Ordinance No. 19-16 CITY OF TIGARD, OREGON
TIGARD CITY COUNCIL
ORDINANCE NO. 19-/(
AN ORDINANCE ENACTING A CITYWIDE CONSTRUCTION EXCISE TAX ) 44: f y
WHEREAS,there is an identified need for affordable housing in the City of Tigard; and
WHEREAS, in 2016, the Oregon Legislative Assembly passed Senate Bill 1533, which allows cities and
counties to collect construction excise taxes to fund affordable housing;and
WHEREAS,the City Council adopted an Affordable Housing Plan in June of 2019;and
WHEREAS,a key recommendation of that plan is the adoption of a construction excise tax to fund affordable
housing programs within the city;and
WHEREAS, Goal 10 of the City of Tigard's Comprehensive Plan is to "provide opportunities to develop a
variety of housing types that meet the needs, preferences, and financial capabilities of Tigard's present and
future residents";and
WHEREAS,the Council desires to continue to develop a sustainable affordable housing program to ensure an
adequate supply of housing for all of Tigard's residents;and
WHEREAS, in 2018, Council adopted an exemption from city systems development charges (SDCs) for
affordable housing developments;and
WHEREAS,a construction excise tax provides a means to offset lost revenue from SDC exemptions;and
WHEREAS,the 2019-2021 Council Goals prioritized adoption of a citywide construction excise tax.
NOW,THEREFORE,THE CITY OF TIGARD ORDAINS AS FOLLOWS:
SECTION 1: Chapter 3.90 of the Tigard Municipal Code is hereby adopted, as shown on the attached
Exhibit A.
SECTION 2: If any provision of this ordinance or the application thereof to any person or circumstance
is held invalid, such invalidity shall not affect the other provisions or applications of the
ordinance which can be given effect without the invalid provision or application, and to this
end the provisions of this ordinance are severable. This City Council hereby declares that it
would have adopted this ordinance irrespective of the invalidity of any particular portion
thereof and intends that the invalid portions should be severed and the balance of the
ordinance be enforced.
SECTION 3: This ordinance shall be effective January 1,2020.
ORDINANCE No. 19-/a
Page 1
PASSED: By ZZ.c.Iotzm6ZG.y vote of all council members present after being read by number
and title only,this day of/ /07/r°1'yZl ,2019.
Carol A. Krager,City Recorder
APPROVED: By Tigard City Council this 5-1-A-day of /V6 iti-e4-. ,2019.
Jaseii B. Snider,Mayor
Approved as to form:
City Attorney
Date
ORDINANCE No. 19- 1
Page 2
Exhibit A
TIGARD MUNICIPAL CODE
Chapter 3.90 CONSTRUCTION EXCISE "Commercial" means any structure designed
TAX. or intended to be used, or actually used, for
occupancy for other than residential purposes and
Sections: includes structures otherwise categorized or
described as industrial.
3.90.010 Purpose.
3.90.020 Definitions. "Construct" or "construction" means
3.90.030 Tax Imposed. erecting, constructing, enlarging, altering,
3.90.040 Administration and repairing, improving, or converting any building
Enforcement. or structure for which the issuance of a building
3.90.050 Exemptions. permit is required pursuant to the provisions of
3.90.060 Failure to Pay. Oregon law.
3.90.070 Failure to Maintain Units as
Affordable. "Improvement" means any improvements to
3.90.080 Expenditure of Funds. real property resulting in a new structure,
3.90.090 Statement of Entire Value of additional square footage added to an existing
Improvement Required. structure, or additional living space to an existing
3.90.100 Penalties and Interest. structure.
3.90.110 Enforcement by Civil Action.
3.90.120 Refunds. "Median family income" means median
3.90.130 Appeals. family income by household size as defined
annually by the Housing and Urban Development
3.90.010 Purpose. (HUD) for the Portland-Vancouver Metropolitan
Statistical Area(MSA).
This chapter establishes a construction excise
tax ("CET") on commercial and residential "Net revenue" means revenues remaining
improvements to provide funding for affordable after refunds and the administrative fees described
housing in the City of Tigard. in Section 3.90.080.A are deducted from the total
construction excise tax collected.
3.90.020 Definitions.
"Residential" means any structure designed
As used in this chapter, unless the context or intended to be used, or actually used, for
requires otherwise: occupancy for residential purposes including any
residential structure, dwelling,or dwelling unit.
"Building official" means the building
official for the City of Tigard, or his or her "Value of improvement" means the total
designee. value of the improvement as determined by the
construction permit(s) or building permit(s) for
"City"means the City of Tigard, Oregon. the improvement, regardless of the number of
separate permits issued. The city building official
"City manager" means the city manager for will calculate the total value in accordance with
the City of Tigard, or his or her designee. OAR 918-050-0100, Statewide Fee
Methodologies for Residential and Commercial
Permits, or as otherwise provided by law.
3-90-1
Exhibit A
TIGARD MUNICIPAL CODE
the date of issuance of the building permit on
which the improvement value is based and that
3.90.030 Tax Imposed. remain affordable. For purposes of the initial
determination of eligibility for this exemption,the
A. Each person who obtains a permit to city will use the median family income for the
construct a commercial improvement in the city year prior to the date of issuance of the permit on
must pay a commercial CET in the amount of one which the improvement value is based.
percent(1%)of the value of the improvement. Continuing affordability will be determined based
on the median family income for the prior
B. Each person who obtains a permit to calendar year.
construct a residential improvement in the city
must pay a residential CET in the amount of one 2. Accessory dwelling units. This
percent(1%)of the value of the improvement. exemption is repealed automatically on July 31,
2023, after which date the full CET value will be
C. The CET is due and must be paid at the assessed.
time of issuance of a building permit. The CET
amount is assessed at the time of submittal of a 3. Construction or improvements
building permit application. having a total improvement value of less than fifty
thousand dollars($50,000.00).
3.90.040 Administration and
Enforcement. 4. Construction or improvements to a
residential structure that was partially or
The city manager is responsible for the completely destroyed by unintentional means,
implementation, administration, and enforcement such as fire or act of nature, where such
of this chapter. The city manager may adopt such construction or improvement results in a net
policies and procedures as are necessary to increase of living area of ten percent(10%)or less
efficiently and effectively carry out that over the living area of the destroyed structure.
responsibility, consistent with the provisions of
this chapter. 5. Cottage clusters, courtyard units,
and quads, as defined by Title 18.200 of the
3.90.050 Exemptions. Tigard Community Development Code (2019),
from -frfty-pereent---€50%r of the CET. The
A. Notwithstanding TMC 3.90.030, the emaining fifty percent is due and payable as
following are exempt from payment of the CET: provided in Section 3.90.030.C. This exemption
is repealed automatically on July 31, 2023.
1. Residential housing units,including
detached housing, that are subject to a deed 6. Public and private school
restriction or other mechanism acceptable to the improvements.
city ensuring that the unit(s) are affordable under
guidelines established by the United States 7. Public improvements as defined in
Department of Housing and Urban Development, ORS 279A.010.
to households that earn no more than eighty
percent (80%) of the median household income 8. Public or private hospital
for a period of at least twenty(20)years following improvements.
5�,��►a fh — t 1 v e (75 f ) amen/el
3-90-2 /42, Coe,nG<
Exhibit A
TIGARD MUNICIPAL CODE
the CET will immediately be due and payable as
9. Improvements to religious facilities of the date the unit no longer qualifies as
primarily used for worship or education associated affordable, together with interest and penalties as
with worship. provided in Section 3.90.100. The amount of the
CET will be calculated using the CET in effect at
10. Long-term care facilities, as the time the unit ceases to qualify. The owner of
defined in ORS 442.015, operated by a not-for- record of the unit at the time the unit ceases to
profit corporation. qualify will be obligated to pay. The seller and
buyer, jointly and severally, will be obligated to
11. Residential care facilities, as pay if the unit ceases to qualify as the result of a
defined in ORS 443.400, operated by a not-for- sale, including a sale to a person occupying or
profit corporation. intending to occupy the unit whose income
exceeds the median family income determination
12. Continuing care retirement for the prior year.
communities, as defined in ORS 101.020,
operated by a not-for-profit corporation. 3.90.080 Expenditure of Funds.
13. Any improvements required to be A. The city may retain up to four percent
exempted from this CET by state law. (4%) of the tax collected for payment toward
administrative expenses related to collection and
B. The city may require any person seeking distribution of the tax.
an exemption to demonstrate that the •
improvement is eligible for an exemption and to B. After deducting the administrative fee
establish all necessary facts to support the authorized by subsection A, the net revenue from
exemption. the tax on residential improvements will be
allocated by the city as follows:
3.90.060 Failure to Pay.
1. Fifteen percent (15%) of net
The City may not issue a building permit to revenue will be remitted to the Oregon
any person required to pay the CET unless the Department of Housing and Community Services
person has paid the full amount of CET alleged by to fund home ownership programs.
the city to be due.
2. Fifty percent (50%) of net revenue
3.90.070 Failure to Maintain Units as will fund incentives for the development and
Affordable. construction of affordable housing authorized by
the city as provided by state law.
The exemption for affordable units provided
in Section 3.90.050.A.1. automatically terminates 3. Thirty-five percent (35%) of net
if the unit ceases to qualify as affordable at any revenue will fund programs and activities related
time during the twenty (20) year period of to affordable housing.
affordability. For purposes of this section,
affordability is calculated using the median family C. After deducting the administrative fee
income determination for the preceding calendar authorized by subsection A, fifty percent(50%)of
year. At any time, if the exemption terminates, the net revenue from the tax on commercial
3-90-3
Exhibit A
TIGARD MUNICIPAL CODE
improvements will fund programs of the city within thirty (30) days of notice from the city that
related to housing. the tax is due.
C. Penalties and Interest Merged with Tax.
Any accrued interest and imposed penalties under
3.90.090 Statement of Entire Value of this section will be merged with and become a
Improvement Required. part of the CET required to be paid under this
chapter. This amount becomes the new base for
A. It is a violation of this chapter for any calculating new interest amounts.
person to fail to state or to misstate the full value
of any improvement. 3.90.110 Enforcement by Civil Action.
B. Additional CET will be due on any The CET, and any assessed interest and
increase in the value of the improvement arising penalties, due and owing under this chapter
from the value having been understated or arising constitutes a debt owing to the city by the person
from construction changes that result in increased liable for the tax as set forth in Section 3.90.040.
building permit fees. The city has all remedies available at law and
equity.
3.90.100 Penalties and Interest.
3.90.120 Refunds.
A. Interest. Interest will be due on the
entire amount that the city manager determines A. The city will issue a refund to any
has not been paid and assessed at the rate of ten person who has paid a CET if:
percent (10%) per annum from the due date.
Interest will be assessed to the 15th day of the 1. The person establishes that the tax
month following the due date. Interest amounts was paid for improvements that were otherwise
properly assessed in accordance with this section eligible for an exemption under Section 3.90.050
may not be waived or reduced by the city at the time of permit issuance;
manager.
2. The person establishes that
B. Penalties. In addition to assessing construction of the improvements had not begun
interest, a penalty of five percent (5%) of the and the associated building permit was cancelled
otherwise applicable CET liability will be by the city;or
imposed upon:
3. The city manager determines that
1. Any person who removes one or the amount of any CET, penalty, or interest was
more units from the affordability exemption in erroneously collected or paid to the city.
Section 3.90.050.A.1.
B. The city will either refund all amounts
2. Any person who intentionally fails due within thirty (30) days of a complete request
to state the full value of an improvement. for the refund or give written notice of the reasons
why the request has been denied. Claims for
3. Any person who fails to pay the refunds must be made upon forms provided by the
full amount of the tax, interest, and any penalty city. The request for the refund must be submitted
3-90-4
Exhibit A
TIGARD MUNICIPAL CODE
within three(3)years from the date of payment of
the CET.
C. Denial of a request for refund may be
appealed as provided for in Section 3.90.130.
3.90.130 Appeals.
A. A person who objects to a determination
issued by the city applying the provisions of this
chapter may file for review of the determination
by the city's finance director. The request for
administrative review must be in writing,received
within ten (10) days of the determination, and
must include documentation supporting the
request. The finance director's determination in
the administrative review will be sent by regular
mail.
B. The administrative review determination
of the finance director may be appealed to the city
manager by filing a notice of appeal with the city
manager within ten (10) days of issuance of the
finance director's determination. The notice must
describe the basis for the appeal and the relief
sought.
C. The filing of any notice of appeal does
not stay the effectiveness of the written
determination unless the city manager so directs.
D. Notwithstanding Section 3.90.060, the
city may issue a building permit while an appeal
is pending provided that the applicant posts with
the city the full amount alleged by the city to be
due.No interest will accrue to the applicant on the
deposit.
E. The city manager will provide a written
decision by regular mail to the person who filed
the appeal. The city manager's decision on appeal
is the city's final decision, subject to judicial
review only as provided in ORS 34.010 et seq.
3-90-5