This chapter establishes a construction excise tax on construction improvements to provide funding for needed housing in the city.
(Ord. 6065 § 1 (Exh. A), 2025)
The following definitions apply in this chapter:
(1) 
“Affordable housing”
means a housing unit for which a person or household earning 80 percent or less of area median income would not pay more than 30 percent of their gross income for housing payments.
(2) 
“Area median income”
means the City of Albany median household income by household size as defined by the United States Department of Housing and Urban Development and published annually.
(3) 
“City manager”
means the Albany city manager or the manager’s designee.
(4) 
“Commercial”
means a structure designed or intended to be used for uses other than residential purposes, including commercial, industrial, institutional, civic and other nonresidential uses, and the nonresidential portions of mixed-use property.
(5) 
“Community development department”
means the Albany Community Development Department staff.
(6) 
“Construct” or “construction”
means erecting, constructing, enlarging, altering, repairing, improving, or converting any building or structure that results in residential living or occupiable commercial space, for which the issuance of a building permit is required by Oregon law.
(7) 
“Housing units guaranteed to be affordable”
means a residential dwelling 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 house-holds 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.
(8) 
“Improvement”
means a permanent addition to, or modification of, real property resulting in a new structure, additional square footage to an existing structure, or an addition or remodeling that adds living space to an existing structure.
(9) 
“Net revenue”
means revenues remaining after the administrative fees described in AMC § 3.09.110 are deducted from the total construction excise tax collected.
(10) 
“Residential”
means a structure permitted to include living, sanitation, and sleeping spaces, as specified in the Oregon Building Code, and their accessory structures. “Residential” includes but is not limited to one- and two-dwelling structures, manufactured homes, townhouses, accessory dwelling units, triplexes and fourplexes, apartment units, cottage clusters, bed and breakfasts, group homes, assisted living facilities, residential care facilities, and residential treatment facilities; but does not include hotels and motels and other uses considered commercial in the Albany Development Code.
(11) 
“Structure”
means something constructed or built and having a fixed base on or fixed to the ground or to another structure that adds living space for residential uses or occupiable space for commercial uses.
(12) 
“Value of improvement”
means the total value of the structural improvement as determined by the International Code Council (ICC) construction valuation table during the process of issuing the building permit.
(Ord. 6065 § 1 (Exh. A), 2025)
The city council shall set the percentage rate of the construction excise tax by resolution, in an amount not to exceed that permitted by State law, unless subject to exemption under AMC § 3.09.040:
(1) 
Each application for a building permit to construct commercial improvements in the City shall be subject to the commercial construction excise tax, in an amount based on a percentage of the full value of the improvement, as set by the city council through resolution.
(2) 
Each application for a building permit to construct residential improvements in the city shall pay a residential construction excise tax in an amount based on a percentage of the full value of the improvement, as set by the city council through a resolution.
(3) 
The Community Development Department shall calculate the amount of excise tax due under this chapter based on the total value of all structural improvements associated with the project as calculated by the International Code Council (ICC) construction valuation table regardless of the number of separate building permits involved.
(Ord. 6065 § 1 (Exh. A), 2025)
(1) 
The following are exempt from the housing construction excise tax by Oregon Revised Statutes (ORS 320.173):
(a) 
Private school improvements.
(b) 
Public improvements as defined in ORS 279A.010 (Definitions for Public Contracting Code).
(c) 
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.
(d) 
Public or private hospital improvements.
(e) 
Improvements to religious facilities that are primarily used for worship or education associated with worship.
(f) 
Agricultural buildings, agricultural grading and equine facilities, as defined in ORS 455.315.
(g) 
Facilities that are operated by a not-for-profit corporation and that are:
(i) 
Long term care facilities as defined in ORS 442.015;
(ii) 
Residential care facilities as defined in ORS 443.400; or
(iii) 
Continuing care retirement communities as defined in ORS 101.020.
(h) 
Residential housing being constructed on a lot or parcel of land to replace residential housing on the lot or parcel of land that was destroyed or damaged by wildfire or another event or circumstance that is the basis for a state of emergency declared under ORS 401.165 (Declaration of state of emergency) or 401.309 (Declaration of state of emergency by city or county) or for the exercise of authority under ORS 476.510 (Short title) to 476.610 (Payment of claims).
(i) 
Any improvements to buildings and facilities that are now or hereafter exempt under State law.
(2) 
The following is also exempt from the CET:
(a) 
The first $50,000 of the value of the improvements for all building permits associated with the construction of improvements to each new or existing structure on the same property within a 12-month period.
(3) 
The community development director may require any person seeking an exemption to demonstrate that the improvements associated with the building permit are eligible for exemption and to establish all the facts necessary to support the exemption.
(4) 
If within five years of the certificate of occupancy for improvement the property receiving an exemption under this section no longer qualifies for the exemption due to a change of use or ownership, the seller of the property or owner of the property shall be liable for the foregone tax revenue, interest and fees outlined below:
(a) 
An amount equal to the applicable construction excise tax as identified on the issued building permit;
(b) 
Interest on the tax at an annual rate of 10 percent from the date of the exemption; and
(c) 
A late fee equal to 5 percent of total applicable taxes and interest owing under this section.
(Ord. 6065 § 1 (Exh. A), 2025)
(1) 
The construction excise tax shall be due and payable and must be paid prior to the issuance of any building permit as required by ORS 320.189.
(2) 
The construction excise taxes may be paid by the owner of the subject property or any agent of the property owner authorized to apply for a building permit on the property owner’s behalf.
(Ord. 6065 § 1 (Exh. A), 2025)
All amounts of construction excise tax not paid when due shall bear interest on the entire unpaid amount at the rate of 0.833 percent simple interest per month or fraction thereof (10 percent per annum), computed from the original due date to the fifteenth day of the month following the date of the payment. Interest amounts may not be waived.
A penalty of 5 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 AMC § 3.09.040(3) prior to expiration of the applicable income restriction period or failing to be an exempt use permitted under AMC § 3.09.040.
(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 merging, the previously assessed interest and penalty become part of the tax due for the purposes of calculating any interest and penalty for subsequent periods.
(Ord. 6065 § 1 (Exh. A), 2025)
The City shall issue a refund to any person who has paid a construction excise tax, the amount of the tax actually paid:
(1) 
If the payer establishes that the tax was paid for improvements that were otherwise eligible for an exemption under AMC § 3.09.040.
(2) 
If the payer establishes that construction of the improvements has not commenced, and the associated building permit has been withdrawn or expired.
(3) 
Upon determination by the city manager or the council that the amount of any construction excise tax, penalty, or interest has been erroneously collected or paid to the City under this chapter.
The city manager shall either refund all amounts due under this section within 30 days of a complete application for the refund or give written notice of the reasons why the application has been denied. Any request for a refund must be submitted within three years from the date of payment.
(Ord. 6065 § 1 (Exh. A), 2025)
Net revenues from the construction excise tax shall be deposited into the general fund, then used or transferred in a manner required to meet the obligations set out for these revenues under State law and by City housing program guidelines.
(Ord. 6065 § 1 (Exh. A), 2025)
(1) 
Residential CET Revenue Use. Except for the funds withheld for administrative costs under AMC § 3.09.110, all construction excise taxes levied upon residential improvements shall be used in accordance with State law and as specified in subsections (1)(a) through (1)(c) of this section:
(a) 
Fifty percent must be used to fund developer incentives for housing pursuant to ORS 197.309(5)(c) and (5)(d) and 197.309(7). Incentives include but are not limited to whole or partial fee or systems development charge reductions, land acquisition, finance-based incentives, and/or public improvements associated with housing;
(b) 
Thirty-five percent may be used flexibly to fund developer incentives as described in subsection (1)(a) of this section and affordable housing programs as defined by the City, to include down-payment assistance for homeowners, rent buy-downs and subsidies, and/or foreclosure prevention assistance; and
(c) 
Fifteen percent to Oregon Housing and Community Services to fund home ownership down payment assistance programs for households earning 100 percent or less of AMI.
(2) 
Commercial CET Revenue Use. Except for the funds withheld for administrative costs under AMC § 3.09.110, the construction excise taxes levied upon commercial improvements shall be used to fund programs related to housing as defined by the City.
(3) 
The community development director will 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.
(Ord. 6065 § 1 (Exh. A), 2025)
As authorized by ORS 320.195, the City shall receive an administrative fee equal to 4 percent of the gross construction excise taxes, without regard to the subsequent reductions due to refunds, failed payments, or similar reductions.
The City shall deduct the administrative fees directly from the collected CET.
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. 6065 § 1 (Exh. A), 2025)
(1) 
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 delivered to the city manager within 10 days after receipt of the written determination together with all documentation required to support the request.
(2) 
Any written determination from the city manager applying the provisions of this chapter regarding liability for payment of construction excise taxes may be appealed to the council by filing a notice of appeal with the City Manager’s Office within 10 days of receiving the city manager’s written determination. The City shall determine a date and time for the city council to hear said appeal. Action by the city council on appeals shall be decided by a majority of the members of the council present at the meeting where such an appeal is considered.
(3) 
The filing of any appeal shall not stay the effectiveness of the written determination unless the council so directs.
(Ord. 6065 § 1 (Exh. A), 2025)
The construction excise tax and any assessed interest and penalties due and owed under this chapter constitute a debt owed to the City by the person liable for the tax as set forth in AMC § 3.09.030.
(Ord. 6065 § 1 (Exh. A), 2025)