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Home My WebLink AboutITEM V-Ck CITY OF BURN WASHINGTON Memorandum TO: Councilmember Lynn Norman, Chair, Planning & Community Development Committee Councilmember Nancy Backus, Vice-Chair, Planning & Community Development Committee Councilmember John Partridge, Planning & Community Development Committee CC: Mayor Pete Lewis FROM: Kevin Snyder, AICP, Director, Planning & Development Department DATE: January 6, 2011 SUBJECT: DISCUSSION & INFORMATION: Ordinance No. 6342 - Construction Sales Tax Exemption At the Planning and Community Development Committee's December 13, 2010 meeting, the Committee reviewed a draft of Ordinance No. 6432 (Exhibit 1). This Ordinance offers the City a potential new economic development incentive in the form of a sales tax exemption. This exemption opportunity would be for purchasers who have paid a tax authorized under the provisions of Chapter 3.60 (Sales and Use Tax) of the Auburn City Code on construction materials, fixed equipment, or machinery installation directly related to the construction of new commercial buildings, expansion of existing commercial buildings that creates new or expanded building floor area that generates additional sales tax revenue on property zoned C3 (Heavy Commercial District), and C4 (Mixed Use Commercial) or on sales of or charges made for labor and services rendered in respect to such construction or installation of such machinery or equipment. In its current form, draft Ordinance No. 6342 would be in effect for a period of four years, be limited to properties in the C3 (Heavy Commercial District), and C4 (Mixed Use Commercial) and be available only to a limited class of eligible business types based on statutory sales tax coding. At the Committee's December 13th meeting, the Committee requested staff analyze the potential for expanding the types of business classes that could make use of this exemption. Staff from Staff from Finance, the City Attorney's Office and Planning and Development met subsequent to the December 13th meeting and identified the following additional business classes for inclusion in the Ordinance: • Full Service Restaurants • New and Used Automobile and Light Utility Truck Dealers • Bowling Centers • Motion Picture Theaters (excluding drive-in theaters) Also, the Committee at the December 13th meeting requested information on construction sales tax receipts for the City of Auburn since 2006. Finance Director Coleman prepared Exhibit 2 that provides this information. Similar to other communities, the City of Auburn has been impacted by the national economic downturn that has impacted the local economy. These impacts have included diminished commercial construction activity as evidenced by Exhibit 2 that has reduced the number of new commercial developments that have the potential to generate significant sales tax revenue for the City of Auburn. As the Planning and Community Development Committee is aware, the City has very few incentive tools in economic development toolbox. Staff believes that the Council's passage of this ordinance could be a positive economic development action that will distinguish the City of Auburn in the highly competitive regional marketplace and be an effective community marketing tool. EXHIBIT 1 ORDINANCE NO. 6 3 4 2 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, AMENDING SECTION 3.60 OF THE AUBURN CITY CODE WHEREAS, Auburn City Code Chapter 3.60 imposes a sales or use tax, as the case may be, as authorized under RCW 82.14.030 (2), upon every taxable event, as defined in RCW 82.14.020, occurring within the City and specifies that the tax shall be imposed upon and collected from those persons from whom the state sales tax or use tax is collected pursuant to Chapters 82 WHEREAS, the City of Auburn through the development of new certain zoned areas of the City generation within the event opportunities ivities that create taxable incentivize the construction of new or ex exemption an the City of Auburn of the City by providing a sales tax purchasers who have paid the tax imposed in materials, fixed equipment, or machinery installation directly related to the construction of new commercial buildings, expansion of existing commercial buildings, or tenant improvements to existing commercial buildings, or on sales of or charges made for labor and services rendered in respect to such construction or installation of such machinery or equipment; and, WHEREAS, the Auburn City Council finds that it is in the public interest because of current economic conditions and challenges to create an economic incentive for the increased sales tax revenue Ordinance No. 6342 January 6, 2011 1D8G8 b8F Q 2010 Page 1 of 4 construction of new or expanded businesses in certain zoned areas of the City for businesses that will contribute to increased sales tax revenue generation within the City through new or increased sales activities that create taxable event opportunities, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, DO ORDAIN as follows: Section 1. Amendment to City Code. That Chapter 3.60 of the Auburn City Code, entitled `Sales or Use Tax,' regarding the imposition of sales or use taxes within the City of Auburn, is hereby amended to read as follows: E Targ con construction or instaiiation of such r an exemption as provided for in this (b) Begl is eliaib and USE to ame Auburn this sub 2. For purposes ection, the following definitions apply: (a) "Commercial building" means a structure that has, as its primary purpose, a Commercial Use as that term is defined in ACC 18.04.240. (b) "Expansion" means to add to the floor area or height of a building. (c) "Purchaser: means a person or entity that is the recipient of a good or service. 3. Eligible Target Business Class. The construction sales tax exemption specified in Section 3.60.035.1.a-b shall only apply to those businesses engaged in normal business activities under the following classifications of businesses occurring within the specified zoning designations: Ordinance No. 6342 January 6, 2011 1D8G8 b8F Q 2010 Page 2 of 4 3.60.035 - Construction Sales Tax Exemption (a) General Merchandise, Warehouse Club, SuperCenter - Sales Tax Classification Code 45291 (b) Building Materials and Garden Home Center - Sales Tax Classification Code 44411 (c) Electronics and Appliances - Sales Tax Classification Code 44311 (d) Full Service Restaurants - Sales Tax Classification Code 722110 (e) New and Used Automobile and Light Utility Truck Dealers - Sales Tax Classification Code 44110 (f) Bowling Centers - Sales Tax Classification Code 713950 (g) Motion Picture Theaters (excluding drive-in theaters) - Sales Tax Classification Code 512131 1) 2) (NAICS) code under which the ber of the vendor/contractor State of Washington; and, ported under the State Use ation Codes 1702 and 2724. ince under this section more frequently 3t specify the amount of exempted tax which the exemption is claimed. The to the City in making its claim. ie eligibility under this section based on the information , which is subject to audit verification by the City. If the all remit eligible taxes paid to the purchaser. 5. Appeals. Any applicant aggrieved by an action of the City concerning eligibility or computation of remittance under this Section may file a written appeal to the City's Hearing Examiner in accordance with Chapter 18.66 ACC within fourteen (14) calendar days of receipt of the City's decision. The Hearing Examiner is specifically authorized to hear and decide such appeals and the decision of the Hearing Examiner shall be the final action of the City. Ordinance No. 6342 January 6, 2011 1D8G8 b8F Q 2010 Page 3 of 4 Section 2. Implementation. The Mayor is hereby authorized to implement such administrative procedures as may be necessary to carry out the directions of this legislation. Section 3. Severability. The provisions of this ordinance are declared to be separate and severable. The invalidity of any clause, sentence, paragraph, subdivision, section or portion of this ordinance, or the invalidity of the application thereof to any person or circumstance shall not affect the validity of the remainder of this ordinance, or the validity of its application to other persons or circumstances. Section 4. Effective date. five days from and after its passage, approval inance shall take effect and be in force I publication as provided by law. NTRODUCED: SASSED: \PPROVED: 14 CITY OF AUBURN PETER B. LEWIS MAYOR ATTEST Danielle E. Daskam, City APPROVED AS TO FORM: rk Daniel B. Heid, City Attorney Published: Ordinance No. 6342 January 6, 2011 1D8G8 b8F Q 2010 Page 4 of 4 EXHIBIT 2 i a 0 U I 0 T- 0 N Cfl O N 4-1 Q X m F- U) 0 V L a 0 U c c~ Q O U O 0 D Q v c c~ c M L c~ Q Q I - CL C4 CN CY) OD CD CD CD 4-F m CN ED CD T4 - C)D C M (.0 - CN M _ CD CN CN r- CN C:) ilo C:) lzr CN CN CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD CD ~ ~ ~ CD CD CD M C4 C4 - - ~ ~ ~ EF). SO Io~)Od