HomeMy WebLinkAboutITEM IV-Bt'T'~' O~ ~
* HITOi AGENDA BILL APPROVAL FORM
Agenda Subject Date: June 9, 2011
Ordinance No. 6342 -Construction Sales Tax Exemption
Department: Planning and Attachments: Ordinance No. 6342 Budget Impact: See below
Development Administrative Recommendation: Planning and Community Development Committee to recommend
to the City Council approval of Ordinance No. 6342
Background Summary:
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 that has reduced the number of new commercial developments that have the potential to generate significant sales tax revenue for the City of Auburn. Based on current state constitutional
limitations, the
City has very few incentive tools for its economic development toolbox.
Ordinance No. 6342 offers the City a potential new economic development incentive in the form of a
construction 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, redevelopment of existing vacant buildings 25,000 square feet or greater.
expansion of existing commercial buildings that creates new or expanded building floor area that
generates additional sales tax revenue on property zoned Downtown Urban Center (DUC), 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 Downtown Urban Center (DUC), 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.
Reviewed by Council & Committees: Reviewed by Departments & Divisions: ❑ Arts Commission COUNCIL COMMITTEES: ❑ Building ❑ M&0
❑ Airport ❑ Finance ❑ Cemetery ❑ Mayor
❑ Hearing Examiner ❑ Municipal Services ®Finance ❑ Parks
❑ Human Services ®Planning & Dev. ❑ Fire ®Planning ❑ Park Board ®PublicWorks ®Legal ❑ Police
❑ Planning Comm. ❑ Other ❑ Public Works ❑ Human Resources
Action: Committee Approval: ❑Yes ❑No
Council Approval: ❑Yes ❑No Call for Public Hearing l I
Referred to Until I l Tabled Until l I
Councilmember: Norman Staff: Chamberlain
Meetin Date: June 13, 2011 Item Number:
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The Planning and Community Development Committee unanimously recommended to the City Council
approval of a previous version of Ordinance No. 6342 at its January 10, 2011 meeting. Subsequent to this meeting, additional concerns and ideas pertaining to the content and implementation
of the Ordinance
were identified. At the Planning and Community Development Committee's April 25, 2011 meeting, the
Committee discussed and gave feedback on the following items:
1. The Ordinance does not consider a broad enough range of eligible target business classes that the
Ordinance could be applied to.
The Committee directed staff to add Hotels to the list eligible target business classes because of the
potential direct and indirect draw effect that hotels can have on other sales tax generating businesses
2. The inclusion of Motion Picture Theaters in the eligible target business classes because of the likely
low future sales tax return to the City from this class.
The Committee directed staff to retain Motion Picture Theaters because of the potential direct and
indirect draw effect that Motion Picture Theaters can have on other sales tax generating businesses.
3. The inclusion of Full Service Restaurants in the eligible target business classes because of the likely low future sales tax return to the City from this class.
The Committee directed staff to retain Motion Picture Theaters because of the potential direct and indirect draw effect that Motion Picture Theaters can have on other sales tax generating
businesses.
4. The Ordinance's applicability should be applied to the Downtown Urban Center in addition to the
Heavy Commercial District (C3) and the Mixed Use Commercial District (C4).
The Committee directed staff to include the Downtown Urban Center (DUC) in the Ordinance.
Subsequent to the April 25t" meeting, staff also identified one additional recommended change to Section
3.60.035.1.a. This recommended change is the addition of language specifying the applicability of the
ordinance to the redevelopment of existing vacant buildings 25,000 square feet or greater. Staff felt that
this language would help clarify the potential applicability of the ordinance to certain redevelopment
projects that met the other criteria of the ordinance and is consistent with previous Committee discussion
on the applicability of the ordinance.
Staff anticipates that there will be some short-term budget impact resulting from the passage of
Ordinance No. 6342 as a result of the potential application of the construction sales tax exemption.
However, staff believes that this will be offset by increased sales tax revenue from new or non-performing
commercial developments and associated property tax revenue resulting from productive and intensive use of the land.
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ORDINANCE N0.6_
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF AUBURN, WASHINGTON, AMENDING SECTION
3.60.035 OF THE AUBURN CITY CODE REGARDING
CONSTRUCTION SALES TAX EXEMPTION
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 82.08 and 82.12 RCW; and
WHEREAS, the City of Auburn desires to promote economic development
through the development of new businesses or the expansion of existing businesses in
certain zoned areas of the City that will contribute to increased sales tax revenue
generation within the City through new or increased sales activities that create taxable
event opportunities as specified above; and,
WHEREAS, the City of Auburn desires to incentivize the construction of new or
expanded businesses in certain zoned areas of the City by providing a sales tax
exemption and remittance opportunity for purchasers who have paid the tax imposed in
the City of Auburn on construction 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 orequipment; and,
Ordinance No. 6342
June 1, 2011 Page 1 of 5
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
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:
3.60.035 -Construction Sales Tax Exemption
1(a). Purchasers in the Eligible Target Business Class who have paid the tax
imposed by this Chapter on construction materials, fixed equipment, or
machinery installation directly related to the construction of new commercial
buildings or redevelopment of existing vacant buildings 25,000 square feet or
rg eater or expansion of existing commercial buildings that creates new or
expanded building floor area that generates sales tax revenue on property zoned
Downtown Urban Center (DUCE 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,
are eligible for an exemption as provided for in this Section.
(b) Beginning on (EFFECTIVE DATE OF ORDINANCE}, 2011 through DATE,
2015, a purchaser is eligible for an exemption specified under subsection (1)
from the local sales and use tax paid under this Chapter, as authorized under
RCW 82.14.030 (2), up to a maximum of twenty (20} percent of taxes imposed
and paid to the City of Auburn not to exceed $100,000. The purchaser is eligible
for an exemption under this subsection (1 }(b) in the form of a remittance.
2. For purposes of this Section, 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.
Ordinance No. 6342
June 1, 2011 Page 2 of 5
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:
(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
(fl Bowling Centers -Sales Tax Classification Code 713950
(g) Motion Picture Theaters (excluding drive-in theaters) - Sales Tax
Classification Code 512131
(h) Hotels -Sales Tax Classification Code 72110
4(a) A purchaser claiming an exemption in the form of a remittance under
subsection (2)(b) of this section must pay the tax imposed by ACC 3.60.020. The
purchaser may then apply to the City for remittance in a form and manner
prescribed by the City and shall submit information that the City deems adequate
to justify the exemption, including but not limited to:
1) Identification of the vendor/contractor;
2) North American Industry Classification System (NAILS) code under which the
tax was reported;
3) Name and Unified Business Identifier (UBI) number of the vendor/contractor
on the Combined Excise Tax Return filed with the State of Washington; and,
4) Detailed information supported the amounts reported under the State Use
and Sales Tax section of the above report for Location Codes 1702 and 2724.
(b) A purchaser may not apply for a remittance under this section more frequently
than once per quarter. The purchaser must specify the amount of exempted tax
claimed and the qualifying purchases for which the exemption is claimed. The
purchaser must retain all records provided to the City in making its claim.
(c) The City shall determine eligibility under this section based on the information
provided by the purchaser, which is subject to audit verification by the City. If the
City verifies eligibility, it shall 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
Ordinance No. 6342
June 1, 2011 Page 3 of 5
specifically authorized to hear and decide such appeals and the decision of the
Hearing Examiner shall be the final action of the City.
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. Severabili 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, orthe validity of its application to other persons or circumstances.
Section 4. Effective date. This Ordinance shall take effect and be in force
five days from and after its passage, approval and publication as provided by law.
INTRODUCED:
PASSED:
APPROVED:
CITY OF AUBURN
PETER B. LEWIS
MAYO R
ATTEST:
Danielle E. Daskam, City Clerk
APPROVED AS TO FORM:
Ordinance No. 6342
June 1, 2011 Page 4 of 5
Daniel B. Heid, City Attorney
Published:
Ordinance No. 6342
June 1, 2011 Page 5 of 5