Chapter 3.60
CONSTRUCTION EXCISE TAX (EXPIRED)
(Added by Ord. 2860; Expired July, 2023, pursuant to Ord. 2917*)
* Code reviser’s note: Chapter 3.60 as added by Ord. 2860 expired pursuant to Ord. 2917 on July 1, 2023. The full text of the chapter as added by Ord. 2860 is presented below for reference.
Sections:
3.60.060 Statement of full value of improvement required.
3.60.070 Interest and penalties.
3.60.010 Purpose.
This chapter establishes a construction excise tax on commercial and residential improvements to provide funding for affordable housing in the city. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.020 Definitions.
The following definitions apply in this chapter.
“Affordable housing” means a housing unit for which a person earning 80 percent or less of area median income would not pay more than 30 percent of their gross income for housing payments.
“Area median income” means the Yamhill County median household income by household size as defined by the United States Department of Housing and Urban Development and published periodically.
“Building division” means the Newberg building division.
“City manager” means the Newberg city manager or the manager’s designee.
“Commercial” means designed or intended to be used, or actually used, for other than residential purposes.
“Commercial and industrial” means a structure designed or intended to be used, or actually used, for purposes other than residential purposes. Structures on land zoned industrial or commercial are presumed to be industrial or commercial.
“Construct” or “construction” means erecting, constructing, enlarging, altering, repairing, improving, or converting any building or structure for which the issuance of a building permit is required by Oregon law.
“Housing unit guaranteed to be affordable” means a residential housing unit for which a deed restriction or contractual obligation guarantees that the housing will remain affordable, under guidelines established by the United States Department of Housing and Urban Development, to households that earn no more than 80 percent of the median household income for the area in which the construction tax is imposed, for a period of at least 60 years following the date of construction of the residential housing.
“Improvement” means a permanent addition to, or modification of, real property resulting in a new structure, additional square footage to an existing structure, or addition of living space to an existing structure.
“Net revenue” means revenues remaining after the administrative fees described in NMC 3.60.100 are deducted from the total construction excise tax collected.
“Partial exemption” means one-half the percentage rate of the construction excise tax.
“Structure” means something constructed or built and having a fixed base on, or fixed to, the ground or another structure.
“Value of improvement” means the total value of the improvement as determined in the process of issuance of the building permit. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.030 Imposition of tax.
Unless subject to exemption under NMC 3.60.040, each person who applies for a building permit for real property located in the City of Newberg shall pay a construction excise tax, as follows:
A. Commercial or industrial improvements shall be subject to and pay an excise tax in the amount of one percent of the value of the improvement. One hundred percent of the net revenue of the tax collected shall go towards affordable housing programs, after deducting the administrative fee as set forth in NMC 3.60.100.
B. Residential improvements shall be subject to and pay an excise tax in the amount of one percent of the permit valuation of the improvement. The tax collected shall go towards administration and affordable housing programs per ORS 320.195(3).
C. The building division shall calculate the amount of excise tax due under this chapter based on the documentation provided by the permit applicant at the time of issuance of building permits and shall be based on the total value of all improvements associated with the project regardless of the number of separate building or trade permits involved.
D. The percentage rate of the construction excise tax shall not exceed that permitted by state law.
E. Construction excise taxes may be paid by:
1. The owner of the subject property; or
2. Any agent of the property owner authorized to apply for a building permit on the property owner’s behalf. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.040 Exemptions.
A. Construction taxes may not be imposed on the following:
1. Private school improvements.
2. Public improvements as defined in ORS 279A.010 (Definitions for Public Contracting Code).
3. Residential housing that is guaranteed to be affordable, under guidelines established by the United States Department of Housing and Urban Development, to households that earn no more than 80 percent of the median household income for the area in which the construction tax is imposed, for a period of at least 60 years following the date of construction of the residential housing.
4. Public or private hospital improvements.
5. Improvements to religious facilities primarily used for worship or education associated with worship.
6. Agricultural buildings, as defined in ORS 455.315 (Exemption of agricultural buildings, agricultural grading and equine facilities) subsection (2)(a).
7. Facilities that are operated by a not-for-profit corporation and that are:
a. Long term care facilities, as defined in ORS 442.015 (Definitions);
b. Residential care facilities, as defined in ORS 443.400 (Definitions for ORS 443.400 to 443.455); or
c. Continuing care retirement communities, as defined in ORS 101.020 (Definitions).
8. Any improvements that are exempt from the construction excise tax under state law.
9. Any improvement funded by construction excise tax proceeds, or other dedicated affordable housing funding through the City of Newberg. Such exemption is limited to the amount of the city’s investment in the improvement.
10. Non-living space located on residential property (e.g., shop buildings, garages).
11. Accessory dwelling units, accessory farm dwellings, seasonal farm worker housing, and temporary hardship dwellings, as defined in applicable state law or city land use regulations.
12. Improvements having a total improvement value of less than $100,000.
B. Partial exemption of 50 percent shall apply to residential housing that is subject to a deed restriction requiring that the property remain affordable to households that earn between 81 percent and 120 percent of the area median income for a period of at least 60 years following the date of the restriction.
C. The city manager may require any person seeking an exemption to demonstrate that the improvements are eligible for an exemption and to establish all facts necessary to support the exemption.
D. In the event that a property receiving a full or partial exemption under this section as affordable housing is subsequently sold for an amount that no longer qualifies as affordable housing, the seller shall be liable for all of the following:
1. An amount equal to the applicable construction excise tax as of the time of the construction;
2. Interest on the tax at an annual rate of 12 percent from the date of the exemption; and
3. A late fee equal to five percent of total applicable taxes and interest owing under this section. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.050 Collection of tax.
A. The construction excise tax is payable on issuance of a building permit for the construction of improvements. A building permit may not be issued until the construction excise tax is paid. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.060 Statement of full value of improvement required.
It is a violation of this chapter for any person or legal entity to fail to state, or to understate, the full value of improvements to be constructed in the city in connection with an application for a building permit. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.070 Interest and penalties.
All amounts of construction excise tax not paid when due shall bear interest on the entire unpaid amount at the rate of 0.83 percent simple interest per month or fraction thereof (10 percent per annum), computed from the original date to the fifteenth day of the month following the date of the payment. Interest amounts may not be waived. A penalty of five percent of the underpayment of construction excise tax shall apply to:
1. Any underpayment due to the improvements constructed initially failing, or later ceasing, to be exempt affordable housing under NMC 3.60.040(A)(3).
2. Any underpayment involving a failure to state or an understatement of the full value of improvements. If not paid within 10 days after billing, all interest and penalties shall merge with and become part of the construction excise tax required to be paid under this chapter. From the point of merger, the previously assessed interest and penalty become part of the tax due for calculation of interest and penalty for subsequent periods. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.080 Refunds.
A. The city shall issue a refund to the owner listed on the permit for which a tax was assessed and paid, in the amount of the tax actually paid, under the following circumstances:
1. If the taxpayer establishes that the tax was paid for improvements that were otherwise eligible for an exemption under NMC 3.60.040.
2. If the taxpayer establishes that construction of the improvements was not commenced and the associated building permit has been canceled by the community development department.
3. If the taxpayer establishes that the tax was assessed, and the taxpayer paid the tax, on or after April 1, 2023.
B. Requests for refunds must be made in writing and submitted by the taxpayer to the city manager. The city manager shall either refund all amounts due under this section within 30 days of the date a written request for refund is filed with the city manager or give written notice of the reasons why the refund request has been denied. Such decision is subject to the appeals provisions in NMC 3.60.110.
C. Any request for refund must be initiated within one year from the date of payment. The city shall deny any refund request that is made more than one year after the date of payment of the tax, or that otherwise does not comply with the requirements of this provision. [Ord. 2917 § 1 (Exh. A), 5-1-23; Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.090 Use of revenue.
A. Except for funds withheld for administrative costs under NMC 3.60.100, all construction excise taxes levied upon projects on commercial, industrial and mixed-use property under NMC 3.60.030(A) shall be used in accordance with subsections (C) and (D) of this section; and
B. Except for funds withheld for administrative costs under NMC 3.60.100, construction excise taxes levied upon projects on residential improvements under NMC 3.60.030(B) shall be used as follows:
1. Fifty percent to fund developer incentives under subsection (C) of this section;
2. Fifteen percent to the Oregon Housing and Community Services Department to fund home ownership programs that provide down payment assistance; and
3. Thirty-five percent to fund developer incentives and affordable housing programs under subsections (C) and (D) of this section.
C. The city may fund developer incentives allowed or offered pursuant to ORS 197.309(5)(c) and (d) and (7), including but not limited to:
1. System development; and
2. Land acquisition; and
3. Local public improvements required by municipal governments.
D. The city may fund affordable housing programs in accordance with ORS 320.195, including but not limited to:
1. Rent buy-downs and subsidies; and
2. Down-payment assistance; and
3. Foreclosure-prevention assistance.
E. Any affordable housing unit built or purchased with construction excise tax funds shall have recorded in its chain of title a deed restriction that requires that the property remain “affordable housing” as defined by this chapter, for a period of no less than 60 years from the date of restriction.
F. The city manager shall provide the city council with an annual accounting, based on the city’s fiscal year, for construction excise taxes collected and the projects funded from each account in the previous fiscal year. A list of the amounts spent on each project funded in whole or in part with construction excise tax revenues shall be included in the annual accounting. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.100 Administrative fee.
A. As authorized by ORS 320.192 and 320.195, the city shall receive an administrative fee equal to four percent of the gross construction excise taxes, without regard to subsequent reductions due to refunds, failed payments, or similar reductions.
B. The city shall deduct the administrative fees directly from the collected construction excise taxes.
C. The city may recover from the construction excise taxes any banking fees or penalties that arise from the collection of construction excise taxes such as returned check charges. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.110 Appeal procedure.
A. Any written determination issued by the community development department applying the provisions of this chapter, believed to be in error, may be reviewed by the city manager if the recipient requests review in writing within 10 days after receipt of the written determination together with all documentation required to support the request.
B. Appeals of any other decision required or permitted to be made by the city manager under this chapter must be filed in writing with the city manager within 10 days of the decision.
C. After receiving an appeal under subsection (B) of this section, the city manager shall schedule the appeal to be heard by the city council, and provide notice to the appellant. The city council shall determine whether the city manager’s decision or the expenditure is in accordance with the provisions of this chapter and state law. The city council may affirm, modify, or overrule the decision. The decision of the city council shall be reviewed only by writ or review.
D. The filing of any appeal shall not stay the effectiveness of the written determination unless the city council so directs. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.120 Penalty.
Violation of this chapter is a civil infraction. [Ord. 2860 § 1 (Exh. A), 11-16-20.]
3.60.130 Duration.
A. This chapter shall remain in effect until July 1, 2023.
B. All construction excise taxes collected as of July 1, 2023, shall be transferred to the city’s general fund.
C. All construction excise tax revenue unexpended as of July 1, 2023, shall continue to be used solely for the purposes permitted under NMC 3.60.090. [Ord. 2917 § 1 (Exh. A), 5-1-23; Ord. 2860 § 1 (Exh. A), 11-16-20.]