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Home My WebLink AboutITEM IV-E A _RN AGENDA BILL APPROVAL FORM . U U # WASHINGTON Agenda Subject: Ordinance No.16342 - Amendment to Section 3.60 of Date: February 1, 2011 the Auburn City Code. Department: Planning and Attachments: Ordinance No. 6342 Budget Impact: See below Development Administrative Recommendation: City Council introduce and adopt 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. Because of statutory limitations, the City has very few incentive tools in economic development toolbox. Ordinance No. 6342 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. As presented, 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), be, limited-to a maximum of twenty (20) percent of taxes imposed and paid to the City of Auburn not to exceed $100,000 and be available only to a limited class of eligible business,types based on statutory sales tax coding.'ln addition, parties requesting the exemption in the form of a. refund would be required to submit, written documentation containing an adequate level of detail to the Auburn Finance Department. If approved by City Council, City staff would prepare guidance documents and forms to assist potential applicants for the exemption. L0207-2 i Reviewed by Council & Committees:. Reviewed by Departments & Divisions: ❑ Arts Commission COUNCIL-COMMITTEES: E] Building El M&O ❑ Airport ED-Finance; ❑ Cemetery ❑ Mayor ❑ Hearing Examiner ❑ Municipal Serv. ❑ Finance ❑ Parks ❑ Human Services ED Planning 8 CD ❑ Fire ® Planning ❑ Park Board ❑ Public Works ® Legal ❑ Police ❑ Planning Comm. ❑ Other ❑ Public Works ❑ Human Resources ❑ Information Services Action: Committee Approval: ❑Yes ❑No Council Approval: ❑Yes ' ❑No Call for Public Hearing Referred to Until Tabled Until Councilmember:, Norman, - Staff: Sn der . Meeting Date: February 7, 2011. Item Number: VIII.A.1 i~ i AUBURN. * MORE THAN YOU IMAGINED i Agenda Subject: Ordinance No. 6342 - Amendment to Section 3.60 of Date: February 1, 2011 the Auburn City Code Ordinance No. 6342 if approved by City Council could result in some reduction of the total amount of the construction sales tax annually received by the City. However, Ordinance No. 6342 is intended to help attract businesses that would help expand the City's overall sales tax base that over time could lead to a total increase in the amount of sales tax collected by the City. Passage of Ordinance No. 6342 is expected to be viewed as 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. The Planning and Community Development Committee at its January 10, 2011 regular meeting unanimously recommended the City Council introduce and adopt Ordinance No. 6342. Page 2 of 2 ORDINANCE NO. 6 3 4 2 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, CREATING A NEW SECTION 3.60.035 OF THE AUBURN CITY CODE, RELATING TO EXEMPTIONS FROM CITY-IMPOSED SALES AND USE TAX 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 or equipment; and, Ordinance No. 6342 February 2, 2011 Page 1 of 4 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. Creation of New Section to City Code. That a new Section 3.60.035 of the Auburn City Code, entitled ' Construction Sales Tax Exemption,' 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, expansion of existing commercial buildings that creates new or expanded building floor area 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, are eligible for an exemption as provided for in this Section. (b) Beginning on March 1, 2011 through March 1, 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, but not to exceed a total exemption of $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 February 2, 2011 Page 2 of 4 i 3. Eligible Target Business Class. The construction sales tax exemption specified in Section' 3.60.035.1 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 7,22110 (e) New and Used Automobile and Light Utility Truck Dealers Sales Tax Classification Code 441,10 (f) Bowling Centers - Sales Tax Classification Code 713950 Motion Picture Theaters (excluding drive-in theaters) - Sales Tax (9) ? Classification Code 512131 4(a) A :purchaser claiming an exemption in the form of a remittance under this section must pay the tax imposed by ACC 160.020. 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 IndustryClassification System (NAICS).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. J. (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 1 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 F 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 j 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. . I 1 Ordinance No. 6342 February 2, 2011 Page 3 of 4 I 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. 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 MAYOR ATTEST: Danielle E. Daskam, City Clerk AP ED FO M- Daniel B. Heic#~City Attorney Published: Ordinance No. 6342 February 2, 2011 Page 4 of 4