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City looks at new land use tax.

Byline: Edward Russo The Register-Guard

Eugene should explore ways to impose special taxes on property owners who benefit financially from changes in land use rules, the City Council decided Wednesday.

The council's directive eventually could lead to a money-raising proposal to pay Measure 37 land use claims, but more council decisions would have to be made first.

``This is about having the ability to regulate land use in the future,'' said Councilor Bonny Bettman, who last year proposed the idea of assessing property owners to pay for Measure 37 claims.

Passed by voters in 2004, Measure 37 allows landowners to seek financial compensation from state and local governments if land use restrictions lessen their property values.

As an alternative to paying compensation, governments can waive land use rules and allow previously prohibited development to be carried out.

The fate of Measure 37 is uncertain.

A Marion County Circuit Court judge ruled the law unconstitutional last October. The Oregon Supreme Court is expected to decide the issue later this year.

Only two claims have been filed against the city of Eugene. But hundreds of claims have been filed statewide, including several dozen regarding properties in incorporated areas of Lane County.

On a 4-3 vote, councilors directed the city staff to explore two ways to raise money by taxing increases in land values brought about by city land use actions.

A tax will be necessary in case Measure 37 is upheld, the four councilors said.

"I don't think we can do nothing," Councilor Andrea Ortiz said. "We need to do something."

The tax proposals were inspired by councilors and developed by city attorney Glenn Klein and city staff.

One of the ideas would capture increases in land values when the city changes the zoning of specific parcels to allow more dense development. This happens 25 to 50 times annually, Klein said.

The second proposal would tax increased land values if the city changes its growth guides or building regulations.

Relaxed building rules, for example, could allow taller or larger buildings, which can make property more valuable, Klein said.

With the legality of Measure 37 in question, some councilors and City Manager Dennis Taylor thought it was unwise for staff to work on the proposals.

"Let's get clarity on the legal environment before we move" on either proposal, Taylor said.

Councilor Chris Pryor said he opposed the idea of taxing properties that are rezoned to allow more intense develop- ment.

Property taxes rise when the assessed value of land goes up anyway, he said, so a rezoning charge would equal "double dipping" by city government.

Voting to develop the new taxing proposals were Bettman and Ortiz and councilors Betty Taylor and David Kelly.

Voting against were Pryor and councilors Jennifer Solomon and Gary Pape. Councilor George Poling was absent due to illness.

No other city or county in Oregon is contemplating a similar tax, Klein told councilors.

Portland-area officials are thinking about expanding urban growth boundaries to include rural properties, he said.

Bringing those properties into the urban area would increase their value, part of which may be taxed to finance any Measure 37 claims, Klein said.
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Title Annotation:Government; In response to Measure 37, councilors consider ways to gain revenue when a rule change makes land more valuable
Publication:The Register-Guard (Eugene, OR)
Date:Jan 26, 2006
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