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TAX INFORMATION The Certificates will not be exempt from the limitations of'~leasure 5 and Measure 50. The property tax is used by Oregon cities, counties, schools and other special districts to raise revenue to partially defray expense of local government. The State of Oregon has not levied property taxes for general fund purposes since 1941 and obtains its revenue principally from income taxation. Property ta~c administration governed by the Oregon Constitution, the State's ta~cation laws and regulations of the Dept of Revenue, includes the process of assessment, equalization, levy and collection of taxes. A taac limitation measure ("Measure 50") that affects property tax collections was approved by the voters in the May 1997 special election. The Oregon Legislature recently implemented legislation for the new constitutional provisions of Measure 50. This new implementing legislation will change the property tax administration system substantially, including changes to levy rates, assessments and equalization. Property Tax Limitation 'The Oregon Constitution places certain limits on property tax rates for general purposes. The Constitution does not limit property tax rates for general obligation bonds, for capital construction and improvements approved in accordance with voting requirements or used to refund certain outstanding general obligation bonds (see "Exempt Bonded Indebtedness" herein). Measure 5 Article XI, Section l lb (commonly known as"Measure 5") of the Oregon Constitution contains various limitations ~ on property taxes levied by local jurisdictions. Approved by the voters state-wide in November 1990, Measure 5 placed certain limits on property tax rates and made modifications to the sysiem of property ta~c administration then in place. The limitations resulting from Measure 5 will remain in place despite the passage of Measure 50, (See "Measure 50" herein) which was designed as an addition to, rather than a replacement for, Measure 5. The Constitution calis for taxes imposed upon property to be sepazated into two categories: one to fund the public school system and community colleges and one to fund government operations other than the public school system. Combined property tax rates for non-school government operations are limited to $10.00 per $1,000 of Real Market Value per County-assigned tax code area. Similarly, combined property tax rates for the public school system are limited to $5 per $1,000 RMV for each ta~c code area. Measure 5 does not limit property ta~c rates for general obligation bonds approved by a majority of the voters in accordance with certain requirements (see "Exempt Bonded Indebtedness" herein) or used to refund certain outstanding general obligation bonds. The Certificates do not qualify as exempt bonded indebtedness. The collection of property taxes is subject to the limits of both Measure 5 or Measure 50. Measure 50 Ballot Measure 50 ("Measure 50") was approved by Oregon voters at the state-wide special election ballot on May 20, 1997. Measure 50 repealed a previously approved property tax reduction measure known as Measure 47 ("Measure 47") and replaced it with new ad valorem properiy tax limitations. Measure 50 retained, with certain modifications, many of Measure 47's key features, including a reduction of property taxes and a limit on the growth in annual assessed valuation. Senate Bill 1215, which provided implementing language for Measure 50, was signed by the Governor on July 14, 1997. Specific provisions include: "Rollback" Provisions. Measure 50 reduced property taxes imposed statewide by approximately 17 percent from ~ fiscal year 1997-98 leveis unless certain exemptions applied. (See "Exemptions" below.) Measure 50 also rolled back the "real market value" of each unit of property for the tax year 1997-98 to its 1995-96 value, less ten percent. 34