LEBANON — The Lebanon Community School District will convene a committee to explore the possibility of collecting a construction excise tax to raise money for capital projects.
Board members voted 4-0 on Thursday, with Mike Martin absent, to form a committee of two board members, two district officials including Business Director Linda Darling, two representatives from City Hall and three Lebanon residents to study the issue and provide a recommendation to the school district. The timeline for that recommendation is to be about six months out.
Construction excise taxes became part of Oregon law in 2007. They allow school districts to enter into intergovernmental agreements with taxing entities — both Linn County and the city of Lebanon, in Lebanon's case — to collect a tax on certain new developments or on additional square footage added to certain developments.
The current maximum that can be collected is $1.26 per square foot for residential construction and 63 cents per square foot for nonresidential construction (capped at $31,400). Private schools, public buildings, hospitals, low-income housing, churches, senior care facilities and agricultural buildings are exempt.
Money raised through the taxes can be used only for capital projects such as purchasing land, constructing a building or buying furnishings and other tangible property. It can't be used for salaries or building maintenance.
In the mid-valley, Albany, Corvallis and Monroe school districts all collect construction excise taxes. Lebanon board member Russ McUne said hearing about Albany's use of the tax prompted him to bring up the question.
Darling told board members she estimates the district could raise about $250,000 a year. The money can grow from year to year and does not have to be spent at any particular time.
Members of the Lebanon City Council discussed the potential for the school district to move forward with the tax at Wednesday's meeting of the council and had several concerns, City Manager Gary Marks told the Lebanon board.
Lebanon doesn't have a lot of buildable residential land right now, Marks said. Last year, which he called a good year, saw 50 new homes built. The city doesn't track development by square footage, he said, but assuming each was 1,400 square feet, the school district would gather about $88,000, which he noted doesn't jibe with the figure Darling gave.
"I don't see that, at least in the short term," he said.
Councilors also are concerned a new tax could hurt economic vitality, possibly even future school bond requests. They also didn't like the idea that city employees, as the tax collectors, would feel the brunt of taxpayers' wrath.
However, Marks said, the city values the school district's role in the community and welcomes a continued dialogue "that addresses the best interests of our community."
Board members said even small amounts could go a long way in making school improvements and said better buildings helps the city as a whole. They agreed studying the subject could bring more clarity.