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Construction Excise Tax

What is the Construction Excise Tax?

The Oregon Legislature passed a law (SB 1036), during the 2007 session,  that provides a financial tool to help school districts pay for a portion of the cost for new or improved facilities needed due to growth in the community.  The law authorizes a school district, in cooperation with cities and counties, to tax new residential and non-residential development. Specifically, the tax applies to improvements to real property that result in a new structure or additional square footage in an existing structure.

What does the tax pay for?

The excise tax revenue may be used for capital improvements such as acquiring property, construction of facilities, related architect and engineering expenses, and for additional fixtures, furnishings and equipment. The excise revenue would allow the district to purchase and prepare sites for future school facilities, and/or to help defray the cost of new school facilities.

Who pays the tax and when?

The tax is required to be paid by developers or property owners who develop property in the Oregon Trail School District.  Payment is due at the time when they wish to have a permit issued by the Clackamas County or the City of Sandy.  A permit will not be issued unless the tax is paid or unless an approved exemption is submitted on the Exemption Form.

Who is exempt from paying the tax?

The following are exempt from the Construction Excise Tax: (1) Private school improvements; (2) Publicimprovements as defined in ORS 279A.010; (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% 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 for residential house); (4) Public or private hospital improvements; (5) Improvements to religious facilities primarily used for worship or education associated with worship; (6) Agricultural building as defined by 455.315; (7) Improvements to real property that result in a new structure or additional square feet totaling 1,000 square feet or less.

How much is the tax?

The tax is $1 per square foot on residential construction and 50 cents per square foot on non-residential construction.  For non-residential construction only, the excise tax is limited to $25,000 per building permit or $25,000 per structure, whichever is less.

Is this a permanent tax?

Yes. The statute does allow periodic increase of the rate based upon a not-to-exceed index established by the Oregon Department of Revenue.

Who can I contact for more information?

If you have additional questions, you may contact the Oregon Trail School District’s Director of Business and Support Services, Tim Belanger, via e-mail at timothy.belanger@ortrail.k12.or.us or by phone: (503) 668-5541 ext. 4007.

Construction Excise Tax Exempt Form