Eugene City Council — October 28, 2026

0:04 Good afternoon, everyone, and welcome to the October 28, 2026 City Council Work Session.

6:37 Thank you for joining us today in this hybrid meeting format. work sessions like this one there is no opportunity for public comment and those wishing to access the meeting can do so by watching the live stream available on our website the broadcast on Comcast channel 21 or by calling into one of the to the city of Eugene. Thank you again for joining us today. I now call the October 2026 work session of the Eugene City Council to order. I'll turn things right over to our city manager for our first topic, which is a work session and possible action on an ordinance establishing a residential energy performance disclosure requirement. Thank you, Mayor. Just a couple of things. I wanted to put out the two points. This project is in response to an action by the Council back in November. This was related to the Climate

7:27 Action Plan 2.0, where Council directed staff to develop implementation strategies for a . Today, as proposed, the ordinance would require responsible parties to disclose the Then I will go over the draft ordinance and and code provisions, then I will give a quick

8:21 preview of what would come next if council decides to adopt deference today. Before I get into local policy, direct introductory introductory work sessions, again, I'm talking about the condition of most of Eugene's housing stock, with many homes in our region being very inefficient. These conditions lead to higher energy costs, reduced indoor air quality, and inefficient energy use. From talking directly to many residents, we know that many of them are unaware of how to address use. Expanding the use of home energy scores is one tool that can help. A home energy score is an energy assessment tool developed by

9:08 to evaluate a variety of physical and mechanical features to evaluate a variety of physical and mechanical features throughout a home. The assessor creates a report that provides a score on a scale of one to ten based on the energy use of a home, kind of like a miles per gallon, gallon rating for a car. The report also includes a lot of other helpful information like estimated energy, recommended improvements, and available rebates. Many other cities, including four in Oregon, have implemented a home energy score disclosure requirement, basically requiring the seller of a home to include the score and report in the online listing when a home is listed for sale so that prospective buyers can view it. The goals are to increase transparency, educate homeowners

9:55 about opportunities to improve energy efficiency, and finally to connect them to incentives that can help finance upgrades. Many of these goals, many of these goals align with What I would like to do with the rest of this presentation is walk through the timeline of council direction and prior work sessions that have gotten us to where we are today. So what started this journey first was council direction, to implement a home energy score policy both through a CAP 2.0 action and motions passed in 2021. Quickly here's the language of the CAP 2.0 action

10:42 directing the city to implement a mandatory home and A a Here are previous city council motions directing the city manager to do engagement research and create an implementation plan and there's one more I options-related to developing options for renters has not been the focus of staff's work work to date at the February and Mark March work sessions staff shared the the results of engagement and research. a wide range of community perspectives on. with

11:39 Next, Council directed this initiative to draft an ordinance and staff presented it to Council to obtain and disclose a home energy school with the U.S. Department of energy home energy school score tool being the required assessment methodology the Code Authority for the city manager provide financial assistance to the extent that funds are available and to

12:24 levy a penalty for non-compliance it identifies for a variety of distressed sale situations like for example a pre-foreclosure trustee sale as well as for certain building types, either that cannot be scored using the tool or that have a non-residential use. So, for example, commercial buildings, large large apartment complexes, industrial buildings, these are buildings that would not be subject to this. And finally, the the code identifies conditions under which the score and report expire and the effective date of the ordinance, which is six months after adoption. So that's the code. I'd like to give an overview of how this disclosure

13:09 requirement would function in practice. Most people would only be subject to this when they sell their home, so typically once or twice in a a lifetime, and they tend to be guided through this process by a realtor. The The seller would hire a qualified assessor, it costs $50 for the average Eugene home, and then include that score in the listing. If they qualify for an exemption or a free score, they may need to submit paperwork or a brief application. If the listing is posted without a score, they would provide it with time to comply. of compliance after repeated notification may eventually result in a penalty.

13:55 We Because the score provides different insights than an inspection report or utility bills, it gives buyers additional information when making their final decision. In September, Council held a public hearing on the draft ordinance. At the public hearing, 21 people shared a comment.

14:40 Additional comments were submitted to Mayor and City Council via email. Of these comments, 26 expressed support, five expressed opposition opposition, and one was neutral. The themes from this input are pretty consistent with what. Was heard throughout engagement. There is support for increased transparency and consumer protection. Support for better connection to incentives and rebates as well as support for tools to help people better understand how to reduce their bills. There are some concerns about adding a cost to selling a home and there are concerns that there aren't enough assessors locally. There were also requests to identify metrics and evaluate the policy over time.

15:28 There were several questions from City Council at the public hearing that I'd like to address. First, Councillor Groves asked about ways to offset the cost for low-income sellers. would intend to set aside resources so that sellers below a certain income threshold could apply to get a score at no cost. We would what we'd plan to do is have several assessors under contract who can provide the service and invoice the city so that this wouldn't be something that would slow down or delay the sales process. This is considered best practice and all four other cities approach this similarly. Councillor Clark asked if amendments to the code to add metrics for evaluating the policy would require of another public hearing and,

16:13 the city attorney at the time had responded that it would not. But I'd just like to add that - to track various key indicators and metrics once the policy is implemented. Mayor had asked for the number of home assessments completed through the score program in total and per year. For those who are unaware, as a quick reminder, score was a partnership with the U of O, eWeb, and the city providing free scores on a voluntary basis to low-income and renter households. Roughly 800 households participated in that program in eight years, on average about 100 privile... in, Mayor also asked about the number of homes in Eugene built before night

16:59 and the typical building materials associated with construction at that time. From the DCARB report that was built years ago, that report says that approximately 49,000 residential units were built prior to 1990, representing roughly 65 percent of our housing stock. Typical construction features from that, include little to no insulation in the floors, walls, or attic. leaky building envelopes, inefficient heating systems, single pane windows. These features are conditions that can lead to very inefficient energy use and therefore higher energy costs. There is more detail about this in attachment which also includes responses to all previous Council questions since

17:48 the February work session. And so that puts us at today. Council has the opportunity to develop administrative rules that provide more details

18:33 on the requirements, the exemptions, the compliance process, and enforcement penalties, and the financial assistance process. Staff would then develop the systems and processes to turn those rules into an actual program. We have

19:19 up roughly 10 to 15 new assessors. Ben had to do successfully before they launched. We also intend to develop broad communication and outreach materials. We know that realtors and others associated with the home sale transactions are really the ones who are going to be at the helm of responding to this requirement. the . . . . So, in summary, Council

20:25 would expand people's access to information about their homes energy performance. It would be another tool that connects them to existing incentives and it would lead homes to slowly become more energy efficient over time. Moving in this policy direction aligns with Council's goals and priorities established in the climate action plan, the strap plan, and the housing implementation pipeline and at this time we'd like to open it up. We're happy to answer any questions that would inform your decision today and with that I turn it back over to the mayor. Thank you Danielle and for that presentation incredibly helpful to see this work over the period of time that it has

21:12 been a current event in our community I can say personally having participated in some of the CAP 2.0 workshops and those conversations, that thinking back to that moment in time, it was a question really to our community how we could implement and more directly engage our existing building stock with our community's climate goals and energy efficiency goals and the affordability goals and quality of life goals. And I think it is really exciting to see have been leaning into this work and now in 2026 moving it forward and discussion with this body I strongly support the implementation of this work and most of my questions as we cycle through will have to do with nuances

21:58 and details as to how we can further support the effective implementation of this ordinance and what we learn about it over time if council chooses to move forward with it and also to really lean in on the workforce training and development aspects of this, because I think there is a strong opportunity for our community to add to what those best practices might be in other places, as other cities continue to learn from places who have implemented policies like this into their local laws. Having said that, I'll now open the floor for council discussion. I see Councillor Evans, Councillor Groves, Councillor Keating, and the queue. Councillor Evans. Yeah, my questions are more towards the implementation side. So are assessors going to be hired by the city or are they going to be independent contractors?

22:51 That's a great question. will be independent contractors hired by the seller who's ever selling their home. They would hire an assessor to complete the score. What I did mention was for the ones who are completing the scores for free, for the lower income, for families that meet the low income threshold, they would be under contract for the city and we would hire, them to complete the scores for free for that subset of folks who meet the income qualifications. Okay, and what are the training requirements for assessors? So they need to have a residential contractor license, and then they need to complete an additional training that's pretty short. It's about a one to the,. order to get that certification to be an assessor. And what happens if there is

23:41 some disagreement with the assessor's evaluation of the the home and you know it's relative, um, a relative to, you know, or you're pointing out certain things that a homeowner needs to do to improve their home energy score and, you know, make their their home, you know, more, you know, efficient and resilient. What if someone says I don't agree with that? How do- how do we deal with challenges to an assessor's judgment? Yeah, that's a great question. I think what I understand

24:27 your question to be is how would someone go about disputing the score if they disagree with what the assessor you know said there is a pretty robust process through earth advantage they do quality assurance on 5% of all scores that are completed so that's just something they do on an ongoing basis but they also have a process if a specific person wants to dispute their individual score they can bring it up directly with the assessor if they still dispute it after that they can bring it up to earth advantage and earth advantage will the score and, you know, the data that was in verify that

25:26 process already in place. And who is Earth Advantage? So Earth Advantage is a national organization. They provide a range of support including research and policy guidance and a variety services to help implement, you know, building policy for jurisdictions. They supported us in doing the research. They're also under contract with a a variety of cities across Oregon that have this policy under place to help train assessors in some cities they support tracking compliance- I think two other quick things about that council average to talk about one they support

26:11 the? the State Department of Energy's home energy school program so they are the technical experts who provide support to the state all across this you know all across the state into cities or, in the state so that's one of the things and they also operate something that's called the green building registry and that is a place that is a repository for information so they are the ones where you know if this advanced and scores were created that's the place where scores would be held and it's a way to sort of both do management of that information as well as the feed into the quality assurance process. So if we were to pass this today or in another session or time, would we go enter into a contract with Earth Advantage prior to the April start date for this? Yes, I think we already somewhat

27:03 involved in contractual relations via the state. Well, we have access to them via the states and right now that's basically a free service. I think if If this advanced, I think we would get them under contract for two reasons. One would, we would probably bring them on board to help with identifying and training of assessors to make sure that that is being done correctly and that we have sufficient quantity to meet what we expect to be the demand. And then, I think we would probably have an ongoing licensing agreement with them so that this information could be posted to the green building registry. And that is something that we thought about, but to bring them on as a one-time fee would would be something in the $25,000 to $30,000 range, and then an ongoing fee would be about $5,000 a year to keep them about access to their systems.

28:07 to do very targeted outreach to realtors. Several of those relationships we've already established through our engagement, you know, we established a relationship with the Eugene Realtors Association, as well as other realtors beyond that network. And so we plan to lean into those, you know, relationships and do additional training and support to help guide them through, you know, what are the requirements? What's the process? How do you get the score? How do you post it? So a lot of our outreach and education be geared towards them, and ongoing support

29:01 like this always has a certain amount of consternation around it. Also, thinking ahead about how staff is going to manage it, is there somebody here that can speak to that component? In terms of managing the implementation, if this were to proceed? The implementation and then the ongoing care and feeding of the program. Yeah, and that's something we haven't tried to get too far out over our skis on this, but we have thought a little bit about that. That our assumption right now is that we will be absorbing

30:01 of the time spent on this is gonna be in that realm, is understanding, okay, looking at listings, what has been listed, are they posting what, you know, the ordinance is actually requiring, and using that as a way to then send follow-ups, hey, did you have, we have this requirement, can I help you understand it, you know, you need information-wise, so a lot of the time is gonna be spent on that, as well as developing some of the systems for, you know, continued monitoring compliance, you know, looking at metrics and measures and things like that, but that's gonna be handled within the program with support from other parts of the organization who already have some of the systems and processes that we know we're going to leverage and take advantage of if this were to roll out. So there will not be any new employees? That is not my current expectation. I'm expecting to absorb this into the current program.

30:46 And how will that affect your capacity? I think we're going to have to just in make changes into how we show up in other spaces. And I think we'll just have to have, you where we're reprioritizing certain things. I think there are certain things we may just see less of, you know, annual reporting, dashboarding, some of our greenhouse gas inventories, things that we do on a pretty regular cycle but take up a lot of bandwidth and resources, we'll have to revisit those and figure out maybe a different frequency schedule and some of the things that we do in support of both internal departments and some of our partners externally, it may change some of that as well. You know, having bought and sold a number of houses over the years, I mean, I think whatever we do we need to have the capacity to make sure we're able to be responsive and not be

31:32 the point that hangs up a transaction. Council Keating. Wait, just I had one more question. Thank you. And what is the threshold for lower income sellers? Have we set that yet? Thank you. And what is the threshold for lower income sellers? Have we set that yet? In the other cities, it's either 60 or 80 percent of AMI. So, like Ian said, we haven't gone too far out over our skis yet with making those sorts of determinations, but we'd probably do one of those two situations. Okay, so we're being asked to vote on this today and we don't still don't have all the information worked out yet. Is that my understanding? Well there are

32:19 certain parts that would come up through administrative rulemaking that we haven't finalized yet because there hasn't been a decision yet on to advance on actually developing rules. I think what we've done K historically for - And that would probably be my place to start I

33:17 may include to the extent and The specific exemptions that are in here do include, one, they include things related to financially distressed sales, essentially. a number of two, two foreclosure type proceedings. So homes sold that are clearly in financial distress situations.- And then, the Oregon property tax deferral for disabled and senior homeowners. That was an exemption we saw, I think, in other ordinances and staff wanted to include here. But the determination of, you know,

34:02 who would qualify for assistance, whether we have an assistance program, we have left that as an an administration to be laid out in the rules. and what they determine is right to recommend

35:13 home energy score, and there's a trademark. Yeah, it is a tool developed, it's the methodology tool developed by the US Department of the Energy. Residential, performance disclosure requirement was, is the language that a lot of the other cities use when they when they, when they, when they, when they, you know, the more outward facing website documents, they tend to use the home energy score word. Thank you. The Department of Energy, as I understand it, that scale of 1 to 10 is a preferable score. I just want to see. If this lines up with what we're hopefully approving today, 1 to 4 would be a below average, meaning-. R I I., I

35:58 meaning that the home consumes more energy than roughly 85 percent of U.S. homes, 5 smack in the middle, the home to right thank you I am enthusiastic about advancing this today and I

36:44 would be remiss if I didn't know you referenced it about renters about counsel's previous or direction rather that we have a home energy score for renters as well as the only current renter on lives in an energy inefficient home I would suspect I would be probably in that one to four range a 2,000 square foot home acquitted heater AC gaps in the sliding door the front door what weren't renters part of the conversation and or not and or but recognizing their what are the steps for renters should to a council action today. What's a reasonable timeline for us to grapple

37:33 with what I see as a logical next step for a home energy score or an energy performance audit for the 50% of us who rent in this community? That's a great question. As you mentioned, there was a previous council motion directing the city manager to explore options for renters. That wasn't the focus. We determined earlier on that we didn't have

38:27 we would have that would sort of another subset of steps we'd have to figure out. And we didn't have capacity to explore that while also doing this. We also start with time of lease, which is what is before you today, which is sympathizing, which is what is before you today, as a way to learn and potentially explore renters next. I'll let Ian and speak to what it would take for this program to do the renter piece. Yeah, thank you for that question, Councilor Keating. I think just to build on what Danielle has said, I think one of the reasons that we decided to separate it are the reasons that she talked about, which was talking about both was it made it a very complicated conversation

39:12 and it's hard to talk about what's going on with people who might be landlords versus people who are, just owning their house and selling those. So that was part of the complication. I think if it's advanced, we'd like to figure out what this looks like in practice, how it gets implemented, sort of where are some of the kinks in this,

39:57 and use that as a way to think about what might this then look like for renters. In terms of a timeline, I don't think I could put a time on this. I think we really would want to see how the next six months would go if Council chose to proceed to figure out how to get this in place, and roll this out, and figure out what would actually track compliance, what information's out there, and use that as a way to then possibly feed into thinking about an engagement strategy. But this would be one of the things where I think we have to make trade-offs. And we wouldn't necessarily have capacity to develop the rules and also do a big engagement process on this. So we'd have to think about where this fits within a prioritization and how we can think about doing this. I think there are other ways we could think about servicing that audience and servicing that part of our

40:43 program or other things, which aren't necessarily priorities. But if there be a way to think about doing that, long time or if there's been a major alteration made to the house that would affect the and energy usage of the home. I recall at one point there there being a

41:29 mention of an exemption for homes sold by a trust if there's a recent death in the family and we experienced this not long ago my brothers and I with my mom's property is that still part of the equation an exemption for families who are selling a loved one's home? Yes. Yes it is. Thank you. The other questions I had seem or addressed the engagement with the realtors. How many assessors are there locally? You mentioned that we plan to bring up 10 to 15. Are there any who have this training at this juncture? How many? Currently there's four assessors serving the Eugene area and from our research we know that we need about 15

42:15 to 20 in order to meet the demand that this policy will create. Right. Thank you very much. I urge adoption. Thank you, Mayor. Councillor Zalinka and then Councillor Clark and a time check for Council that we do have a another agenda item after this one. Councillor Zalinka. Yeah, thanks. Yeah, other cities have had this program for years, and what we've learned from that is that it's not a very complicated process. It may seem like that in this, but

43:06 It's not a very complicated process to a have this actually done. Councilor Groves, I'm a little surprised that your question about not having all the administrative rules in place, that's pretty much standard operating procedure that we've had for decades where we adopt the administrative rules that the city manager creates. There's administrative rules after city council adopts the policy. So that's not something that we do as a regular basis. This is common practice, how we do this. So all

43:51 I'll point out that when we assessors through this program, assessors, these are jobs. These are creating jobs in our community, and they're well-paid jobs. And what turns out is that they're abundant, and they're well-trained, and they're competent. When it comes to challenges, to assessments, that's really a very, very and infrequent so so so so so, so, so, so, so,

44:50 sectors of energy users and greenhouse gas emissions in the state of Oregon and in Eugene without a robust energy efficiency program. We do have weatherization programs, but they don't cover a lot in a very over a comprehensive period of time. This will help get us there. And I just wanted to point out that Earth Advantage is a nationally recognized expert, not only with Odo, they're our technical assistance contractor, but they're experts across the country and are asked to speak about this all over the country. And on the question of renters, Councilor Keating, it's much more complicated, as the staff said, but Odo contracted with Earth Advantage to do a study about including renters in the

45:37 program and probably roll that out with a model program that doesn't, that could be replicated other cities colleagues who will vote on it. I have, and I also recognize, frankly, the dangers of speaking against the climate orthodoxy and the political incorrect. So, so there's that. But I'm

46:29 troubled by this measure for a couple of reasons, and I just want to speak them out loud before we put this into place, which I am relatively sure we will. Number one to Randy's concerns, we're passing a new ordinance that requires, whether it requires new staff to be hired or not, we're not certain of. We think it probably won't, but we don't know that yet because we haven't seen the compliance amount. And I do have a question of staff, is it the intent of, is it the administrative intent at this point for those free assessments and paying the auditor for those free assessments,

47:18 for that monies to come out of the program itself. In other words, will we increase the amount of the assessment to each homeowner done in order, in order to cover that amount and low income scores. I lost my train of thought. So it would not be additional budgeted funds

48:05 to cover this, and we would not be increasing the cost to regular priced assessments in order to cover the cost for low income scores. But we're making a commitment of expending additional city funds. That's

48:50 is this will be totally absorbed with the current program. I do not expect ever to be given additional staff to actually implement this program. So it will be done with the existing program, our existing resources and our existing staff, bandwidth. And what that will then mean is we will just make adjustments and reprioritization in other parts of the program. Thank you. Allen, to defend my friend Randy here, I would say we're making a commitment to do something and to expand a program without certainty, we have good knowledge, but we don't have certainty that we're not putting ourselves in the position for increased ongoing future expenses that we may not be considering in full. That's, I believe, his concern, and it's mine as well.

49:37 The other part of this is that staff spoke well to the quote, relationships created already during public engagement with realtors. My understanding is that the Eugene Association of Realtors were absolutely against the idea of doing this. I speak, I work in this industry every day and so I have spoken with dozens and dozens

50:23 And I, for one, am always in favor of buyers having complete and accurate information. I think that's a bare minimum. But I believe that this is a great deal more about creating a database of everybody's home in Eugene than it is about serving buyers and their best interest, especially as Matt points out that at least half the houses in Eugene aren't usually for sale to the homeowner to the to the occupant they are for rent to the occupant so I would probably vote against this as a result but I appreciate the conversation. Councillor Yay we're going to move to you next

51:11 and then I'm going to come back to Councillor Kaczynski and ask for a motion on the table. Councilor Yay. I'll try very quick. My question is, is there a way, will this be coming back in our budget discussions or is there a way to set a cap or something? I can at a certain level understand some of the Councillor's hesitation about having an open-ended budget item, but I feel like that's something that we could address in some way. Yeah, so I guess that's my question, the budget discussion? Would it come back during our budget discussions, would it come back at some other time? So I wanted to speak to this. So there's a couple of things that we can do with Council. One, with the administrative rules, clearly bring those back to you as those are developed

51:59 and adopted under my authority. But two is that, as staff said, the idea is to use the existing resources that we have and not to increase the budget. If there is at any Any time it looks like there may be an adjustment as a result of this program should counsel one to approve it, that can be flagged as a part of the budget process, and you can determine whether that is where you would like to allocate resources. I do not envision that. I envision allowing us to go through this program in the first year, track the expenses, and coming back to you and letting you know whether we're working within that dollar amount and if we foresee any expenses increasing to allow us kind of to pilot it. I would agree with Councilor Yay that the budget process could be a place to address that. However, I'm anticipating that we are not going to be increasing the budgeted amount that we have now in our next biennium as a result of this program. the

53:11 I'm really excited about this program. And just talking to people in my neighborhood, I've heard so many stories of people like, oh, I so wish this had been around when I purchased my house. So thank you. Thanks for all the hard work, staff. Thank you, council, and thank you for that clarification, city manager. I think what you're underscoring is that we continuously have the opportunity as a community to improve upon and learn from the good work that we're doing H.. I, area of work would be no different. And I have a lot of confidence in our staff's capacity and also in the work that you've done to date and how you've been thinking about this and developing it over many years' time with the input from literally hundreds of other people but also from national experts. So we have a very robust collection of information

53:59 to work with, as this is coming forward today. I'm now going to turn to the council vice president forward. Thank you. And before I make the motion, I just want to express my appreciation to staff for all the work that they put into this, the materials that were produced, the outreach that you did, the research was very impressive, and I very much appreciate it as we're moving forward with this action to help address climate and climate change impacts and improve our energy scores. So with that, I move to adopt an ordinance establishing a residential energy performance this is a motion to amend the amendment to approve the amendment's disclosure requirement as proposed in

54:49 attachment A to the AIS. Thank you, Councillors. Any further discussion from council? Seeing none, I will now take a vote for this motion. All in favor? One, two, three, four, five, and perhaps. Thank you. Six and all opposed did I miss anyone? Six and all opposed one and the motion passes with a vote of six to one thank you council and thank you staff very much. This concludes our first agenda item for today. I'm now, now going to turn to city manager to introduce our second topic which is a the work session on voluntary annexation follow-up.

55:34 I also want to flag to staff and to council that council president Leach is not here today and did requests to me that we, and also communicated this to vice president Kuczynski that we would not take a vote today, but would actually come back to this vote when councilor Leach is able to be present and that looks like it would be November 9th at our meeting, specific because this area of work impacts directly within councilor and she wanted to be here for that decision point. City manager, if you would not mind introducing our first topic, which is a work session on voluntary annexation follow-up. Thank you, mayor. The council had two previous work sessions on this item, one it in 2024 and one in 2025, and those past

56:20 work sessions focused on facts about annexation and identified potential incentives, incentives for encouraging voluntary annexation. Our interim planning and Planning planning and development director Alyssa Hunter presented four possible voluntary annexation incentives at last year's work session. Those are target outreach and education right away annexation, annexation application fee waiver and property tax differential. This work session provides a follow up to a several counselor inquiries and also provides an opportunity for counsel to indicate whether they're interested in a deeper discussion about what a property tax differential program could look like and in fact if incentives are going to encourage voluntary annexation. So with that, I'll turn it over to staff.

57:08 Thank you and thank you for having us today. As the city manager said, -this is part of an ongoing conversation you've been having related to encouraging voluntary annexations along with the production of more housing. We are here today with staff for planning, city attorney's office and finance to provide a deeper dive into some of the aspects voluntary annexation and in particular one of the potential incentives. So with that I will hand it over to Jeff. Thank You Alyssa. Good afternoon Mayor and City Council it's nice to be in front of you all again. For anyone watching who may not know me I am Jeff Gepper principal planner for the planning divisions land use planning team and I'll be picking up the torch on the

57:55 topic of voluntary annexation. For our agenda today I'll provide a quick annexation refresher, followed by annexation trends and outcomes. I'll then introduce a change in state law impacting annexations in Eugene and then we'll move on to the incentive options the potential financial implications council next and council options and next steps so let's jump right in the nuts and bolts of annexations really quickly while this is a council I want to take a moment to do a quick overview to break it down to its most basic premise within the city's urban growth boundary land is either within city limits or outside city limits. You can see the white on the map there

59:01 anybody interested in annexation should check out those resources. All right, I will move on now to the trends and outcomes we've seen after a council request for a little bit of a deeper dive into this conversation. So, in the last 10 years, we have seen an average of about 10 approved annexations. During this time period, the annexation fee has remained unchanged h at $5,155 and change. Once submitted, an application takes about just over three months to be fully processed and approved. And it was also notable to staff the majority of annexations actually tended to be smaller properties rather than large ones. Looking at the type of land being brought into the city over the 114 applications in the last 10 years the vast majority of applications have been for residentially zoned or designated land to be annexed into the

59:48 city. Thinking about geography we see that annexation applications tend to be concentrated within three neighborhoods this likely comes as no surprise River Road, Santa Clara, and the Northeast neighbors. These neighborhoods consist of existing smaller residential lots. This is likely why we see a large contingent of residential annexation applications that I showed on you on the last slide. Now let's take a look the each application to evaluate what has occurred on residential property since annexation. I want to do a big shout out to some of our staff, Gareth, Warr, and Haley Oaks, two of our planners who've done on a lot of research into this topic. Our annex property of the annex properties, about 51% developed or divided the land

1:00:34 that they're on following annexation. For us, this was one of the more surprising outcomes given that we understood the primary motivation for annexation to be facilitating property investment and development. Of those that divided, we saw 248 lots or parcels created. created through the division of smaller sites that resulted in just the creation one or two extra lots. As far as housing production is concerned annexation has resulted in 362 new units in the 10-year time frame and it appears that it typically takes about two years for a property to develop following annexation. Showing that housing production is actually occurring relatively quick if it does happen after annexation. And with that brief summary I'll move on

1:01:22 to a state legislative update. One of the biggest barriers to annexation has been a state and local requirement for that a property needs to be contiguous with city limits in order to annex even if a property met all the other requirements if the property isn't touching city limits that is to be contiguous a property would is barred from annexing into the city. In response to local advocacy to tackle this barrier the state passed a housing bill House Bill 4108 that changes the rules to allow non-contiguous properties to be eligible for annexation. This applies only within Eugene and only within our urban growth boundary and a property must be designated residential or mixed use. It must be connected to water, wastewater, stormwater services and

1:02:09 accessible by a public road to take advantage of this option. These criteria seem restrictive however there are many properties especially in River Road Santa Clara that would likely qualify. We estimate nearly 4,000 properties that may now be eligible based on this change in state law. The state law does apply directly and effective on January 1 the 2027, applicants will an advantage of this rule change. And we are planning to send a mailer to those properties to inform of this update. I was planning on ending my topic of state legislation here. We are on annex lands within the UGB, this was the Oregon Homes rulemaking, however this

1:02:59 just landed on our desk, so I can't really speak intelligently on that today. We're still diving into what that's going to look like, so we'll come back to that with more information at a later date likely. So moving on to the incentives, these four incentives were provided to you at your last work session by Alyssa. We have already begun some of the work to implement the first two, so I'll only touch on those very briefly. That will spend a little extra time going over the fee waiver and property tax differential options. Outreach-and-education is our first one. This first incentive is also the most achievable and something we've already begun to work on and is within the scope of our existing work plan and resources. The few items listed here are either already underway or will begin to happen in the near future. All right moving down the road to right-of-way

1:03:48 way annexation. This is a tool we already use and have and has potential benefits for incentivizing annexations. The financial implication of this incentive is generally staff time. The cost of this incentive is mostly borne by the City Department undertaking the annexation. Typically that's our public works department. In turn, you know, impact, impact the budget for individual projects or teams pursuing the annexations. Moving forward, right of way annexations will continue to be assessed at a project-by-project basis. The application fee waiver or reduction incentive, an application fee or an application costs you know over $5,000 as I mentioned. Waving or reducing the application fee is one way to reduce the upfront cost of annexation which would be an obvious barrier to a homeowner looking to annex. A question from last

1:04:36 time was- whether this incentive could be targeted to certain properties. That answer is yes. The incentive could be targeted at specific type of land such as residential, industrial, or commercial. It's probably a good time for me to mention that this incentive option is actually slated for, for inclusion, within our scheduled fee modernization project coming in 2027. Myself, as well as an excellent team of folks helping me out, will be taking this project on in the coming year. As of right now, given our housing need and the previously identified interest in supporting housing production, we are planning to propose an annexation fee waiver or reduction for residential lands. Financial impact here is to the general fund as there's a loss of fees that would normally offset the cost for staff time.

1:05:24 Consideration of these potential financial impacts can be integrated into the overall budget process later on given that following the fee modernization project. Finally, On property tax differentials, this incentive allows the phasing of the city's tax rate over a period not to exceed 10 years as part of annexation. It probably comes as no surprise that we anticipate this action would have the greatest financial implication due to the loss of new property tax revenue. How it may also be the most attractive incentive for new property owners as this increase in property taxes has been highlighted as one of the biggest deterrents when looking to annexing the city. From last year, we will spend a little bit extra time looking at the financial implications

1:06:11 of this incentive. To help us understand this issue, we used a hundred percent annexation scenario for eligible un-annexed properties in River Road in Santa Clara. This is what if scenario compares the overall revenues to the anticipated operating expenses for a year. So to start, we look at the revenues column. The first four million in the property tax revenue, the first four million is the property tax revenue based on the reduced general fund tax rate. We refer to this as the hold harmless rate because if it were decided that this incentive would offer a 100% tax differential, the property owner's tax rate would remain the same

1:06:56 as if it were before pre-annexation. Based on general out. Then we add the other revenues. These other revenues are expected to scale up with the additional population. A good example of these is something called state shared revenue, which million. So let that's look at the operating cost. Right out of the gate we see that the operating

1:07:41 expenses that we anticipate outstrip the forecasted revenue total. The estimate is based on our current general fund operating budget per capita multiplied by the estimated number of new residents in this scenario. This simple formula provides us a rough sense of the scale for The results in the red is the annual deficit of 1.3 million in city tax a. So knowing how that math works, for one year let's take a look at the longer term impacts.

1:08:55 Again we see the base tax rate in blue for the first 10 fiscal years. All properties pay the same tax rate as if they were pre-annexation at the closure-- .

1:09:57 cost to about 60% and

1:10:58 services. While that may be true to omit other costs like infrastructure upgrades or street improvements the, that may be and exact calculation for the cost of service provision is extremely challenging. I'll note that this model also assumes the maximum incentive the council could choose to scale the council could choose to scale the incentive back on many different variables alleviating the overall cost and impact of the budget. For example, the incentive could only provide for two years of and this would align with what we talked about the average to develop is about a develop is about only in on those financial implications there is anticipated deficit obviously between the property tax revenue and expenses but there's also the administrative cost of running such a program

1:11:45 from a, policy perspective though there is a balancing act here property tax differential is a potentially large impact to the general fund but it also presents other tangible and meaningful the We are looking at one topic that staff is looking for direction on from the council and that

1:12:39 is the property tax differential program. Given the anticipated significant impact on and resources we would like to have interest look I thank you for listening to me get through that all I appreciate it and I will hand it back to you all for discussion thank you staff I want to express a I

1:13:27 Thank you Mayor. a appreciate Jeff the need robust incentives to do this and to see voluntary acceptance and compliance of people annexing it. I think all

1:14:12 of the incentives that you listed are going to be necessary, plus another or two. And I've thought of some I want to ask about. but But on the larger issue, at a first I want to say, this is one of those long term decisions. It's a decision that have some cost up front or in the short run, but is in the long term interest of the community and the people who live here more than anything else I and we have a number of problems at that checkerboard interface of county versus city properties, largely because this is an issue we've never dealt effectively and looked at with a long term focus. the expense numbers

1:14:59 responding to non city properties especially in the and we we don't actively capture how much money we're currently spending on producing any tax revenue. And the new legislation and how are applying for access by a public road. Is there a definition in the legislation about what constitutes a public road?

1:15:45 There's no definition within the house bill that was provided. However, a public road, as defined in both our UTA code and Eugene code would just be any, any street or access way or public way that is owned or operated by a jurisdiction that would be Lane County or the city of Eugene. L.A.R. would not be considered a public and L.A.R.R. would qualify as a road under this definition. L.A.R. for everybody is a local access road, sorry. Excellent news. Excellent news. Another idea of mine that I'd like to delve further when we have opportunity to analyze it. The idea that L.A.R.s, which are a huge problem to both the property and to the county,

1:16:32 they're local roads that are owned and the liability for what happens on them is borne by the property owners I onlook the the, road that they're on would no longer be considered a local access road but a public city road I'd like this it's my idea that I'd like to have this staff

1:17:21 look into the ramifications and of that for the future work session we're going to have thank you. Councillor Kuczynski. Yes thank you and thank you staff for all of your work on this the first sort of thought I had was surrounding the fee reduction or the fee elimination. I know that's gonna come back as part of a different process, but really looking at targeting a residential, but also I'd be interested in sort of targeting at smaller lots, perhaps, ones where they're maybe not gonna be subdividing or going through bigger processes, just because that seems like a good way to help smooth the path for someone who's like,

1:18:06 like I'm just gonna go to a building permit and build some houses. So, if we're looking at ways to I feel like this information of when we annex in a property, So if we're looking at ways to target that more, that sort of lot size piece is one that I was thinking of of when we annex in a property, the cost to serve that property is greater than the property taxes they bring in. That's been included in many packets packets and many discussions in the past so very familiar with that. Is that specific to River Road annexed properties or is that like sort of everybody's property? The research that we did focused on the River Road Santa

1:18:54 Now, the special, like a lot of the math that goes into that is because of the difference between the special districts and the different rates that people are paying in those areas. So although that may have these, maybe there's some out in the Laurel Hill Valley, those other areas, we would have to go look at those specifically, but that tax rate is a little bit different in each area. Let me re, let me rephrase my question a little bit. We have overall a general instability in our budget where, you know, we're not able to afford the level of services that our community would like us to have. And so is, is this

1:19:40 gap between the cost of providing service specific, and the property taxes they bring specific to any property anywhere in the city where we might want to annex it in or is it universal for all property within the city? I would say generally speaking property tax that is collected does not pay the full freight of what it costs to provide services across the board. Okay so that's that's not specific to newly annexed property. That's good to understand with that. It does feel like we're in a little bit of a catch-22 here in as much as there are reasons for wanting to have properties to nxn to get rid of the sort of checkerboard.

1:20:29 There's lots of problems that are caused by that I acknowledge and really recognize that and I know some of my colleagues feel that a lot more than I do and see that day-to-day a lot more than I do but I agree that that's a real problem and it seems like solving that problem or putting incentives in place-in place to solve that problem will exasperate our existing challenges with building a sustainable budget and so that that makes it very challenging to sort of say like this is the thing that we want to prioritize for incentives incentives and things like that I do feel like fee based incentives like things that will be more directly related to creating housing might be there, but yeah, I think I think it's a very challenging to talk about incentives

1:21:18 for this. Council, Councillor Groves. Thank you Mayor, and thank you for the presentation. It's always helpful to go over this and see kind of what the impacts are. I agree with Councillor Clark, I like the idea that we're talking about this and trying to decide to move forward and I also understand Councill that Leach wanting to be part of the decision and I think that's Does the gap between slide 20, does the gap between cost and revenue include adjusting

1:22:16 I don't know. I don't I don't believe some reach it could correct me if, I'm wrong. Afternoon, everybody. I'm Maurizio from the finance to answer your question. I would actually the right response. I would say no, it's assuming the same level of service providing citywide on a per person basis. So if we carry over, it will cover the cost of people to serve that area. But if serving It provides the same

1:23:11 Thank you. I didn't recognize you without the bottom half of your mustache mustache. The You know getting back to something that was was talked about earlier the fire response Whether they respond to a annex property or an annex property, it's really a sunk cost We pay for the crew, which is really the biggest part of that cost whether responding to this call or that call What it affects and is very important is response reliability and response reliability Is the percentage of time a fire company is available in its first in first due area and? Anytime that units tied up and you have to send one from further away Obviously, there- the police has their own standards, and I know that they have some

1:24:11 capacity issues as well that they're trying to address, but we can't ever seem to quite get caught up. So I think that needs to be a part of this discussion, and I'm assuming that discussions have been had with police fire and public works on this. That's correct. and a lot of our conversations. And we were lucky enough to have

1:24:58 But the one thing I keep looking back to is the cost benefit analysis of this. Over the long term, not short term, but over the long term, the problem is that cost far exceed the revenue with little to no other kind of benefits. And point of view, Ward 3, where I sit in South East Eugene, that would be a giant sum for the rest of our city to the folks that are being annexed. And how does that differential in cost get a zero, that we have a zero budget?

1:25:47 It's all, to my understanding, it's a bigger budget problem and would not be high on my list. And it's doing the same thing that where we would have the same amount of staff potentially doing much more work. And that's how we got into this current budget problem. And we already have the lowest FTE per capita that we had in 20 years. And as former city manager Sarah Madari was trying to say, we added the entire city of Springfield

1:26:32 into amount of people into Eugene and didn't increase staff, and this just that kind of thinking got us into this problem. And now this would I would exacerbate that. So I agree with what Councillor Kaczynski was saying. This wouldn't be high on my list of things to incentivize for us to do, which would create more problems. Councillor Yay and then Councillor Evans. Yeah, thanks and thanks staff. I really appreciated the graph. It was really easy to understand. So to your question, should we still, should we keep looking at this? I think the answer is yes. I think there are benefits to bringing folks into the city

1:27:18 and not having a patchwork that would, that outweigh not doing anything. I don't think that a 10 year tax incentive is probably where I would land. I would appreciate getting information back on, like you mentioned, like a two year version or some other options that were not as high cost because while I'm okay with giving modest incentives, I think the example that you gave would not be appropriate when you take into consideration the effect it would have on everyone else. I think Mike's idea about the local access roads

1:28:05 is interesting. Again, it creates a situation where we already can't take care of our transportation system. I'm not sure is the best idea that I do think we think we provide and provides one so I'm receiving some information back on that and the impact it would have and I think that's it councilor Keating is back into the queue so councilor Keating and then councilor Evans thanks mayor I'll be brief I want to follow up on what councilor Yay just pointed out about a two-year property tax differential. I'm interested in exploring options beyond the ten as well to the five year. If, if that were to, if we were to go down that road would we have

1:28:51 to encourage the legislature to to amend HB 4130? 4108 excuse me? No the the rules around tax deferential set a 10 years and M so you could select a range based on the level of incentive you're looking at based on the information you're kind of the level of impact that we're

1:29:40 would annexation ultimately affect them coming in the city? It's actually basically costing more money tax-wise and then also looking at the River Road parks district, are we looking at either absorbing them, annexing them, or how will we go about that? Because that's another location where we have parks, a pool, which is desperately needed around here. I get people all the time that ask me, well, are we ever going to get another pool? Are we going to, you know, that kind of thing?

1:30:26 We got swim clubs, all of that. How does that factor into a more robust blanket annexation proposal? Thank you for the question. We've actually been thinking a lot about that because the scenarios, that we present here, show you just a blanket annexation of all of River Road, right? So that would eliminate functionally the Parks district. However how this is occurring at time it's just it's incremental and it's slow. Now incentivizing voluntary annexation is going to increase that. And so as it increases it's going to reduce the amount of funds going to the River Road Parks District. And so we would want to consider those impacts kind

1:31:11 of and what forecasting would look like. But at this time we haven't actually identified and met with the Parks District to talk about that kind of long-term impact. Yeah, wouldn't absorbing the River And so we can bring back more information on kind of what the interplay between the Parks District and what this annexation outcomes

1:31:56 would actually end up with. Because about four years ago, I attended a meeting over in River Road with Commissioner Farr and the feedback from people over there is, we don't wanna lose our pool and we don't wanna lose our park to Eugene. So I think we need to think about that and how we can present a better offer to those folks if we are gonna proceed with a blanket annexation and determine exactly what does that mean for the parks district and because if we had to absorb it,

1:32:43 then that means more cost for our parks in general. So, we really need to do some deeper dive and deeper thought on this. I have Councillor Kuczynski and then Councillor Keating and just a few minutes remaining. Also, just a clarifying statement that this is a voluntary annexation program, not a proposal for a blanket annexation by the City of Eugene, in case anyone is listening along at home. And Councillor Evans, I know that that's not likely what you meant. Councillor Kuczynski. Yes, I think a lot about how, We're having a lot of conversations right now about how we prioritize our resources. And that's, I feel like not just financial resources, but also staff resources, staff time, staff effort.

1:33:29 I'm the assuming the reason why you're asking for specific council direction about if we want more information about this, if we want a more robust proposal is because it's gonna take a significant amount of staff time to create such a proposal. While I am sort of always interested in just having more information, I love information, I'd love to have all the information. I'm a little curious about if we do not move forward with a request for more information, what would staff be working on instead? Like what would be the next thing on the priority list that we would tackle? I mean, our work plan has quite a lot of items on it. However, in terms of voluntary annexation and what we're gonna be focusing on is those other three incentive options are things that we will continue to pursue.

1:34:15 And so the outreach and education, the continuing annexation of right of ways, and the bringing back as part of a fee modernization project next year, looking at building in some incentives for, we're going to be building incentives for housing production generally into our fee modernization project. And so we want to look at those impacts and also what that impact would be for annexation as well. Okay. So there would be work continuing on some of these other incentives regardless, and would likely mean that some other housing incentive or the timeline for that project would move up a little bit? That is correct. Yeah, the tax differential program just generally is such a bigger lift from both a structural sense and administrative sense and just coordination perspective.

1:35:01 So that's why we were looking to see if there truly was interest in pursuing that. Thank you very much. Thank you. And Councillor Keating, I realize you're remaining in the queue, but we are at time today be returning to this topic on our November 9th meeting when Councilor Leach is also president, so I will keep you in the queue. There's a quick clarifying question, if I could. Quick clarifying question, like 10-second question. HB 4108 was discussed and supported by the IGR Committee in the last legislative session carried by Rep Fraggle and Co-Chief by Senator Manning. Is that accurate that it was an IGR priority or proof advocated on our behalf? I believe it was unbeated by them.

1:35:46 I'm unsure if it was actually supported by them, however, there was previous support at the last meeting supporting an amendment to the state law to facilitate this change that we then saw coming through HB 4108. their IGR members who want to well thank you Jeff I believe we did support it remember what I had for dinner last night we can also return and offer more clarifying information about

1:36:33 We are adjourned.