Item A: Measure 37 Givings Tax - Laserfiche WebLink

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collection of the tax could be deferred until the property is transferred (in order to provide the property owner with a source of revenue to pay the tax). Determining the amount of the tax will involve two decisions: a policy decision and an administrative determination. First, the council will need to determine the tax rate as part of the adoption of this type of tax. Presumably, the tax rate will be a percentage of the increase in fair market value resulting from the rezoning or comprehensive or refinement plan amendment. This rate could be structured a number of different ways. The simplest way to structure the rate would be as a straight percentage of any increase in value; for example, the rate could be 25% of the amount that the property increased in value. More complicated structures could include exempting a portion of the increase and taxing the remainder. In this latter alternative, the council could structure the tax as follows: determine the increase in value, deduct from that increase a percentage of the increase or alternatively, the amount that the property spent in obtaining the rezoning, and then imposing a tax on the remainder (for example, 25%). The tax rate determination is a policy decision based on the public interest, fairness, etc. The second decision is the administrative decision of determining the increase in fair market value resulting from the rezoning or plan amendment. This determination likely will need to be based on appraisals or other evidence of the fair market value of the property before and after the rezoning or plan amendment. Once these two determinations have been made (the first determination would be part of the ordinance and apply to all future rezonings and plan amendments), the determination of the amount of tax actually owed would be a simple mathematical calculation. What is the anticipated cost of administration (and what are the things that would make it high or low)? The costs to the City in administering this type of tax would be relatively low when compared to the other three options. The universe of people subject to the tax would be easily determined (property owners applying to the City for a rezoning or a plan amendment). On average, there are between 25 and 50 rezonings each year. Information could be required as part of the rezoning or plan amendment application, and the rezoning or plan amendment could be made effective upon payment of the tax (reducing collection costs). However, unless the City were willing to accept the values stated in the appraisal submitted by the property owner, then the City would incur administrative costs to obtain its own appraisals. The cost of such an appraisal could range anywhere from a few thousand dollars or more – particularly since two values would be needed (the “before” and the “after”). In addition, where the City and property owner disagreed as to value, the City would need to defend its determination in front of a hearings official, and possibly in court. Has the property owner paid (or will the property owner owe) other assessments, taxes or fees in connection with the same triggering action? Measure 50 allows assessed value (and therefore property taxes) to be increased under certain circumstances, such as for additions or improvements, partitions, subdivisions, rezoning where the property is used consistently with the rezoning, lot line adjustment, or the property is dis- L:\CMO\2006 Council Agendas\M060125\S060125A.doc