Item 3: Ratification of Unanimous and Non-Uanimous IGR Actions

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Larry Hill CS-FIN 1/28/2011 -- Monitor Comments: With passage of Measure 50 in 1997, taxable assessed value of real property was reduced to be significantly less than its real market value. Assessed value was allowed to grow only 3% annually, while real market value have typically grown faster. Even though real market values have generally decreased in the recent recession, there exists a significant gap between assessed value and real market value for most properties. This gap varies widely among types of properties. For instance, in 2010 residential properties were on average assessed at about 74% of their market value and commercial properties were assessed at 54% of their market value, while industrial properties were on average assessed at 100% of market value. With economic recovery, real market values will increase again and this gap between assessed and real market values widen for most properties. This situation has several impacts. It unfairly shifts the relative shares of the total property tax burden among types of property, and it contributes to the structural revenue difficulties of local governments, including City of Eugene. SJR 7 and SJR 8 are similar in that they propose various amendments to Article XI, Section 11 of the Oregon Constitution. This constitutional language contains a method to set assessed values of a changed property for purposes of taxation, usually much lower than the property's real market value. While this discussion is very important I don't think we can yet endorse a specific amendment because of the need for analysis of the impacts of the various proposals on the City of Eugene. I'm recommending the discussions be closely monitored until we have a better idea of the impacts. The League of Oregon Cities has made a constitutional amendment allowing local governments to deal with the impacts of Measure 5/50 property tax restrictions a high priority. SJR 7, like SJR 8, would imposes a changed method of determining the assessed value of real property if a property is sold or undergoes a major change. The new AV would be 75% of the real market values rather than be determined by the "changed property ratio" as is now done. While this would allow some properties, such as commercial properties, to be assigned assessed values closer to their real market values, other properties, especially industrial properties, would actually be assigned lower assessed values than under the current formula. A closer analysis is needed. SJR 0008 Relating Clause: Proposes amendment to Oregon Constitution creating minimum assessed value for ad valorem property taxation equal to 50 percent of real market value and maximum assessed value for property taxation equal to 75 percent of real market value. Title: Proposes amendment to Oregon Constitution creating minimum assessed value for ad valorem property taxation equal to 50 percent of real market value and maximum assessed value for property taxation equal to 75 percent of real market value. Changes exception valuation of property to 75 percent of real market value. Adds to classes of property subject to exception valuation property sold or transferred to new owner. Applies to tax years beginning after July 1, 2010. Refers proposed amendment to people for their approval or rejection at next regular general election. 24