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Accord sets stage for Santa Clara sale.

Byline: Anne Williams The Register-Guard

In an agreement expected to win approval from the school board next week, the Eugene School District will cover the costs of a possible value added tax the City Council could impose after the pending sale of the Santa Clara Elementary School property - a fee that could gobble up more than $1 million of the $7.4 million proceeds.

A divided City Council debated the new tax in May, referring it to the city staff to develop final details. Tax collections would go into a fund to pay future claims under Measure 37, a state law passed in 2004 that requires governments either to pay property owners if their land values have been reduced by zoning and other land use rules while they owned the property, or waive the land use rules.

The original ordinance set the tax at 25 percent of the increase in the land's current value and its value after any zone changes. About two-thirds of the Santa Clara property is zoned for public use, the rest for commercial use. The proposed buyer, an offshoot of the Eugene-based development group Oregon West Management LLC, will seek permission to rezone the entire parcel for commercial use, with the aim of attracting a mix of medium-size anchor tenants and retail businesses.

At its Dec. 11 meeting, the council referred the issue to a technical work group to develop options and a recommendation for how the city "might best capture value when it grants increased development rights to property owners."

If the group doesn't bring back a recommendation by the end of March, the original ordinance will be reconsidered.

Sue Prichard, the district's real estate broker, called the ordinance "highly problematic" in its current form, with inconsistencies about when and how the tax would be collected.

She said it has the potential to "seriously affect the value of any parcel," and noted that any savvy buyer would expect, as the Santa Clara buyers do, the seller to pick up the tab.

The district has formally requested that public agencies, which can't themselves bring Measure 37 claims, be exempt from the tax.

Jon Lauch, the district's assistant director of facilities, said the district can only speculate how much the tax might amount to, should the city impose it in the case of Santa Clara. Much would depend on how the city calculates the current value, he said.

The school board accepted Oregon West Management's $7.4 million offer on the property in August. The offer did not include a zone change as a contingency, but it set a "due diligence" period of 120 days from date of acceptance, during which the buyer could terminate for cause. That period was extended by 30 days solely because of the city tax issue.

Once the agreement is approved, the sale would close within 30 days.

Eight percent of the sale proceeds would go to the Santa Clara Grange, which agreed to waive a deed restriction on the property in exchange for a cut.

As part of the deal, Oregon West - whose partners have formed a separate LLC, Santa Clara Properties, for the purpose of purchasing the site - agreed to commemorate the history of the 73-year-old school on the site, perhaps by incorporating decorative castings from the school's original facade.

A neighborhood group, Santa Clara Committee for Sensible Parks & Open Space, had lobbied the board to seek ways to preserve the building and grounds, but the district was intent on selling. The group couldn't drum up interest from the city or any organization to make an offer.

The school, which closed in 2003, was demolished last winter.
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Title Annotation:Schools; The school board is likely to pay for a tax the city may seek to cover land use claims
Publication:The Register-Guard (Eugene, OR)
Date:Jan 13, 2007
Words:607
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