Laserfiche WebLink
Reset at Sale <br /> SJR 11/HJR 13 <br /> <br />Description <br />The League’s second proposed constitutional referral would reset a property’s taxable value to its real market value at <br />the time of sale or construction. The referral would not raise anyone’s taxes on their current home, but would restore <br />equity by recalibrating taxes based on the market’s valuation of a property at the time of sale—a better measure of a <br />property’s value and an owner’s ability to pay. <br />Background <br />Measure 50, passed in 1997, created a new artificial taxable value for all properties. Taxable value was initially set at <br />90 percent of a property’s 1995-96 real market value. For newer properties, a county-wide ratio is applied to determine <br />the initial taxable value. Growth in taxable value is limited to 3 percent annually. <br />By locking in taxable values based on 1995-96 real market values or a ratio at the time of construction, and by capping <br />annual growth, huge disparities in tax bills have emerged as property values have changed and as neighborhoods have <br />gentrified. <br />DEOH7D[LQHTXLWLHVEHWZHHQWZRQHLJKERUKRRGV <br />7 <br />Example and Statewide Impacts <br />LQ3RUWODQG <br />Homeowners in inner North and Northeast Portland, <br />for example, often have property tax bills that are one- <br />ƒšƒ„Ž‡ <br />third or one-fourth of what homeowners with similar <br />•–ƒ„Ž‹•Š‡†ƒš‡• <br />ƒŽ—‡ <br />real market values pay across town. The reason is <br />simple. In the early and mid-1990s, large swaths of <br />͙͙͘͡͡͞•–͚͆͞͡ǡ͚͙͆͛͘͟͞ǡ͛͆͘͜͡ǡ͚͛͞ <br />North and Northeast Portland had lower market values, <br />͙͙͛͡͡͞•–͚͆͘͟ǡ͚͆͛͘͝͡͞ǡ͙͙͆͘͜ǡ͚͘͟ <br />and those values still determine the taxes owed. (See <br />Table 1 for examples.) <br />͙͛͘͡͡͞•–͚͆͟͡ǡ͚͙͛͆͘͡͞ǡ͚͆͘͜͡ǡ͛͠͝ <br />Similarly, the ratio applied to new property can vary <br />͙͙͙͡͡͞•–͙͙͆͛ǡ͚͚͆͘͜͝͝ǡ͆͘͘͟͜ǡ͟͠͡ <br />greatly from year to year as the market fluctuates. In <br />ƒšƒ„Ž‡ <br /> <br />ƒš‡• <br />Deschutes County, the ratio used to calculate taxable <br />ƒŽ—‡ <br />value for new properties has increased 50 percent <br />͙͙͛͜͝͞–Š͚͆͟͞ǡ͚͆͘͟͟͠ǡ͙͆͘͟͠ǡ͚͜͞ <br />between 2010 and 2011. As a result, identical <br />properties with the same sale price but permitted only <br />͙͙͙͟͝͞–Š͚͆͞͠ǡ͙͆͘͜͠͝ǡ͙͆͘͟͡ǡ͙͜͝ <br />months apart can have dramatically different tax <br />͙͚͙͝͞͞–Š͚͚͆͠ǡ͙͙͆͘͜͝ǡ͙͆͘͜͞ǡ͙͙͝ <br />liabilities. <br />͙͙͛͛͝͞–Š͚͆͛͝ǡ͙͛͆͘͝͠ǡ͙͛͆͘͡ǡ͚͠͞ <br />These inequities are not confined to certain areas of the <br />state, however; they exist statewide. <br />Solution <br />Seventeen other states have property tax limitations similar to Oregon’s. Of those, 15 readjust property taxes at the <br />time of sale. Oregon’s existing system, according to a Lincoln Institute of Land Policy report, “has gone the farthest of <br />any [in the country] in breaking the link between property taxes and property values.” <br />Resetting taxable value to real market value at the time of sale would reconnect the link between property value and <br />property taxes, and improve the fairness of Oregon’s system. <br />For more information, contact Chris Fick at (503) 588-6550 or cfick@orcities.org. <br />