HomeMy WebLinkAboutItem 1: PH on Ordinance Establishing Real Property Value-Added Charge
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Public Hearing: An Ordinance Establishing a Real Property Value-Added Charge;
Adding Sections 2.100, 2.105, 2.110 and 2.115 to the Eugene Code, 1971; Amending
Section 8.005 of that Code; and Adopting a Severability Clause
Meeting Date: October 16, 2006 Agenda Item Number: 1
Department: Planning and Development/City Attorney Staff Contact: Susan Muir/Glenn Klein
www.eugene-or.gov Contact Telephone Number: 682-6077/682-5080
ISSUE STATEMENT
Under Ballot Measure 37, governments must pay compensation or waive regulations when certain
regulations restrict the use of property and reduce its value. The measure did not provide any funding
with which to pay those Measure 37 claims. The proposed ordinance would establish a real property
value-added charge to be paid when certain regulations increase the value of the property. Such a
charge would allow the City to create a fund with which to pay valid Measure 37 compensation claims.
BACKGROUND
On January 25, 2006, the council held a work session to review and discuss four separate options for a
possible fee or tax to fund payment of Measure 37 claims. The council directed the City Manager to
study Option 1 and a modified version of Option 3 in more detail, including development of an analysis
of the amount of the tax and the potential economic consequences of implementation of such an
ordinance.
In response to the council’s direction, staff provided detailed information on those options at the May
22, 2006, council work session. Based on a financial analysis of Option 1, staff concluded it could be
implemented without significant administrative costs, and most of the money raised could be set aside
for Measure 37 claims. The cost for implementing Option 3 was more difficult to predict. Using 2005
as an example year for implementation, a charge imposed on the upzoning value reflected for that year
would generate $113,000 for each five percent of charge imposed.
At the May 22 work session, staff requested further direction from the council on issues such as which
actions should be subject to the charge, the timing on when it would become due, how values would be
calculated and whether the charge should be a flat rate. After discussion, the council directed the City
Manager to bring back to the council for public hearing an ordinance that would impose a charge of 25%
of the increase in value when the increase was the result of citizen-initiated requests for zone changes,
plan designation changes, or a change in the Urban Growth Boundary (UGB). The charge also would be
imposed for those actions when initiated by the City or other governmental entity, but only if the
property owner submitted some type of application (for example, building permit application) that could
not have been approved without the City’s action making a change in the zoning, Metro Plan,
Refinement Plan or UGB.
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The proposed ordinance is consistent with those objectives. The ordinance’s stated purpose is to recover
from a property owner a portion of the increase in value of real property resulting from a zone change,
plan (Metro or refinement plan) change, or UGB change. The funds raised by this real property value-
added charge would be used for Measure 37 claims. The proposed value-added charge is 25% of the
increase in real market value resulting from the action. Land values for the different zones and plan
designations would be established by administrative order of the City Manager based on the median real
market value per acre for land within the City with that zone or designation based on data maintained by
Lane County Assessment and Taxation. Provision would be made for property owners who disagree
with the assigned value to secure their own appraisal and to appeal a determination by the City that does
not accept the valuation in that appraisal.
A property owner requesting a zone change, plan change or UGB change would be required to deposit
the value-added charge at the time the application is submitted. If the application is denied, the amount
deposited would be returned to the applicant. If the applicant fails to deposit the charge, the amount
would become a lien upon the applicant’s property and entered in the City’s lien docket.
When property becomes subject to a value-added charge as a result of a zone change, plan change, or
UGB change that was not requested by or on behalf of the property owner, the City would forward to the
property owner a notice identifying the potential value-added charge. The charge would not become due
and payable until such time as the property owner takes some action, such as submission of an
application for a development permit or land use permit that relies upon and takes advantage of the City-
initiated action. The value-added charge would have to be deposited at that time, and thereafter the
application would be processed in the same manner as for citizen-initiated changes. In order to ensure
public awareness of this potential charge, the notice would be recorded in the City’s lien docket.
The resources needed to implement the value-added charge for “requested changes” are not expected to
be significant. However, to implement the charge for “non-requested” changes (i.e. the prior
paragraph), there may be a significant resource impact. For these non-requested changes, the City
would need to keep track of all of the properties (including any new lots created by subdivisions) and the
changes in zoning or plan designations, and then check those whenever the property owner submits
some application to the City related to the property. Without knowing the number or magnitude of these
“non-requested” changes, it is impossible to predict the amount of resources needed to implement this
part of the proposed ordinance.
In order to ensure that the value-added charge is paid, the ordinance would prohibit the submission of an
application for a building permit or other development permit until the charge is paid. The proposed
would apply to any zone change or plan amendment
ordinance (section 4) also provides that it
application pending at the time of adoption
(for example, McKenzie-Willamette’s application). This
was not an issue discussed by the council during its work sessions. It is highlighted here to ensure that
the council has a chance to clarify whether or not this provision is consistent with the council’s intent.
RELATED CITY POLICIES
As previously indicated, creation of a fund to pay compensation for valid Measure 37 claims could help
the City preserve its regulatory authority under its Land Use Code (Chapter 9).
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COUNCIL OPTIONS
The council may:
1. Provide direction for amendments to the proposed ordinance.
2. Provide direction to schedule the ordinance for adoption.
3. Take no further action.
CITY MANAGER’S RECOMMENDATION
None; this is a public hearing.
SUGGESTED MOTION
None; this is a public hearing.
ATTACHMENTS
A. Proposed Ordinance
FOR MORE INFORMATION
Staff Contact: Susan Muir, Executive Director
Telephone: 682-6077
Staff E-Mail: susan.l.muir@ci.eugene.or.us
City Attorney: Glenn Klein
Telephone: 682-5080
Staff E-Mail: glenn.klein@harrang.com
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ATTACHMENT A
ORDINANCE NO. __________
AN ORDINANCE ESTABLISHING A REAL PROPERTY VALUE-ADDED
CHARGE; ADDING SECTIONS 2.100, 2.105, 2.110 AND 2.115 TO THE
EUGENE CODE, 1971; AMENDING SECTION 8.005 OF THAT CODE;
AND ADOPTING A SEVERABILITY CLAUSE. (CB #4932)
Section 1,
The following caption and Sections 2.100, 2.105, 2.110 and 2.115
are added to the Eugene Code, 1971, to provide:
REAL PROPERTY VALUE-ADDED CHARGE
2.100 Real Property Value-Added Charge – Establishment.
(1) Purpose. Measure 37 requires governments either to compensate
property owners when certain regulations reduce the real market
value of real property, or to waive those regulations. Sections 2.070
through 2.095 of this code establish a process for the city to follow in
processing those Measure 37 claims. Measure 37, however, does
not provide any funds to pay compensation. Under certain
circumstances, the city takes regulatory action that increases the
real market value of real property, including changes in the zoning of
real property and changes in a property’s designation in the
Metropolitan Area General Plan (“Metro Plan”) or a refinement plan.
When a property owner requests such a change, or takes advantage
of such a change initiated by the city, the city should receive a
portion of that increase in value in order to develop a fund that can
be used to pay compensation when a valid Measure 37 claim is filed.
(2) Charge Imposed. A real property value-added charge is imposed on
the increase in real market value, measured as set forth in
subsection (4), whenever the city approves one of the actions listed
in subsection (3) after [the date of adoption of this ordinance]. The
amount of the charge shall be equal to 25% of the increase in real
market value resulting from the action.
(3)Regulatory Actions Triggering Charge.
(a) The charge created by subsection (2) shall be imposed on the
following actions when requested by the property owner or by
someone on behalf of the property owner:
1. A zone change;
2. An amendment to the Metro Plan or refinement plan
designation for the property; or
3. An amendment to the Urban Growth Boundary (“UGB”).
(b) Where a zone change, amendment to the Metro Plan or
refinement plan designation, or amendment to the UGB was
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not requested by or on behalf of a property owner, and instead
was initiated by the city or another governmental entity, the
charge shall not be imposed at the time of that change or
amendment. Instead, the charge shall be imposed if, and at
the time that, the property owner submits an application to the
city for an approval – such as a development permit, as
defined in section 9.0500 of this code, or land use approval -
that could not be approved but for the zone change, Metro
Plan or refinement plan amendment or UGB amendment.
(4) Measure of Increase in Real Market Value, The increase, if any, in the
real market value of the property shall be measured by the change in
the real market value of the land under its new zone, designation or
UGB status, as compared to its real market value under its prior
zone, designation or UGB status. The change in real market value
shall be determined as provided in section 2.105 of this code.
2.105 Real Property Value-Added Charge – Determining Changes in Real Market
Value.
(1) The city manager shall adopt an administrative rule pursuant to
section 2.019 of this code that establishes a per acre real market
value for different zones and plan designations for property inside
the city. The values adopted by the manager shall be based on the
median real market value per acre for land in the city with that zone
or designation according to data maintained by Lane County
Assessment and Taxation. The city manager may update the values
contained in the administrative rule whenever the manager
determines that the most recent assessment and taxation data
justifies updating the administrative rule.
(2) Except as provided in subsections (4) through (7) of this section, the
per-acre values established by this administrative rule shall be used
to determine the value of the property following the change in
zoning, plan designation or UGB status, by multiplying the
applicable per-acre value times the acreage of the property subject
to the zone change, or amendment to the plan designation or UGB.
(3)Except as provided in subsections (4) through (7) of this section, the
pre-change value of the property shall be equal to the real market
value assigned to the land by Lane County Assessment and Taxation
immediately prior to its rezoning or redesignation.
(4) If a property owner disagrees with the real market values as
determined under subsections (1) through (3) of this section, the
property owner may obtain and submit to the city an appraisal for the
property from an appraiser certified by the State of Oregon as a
General Appraiser. The appraisal must comply to the maximum
extent possible with the Uniform Standards of Professional Appraisal
Practice, and shall include appraised amounts for the property both
(a) prior to the change in zoning, plan designation or UGB status,
and (b) subsequent to the change.
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(5) If a property owner obtains and submits an appraisal as provided in
subsection (4) of this section, then the city shall either accept the
values contained in the appraisal, or obtain its own appraisal. If the
city accepts the values, then the value-added charge shall be based
on the difference between the pre-change and post-change values
contained in that appraisal. If the city chooses to obtain its own
appraisal, the city’s appraisal shall meet the same standards as
required for the property owner’s appraisal.
(6)If the city chooses to obtain its own appraisal, the city shall provide
to the property owner a notice of determination as to the real market
values and a copy of the appraisal on which that determination is
based. Within 15 days following the property owner’s receipt of the
city’s determination and appraisal, the property owner shall decide
whether to (a) accept the real market values as determined by the
city, or (b) appeal the issue in accordance with section 2.021 of this
code. Unless the owner submits the appeal under section 2.021
within 15 days of the receipt of the city’s determination and
appraisal, the city’s determination shall be final and not subject to
further review.
(7)If the property owner submits a timely appeal request under section
2.021, a hearings officer shall hold a hearing and issue a decision on
the change in value. The hearings officer’s decision shall be the
city’s final decision on the matter.
2.110 Real Property Value-Added Charge – Requested Changes .
(1) At the time a property owner or someone on behalf of a property
owner submits an application for a zone change, plan amendment or
UGB amendment, the applicant shall deposit with the city:
(a) The amount of the charge as determined in accordance with
subsections (1) through (3) of section 2.105 of this code; or
(b) The amount of the charge based on an appraisal performed
under subsection (4) of section 2.105 of this code, together
with a copy of the appraisal required under that subsection.
If the application for a zone change, plan amendment or UGB
amendment is denied, the amount of the charge deposited shall be
returned to the applicant.
(2) If the applicant fails to deposit the charge as required by subsection
(1), the city manager shall determine the amount that is due based on
subsections (1) through (3) of section 2.105 of this code, and shall
send written notice of that determination to the property owner. The
amount due as determined by the city manager in accordance with
subsections (1) through (3) shall be final, unless the property owner
appeals that determination pursuant to section 2.021 of this code.
The sole basis for an appeal shall be that the manager erred (a) in
applying the administrative rule adopted under subsection (1) of
section 2.105, or (b) in reviewing the information from Lane County
Assessment and Taxation related to the most recent determination
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as to the real market value. For purposes of this appeal, the real
market values contained in the administrative order and in the
records of Lane County Assessment and Taxation shall be
conclusively presumed correct. No appraisal or other information
may be presented to or considered by the hearings officer. The city
manager shall forward the notice of determination of the amount of
the charge and requirement for its deposit to the applicant. The
notice shall contain a statement that failure to submit the deposit by
the date set forth in the notice will result in the imposition of a lien
against the applicant’s property, which shall be recorded in the city’s
lien docket.
(3) If the applicant submits a deposit under subsection (1) of this
section based on an appraisal, the city manager shall inform the
applicant, as provided for in subsection (5) of section 2.105, whether
the city accepts the real market values contained in the applicant’s
appraisal. If the city does not accept those values, and if the final
determination of real market values (after the city obtains an
appraisal and possibly after a hearing) establishes values that result
in a greater change in value than calculated by the applicant, the
applicant shall submit the additional value-added charge that is due.
Failure to do so shall result in the imposition of a lien for the
additional amount due, which shall be recorded in the city’s lien
docket.
2.115 Real Property Value-Added Charge – Non-Requested Changes.
(1) Purpose. This section governs the imposition of the real property
value-added charge when the change in zoning, plan designation or
UGB status is not one that had been requested by or on behalf of the
property owner. In this situation, the charge shall be imposed only if
a property owner decides to seek a regulatory approval – such as
approval of a development permit, land division, or other land use
permit – that could not be approved if the change in zoning, plan
designation or UGB status had not been approved.
(2) The city shall forward to a property owner who becomes subject to a
real property value-added charge as a result of an action initiated by
the city under section 2.100(3)(b) a notice identifying a potential real
property value-added charge. The charge will not become due and
payable until such time as the property owner takes some action
such as the submission of an application for a development or land
use permit that relies upon and takes advantage of the city-initiated
action. If there are multiple city-initiated actions involving the same
property occurring at different times, the charge shall be computed
for each individual action as though it were being imposed at that
time. The notice shall be recorded in the city’s lien docket as a
potential future charge upon the property.
(3) Upon receipt of a notice under subsection (2), a property owner who
disagrees with the city’s valuations may appeal the city’s
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determination to a hearings officer in accordance with the provisions
of section 2.021 of this code. The decision of the hearings officer is
final. If the hearings officer’s decision establishes a different amount
of value-added charge than initially established by the city manager,
the lien recorded in the city’s lien docket shall be corrected to reflect
the amount established by the hearings officer.
Section 2.
Subsection (11) of Section 8.005 of the Eugene Code, 1971, is
amended to provide:
8.005 Administrative Code
.
(11)
Applications for permit. To obtain a permit, the applicant shall complete
and file an application and related materials as required by the city
manager in regulations developed pursuant to this code. If the property
is subject to a real property value-added charge under sections 2.100
through 2.115 of this code, no application may be submitted, or
accepted by the city, unless the applicant has paid to the city the
amount of the value-added charge.
Section 3.
If any section, subsection, sentence, clause, phrase, or portion of this
ordinance is for any reason held invalid or unconstitutional by any court of competent
jurisdiction, that portion shall be deemed a separate, distinct, and independent provision
and that holding shall not affect the validity of the remaining portions of this Ordinance.
Section 4.
Notwithstanding the effective date for imposing the real property
value-added charge as set forth in the proposed section 2.100(2), the charge shall be
imposed with respect to any application for a zone change or change in plan
designation pending upon the effective date of this ordinance. The City Manager shall
forward to any such applicant a notice setting forth the amount of the real property
value-added charge based on subsections (1) through (3) of section 2.105 of the
Eugene Code, 1971. Any such applicant may choose to accept that amount, or
alternatively, obtain and submit to the city an appraisal pursuant to section 2.105(4). In
the event that the applicant submits such an appraisal, then subsections (5) through (7)
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of section 2.105 also shall apply. No development permit, as defined by section 9.0500,
shall be issued until the charge has been deposited with the city.
Section 5.
The City Recorder, at the request of, or with the concurrence of the
City Attorney is authorized to administratively correct any reference errors contained
herein or in other provisions of the Eugene Code, 1971 to the provisions added,
amended or repealed herein.
Passed by the City Council this Approved by the Mayor this
____ day of ____________, 2006 ____ day of ______________, 2006
___________________________ _____________________________
City Recorder Mayor
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