In 1999, the City Council investigated tools to fund street infrastructure necessary to support future development. The Council studied a variety of tools through which new streets and street improvements could be financed. A Citizens Advisory Committee (CAC) on Establishing an Excise Tax was created to make recommendations on a specific form of excise tax (referred to as a “License Surcharge”).
The Committee proposed a License Surcharge tax which led the City Council to endorse and place the issue before the voters in November of 2000. The measure passed and the City Council amended Chapter 5 of the City Code to adopt Article 18. New Construction License Surcharge. Collection of the License Surcharge began on January 1, 2001. The License Surcharge is charged to new construction activities in the eastern portion of the City as shown on the License Surcharge Map.
The License Surcharge is collected based on the amount of traffic the structure will generate during the PM peak hour when traffic is the heaviest. The number of traffic trips generated is then multiplied by a tax rate depending on the type of land use. For example, a new single family house would pay $1,414 at the time of building permit application, a 50,000 square foot office building would pay over $63,000 at the time of building permit application and a 75,000 square foot retail building would pay over $247,000 at the time of building permit application. The funds collected are deposited into the License Surcharge fund and can only be used for License Surcharge projects. The Street Improvement Oversight Committee performs the review of the License Surcharge program.
The License Surcharge program has been very successfully used to fund or leverage other sources of funding to complete twelve (12) projects since its inception. Since its inception, the License Surcharge program collected over $8.8 million; however, over the last 7 years, the amount collected has been significantly less than what was collected at the start of the program, accounting for approximately 10% of the total funds collected.
In 2012, the City Council established a moratorium on the License Surcharge to aggressively pursue the limited investment opportunities in the region and to create a competitive advantage. The result of the moratorium was 11 new projects were constructed.
One of the goals of the Independence for All Strategic Plan is to increase economic prosperity of the community through increasing population, household income, and the number of good-paying jobs. A moratorium on the License Surcharge would create competitive advantages within the region to help meet that goal. The long term benefits of this action will not undermine the current or future roadway system in the community.