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HomeMy WebLinkAboutCC Minutes - 01/25/06 Work Session M I N U T E S Eugene City Council Work Session McNutt Room—Eugene City Hall January 25, 2006 Noon COUNCILORS PRESENT: Jennifer Solomon, Betty Taylor, David Kelly, Gary Papé, Chris Pryor, Andrea Ortiz, Bonny Bettman. COUNCILORS ABSENT: George Poling. Her Honor Mayor Kitty Piercy called the meeting of the Eugene City Council to order. A. WORK SESSION: Measure 37 Givings Tax The council was joined for the item by City Attorney Glenn Klein. City Manager Dennis Taylor compli- mented staff on the work done on this item. He noted that Ballot Measure 37 led the City into uncharted territory and it was difficult to know how to proceed. Mr. Klein reviewed four options for collecting a tax or a charge to create a fund to pay compensation claims, outlined in the Agenda Item Summary (AIS) and attachments A through D. Option 1—Tax on ‘upzonings’ Option 2—Tax on City investment Option 3—Tax on increase from legislative change Option 4—Tax on capital gains Mr. Klein noted that Sue Cutsogeorge, Financial Analysis Manager for the Central Services Department, was available to answer questions. Mayor Piercy called for questions and comments from the council. Ms. Bettman complimented Mr. Klein and Ms. Cutsogeorge on the clarity of the materials in the AIS. She disagreed with the staff recommendation to do nothing at this time. She indicated she was not interested in the second option, which would utilize a tax on increased property values brought about by a local investment by the City. She also would not support the fourth option, which would tax the difference between a property’s purchase price and its current worth after improvements. She supported further exploration of options 1 and 3, however. MINUTES—Eugene City Council January 25, 2006 Page 1 Work Session Ms. Taylor thought the exercise pointed to the need for more revenue, tax reform, and new sources of revenue. She said the only option she could support was the first one, which would tax increases in property value brought about by changes in zoning or designation of a property. She felt a property owner would only request such a change if he or she was seeking to improve the value of the property. Ms. Taylor asked Mr. Klein to provide an example of a legislative change that would increase value, as addressed in the third option. Mr. Klein explained that if the code currently restricted height in a commer- cial zone to 20 feet and the height limitation was increased to 100 feet, some properties could increase in value because a person could build a much larger structure on a particular land parcel. Ms. Taylor remarked that it seemed that this option could tax people who were not benefiting from a legislative change. Mr. Kelly agreed that the materials before the council were very thorough and informative. He reiterated that the City could face “millions of dollars in potential liability” in Ballot Measure 37 claims. He averred that the City had to find a way to pay for those claims. He thought the alternative would be that the City would have to eliminate much of its land use management. He also supported the first option and opposed the second and fourth options. He thought the third option bore further examination. He likened it to a capital gains tax which was only exacted when a sale of stocks or other large properties were realized. He recognized that dealing with approximately 50,000 properties added a level of complexity to the third option, but pointed out that the property tax system dealt with a large number of properties every year. He thought the City could potentially utilize the property tax assessor’s office as a resource should the third option be chosen. Mr. Pryor asked how many Measure 37 claims the City currently faced. Mr. Klein replied that two claims had been filed, but one was not going forward because the property owner agreed to place it on hold pending the Supreme Court decision and the other would likely go away administratively. Mr. Pryor asked if it was known how soon the decision from the Supreme Court would be rendered. Mr. Klein guessed that it would be known in the summer, though it could be anywhere from two weeks to two years. Mr. Pryor did not sense an enormous amount of Measure 37 activity going on at the moment. He did not think it prudent to create a system that could potentially assess people for increases in property values in advance of the decision. He appreciated the arguments against the second and fourth options and agreed with them. He shared some councilors’ hesitance to support the third option because of the number of properties involved and the cost to the City. He felt that what the City could gain in money might not even compensate for what it would pay out in fees and assessments. He predicted it would be expensive. He also was not enamored with the first option. He said it would charge property owners twice. He pointed out that when property values increased, property taxes were the mechanism to receive compensation for such an increase. He thought charging again for property value increases could be perceived as “double-dipping.” He preferred to table all of the options at present. He underscored that if a Measure 37 issue arose that was significant, real, and of concern to the City the council could always bring the conversation back. At present, however, he did not see the need. Ms. Solomon concurred with Mr. Pryor. She agreed that the discussion was premature and there was no need to waste resources on it at this time. Mayor Piercy indicated her agreement with Mr. Pryor as well. MINUTES—Eugene City Council January 25, 2006 Page 2 Work Session In response to a question from Mr. Papé, Mr. Klein stated that the Metropolitan Service District (Portland area) was looking into something akin to the first option but the fee or tax would be triggered by urban growth boundary (UGB) expansion. He affirmed, in response to a follow-up question from Mr. Papé, that a property brought into the UGB despite the property owner’s opposition would still be taxed. Mr. Klein said property experienced approximately a five-fold to ten-fold increase in value when it was moved inside the UGB around the Portland area. He explained that Metro was looking at a number of options, such as overlooking the first 100 percent increase in value and taxing a percentage of the increase above that. Mr. Papé added his kudos to staff for the clarity and thoroughness of the materials in the AIS. He noted his agreement that some tax reform was needed in the state. Ms. Solomon, seconded by Ms. Ortiz, moved that the City take no additional action on a givings tax at this time. Ms. Bettman thought it unfortunate that the word ‘tax’ was being used. She said the fees were supposed to create a fund to help enable the City pay for Measure 37 claims. She believed the proposed fees were not so much to pay claims that would come to the City as they were a way to enable the City to regulate develop- ment in the future. She did not think the City could ignore the impact that Measure 37 would have on planning. She averred that the issue was to have the resources available so that as the City moved forward in planning, it would be known that the City had the resources to pay claims that could result from land use changes impacting people in a negative way. She felt it was future-thinking and pro-active to do so as the outcome of the Measure 37 litigation was not known. Mr. Kelly disagreed that action would be premature given the length of time it took to work on the underpinnings of an ordinance. He maintained that doing nothing at this point was not an option. Mr. Kelly, seconded by Ms. Bettman, moved to amend the motion to direct the City Man- ager to study options 1 and 3 in more detail, including completing a proposed analysis of the tax/fee amount and economic consequences and that the City Manager would return to the City Council with focused decisions to be made around implementation of such an ordi- nance. Mr. Kelly suggested staff look at what the council had done since the Land Use Code Update (LUCU) was enacted and review what sorts of things would fall under the third option and how they would be affected. City Manager Taylor explained the rationale for his recommendation. He underscored that there were always more weighty things to accomplish than there were resources to accomplish them. He took the council’s priority setting as a way to ascertain which tasks should rise to the top. He said when looking at the administrative costs and the time and resources to implement a fee in the face of the likelihood of litigation, it seemed more prudent to wait. He averred that the City wanted to be “on the leading edge and not the bleeding edge.” He pointed to the issues of smoking, Public Employee Retirement System (PERS) reform, and telecommunications as examples of the City taking the lead on issues. He felt that the Measure 37 issue could wait until staff and the council could get clarity with regard to the legal environment before putting the time and resources into fleshing out one of the two options preferred by council. Ms. Taylor also wished to commend staff on the materials. She said she was less opposed to the third option after hearing discussion of some kind of triggering mechanism. MINUTES—Eugene City Council January 25, 2006 Page 3 Work Session Mr. Klein asked the maker of the motion if his intention was that the third option would include a trigger as opposed to all 50,000 affected properties. He noted that the analysis that staff would have to go through, including consultants that would need to be hired, would be very different. Mr. Kelly indicated his comfort with making this explicit. Ms. Bettman agreed. Ms. Taylor indicated her support for the motion. Ms. Ortiz thanked staff for the materials. She did not believe that the council and staff could afford to do nothing. She felt that doing nothing was not an effective form of planning in this instance. Mr. Papé agreed that it was good to be prepared. He asked how many cities were involved in Measure 37 claims. Mr. Klein responded that he had conducted a survey for the League of Oregon Cities there had been approximately 15 cities and approximately 50 claims. He said there were now around 3,000 claims statewide and the vast majority of them were rural. Mr. Papé surmised that Mr. Pryor’s point had some merit. He agreed that there was a lack of certainty that Measure 37 would create a problem. In response to a question from Mr. Papé, City Manager Taylor affirmed that the City relied on the County for land evaluation. He said to implement Option 1 would require City staff to do much work. He was concerned, given that he and staff were in the final phases of crafting a budget to recommend to the council for fiscal year (FY) 2007, about meeting the council priorities and supporting the current levels of service. He was not sure how staff could do all of the other things that the council had added to “the plate” by its action over the last year. He questioned the level of return the investment would provide. He did not believe that it would justify the amount of staff and consultant time. In response to a question from Mr. Papé, Mr. Klein said the City would need appraiser expertise to conduct the evaluation required by option 3. He reiterated that the City would need consultant assistance for development of options 1 and 3. Mr. Papé predicted that option 3 would have multiple legal ramifications if brought into play. In response to Mr. Papé, Mr. Klein affirmed that it was not yet known whether a waiver would be transferable with the sale of a property. He noted that the Supreme Court would not likely address that question, given that it had not been raised in the proceedings. Ms. Solomon, seconded by Ms. Ortiz, moved to extend the discussion by five minutes. The motion passed unanimously, 7:0. Ms. Bettman agreed that consultants and an appraiser would be needed to resolve Measure 37 issues. She found the City Manager’s position to be inconsistent as she believed these costs would be incurred and the City was “forced to do something.” She likened doing nothing to “averting our eyes from responsibility.” Mr. Kelly thought it could be six more months before the framework for options 1 and 3 would be completed and by then, the Supreme Court decision would likely be known. Mr. Kelly admonished the City Manager not to speak of a return on the investment without having conducted a fiscal analysis. The amendment passed, 4:3; Mr. Papé, Mr. Pryor, and Ms. Solomon voting in opposition. MINUTES—Eugene City Council January 25, 2006 Page 4 Work Session The motion passed, as amended, 4:3; Mr. Papé, Mr. Pryor, and Ms. Solomon voting in op- position. B. WORK SESSION: Report and Update on Lane Regional Air Pollution Authority City Manager Taylor said he hoped it was the last time the Lane Regional Air Pollution Authority (LRAPA) would provide a report, given that the organization was soliciting agreement to change its name. He noted that Interim Director Merlyn Hough had been permanently appointed to the position. Ms. Taylor, having served on the LRAPA Board for nine years, introduced Mr. Hough. She stated that he had served the Department of Environmental Quality (DEQ) for 31 years. She suggested that he would be a good person to explain the difference between the DEQ and LRAPA. Mr. Hough introduced the board members from LRAPA who were present. He said LRAPA wished to change its name. He noted that the LRAPA board had approved the name change, but the member jurisdictions had to concur with the change. He stated that the board had been developing a vision statement, refining its mission statement, and updating the strategic plan for the agency. He related the new vision statement: “Community partners working together to ensure clean air for everyone.” Mr. Hough highlighted the overriding goals of the agency, as follows: 1) Ensuring healthful air quality for all Lane County citizens; 2) Involvement in forming an evolving citizens and stakeholders’ service; 3) Serving citizens and stakeholders well; 4) Trying to make the best use of combined resources for solving community problems. Mr. Hough related that when going through this process, several board members questioned whether the agency’s name was descriptive of the current role of LRAPA. He said the idea of authority seemed narrow and the idea of an agency seemed broader. Pollution had been deemed to represent more of the negative part of LRAPA, while ‘protection’ was a more positive part. He stated that there had been a desire to retain the acronym. The end result had been a proposal to change the name to the Lane Regional Air Protection Agency. Mayor Piercy conveyed her appreciation for the work that had been done and for the mission and goals. She called on the council for questions and comments. Ms. Ortiz thanked the members of LRAPA for coming to the meeting. She averred it was good that LRAPA existed to help monitor and educate businesses that impacted air quality. She said her constituents had been affected by air quality issues. Mr. Kelly asked Mr. Hough to respond to suggestions that the DEQ could do the work of LRAPA. Mr. Hough held the DEQ in a high regard and said he considered the department to be a key partner in LRAPA’s mission and goals. He stated that in looking at goals, LRAPA had the ability to provide a greater level of service than the DEQ. He cited the recent work LRAPA and a neighborhood had done with the J.H. Baxter Company to mitigate neighborhood air quality as an example of the type of close collaborative work in MINUTES—Eugene City Council January 25, 2006 Page 5 Work Session which the local agency was able to participate. He noted that the neighborhood groups had been very helpful in addressing the issue and helping to monitor air quality. He said there had been much progress in that situation. He stated that the DEQ was spread over the entire state and did not have the same resources per capita. Mr. Hough said, in response to Mr. Kelly, that the city of Eugene had more air monitoring stations and more real-time data than the rest of the state. He indicated that a citizen could check the LRAPA Web site and access the information. In response to a follow-up question from Mr. Kelly, Mr. Hough stated that there were four real-time monitoring stations and there were other stations that provided weather data. Mr. Kelly thought the west side industrial area would be a good location for a monitoring station. Mr. Hough responded that a filter sampler was located in the Four Corners area. Mr. Papé wished Mr. Hough good luck in his permanent position. He asked what management philosophy Mr. Hough planned on using for addressing both internal and external affairs. Mr. Hough replied that a key part of what he hoped to do was to ensure that priorities and goals were clear and that everyone had an important role in accomplishing this mission. Regarding the board, Mr. Hough averred that the strength of it lay in its diversity and that the different viewpoints brought to the table made a healthy process. He noted that the board reached some decisions with unanimity and others by a narrower margin. Mr. Papé asked what jurisdictions LRAPA oversaw. Mr. Hough replied that it covered all of Lane County and had five partner jurisdictions. Mr. Papé surmised that all of the jurisdictions wished to retain LRAPA. He wondered if, as it evolved, it was time to look at a governance model that included Junction City, Florence, Creswell, and other smaller jurisdictions. Mr. Hough responded that the smaller jurisdictions would be welcome to participate. Mr. Papé asked if Florence paid a fee for LRAPA work. Mr. Hough explained that the funding came through the County. He noted that LRAPA members met with Lane County Commissioner Anna Morrison, who represented the Florence area. Ms. Bettman asked if the intergovernmental agreement amendment for the name change had any other provisions in it. Mr. Hough replied that it was for the name change only. Ms. Bettman expressed concern that the loss of the word ‘authority’ could translate into an actual loss of authority. Mr. Hough responded that the name change had no effect. He felt that calling it an agency recognized the broader scope of the work in which LRAPA was now involved. Ms. Bettman asked if the name change would change the purpose of LRAPA. Mr. Hough replied that it would not. He stated that it would underscore the commitment to the vision of providing healthful air quality for everyone in Lane County. Ms. Taylor called the change ‘good.’ She emphasized that there had been no dissension among board members regarding the change. MINUTES—Eugene City Council January 25, 2006 Page 6 Work Session Mayor Piercy said she was very interested in the issues of climate change and carbon emissions and how the City could work with LRAPA toward the goal of reducing emissions. City Manager Taylor remarked that he was gratified to hear that LRAPA wanted its fair share of state-wide DEQ resources. Ms. Solomon, seconded by Ms. Ortiz, moved to authorize the City Manager to sign an amendment to the intergovernmental agreement between Lane County and the cities of Cot- tage Grove, Eugene, Oakridge, and Springfield which changes the name of the agency from the Lane Regional Air Pollution Authority to the Lane Regional Air Protection Agency. Mr. Hough indicated his hope that LRAPA could come before the council on an annual basis to report on its work. The meeting adjourned at 1:16 p.m. Respectfully submitted, Dennis M. Taylor City Manager (Recorded by Ruth Atcherson) MINUTES—Eugene City Council January 25, 2006 Page 7 Work Session