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HomeMy WebLinkAbout2025-05-05 Study Session MINASHLAND CITY COUNCIL STUDY SESSION MINUTES Monday, May 5, 2025 Mayor Graham called the meeting to order at 5:30 p.m. Council Present: Mayor Graham, Councilors Dahle, Bloom, Kaplan, DuQuenne, Hansen and Kaplan. Council Absent: none Staff Present: Jordan Rooklyn Deputy City Manager Marianne Berry Finance Director Bryn Morrison Deputy Finance Director Brandon Goldman Community Development Director Linda Reid Housing Program Manager Johan Pietila City Attorney Alissa Kolodzinski City Recorder I. Public Input Citizens spoke on concerns about the proposed Parks fees and budget, livability in Ashland, the proposed cost increase for sporting teams to utilize fields, concerns about night lawn rules and enforcement, and suggested alternatives to budget cuts through cost savings. 11. Budget Background #3 Berry and Morrison provided a presentation (see attached). • Review of budget background, process, and timeline for the 2025-27 Budget. The Citizen Budget Committee (CBC) began its deliberations on April 30 to develop a balanced budget to send to council for adoption in June. • Clarification that no City department has overspent on the current budget and that there is not a deficit. Reductions in departmental budgets for the next biennium are because projected revenue has not kept pace with increasing projected costs. • Review of how to view revenues and expenses in the online proposed budget. • Discussion on long-term financial forecasting and how to gather projections earlier in the budget season to best prepare citizens for future budgets. Rooklyn provided a presentation related to property taxes in Oregon (see attached). • Measure 5 capped the amount of tax levied through property taxes in 1990 at $5 per $1,000 for education districts and $10 per $1,000 for general government. • IN 1997, Measure 50 permanently set the tax rate and no longer taxed on actual market value but on a newly created 'assessed value' that can only grow at 3% per City Council Study Session May 5, 2025 Page I of 2 year. Ashland's tax rate is held at $4.2865 per $1,000. Measure 50 allows for a temporary'local option levy' for 5 years but is subject to Measure 5 limits. • The growing gap between assessed and real market property values has kept property taxes low and predictable for property owners but limited cost recovery for local government. Property taxes paid for most government services prior to 1990. • New or greatly improved properties are assessed using a county -wide Changed Property Ratio. Various inequity scenarios were presented to show how similar circumstances for neighboring homes are impacted differently by these laws. • Discussion of future cost recovery included how to increase development and considerations to broaden the tax base such as annexation and/or change in the urban grown boundary. III. Non -Profit Affordable Housing Tax Exemption Goldman and Reid introduced the topic and provided background. The City was approached to see if there was interest in providing property tax exemption for affordable housing operated by a non-profit organization. This exemption would help keep rent low and help meet the City's Housing Production Strategy goals of incentivizing affordable housing in Ashland. Neighboring municipalities have passed and/or are considering similar exemptions to encourage affordable housing. • Request for more information about the potential financial impact to the City. • Council has a general interest in moving forward with an ordinance of this type. • Direction for staff to contact the Ashland School District to gauge the level of interest. • Direction for staff to estimate the projected increase of the affordable housing market in the next three to five years. Staff offered to return with a comparison between non-profit and private development within the affordable housing market. • Direction for staff to bring back specific criteria in which a development would qualify. IV. Adjournment of Study Session The meeting was adjourned at 7:26 p.m. A�d-1 J � City Recorder Alissa Kolodzinski Mayor Tonya Graham City Council Study Session May 5, 2025 Page 2 of 2 Summary ❖ Frequently Asked Questions ■ Budget Process Timeline ■ Budgeting General Fund Revenues ■ Open Gov Portal ❖ Overview and History of Property Tax F-,�gv, I MV I Budget Process & Timeline • November. Leadership Retreat City Manager Direction; Review Departmental Needs • January -February: Projections Begin Determine Carryforwards and Buildout Projections ■ March: Preliminary Budget Council Retreat March 1st Upload Departments' budgets into Open Gov Review Preliminary Budget ti� 4So> Q�t? 4So`r C4, 1 Pad tiov'24 Jan/Feb'25 M2rch'25 April'25 Mai '25 June'25 kvw Review City needs Reconcile acnrals Cowl Retreat Balance Budget Review Proposed Council Adopts C11 Direction Assumptions Update Open Gov Budget Budget Budget Process & Timeline ■ April -May: Budget Committee Meetings Review, deliberate and potentially make any changes to Proposed Budget • May: Budget Committee Approves Budget Sends Approved Budget to City Council • June: Council Adopts Budget May make changes to Approved Budget If less than 107., public hearing not needed Sets tax levy & passes other budget -related resolutions \ov'24 Jan'Feb'25 Nbrc6'25 _ap61'25 June'25 q1FIAMmm Review City needs Reconcile actuals Councl Retreat Balmee Budget Review Proposed CouncilAdopts CNf Direction Assumptions Update Open Gov Budget Budget Budgeting General Fund Revenues Largest revenues in BN 23-25 Property Taxes Franchise Fees Electric User Tax Transient Lodging Tax Ambulance Revenue Central Service Fee Other revenues Building & Planning Fees Licenses (Business, Liquor, Tobacco) Other Taxes (Cigarette, Marijuana, Liquor) Interest Income Grants Park Fees (facilities, recreation, etc) Fines & Other Fees Fees for Services (PD, Court, Cemetery, Budgeting General Fund Revenues Over 110 lines of revenues to forecast Departments project revenues • Enterprises • Fire • Police • Parks & Recreation Aggregating the data • Public Works • Community Development • Finance & Administration ■ Where/how to review in Open Gov Pre-1990's Property Taxes Based on Market Values Every six years, the County Assessor would assess Real Market Value countywide, and property owners would be charged property taxes on the assigned Real Market Value. During this period, property taxes paid for the majority of city services. 1990 - Measure 5 Total Property Taxes are capped. 1997 - Measure 50 Property Taxes no longer taxed on actual value, growth is limited, and tax rate is permanently set. n 1990 - Measure 5 1. Set limits on the amount of tax levied per $1,000 of a property's real market value • $5 per $1,000 for education districts • $10 per $1,000 for general government 2. If taxes exceed the limits, taxes are reduced under "compression." • 65% of Oregon cities lost revenue in FY17. 1997 - Measure 50 Year Built 1989 Real Market Value $200,000 Measure 5 Limits $1,000 ed / $2,000 gov't Tax Rate $1,035 ed / $2,052 gov't Taxes Paid $1,000 ed / $2,000 gov't Compression $35 ed / $52 gov't 1. Set a permanent rate limit for each taxing district. • Based on tax levies that existed in 1997. �shlAhd's is • Forever set at the 1997 limit. �4.261v5 per �I,DDD • Allows a temporary "local option levy." 2. Separated property tax from real market value. • Newly created "assessed value" • The "assessed value" can only grow 3% per year. • Exception: new properties or major improvements • Changed Property Ratio A" $1,200 1 ,.., $1,000 c ° $800 w $600 $400 $200 $0 1995-96 FA7 199MO 2003-04 2007-08 2011-12 2015-16 2019-20 2023-24 How has that impacted me & my neighbors? Base Year Inequity Homes that have the exact same market value may have very different property taxes depending on when they were last assessed when Measure 50 went into effect. Exhibit A: Base near ineauih, Home A Home 8 Real Market Value In 1990: $150,000 $150,000 Annual rate of growth 8% 8% Assessment year: 1990 1996 Market value according to assessors in 1996: $150,000 $220,000 1996 Assessed Value Limits according to Measure 50 formula: $135,000 $200,000 Property taxes owed In 1996: $1,350 $2,000 Assessed Value Limit in 2010: $200,000 $300,000 Property taxes owed in 2010: $2,000 1 $3,000 A" *Table source: League of Oregon Cities Measure 5 & 50. A Primer How has that impacted me & my neighbors? Neighborhood -to- Neighborhood Inequity Since assessed values were locked in 1995-6, slower growing neighborhoods have a relatively higher tax burden than faster growing neighborhoods. Exhibil B, N(,iehhorhood to rti,ii hhorhooci iiieuuitr Faster growing Slower growing Market value in 1996 $150,000 $150,000 Market value in 2010 $400,000 $300,000 Property taxes owed in 2010 $4,000 $4,000 Property taxes as percentage of RMV 1% 1.33% " &a `Table source: League of Oregon Cities Measure 5 & 50: A Primer How has that impacted me & my neighbors? New Property Inequity Since the change property ratio is county wide, slower growing neighborhoods are more likely to see new houses coming on at lower tax levels than older homes with the same market value. Erhihit ('• Now Yrnnertr lnvuuinv Neighborhood with Neighborhood with S% 20% annual growth annual growth Home A New Home Home B New Home 1996-97 • RMV $150,000 $150,000 . AV $150,000 _ $150,000 2010 • RMV $570,000 $297,000 • AV $227,000 0.398 $227,000 0.764 Ratio CPR for new 0.46 0.46 property 2011 • RMV $627,000 $627,000 $312,000 $312,000 • AV $234,000 $288,000 $234,000 $143,000 "Ik 'Table source: League of Oregon Cities Measure 5 & 50 A Primer Changed Property Ratio Used to calculate the assessed value of new or greatly improved properties Total Assessed Value Changed Property Ratio = x 100 Total Real Market Value Residential 57.3 63.0 Commercial/Industrial 69.6 F-7 Changed Property Ratio Used to calculate the assessed value of new or greatly improved properties Manufactured Home Park Rebuild Account T— Sales History Vatue H.stcuy Values 510OW 000 S900o 000 Seo00oo0 52.000.000 $6000,000 u.aoo.000 n.oao.000 S2 w0.wo $"oX000 So 2015 2016 2012 2016 2019 2020 2021 202Z 2023 2024 RMV MAV t AV Residential Rebuild Account ta.e9 Satas History Valua Hrstory Values S 200 000 S600.000 SSW.000 5400,000 1300,000 S200 000 1100,000 So 2015 2016 2012 2019 20M Mn 2021 2022 2023 2024 IL RMV MAV T- AV How has that impacted me & my neighbors? New Property Inequity Since the change property ratio is county wide, slower growing neighborhoods are more likely to see new houses coming on at lower tax levels than older homes with the same market value. Frhilbif C• h%Pw PrnnPrty Ineituily Neighborhood with Neighborhood with 5% 10% annual growth annual growth Home A New Home Home B New Home 1996-97 • RMV $150,000 $150,000 • AV $1.50,000 $150,000 2010 - - • RMV $570,000 $297,000 • AV $227,000 $227,000 0.764 Ratio 0.398 0.46 CPR for new 0.46 property 2011 _ • RMV $627,000 $627,000 $312,000 $312,000 • AV $234,000 1 $288,000 $234,000 $143,000 `Table source: League of Oregon Cities, Measure 5 & 50: A Primer How has that impacted me & my neighbors? Commercial vs State Industrial* Since the change property ratio is calculated on property type, large industrial property has significantly higher property taxes than commercial property. Fvhihil D: Cnnnnerrial vs. Industrial Commercial Industrial Market Value $1,000,000 $1,000,000 Changed Property Ratio .50 1 Assessable Value $500,000 $1,000,000 Property taxes owed at $10 per $1,000 of AV $S,aaa $10,000 *This ovily impacts desi9v1atrd laved - there are, viovie ih Ashlavid. 'Table source: League of Oregon Cities, Measure 5 & 50: A Primer How has Measure 5 & 50 impacted City of Ashland? Significant reductions in city tax revenues over time. S'aa� s1aM 5161a S14hI S12M S10M 58M SfiM SAM S:M Sad Estimated io<as w/o M50 Estimated Taxes dowmanow 2017 1018 :C21 20:2 2C:3 ..: How has Measure 5 & 50 impacted City of Ashland? Which has led us to change how we fund city services. 31.6M , Cr" 24.8M � 38.SM 38 2M 40.8M 'Cie FY 2019 Fr 102C FY 2021 FY 2022 F, 2023 FY 2024 a« Parks & Rec Fees Planning/Building Fees Ambulance Revenue Grants Admin Services TLT Revenue Franchise Fees Utility Bill Fees Property Taxes Given all this, what are the pathways for increasing revenue? J�1 Change the statewide property tax system Create a new taxing district Increase development Create a local option levy Create a fee f -= DEITY QUESTIONS?