;

Cascade Policy Institute

This proposal is one of ten winning reports from the 1994 Oregon Better Government Competition. The 1994 and 1996 Competitions were organized by the Portland-based Cascade Policy Institute. Opinions expressed are those of the author(s) and not necessarily those of Cascade staff or advisors, nor should they be construed as an attempt by Cascade Policy Institute to influence any election or legislation.

Surplus Property Disposal Project

by Ruth Bendl, Ray Parks, Vernon White

Taxpayer Speakout Team

Portland, OR

EXECUTIVE SUMMARY

Oregon's state and local governments hold a very substantial amount of real estate that is presently unused and for which there is no near-term plan for its use. If this property were placed on the tax rolls, it could reduce the overall tax burden for all property owners. Currently, after all government holdings - federal, state, county, city, school districts, etc. - are subtracted, only 22% of Oregon's total land value generates the property taxes that fund local governments and school districts.

The purpose of this report is to create a framework for the identification, evaluation, and where appropriate, the disposal of surplus public property. Secretary of State Phil Keisling, in an interview with the authors, said he would not dispute the possibility that the potential value of surplus property in Oregon could be several hundreds of millions of dollars.

Because 52% of Oregon's land mass is federally owned, it is highly important that the remainder bear its fair share of the load of financing local government. The goal of this report is to serve as the impetus for getting the maximum amount of real estate back on the property tax roles. Made accessible, state and local surplus land could meet the property needs of other public agencies, of private enterprises, and/or add to the assessed value of public taxing bodies, thereby lowering tax rates for all property owners.

ABOUT THE AUTHORS

Ruth Bendl became a citizen activist in the early 1980's. A nurse by 'Profes~ion, trained and registered in Australia and the U.K., Bendl is now an American citizen. Bendl is involved in the Washington County Citizen Participation (CPO) structure and serves currently as Treasurer of C.P.O. #1. She also produces the Taxpayer Speakout Cable Access series. Ray Parks is a native Oregonian and owner of R.P. Productions, a full three camera quality video production facility. Parks provides camera work for the Taxpayer Speakout Cable Access series. VernonWhite, semi-retired, is senior analyst for Oregon Tax Research. He holds a journalism degree from the University of Oregon and has been a reporter for the Wall Street journal, editor of Western Timber Industry, and manager of related sawmill and plywood clinics and trade shows in North America, Southeast Asia and South America.

DEFINING THE TASK

The task was to identify surplus state and local public property holdings, approximate their value, estimate the potential savings from their disposal, and suggest disposal methods. A survey of the entire state would have been the ideal in determining the total amount of surplus property in Oregon; however, time was limited. Therefore, the authors focused on Clackamas County for this report.

Clackamas County was selected because it includes a good mix of urban, suburban, and rural land, and is subject to the constraints of the Urban Growth Boundary. (The boundary is important because a current shortage of land for commercial and residential development exists within it, and land outside it cannot be developed for such purposes. The shortage of land could be alleviated if surplus property within the boundary were made available to private concerns.) By focusing on a single county, the authors believed it possible to identify and document a sufficient sample of surplus state and local property, which might be proportionate to the amount of surplus property statewide.

FINDINGS

Is there a uniform definition of "surplus" or "excess" property? The answer is "no." Is there any legal compulsion or incentive for agencies to dispose of surplus property in a timely fashion? The answer is "no." Is there a complete statewide catalogue or other source in which surplus property is listed? Once again, the answer is "no."

The authors searched for a map or list that would provide full details about the extent and location of government holdings; the search was a revealing experience. It was a lesson about the inaccessibility of information about tax exempt property holdings. This information has not been translated into a single map or list, either at the state or county level; further, given the way such records are currently maintained, constructing such a map or list would be difficult to do, whether on a county-by-county basis or for the entire state.

The best example found of a map was of Lane County, available from the Division of State Lands. The word "best" is relative: the map is hand-drawn and incomplete. The Lane County map depicts and identifies various tax exempt real estate parcels, but it does not present a comprehensive picture of the amount of property not on the tax rolls, either in quantity or value.

The technology to produce a state map of government-held property certainly exists, but no state agency is charged with the responsibility to produce it. The only apparent exception is Marion County, which encompasses Salem.according to the Division of State Lands, the state Department of Energy undertakes this project because it is mandated. The information provided, however, is limited to Marion County.

The creation of a map, maps, or a single source document that identifies surplus property, is critical to elevating public awareness about surplus property, its relationship to high property tax rates, and how its disposal can help reduce those rates while simultaneously maintaining the current level of property tax revenue. Given our technological capabilities, such maps should be relatively simple and inexpensive to maintain once completed. The information gained in the original process of producing the maps would be invaluable to the public and public servants.

During the research period the authors recognized the existence of a distinct bias in favor of acquiring more land rather than disposing of the unneeded. Consequently, properties accumulate and simply remain in "cold storage," with little concern for the revenues lost while property holdings remain unused.

Compounding the problems caused by the aforementioned mindset is the absence of legally binding requirements for asset disposal, either in general or through "sunset"-type rules, regulations, or laws.

Further, there do not seem to be any positive incentives that encourage surplus property disposal, perhaps Ilecause the property disposal process itself is so cumbersome. (This process is briefly discussed in later sections.)

PROPOSED SYSTEM OF IDEN- TIFICATION AND DISPOSAL OF SURPLUS PROPERTY

Several points must be decided before a smooth working system can be established for the disposal of surplus public property. To begin, a definition of what constitutes "surplus" property must be created.

Once a definition has been created, each public agency must be required to list its real property holdings, their value, location (in layman's terms, not just surveyor's), the length of time held, and purpose or justification for holding said property. If time is to be prima facie evidence of what constitutes surplus property, the burden of disproof must fall on the agency concerned.

To shore up the disposal process, a "trigger" or "sunset"-type legislation should be enacted. Thus, after passage of a specified time and lack of justification for property holding, the surplus trigger would require disposal of the property in question.

To bolster compliance with surplus property disposal, motivational factors should be made part of the process. For example, officials responsible for surplus property disposal could earn a demerit on their employment record, or an agency could be penalized with a reduction in its appropriation, if disposal rules are not followed. One positive incentive for faster disposal of surplus property would be less work and a reduction in the cost of creating, maintaining, and updating maps or lists.

For the sake of fairness, public notification of the availability, and a description, of surplus property must be timely and widespread. Information on all government surplus property should be available from some public information center, for example the Division of State Lands. From there the information could be forwarded to private sector entities for public listing and disposal.

The development of a flow-through surplus property information network, which links an infinite number of private sector organizations to each other, and to the public entity responsible for the collection of surplus property data, would help ensure a fair and open disposal process. A list of all surplus holdings could go to realtors, Chambers of Commerce, industry bulletins, et cetera. Realtors suggest that a sale could be on appraised price with quarterly auctions for remaining pieces, the minimum bid floor set at two-thirds of appraised value.

Adjoining landowners should be notified of tiny parcels, which could be had for nominal sums to be added to existing farm fields, woodlands, and so forth, and so be returned to tax rolls, relieving current tax rates. What constitutes a "tiny parcel" must be resolved.

QUESTIONS RAISED, POSSIBLE ANSWERS

Identifying surplus property is the first step to solving this problem. How could it be marketed, or at least logged in such a way that interested parties might evaluate it? To do this it was necessary to uncover property inventories that already existed and determine whether the information recorded would help individuals and organizations locate surplus property, thus enabling them to determine its potential. Surplus property inventories already completed are covered in another section.

Who should shoulder the responsibility for keeping citizens and public officials informed as to the amount and location of surplus properties within a given county? The authors assert that all taxing districts and public agencies should be required to account to voters and County Assessors (whichever is applicable) for their total real estate holdings on a regular basis.

How would such a process work? To work, the process would undoubtedly need the credibility of legislative authority to ensure the integrity of follow-through. The task of auditing each entity's holdings could be contracted out, or handled by a region's independently elected auditor.

Who would be responsible for compliance and what compliance tools would be best? County Commissioners should be held accountable for local entity compliance with surplus property identification and disposal given their major role in allocating local financial resources. Likewise, it seems logical that the Secretary of State, as a member of the State Land Board, should be responsible for similar compliance by state agencies.

Establishing any compliance requirements first necessitates a coherent definition of "surplus" or "excess" property and a sensible time line, or a mandate, for the disposal of such holdings. It would also be prudent for an official working in the Assessor's Office to be designated as accountable for the application of all required procedures. Natural budgetary considerations would therefore be a compelling incentive for staff compliance. That is to say, when a county reduces the amount of surplus property it has on the books, the less work it will have to do to record or defend those holdings. Further, more property in private hands means more property tax revenue will be generatedproviding the opportunity to reduce property tax rates across the board.

How would taxpayer interests be safeguarded? As it stands, taxpayers' interests are certainly not served by the current inability to identify surplus property, nor by the frustrating lack of information about public property holdings. Two examples of taxpayer interests must be addressed in the disposal process: receiving a good price for surplus property, and the prevention of insider trading. It stands to reason that taxpayer interests would be best protected by the wide dissemination of relevant information concerning surplus property, a very open disposal process, and a general reduction in the amount of government surplus property. To further taxpayer interests, public officials should be obligated to reveal coherent information about the extent of government real estate holdings to the public and the media on all occasions when voters are involved in public financial decisions. Local Voter Pamphlets, which list arguments for and against bond financing requests, should be among the publications required to include such information; a map or list identifying current tax exempt holdings should be among the information provided.

CLACKAMAS COUNTY PROPERTY INVENTORIES

Clackamas County Assessment Rolls Exempt Property Listing

Over the past few years, Clackamas County has diligently worked to document assessments for all property - public and private - within its borders. Compared to other counties, Clackamas is exemplary. Nevertheless, Clackamas County assessment rolls render only sketchy information at best as concerns public property. They do not define "surplus" and often do not reflect current valuations because taxes are not paid on public land, hence they are not appraised. All that can be determined from the assessment rolls is the ownership of the property, its classification, and a very approximate amount and value of each property category. Given this information, however, it was possible to run a calculator on the categories thought to be most relevant, and get an approximate total in terms of value and quantity of vacant land.

Three categories of real estate were selected to derive a dollar and acreage estimate. The categories totalled were for the unimproved (government held) commercial, industrial, and tract lands on Clackamas County's records. These three categories were chosen because they were the only clearly recognized, incontrovertible categories in the Assessor's inventory that could be used as an indicator of developable real estate, currently in various governments' hands, thus not currently on the tax rolls. In acreage, it was nearly 413,000; its approximate dollar value was $245.9 million. The $245.9 million figure is a conservative number because some property values are as old as 1989.

The assessment rolls were yet another listing that did not supply information about the length of time that an entity had owned any holding. Such information has significant bearing on any prudent determination whether a holding could be defined as surplus. Including such information should be a priority.

Clackamas County Development Agency Manual and Budget Information

This agency is run by the County Commissioners and operated by existing county staff. Gary Cook, an agency administrator, outlined the organization's involvement in upgrading a variety of properties, some of which were prone to flooding. One of the properties had also been cleared of asbestos, which appeared -to be the agency's main justification for purchasing it.

Though the intent of the Development Agency appears to be making. these properties more marketable, it is questionable whether this is a justifiable function of government. The more so because some of these holdings were surplus schools that had been purchased with tax dollars from the Clackamas School District. In discussions with other business owners in the area, there was substantial criticism of the agency's involvement in local property development. Mr. Cook acknowledged that passage of Measure Five, the 1990 property tax limitation, and a subsequent court ruling that confined Urban Renewal expenditures to this limit, had quite significantly changed the dynamics and viability of the agency's operations, making them less cost-effective. This point aside, the bottom line is that the agency holds developable surplus property, property that is not paying taxes.

Perusal of the Agency's 1994-1995 Work Program and Budget offers little to convince a reader that the expenditures described justify the public outlays proposed. Again, tax money is used to manage this real estate while it remains off the tax rolls.

Tax Deferred and Exempt Properties Map - Clackamas County Urban Area and Vicinity

Appendix 1 is a map of Clackamas County, its urban area, and immediate vicinity. This map provides an impressive amount of visual information as to how much land is presently not on the tax rolls. The map shows the various public property holdings of the county, city, town, sanitary, fire, water and school districts, state and federal government, and other tax deferred and exempt properties.

Clackamas County Development Agency Map

Maps are available from the Clackamas County Development Agency that plot their holdings. One map in particular is #ADUR0031 (still in draft stage). Observers should note that these holdings include land zoned for commercial development surrounding Clackamas Town Square and a variety of other holdings that, despite their drainage problems, still constitute prime real estate that is off the property tax rolls. Most of the Agency's property holdings can be seen on the map provided as Appendix 1.

Port of Portland Property Holdings in Clackamas County

Contained within the publication, "Real Estate, Port of Portland," (November 1990), are four maps that graphically illustrate the agency's unused, but developable, holdings. Once again there is evidence of significant holdings that are defined as both vacant and having development potential, but are not described as surplus. These maps were too big to be reproduced in this compendium; they are valuable aids for anyone who wishes to visualize the problem.

Information Requests Sent to the Seventy-Eight Taxing Districts in Clackamas County

A letter was sent to the Finance Department of each taxing entity in Clackamas County, of which there are 78, seeking information about their real estate holdings, including length of time held, purpose, value, and if any was considered surplus. Approximately one of three Finance Departments responded. Unfortunately, from the responses received, little information was provided beyond a simple listing of holdings, and whether or not the parcels were vacant land or in use. No values were given. The responses generated, however, indicate that this was the best way to establish the true extent of such holdings on a county-by-county basis. The lack of replies, on the other hand, lends credence to the belief that such information is not recorded in any organized or quickly recoverable manner.

The more important of these questions that was frequently ignored, was the length of time a property was owned by an agency. The response from the City of Portland, a full 231 pages in length, was one such example. Regrettably, too few people - public officials included - are aware of the implications of this situation in terms of lost potential property tax revenues, or the detrimental effects in terms of higher tax rates.

Likewise, the extent of the City of Lake Oswego's real estate was significantly more extensive than anticipated. The response to the authors' letter included over 20 pages of property listings, many of them without-aily designated use, their size or any information about how long these properties had been held. As was the rule in this exercise, none was aefined as-surplus:

It is worth highlighting that, 1clounting Clackamas County as one taxing district, there are 133 legally existing districts" in Clackamas County. "Urban renewal districts receive tax dollars through tax increment financing, but do not have levy authority. [Ninety-three] districts levied a tax in the 1994-95 tax year."(1)

OTHER SURPLUS PROPERTY IDENTIFICATION EFFORTS

The authors looked for similar effort(s) to identify surplus properties and, if so, what were the results. A couple of efforts, both of a very limited scale, were found, the Multnomah County Facilities and Land Holdings Task Force Report, published in 1990, and a study conducted by the Secretary of State's Division of Audits in 1994.

The Multnomah County Facilities and Land Holdings Task Force Report:

The study was commissioned by Multnomah County in 1990. A group of private citizens, which included realty professionals and other business executives, was asked to evaluate Multnomah county's real estate holdings, The task: to ascertain whether the county's properties were being wisely utilized and if anything was to be gained by disposal of some of these holdings. Unfortunately, the Task Force found it difficult to draw any final conclusions - a comment often repeated in their report - because Multnomah County was in the process of evaluating the merits of certain consolidating proposals (city and county functions and agencies), and the outcome of these considerations would clearly affect the Task Force's evaluation in terms of the desirability of sundry property holdings.

It was recommended that the outcome of the consolidation talks be awaited if the report were to have relevance. A minority viewpoint regarding the county's holdings and their overall efficacy was mentioned early in the report. However, the final report did not include a minority report.

The inconclusive outcome of Multnomah County's study should not be seen as cause to disparage the potential benefits of such an audit. In this instance, timing rather than the process appears to have been bad.

Report by the Secretary of State Division of Audits

It is interesting to note the definitive statement on this report's cover. It reads "opportunity to generate additional revenues for the State Highway Fund by identifying and selling surplus property." Dated February 1992, this report summarizes some of the existing drawbacks related to the cost effective disposal of surplus property. It notes the need to improve compliance

monitoring for trades and sales. The report further recommends the consideration of alternative procedures to facilitate efficient disposal of low value parcels. Because a good number of properties are as small as 130 square feet, the recent requirement for an appraisal of properties prior to disposal was regarded as a setback that unnecessarily slows the disposal process. That opinion was frequently expressed in this report.

STATE PROPERTY LISTINGS

Oregon Department of Transportation (ODOT) Surplus Holding List

The Oregon Department of Transportation (ODOT) is very likely to have the most significant collection of surplus property holdings of all state government entities. Secretary of State Phil Keisling, in a February 7, 1994 interview, said the Highway Division owns some 60,000 parcels of real estate. Of these, 3,000 are considered surplus, but "only about 1,200" have been inventoried and "only about 166" have been appraised (the appraised value of those 166 properties was over $10 million). Very few of the 166 appraised properties have been sold.(2) (This surplus holdings list was compiled as a result of an ODOT audit prompted by the Secretary of State. The authors of this report did not see a copy of the audit's findings.)

The Secretary of State indicated the few surplus parcels that have been sold have generated a million dollars plus in revenue.(3) This surplus holdings list is one of the most daunting of its kind in terms of pinpointing the size and whereabouts of holdings listed. The data is not presented in layman's teryns. Further, it does not state the length of time that aAy of these holdings have been in ODOT's possession.

The inventory has, however, been separated by county, which means that interested parties in each county, including realtors and other local entities, could be advised about the availability of these parcels in a timely manner. The Highway Division's property holdings are not plotted on the map found in Appendix 1; if the Highway Division's holdings were plotted on that map, even less white space, even fewer taxpaying properties, would be seen. It is the opinion of the authors of this report that each county should be required to develop such a map. If the development of a map is cost prohibitive, a comprehensive and informative list should be made.

STATE LANDS SURPLUS PROPERTY LISTING AND EXISTING DISPOSAL EFFORT

A relatively new effort is underway to catalogue and dispose of surplus state holdings. It is a selffinanced program operating in the Division of State Lands. The office, which has existed for only two years, is staffed by Bill Nickleberry, a former ODOT right-of-way official, and one assistant. Its major function is to be a clearinghouse for property sales and purchases by state agencies. All state agencies now must notify this office when they have surplus property for disposal, or when they wish to purchase state-owned surplus property.

As part of its disposal effort, the Division of State Lands issues a monthly listing of property that other state agencies have decided they no longer need. This notice goes out to public agencies in the vicinity of the surplus real estate holdings, and to anyone who asks to be placed on the mailing list. Bill Nickleberry is the contact person for additional purchasing information. The Division of State Lands also helps facilitate property sales. This list only deals with state agency-held surplus holdings.

An interview with Mr. Nickleberry covered the difficulty of locating state-owned property, appraising, and disposing of it. The interview confirmed that much still needs to be learned about the extent, whereabouts and value of Oregon's state holdings that are scattered across thirty-six counties. It also brought to light another problem. There are apparently thousands of stateowned buildings and other structures scattered across Oregon's 96,000 plus square miles. Thus, the problem of surplus property is more than just excess real estate, it also includes buildings and structures.(4)

STATUTES COVERING SURPLUS PROPERTY DISPOSAL

Assistant Secretary of State Mike Greenfield and Bill Nickleberry at the Division of State Lands assisted the authors in locating existing statutes governing the public property disposal process. These statutes are included with laws governing "State Real Property," starting at ORS 270.005, and continuing to 270.190. (These are the only statutes governing property disposal known to the authors.) As stated before, these rules and requirements do little to encourage the disposal of government's unnecessary real estate.

It was evident from these statutes that the definition of "surplus" needs a lot more consideration and attention. No definition of surplus property is to be found in these statutes. Moreover, the wording seems altogether too subjective to compel swift disposal of unused holdings.

COMPLEXITY OF RULES GOVERNING PROPERTY DISPOSAL

Charting location and value of a holding does not alone solve disposal. There are complex rules governing the disposal of public property. They need simplification. Legislation to do so should be submitted early in the 1995 legislative session. This was a recommendation in the previously mentioned Report by the Secretary of State Division of Audits, February 1992.

The intent of any statute should be clear enough to preclude any subsequent administrative rule making which would have the effect of again complicating (and perhaps blocking) a smooth disposal process.

One particular requirement in ORS 270.100 urgently needs modification because of its unnecessary burden on taxpayers. The provision mandates that the option to acquire surplus property must first. be offered to other public districts in overlapping or close vicinity. Yet, in most cases, properties can only be sold at the prevailing, market price. That means if the surplus holding is-purchased by any local agency, which is likely to be supported by the same set of taxpayers, they (the taxpayers) can end up paying for property twice or more.

To illustrate the point, suppose a property is bought from the private sector for a county regional office. Taxpayers pay full value. Plans change. The school district buys it for a school. The same taxpayers pay full value, but the county need not reduce its property tax levy or any other imposition by an offsetting amount. Demographics may change and the school district sells the property to the water district. The same taxpayers pay full value, but the school district need not reduce its levy. Taxpayers have thus paid thrice for one property while receiving no additional value or relief.

NEED FOR ENHANCED PUBLIC AND MEDIA AWARENESS

Most people - including public officials - are completely unaware of the status of public property holdings. Such property only generates property taxes if leased out for private use. The public should be informed of this, and reminded frequently.

Any future changes should compel agencies and districts to play a lead role in facilitating this process by implementation of policies described in the previous section. It makes sense to impose local accountability, both in terms of cost and returns.

The burden of identifying surplus property will be greatly reduced if requests for such information, and updates from taxing entities, become an established and regularly required practice. The burden will also be substantially reduced if public entities greatly reduce their property holdings.

Print and electronic journalists clearly have an important role to play in educating the public about the property holdings of public entities. All journalists should request updated maps or lists of public holdings for publication whenever there is a vote scheduled for the acquisition of additional property,

RECOMMENDATIONS FOR OREGON STATE LEGISLATURE, 1995

The following is a list of recommendations to Oregon legislators for the 1995 session. These recommendations, individually and collectively, would help to ameliorate the situation thus described.

1. Provide for a uniform definition of "surplus" property among all public agencies in Oregon. Long-term holding of an unused parcel, and a lack of a plan for its near-term use, would be among criteria indicating surplus status.

2. Require all agencies to catalogue their real estate holdings, including improvements, and report surplus to Secretary of State and county commissioners. Impose penalties for failure to comply.

3. Provide a disposal method that keeps potential buyers fairly informed. A combination of (a) a sale to first offer at market price and/or (b) a periodic auction could be used. A price below nominal market value, two-thirds for example, could be used as the auction minimum; the property's failure to sell would be evidence that the market price assigned is too high.

There should be no preferential terms for other public entities. Minor scraps should be offered to adjacent property holders for nominal sums for the advantage of returning them to the tax rolls.

Legislative proposals for the disposal of surplus property should encourage the development of a flow- through surplus property information network, one that links an infinite number of private sector organizations to each other, and to the public entity responsible for the collection of surplus property data. Such a network would help ensure a fair and open disposal process. Qualified members of the network should also be permitted to sell surplus property, not act only as an information clearinghouse.

4. Repeal any requirement that proceeds from real estate sales go to other real property purchases. Instead, allow proceeds to be used for construction or other capital improvements.

5. The legislature should encourage telecommuting where possible for public employees, a policy that would reduce the governmental need to own and maintain 'g're-at amounts of property.

Public facilities should increasingly be regarded as multifuncticinal locations. 'If a property is regarded as surplus, but needed by other service districts serving mutual constituents, a means should be found for the transfer of maintenance overheads until such time when the property is sold and returned to the tax rolls. Taxpayers should not be forced to pay more than once for purchase of the same property or building.

6. Legislative policy should also mandate that local governments maximize return of real property to tax rolls to relieve tax rates. To ensure compliance with surplus property disposal legislation, surplus property should be a specific category that is separately reviewed during local audits - preferably by independent auditors.

7. Each county should be required to develop a list or map, updated annually, to show all public holdings by agency, and separating surplus from non-surplus. Urban Growth and Service boundaries should be shown. This map, with total assessed value of surplus property indicated, should be a required part of the voter pamphlet statement, and other public information publications in all bond levy elections.

8. Establish a process through which property owners, whose property rights are adversely affected by environmental legislation or regulation, would have the opportunity to swap their property for a suitable surplus holding, or holdings.

9. Address the issue, with a view to legally banning or restricting, of the acquisition of real property by public agencies whose intent is to hold the property for rising markets, then sell for profit. Such government activity took place when the Clackamas County Development Agency acquired two schools from Clackamas District No. 12 in Sunnyside District. If it is thought inappropriate for government to speculate in land values or to assemble tracts, something already well done by private concerns, then, perhaps, county development agencies should be dissolved.

10. Set uniform standards for public property record-keeping. This includes, but is not limited to, the date of acquisition, price of acquisition, from whom it was acquired, reason for purchase, current value, a description of the property, as well as surrounding property, and its location. In providing a location, an address or nearby landmark should be included so that average people, not just surveyors, are able to find a given parcel of property.

11. Work to close up loopholes that concern the deeding of property from private to public entities. In some cases, property is deeded from a private to a public concern on a time-based useage agreement. At the end of the stated time, if the public concern has not developed the property, it reverts back tothe original private owner. The private owner benefits from this arrangement by not having to pay taxes on the property during the time it is in the hands of the public entity.

The authors suggest that if a property is deeded over to a public entity on any time-based condition of usage, and should that property revert to its former owner after the agreed time expires, the private owner should be required to reimburse any and all accrued taxes, liability insurance costs accumulated, and other expenses that were born by the public during that period.

12. The public property auditing process should be broadened to require justification for an entity's decision to hold vacant, or unused, property. Any auditors retained should be contracted through a competitive bidding system.

CONCLUSION

This fact should serve as a wake-up call: currently, after all government holdings - federal, state, county, city, school districts, et cetera - are subtracted, only 22% of Oregon's total land value generates the property taxes that fund local governments and schools districts.(5) More Oregon real estate should be on the property tax rolls.

The findings of this report suggest a need for an aggressive effort to define, identify, and dispose of surplus state and local government property holdings. This job is doable and more than justified. Perhaps the best way for it to be done is by an independent, non-government organization. An undertaking of this kind could provide an excellent opportunity for Oregonians to realize both short- and long-term advantages.

Disposing of government surplus property would increase the amount of property on the taxrolls. It stands to mathematical reason that with more property on the fax rolls, the same level of revenue could be produced at lower property tax rates. Ad ' ditionally, by disposing,of surplus property, public entities could reduce their maintenance costs; these savings could also be returned to taxpayers.

The initial task of identifying and cataloging surplus government property is likely to be a major task. However, once the original task is complete, the monitoring and updating of the database should not require significant amounts of funding or time. One way to keep the cost of the database low is to operate it on a competitive contract basis. Yet another way is to significantly reduce the amount of surplus government property.

Indeed, based on discussions with the several contacts made, and most prominently from the 1994 Taxpayer Speakout cable access interview with Secretary of State Phil Keisling, the potential revenues from the disposal of government surplus property could be several hundred million dollars. The disposal of the Highway Division's estimated 3,000 parcels of surplus property can be expected to realize significant revenues, both from immediate sales and subsequent property tax revenues.

There is a growing public disposition to seek financial solutions that do not tap taxpayers for further revenues. Cost-effective disposal of surplus holdings is clearly one of the options to aggressively promote and adopt.

ACKNOWLEDGEMENTS

Taxpayer Speakout wishes to express appreciation to those who helped with the idea and information that make this report possible. Among many, they include: Phil Keisling, Oregon Secretary of State; Michael Greenfield, Assistant Secretary of State; Beverly Clarno, Majority Whip, Oregon House of Representatives; Sharon Kelly, Multnomah County Commissioner; Ray Erland, Clackamas County Assessor; Greg Parker, State Audits Division; Mark Fryburg, Administrative

Services; Jim Lutz, COMI-A; Gary Cook, Clackamas County Development Agency; Bill Moshofsky, Oregonians in Action Legal Center; and Bill Nickleberry, Division of State Lands.

ENDNOTES

1. Bob Vroman, Assessment & Taxation Manager, Clackamas County Department of Assessment and Taxation, fax correspondence to Kurt Weber (Dec. 8, 1994). See also, "Brace yourself for property tax bills," James Mayer, The Oregonian (Oct. 12, 1994), p. Al.

2. Phil Keisling, interviewed by Bill Sizemore for Taxpayer Speakout, Feb. 7,1994 (Salem, Oregon). See also, "State auditor urges Highway Division to speed up land sales," Nancy McCarthy, The Oregonian (Mar. 14,1992), p. D2.

3. Phil Keisling interview, Feb. 7,1994.

4. Bill Nickleberry, interviewed by Ruth Bendl for Taxpayer Speakout, Aug. 16, 1994 (Salem, Oregon).

5. Legislative Revenue Office Report (Sept. 19, 1994), pp. 6-94. See also minutes from Legislative Revenue & School Finance Interim Committee meeting, Sept. 19, 1994 (Salem, Oregon). Refer specifically to testimony of James Scherzinger, Legislative Revenue Officer.