Council Communication

Resolution in Support of Repealing the Ban on Real Estate Transfer Taxes
Meeting Date:	March 1, 2005		Primary Staff Contact:	Brandon Goldman 552-2076 , goldmanb@ashland.or.us
Department:	Community Development		Secondary Staff Contact:	John McLaughlin, 552-2043 mclaughj@ashland.or.us
Contributing Departments:	Legal
Approval:	Gino Grimaldi

Statement: This item is placed on the agenda at the request of the Ashland Housing Commission. Currently State statute (ORS 306.815) prohibits local jurisdictions from adopting a local real estate transfer tax (RETT). A draft bill proposes to repeal this prohibition, giving communities the opportunity to consider if a real estate transfer tax is an appropriate revenue source.
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Background: The City Council considered and approved a resolution on this same subject at its April 15th, 2003, meeting. The existing City resolution (2003-11) emphasized the City's right to home rule and urged the state legislature to not preempt issues of local control. Resolution 2003-11 does urge the legislature to repeal the prohibition on the establishment of real estate transfer taxes. The City Council did not commit to whether a local real estate transfer tax would be adopted or, if adopted, where the funds would be allocated. In 2003, a Senate Bill was also proposed (SB863) before the State legislature that aimed to lift the preemption on real estate transfer taxes for a pilot program which would have allowed the cities of Ashland and Portland to consider the implementation of a RETT equivalent to 0.5% of the sale price of property to benefit affordable housing. The bill did not make it out of committee.
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Related City Policies: The Affordable Housing Action Plan identifies, as Strategy 1, the provision of funding for affordable housing. One of the funding options presented in this plan is a real estate transfer tax. Supporting legislation to lift the preemption on a RETT has no direct fiscal impact. However, assuming the prohibition is lifted, and the City chose to enact a real estate transfer tax in the future, a 0.5% tax ($5 per $1000 of valuation at sale), where the first $200,000 of a property's value would be exempted, would generate approximately $420,000 per year in revenue to address affordable housing. This estimate is based on past real estate transactions (2004) and are subject to change based on different assumptions and changes in the real estate market.
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Council Options: The Council may choose to adopt a resolution supporting the repeal of prohibition on real estate transfer taxes, or may choose to further study the topic, or take no action.
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Staff Recommendation: The Housing Commission has recommended the Council strongly support the Real Estate Transfer Tax and investigate engaging in a lobbying effort to support the lifting of the preemption specifically for the purpose of affordable housing.
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Potential Motions: Move approval of the proposed resolution supporting the repeal of the prohibition on real estate transfer taxes.
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Attachments: • Draft Resolution • Letter submitted by Alice Hardesty Please click on the link below to view the following attachments: • Draft Bill for introduction into the State House of Representatives • Prior Council Resolution: 2003-11; April 16-2003 • Housing Commission Memo, December 15, 2004 • Housing Commission Minutes, December 15, 2004 • Letter RE: RETT (Mensch) dated 12-13-04 • Article on Housing Trust Funds • Ashland Average Home Sales Price - Information

Real_Estate_Taxes_Attachments.pdf (1284.3KB)

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