HomeMy WebLinkAbout6845 ORDINANCE NO. 6845
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
AUBURN, WASHINGTON, AMENDING SECTIONS 3.53.100
AND 3.53.110 REGARDING CITY BUSINESS AND
OCCUPATION (B&O) TAX EXEMPTIONS AND
DEDUCTIONS ALLOWED TO NONPROFIT HEALTH CARE
ORGANIZATIONS IN THE CITY
WHEREAS, ACC Chapter 3.53 sets forth the City's business and occupations
(B&O) tax. ACC sections 3.53.100 and 3.53.110 establish B&O tax exemptions and
deductions for several classes and types of businesses operating in the City, including
nonprofit health care organizations (HCOs);
WHEREAS, ACC 3.53.100 currently provides a B&O tax exemption to nonprofit
HCOs operating in the City with gross income at or below a required threshold. But
using gross income to measure a nonprofit HCOs B&O tax exemption eligibility does not
reflect an operating nonprofit HCO's financial reality;
WHEREAS, a significant portion of a nonprofit HCO's services are devoted to
providing the City's most vulnerable indigent and uninsured residents with needed
health care and related services. Nonprofit HCOs are able to charge these residents
fees for services that would reflect the HCO's gross income. However, these HCOs are
unable in many cases to actually collect charged amounts, and despite being
considered gross income these uncollected charges generate no actual revenue for a
nonprofit HCO;
WHEREAS, to incentivize the continued financially stable operation of nonprofit
HCOs in the City, which is increasingly important during the ongoing COVID-19
pandemic, ACC 3.53.100 should be amended to use a nonprofit HCO's net operating
Ordinance No. 6845
December 9, 2021
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income as the basis to determine B&O tax exemption eligibility. This amendment would
more accurately reflect revenue a nonprofit HCO actually receives from its operations
for the purpose of a nonprofit HCO's exemption from City B&O tax;
WHEREAS, ACC 3.53.110 should also be amended to clarify that a nonprofit
HCO's gross income remains the basis for measuring B&O tax deductions allowed to a
nonprofit HCO.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN,
WASHINGTON, DO ORDAIN as follows:
Section 1. Amendment to City Code. Subsection CC of Auburn City Code
section 3.53.100 is amended to read as follows:
CC. Nonprofit Health Care Organization Fees.
1_This chapter shall not apply to amounts that a nonprofit health care
organization derivesd from charges or fees for medical, nursing, ambulance,
hospital, or _ : -- . . . __ - outpatient care as charges and services fees
:- : : ' "-- - __ - : : . •' _ :- for the benefit of subscribers, where none
of the derived amounts such fees and charges inure to the benefit of the
organization or any of its employees; provided further, that L
2. The exemption in paragraph 1 of this subsection CC shall not apply if athe
nonprofit health care organization's annual net operating gross income; minus
- _... -: :-e . . ':• e _ -••: ':• - - • •-•• • --- : - , exceeds
$310,000,000.00 for the reporting period in which the exemption is claimedfor
- . - . . For purposes of this subsection, "net operating income" shall
mean income in an amount equal to:
a. the organization's aggregate gross revenue generated from operating
activities and services, less—
b. uncollectable debts and uncompensated services, and less—
c. total expenses related to operating activities.
Capital expenditures, debt service and non-cash charges, such as depreciation
of assets or amortization of financing costs, shall not be included in the
Ordinance No. 6845
December 9, 2021
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calculation of net operating income., the exemption in this subsection shall not
charges.
3. Nonprofit health care organizations exceeding the $3010,000,000.00 in gross
income in a reporting period threshold may take the deductions allowed in ACC
3.53.110(S).
Section 2. Amendment to City Code. Subsection S of Auburn City Code
section 3.53.110 is amended to read as follows:
S. Nonprofit Health Care Organization Fees. In computing the tax, nonprofit
health care organizations may deduct up to $30,000,000 in gross revenue
derived from medical, nursing, ambulance, hospital, and other appropriate
outpatient care as charges and service fees by the nonprofit health care
organization.
Section 3. Implementation. The Mayor is authorized to implement those
administrative procedures necessary to carry out the directives of this legislation.
Section 4. 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 of it to any person
or circumstance, will not affect the validity of the remainder of this ordinance, or the validity
of its application to other persons or circumstances.
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December 9, 2021
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Section 5. Effective date. This Ordinance will take effect and be in force five
days from and after its passage, approval, and publication as provided by law.
INTRODUCED: DEC 2 0 2021
PASSED: DEC 2 0 2021
APPROVED: DEC 2 0 2021
ANCY KUS, AYOR
ATTEST: APPROVED AS TO FORM:
` 1 q. .^ C .. _- Aci4 L ( i ,cis
Shawn Campbell, MMC, City Clerk Kendra Comeau, City Attorney
Published: c)(,a24t 14/1 (0 t J il
Ordinance No. 6845
December 9, 2021
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