate the amount of the tax (presumably a percentage of the increased value). In order to make the second set of determinations, the City likely would need to rely on economists, certified appraisers or both. It may be possible that economists can develop a computer model that, when coupled with information from the GIS system, could be used to identify properties where the fair market value increased. Staff has had conversations with a couple of economists (potential consultants should the council direct the City Manager to move forward with one or more of these options) who indicated that such a computer model would probably cost in the $50,000 - $100,000 range to develop, but once developed, might only cost a couple thousand dollars to run for a particular legislative change. Once the properties with the increased fair market value have been identified, it then would be necessary to identify for each property the amount of that increase. For this step in the process, it likely would be necessary to retain certified appraisers to provide that information since it would need to be property specific. A property owner would have the right to challenge the City’s determination (including going to court to contest it); therefore, the City would need to have substantial evidence to support its determination. What is the anticipated cost of administration? The costs to the City in administering this type of tax would be in medium to high category as compared to the other three options. Unlike the “upzoning” tax, the City would need to determine the universe of people subject to this “local investment” tax for each amendment to the land use code and each legislative change to the Metro Plan and refinement plan. Compared to the “local investment” tax, the cost also would be higher: the universe of properties that might be subject to this tax is far greater and covers the entire City, whereas the universe of properties with the “local improvement” tax is going to be geographically constrained to properties in the vicinity of the public improvement. Once the properties have been identified where fair market value likely increased, the City would need to determine the amount of increase for each of those properties. The amount that any particular property increased in value would not necessarily be the same for all of the properties. L:\CMO\2006 Council Agendas\M060125\S060125A.doc