Chapter 4.46

BUILDING AND STRUCTURE CONSTRUCTION TAX

Sections:

• 4.46.010 Chapter title and purpose. 4.46.020 Definitions.

• 4.46.030 Exemptions.

• 4.46.031 Additional exemption - Construction by hospitals on hospital property.

• 4.46.032 Additional exemption - Housing constructed with government assistance.

• 4.46.033 Exemption - Construction in certain redevelopment project areas.

• 4.46.034 Exemption - Construction in the Julian-Stockton redevelopment project area.

• 4.46.035 Exemption - Construction designed or intended to be used solely for religious worship or religiously owned schools.

• 4.46.036 Suspension - Qualified residential high rise project.

• Downtown commercial or industrial construction.

• 4.46.037 Additional exemption - Construction in the downtown central incentive zone.

• 4.46.038 Additional exemption - Construction in the enterprise zone.

• 4.46.039 Additional suspension - The Edenvale Silicon Valley South Industrial Incentive Zone.

• 4.46.039.4 Suspension - Small businesses.

• 4.46.039.5 Suspension - Very low income households.

• 4.46.039.7 Suspension - Solar building service equipment.

• 4.46.039.8 Suspension - Special incentive industrial use tenant improvements.

• 4.46.039.9 Suspension - Office use tenant improvements in the downtown core.

• 4.46.039.10 Partial suspension - Tenant improvement and equipment installations.

• 4.46.039.11 Additional suspension - Downtown commercial high rise.

• 4.46.039.12 Partial suspension of tax - Data centers.

• 4.46.039.13 Suspension - Qualified multifamily housing incentive program project.

• 4.46.040 Imposition - Tax not exclusive.

• 4.46.050 Rate of tax.

• 4.46.060 Place of payment.

• 4.46.070 Time of payment - Refunds.

• 4.46.080 Refunds and procedures.

• 4.46.085 Refund - Historic structures.

• 4.46.090 Disposition and expenditure of funds.

• A. This chapter may be cited as the "San José Building and Structure Construction Tax Ordinance."

• B. The tax imposed under this chapter is solely for the purpose of raising revenues. This chapter is not enacted for regulatory purposes.

• (Prior code § 16200.)

Except where the context otherwise requires, the definitions given in the Uniform Building Code, 1973 Edition, (or subsequent edition thereof) as

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and to the extent said Uniform Building Code, 1973 Edition or subsequent edition thereof is approved and adopted by, incorporated in by reference, and made a part of Chapter 17.04 of this Code, shall govern the construction of this chapter. Whenever reference is made in this chapter to Chapter 17.04 of this Code, it shall mean said Chapter 17.04 as the same may be amended from time to time. (Prior code § 16201.)

The tax imposed under this chapter shall not apply to the following:

• A. The City of San José, the United States or any agency or instrumentality thereof, the state of California, or any county, city and county, district or any political subdivision of the state, or any other governmental agency;

• B. Nothing in this chapter shall be construed as imposing a tax upon any person when imposition of such tax upon that person would be in violation of the Constitution of the United States or that of the state;

• C. Reconstruction or repair of a building or structure, or portion thereof, which was damaged or destroyed by earthquake, fire, flood, or other cause over which the owner had no control (provided that compliance with any building code or other ordinance requirement of the city or of any other applicable law shall not be deemed a cause over which the owner has no control), but only if:

  1. Such reconstruction or repair is done pursuant to a building permit issued within one year after such damage or destruction; and

  2. The number of square feet in the building or structure is not increased. If the number of square feet in the building or structure is increased, then the tax imposed under this chapter shall apply to the

valuation determined and used by the building official under the provisions of Chapter 17.04 of this Code in computing the building permit fee attributable to such increased floor area;

• D. Rehabilitation of substandard housing in the city under a special federal, state or local public agency grant or loan program for the rehabilitation of such substandard housing but only to the extent of such grant or loan;

• E. Construction of any building or structure for which application for a building permit was made prior to August 1, 1976, and solely by reason of administrative error no building permit was issued prior to August 1, 1976. Requests for exemption under this subsection shall be made to the city council whose determination shall be final and conclusive;

• F. Construction of a building or structure, or portion thereof if it or the site on which it is or will be situated is designated as a landmark pursuant to Chapter 13.48 of this Code and if such construction is done pursuant to a historic preservation permit (HP permit) issued pursuant to said Chapter 13.48 of this Code.

(Prior code § 16206; Ords. 18626, 18369, 18241.)

The tax imposed under this chapter shall not apply to the construction of buildings or structures to be used exclusively for hospital purposes and which buildings or structures meet the requirements for property tax exemption set forth in Section 4(b) and Section 5 of the California Constitution and Section 214 of the California Revenue and Taxation Code. The term "hospital," as used herein, shall mean only a hospital which is qualified to use

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the title "hospital" without restriction or qualification in accordance with Section 1256 of the California Health and Safety Code. (Ord. 19485.)

The tax imposed under this chapter shall not apply to the construction of dwelling units financed or assisted by the federal government pursuant to any of the following:

• A. Section 202 of Public Law 86-372, as amended (12 U.S.C. 1701(q)) (Housing Act of 1959);

• B. Public Law 75-412, (U.S. Housing Act of 1937) and Public Laws 93-383 and 95128 (Housing and Community Development Acts of 1974 and 1977);

• C. Section 8 of Public Law 73-479 (U.S. Housing Act of 1937) as added by Public Laws 93-383 and 95-128 (Housing and Community Development Acts of 1974 and 1977);

• D. Section 236 of Public Law 90-448 (12 U.S.C. 1715(z)), as amended.

• (Ord. 19485.)

• A. The tax imposed under this chapter shall not apply to construction of any building or structure or portion thereof (hereinafter collectively referred to in this section as "improvement") on a site in the Park Center Redevelopment Project Area, the San Antonio Plaza Redevelopment Project Area, or the Pueblo Uno Redevelopment Project Area, provided such construction is done subject to and in accordance with the redevelopment plan for the project area in which the site of such construction is situate and that such construction is part of the initial development of the site under such redevelopment plan, and provided further that the exemption provided by this

section shall not apply to any subsequent construction on the site nor to any enlargement, alteration, repair, reconstruction, remodeling, or conversion of any such improvement.

• B. This exemption shall remain in effect in each redevelopment project area set forth in subsection A. only until termination of that project's redevelopment plan and shall have no force or effect thereafter.

(Prior code §§ 16206.4, 20020, 23650.)

Until January 1, 1976 (or sooner by ordinance of the city council), the tax imposed under this chapter shall be suspended and shall not be collected with respect to construction occurring during the period of suspension of any building or structure or portion thereof (hereinafter collectively referred to in this section as "improvement") on a site in the Julian-Stockton redevelopment project area, provided such construction is done subject to and in accordance with the redevelopment plan for said project area and that such construction is part of the initial development of the site under such redevelopment plan, and provided further that the suspension of tax provided by this section shall not apply to any subsequent construction on the site nor to any enlargement, alteration, repair, reconstruction, remodeling, or conversion of any such improvement, regardless of when the activity occurs.

(Ord. 20434.)

The tax imposed under this chapter shall be suspended and shall not be collected with respect to construction occurring during the period of suspension of any building or structure situate on property which is or which will be upon completion of the construction eligible for real property tax exemption by virtue of its exclusive use for religious

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worship, or exclusive use for school purposes of less than collegiate grade and owned and operated by religious foundations or corporations, which property, foundations or corporations meet all of the requirements of Sections 214 and 214.5 of the California Revenue and Taxation Code, and related sections. The phrase "used exclusively for religious worship" shall have the same meaning as that phrase is used in exempting real property pursuant to Section 3(f) of Article 13 of the California Constitution and Section 5 of said article. (Ord. 20471.)

• A. The suspension of the tax imposed under this Chapter, to the extent not already suspended, shall be suspended during the period set out below, and the tax shall not be collected with respect to construction of residential uses within a Qualified Residential High Rise Project as provided in this Section. For a Qualified Residential High Rise Project that includes both residential uses and non-residential uses, the tax suspension shall only apply to the residential uses therein.

• B. The collection of fifty percent (50%) of the tax imposed under this Chapter, to the extent not already suspended, shall be suspended during the periods set out below, and the tax shall not be collected with respect to construction of residential units within a Qualified Residential High Rise Project as provided in this Section. For a Qualified Residential High Rise Project that includes both residential uses and non-residential uses the tax suspension shall only apply to the residential uses therein.

• C. "Qualified Residential High Rise Project" means any new residential structure located in the Downtown Planned Growth Area, as designated in the San José 2040 General Plan, where the highest occupied floor has a floor level elevation that is at least one hundred fifty (150) feet above street level and the develop-

ment has ten (10) or more floors or stories in height not including any non-residential uses.

• D. The suspension will apply to residential uses located within a Qualified Residential High Rise Project of up to two thousand (2,000) units that obtain a building permit by June 30 2029, and pass first inspection within twelve (12) months of obtain a building permit; the fifty percent (50%) reduction will apply to residential uses located within a Qualified Residential High Rise Project of up to an additional two thousand (2,000) units that obtain a building permit between July 1, 2029, and June 30, 2031 and pass first inspection within twelve (12) months of obtaining the building permit; the fifty percent (50%) reduction will apply to residential uses located within a Qualified Residential High Rise Project of up to an additional six thousand (6,000) units that obtain a building permit thereafter and pass first inspection within twelve (12) months of obtaining the building permit, provided that the Qualified Residential High Rise Project meets each of the following:

  1. The developer of the Qualified Residential High Rise Project shall retain contractors licensed by the State of California for the construction of the Qualified Residential High Rise Project; and

  2. The developer of the Qualified Residential High Rise Project shall employ only construction workers who possess necessary licenses and certifications required by the State of California; and

3. The developer of the Qualified Residential High Rise Project enters into a Project Completion Agreement with the City in a form approved by the City Attorney that sets forth the requirements of this Section related to either the suspension or the reduction of fifty percent (50%) of the amount of the tax specified in this Chapter and payment of the unsuspended portion of the tax, if applicable. Any applicable tax will be due at City's issuance of the Certificate of Occupancy.

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• E. If a Qualified Residential High Rise Project that was eligible for either the suspension or reduction as provided for in this Section has not met the applicable deadlines as set out in subsection D above, then the full amount of the tax shall be paid to the Building Official prior to the issuance of a certificate of occupancy, including a temporary certificate of occupancy.

• F. The City Manager is authorized to execute on behalf of the City Project Completion Agreements with developers of Qualified Residential High Rise Projects that are consistent with the requirements of this Section.

Any person who enters into a Project Completion Agreement for the tax suspension pursuant to subsection D.3 of this Section is encouraged to make good faith efforts to:

1. Comply with the State of California's apprenticeship program requirement that at least sixteen and seven tenth's percent (16.7%) of the hours worked on the Qualified Residential High Rise Project must be worked by registered apprentices from approved apprenticeship training programs;

2. Ensure that twenty-five percent (25%) of the registered apprentices working on the Qualified Residential High Rise Project have a barrier to employment such as being homeless, a veteran or an at-risk youth; and

3. Post or cause the posting of bids for subcontracting work on the Qualified Residential High Rise Project on websites such as the Bay Area Builders Exchange for subcontractors to be able to access work for workers in the nine (9) Bay Area counties.

(Ord. 31106.)

Editor’s note— Ord. No. 31106, § 1, adopted Aug. 13, 2024, amended § 4.46.036 in its entirety, in effect repealing and reenacting said § 4.46.036 to read as set out herein. The former § 4.46.036 pertained to

suspension - downtown high rise residential construction and derived from Ords. 20555, 29147, 29212, 29847, 30334, 30846.

• A. The collection of fifty percent of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to construction of a downtown commercial or industrial structure as provided in this section.

• B. A "downtown commercial or industrial structure" means any new structure located in the downtown planned growth area as designated in the San José 2040 General Plan to be used for: 1) industrial purposes; or 2) commercial purposes, as these terms are defined in this chapter.

• C. The suspension shall apply to a downtown commercial or industrial structure for which a building permit has been issued in the downtown planned growth area from May 15, 2012 through and including December 31, 2014, provided that the downtown commercial or industrial structure project meets each of the following:

  1. A completed application for a development permit has been filed with the director of planning, building and code enforcement on or before October 31, 2013. A development permit for purposes of this section shall be as defined in Title 20 of the San José Municipal Code; and

  2. A building permit for the construction of the downtown commercial or industrial structure has been issued on or before December 31, 2014.

• D. In the event that a downtown commercial or industrial structure that was eligible for the suspension provided for in this section has not received a certificate of occupancy, including a temporary certificate of occupancy, on or before August 31, 2016, then the full amount of the tax shall be paid to the building official

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prior to the issuance of a certificate of occupancy, including a temporary certificate of occupancy.

• E. The suspension set forth in Subsection A. shall be effective until December 31, 2014.

• (Ord. 29280.)

• A. The collection of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to the new construction of any multifamily housing project within the central incentive zone.

• B. In the event the construction is construction of a building or buildings designed or intended to be used for any other use in addition to multifamily housing use, the suspension of the collection of the tax shall apply only to that portion of the construction which constitutes a multifamily housing project. The portion of the construction which constitutes a multifamily housing project shall be determined by the building official of the city.

• C. For the purposes of this section, the following words and phrases shall have the following meanings:

  1. "Central incentive zone" means that area so designated on that certain map dated October 13, 1981, entitled "Central Incentive Zone Map," on file with the clerk of the City of San José. Said map is incorporated in this section by this reference.

  2. "Multifamily housing project" means:

     • a. A residential project containing more than four dwelling units; and

     • b. Single-room occupancy housing.

  3. "New construction" means construction for which a building permit is issued on or after September 15, 1989.

  4. "Project" means one or more buildings containing similarly constructed units, the site(s) on which the building(s) is located,

and any functionally related facilities. Multiple buildings will constitute a project only if they are bound together as a result of proximate location, common ownership, and common financing.

5. "Single-room occupancy housing" means a structure consisting of more than four units where such units are designed and constructed as the primary residence of individual persons capable of independent living and where such units do not contain food preparation and/or sanitary facilities. Single-room occupancy housing does not include single-family residential structures, guesthouses, residential care facilities, residential service facilities, extended care facilities, emergency residential shelters, fraternity or sorority houses, or hotels intended primarily for transient use.

• D. The suspension of the collection of the tax provided in this section shall apply to construction of single-room occupancy housing only if:

  1. Such construction is for the purpose of replacing single-room occupancy housing which existed in the central incentive zone on June 20, 1989, but was lost because of:

     • a. Redevelopment; or

     • b. Change of use; or

     • c. Fire which was beyond the control of the owner; and

  2. Such construction is located in an area which the city council has, by resolution, determined is appropriate for single-room occupancy housing.

• E. The suspension of the collection of taxes provided by this section shall remain in effect until December 31, 2001, unless further action is taken by ordinance of the city council prior to that date.

(Ords. 20774, 22427, 23234.1, 24148.)

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• A. The collection of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to the construction of any building or structure, or portion thereof, within that area designated as the "Expanded Enterprise Zone Target Areas" on that certain map entitled "Expanded Enterprise Zone Target Areas," on file with the clerk of the City of San José, which map is incorporated herein by reference. Except as provided in Subsection C, this section shall be effective until April 1, 2001. This exemption shall not apply to residential buildings or structures of four dwelling units or less.

• B. The suspension of the collection of taxes, as provided in subsection A., shall not apply to any parcel of land or structure within the expanded enterprise zone target areas in which a member of the San José city council, serving in that capacity, has a financial interest on June 22, 1993.

• C. Notwithstanding Subsection A above, the collection of the tax imposed by this chapter shall continue to be suspended with respect to the construction of any building or structure, or portion thereof, within the expanded enterprise zone target areas when the construction is done subject to, and in accordance with, a valid, binding and effective agreement with the redevelopment agency, and such agreement meets all of the following requirements:

  1. The agreement is in the form of a development and disposition agreement; an owner participation agreement; or a lease with a term of greater than five years pursuant to which the lessee is required to make substantial improvements to the leased property;

  2. The agreement was entered into prior to January 30, 2001; and

  3. The owner or developer is not in default of any provision of the agreement.

• D. The extension of the suspension of the collection of taxes as provided in Subsection C shall not apply to any construction of tenant improvements undertaken subsequent to the issuance of the initial certificate of occupancy for the building or structure subject to the agreement with the redevelopment agency.

• E. The extension of the suspension of the collection of taxes as provided in Subsection C shall not apply to any parcel of land or structure within the expanded enterprise zone target areas in which a member of the San José city council, serving in that capacity, has a financial interest on December 12, 2000.

(Ords. 22443, 24148, 24417, 26253.)

• A. The collection of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to the construction of any building or structure, or portion thereof, to be utilized for industrial purposes or commercial purposes which serve primarily industrial uses within that area designated as the "Edenvale Silicon Valley South Industrial Incentive Zone" on that certain map entitled "Edenvale Silicon Valley South Industrial Incentive Zone," dated May 8, 1990, on file in the office of the city clerk of the City of San José, which map is incorporated herein by reference.

• B. The suspension of the collection of taxes as hereinabove provided shall not be deemed to require the refund of any such taxes paid to the City of San José prior to June 21, 1990.

• C. For purposes of this section, the term "industrial purposes" shall have the same definition as set forth in Section 4.46.050.B.3. of this Code.

• D. For purposes of this section, the term "commercial purposes which serve primarily industrial uses" means uses which are enumerated in

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Table 20-110 of Section 20.50.100 of this Code, and which are located on property which was zoned for commercial uses as of June 21, 1990.

• E. This section shall be effective until January 1, 2000.

• (Ords. 23467, 24263, 25013.)

• A. The collection of fifty percent (50%) of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to construction of small business improvements.

• B. Small business improvements means any improvement of 3,000 square feet or less, either as new construction or as tenant improvement, intended to be used by a business entity having 35 or fewer total employees.

• C. In cases where the total square footage of small business improvement exceeds 3,000, the tax suspension allowed under this section shall be applicable to the first 3,000 square feet of improvements.

• D. This section shall be effective until November 30, 2007.

(Ords. 27265, 27753.)

Editor’s note— It should be noted that section 4 of Ord. 27753 provides, "For building permits which are issued between May 16, 2006, and the effective date of this Ordinance, and which otherwise qualify for the suspension created under the provisions of Sections 1, 2, and 3 of this Ordinance, the provisions of Section 4.46.070, 4.47.050, and 4.54.070 as to when the tax shall be due and payable shall be suspended."

• A. To the extent not already suspended, the collection of the tax imposed pursuant to this chapter shall be suspended and not collected with respect to the construction of any building subject to affordability restrictions which

require that the building or a portion thereof be utilized for housing by households which qualify as very low income.

• B. The suspension of the collection of taxes as hereinabove provided shall not be deemed to require the refund of any such taxes paid to the City of San José prior to the effective date of this ordinance. The suspension of taxes hereunder shall terminate on June 30, 2011.

• C. Definitions.

  1. "Very low income households" means persons and families whose incomes do not exceed the qualifying limits for very low income households as established and as it may be amended from time to time pursuant to California Health and Safety Code Section 50105. In the event such standards are discontinued, the council shall, by resolution, establish income limits for very low income households for the city.

2. "Affordability restrictions" means covenants, conditions and restrictions running with the land and recorded with the Santa Clara County Recorder's Office in connection with a building used for housing to be utilized by very low income households within the City of San José. The affordability restrictions shall require that a building used for housing, in part or in whole, be utilized by very low income households for a minimum period of thirty (30) years, or as may be otherwise required by federal or state law.

(Ords. 23855, 24068, 25045, 26399, 27723.)

• A. The tax as imposed under this chapter shall be collected with respect to the construction of any structure within the area designated as the Evergreen Specific Plan Fire and Housing Incentive Zone until the city council has received and, by resolution, accepted an irrevocable

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• commitment of private funding for the full construction of a fire station within the Evergreen Specific Plan Area. Thereafter, the provisions of Section 4.46.039.6.B. and C. shall apply.

• B. After the date of resolution of acceptance, the collection of the tax imposed under this chapter, to the extent not already suspended by other provisions, shall be suspended and the tax shall not be collected with respect to the construction of dwelling unit or units within that area designated as the "Evergreen Specific Plan Fire and Housing Incentive Zone" on that certain map entitled "Evergreen Specific Plan Fire and Housing Incentive Zone," dated October 27, 1992, on file in the office of the city clerk of the City of San José, which map is incorporated herein by reference.

• C. All taxes imposed under this chapter with respect to the construction of any dwelling unit or units within the Evergreen Specific Plan Fire and Housing Incentive Zone which have been collected from October 27, 1992, to the date of commitment shall thereafter be refunded to the person who has paid the tax. Any refund shall, at the discretion of the director of finance, be in the form of a credit against any assessment or other obligation of the person paying the tax, or a cash refund.

• D. The suspension of the collection of taxes as hereinabove provided shall not be deemed to require the refund of any such taxes paid to the City of San José prior to October 27, 1992.

• E. This section shall be effective until January 1, 2003.

• (Ord. 24213.)

• A. The collection of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to the construction or installation of any solar building service equipment.

• B. For purposes of this section "solar building service equipment" means any plumbing, mechanical or electrical equipment, including but not limited to solar water heaters and photovoltaic equipment, which generates heat or electricity from solar radiation.

• C. For building permits that are issued for a scope of work beyond the installation of above systems, the suspension provided for in subsection A. shall only apply to the valuation of construction calculated with respect to that portion of the project which constitutes the solar building service equipment.

• D. This section shall be effective until December 31, 2006.

• (Ord. 26465.)

industrial use tenant improvements.

• A. The collection of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to the construction or installation of any special incentive industrial use tenant improvements.

• B. For purposes of this section "special incentive industrial use tenant improvements" means the interior improvements created for the purpose of industrial or research and development uses located in a vacant building or vacant portion of a vacant building.

• C. For purposes of this section "building" means a building for which a building permit was issued prior to April 1, 2002.

• D. For purposes of this section "vacant" means that portion of a building which is unoccupied at the time that the application for the permit for the improvements is made.

• E. This section shall be effective until April 30, 2008.

• (Ords. 26614, 27008, 27437, 27894.)

Editor’s note— It should be noted that section 2 of Ord. 27894 provides, "Section 4.46.039.9 shall be effective retroactive to November 1, 2006 for taxes that were due to the City during the period between

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November 1, 2006 and the effective date of this Ordinance. Any taxes paid for building permits which are issued between November 1, 2006 and the effective date of this Ordinance which would have otherwise qualified for suspension under Section 4.46.039.9 as amended by this Ordinance, shall be eligible for a refund if the person or entity which paid the taxes applies for a refund after the effective date of this Ordinance but not later than January 31, 2007."

improvements in the downtown core.

• A. The collection of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to the construction or installation of any office use tenant improvements in the Downtown Core.

• B. For purposes of this section "office use tenant improvements" means the interior improvements created for the purpose of office uses located in a vacant building or vacant portion of a vacant building.

• C. For purposes of this section "building" means a building for which a building permit was issued prior to April 1, 2002.

• D. For purposes of this section "vacant" means that portion of a building which is unoccupied at the time that the application for the permit for the improvements is made.

• E. For purposes of this section "Downtown Core" means that area as defined in the City's General Plan, and which is depicted on that certain map entitled "Downtown Core" dated October 28, 2003, on file in the office of the city clerk which map is incorporated herein by reference.

• F. This section shall be effective until April 30, 2008.

(Ords. 27008, 27438, 27895.)

Editor’s note— It should be noted that section 2 of Ord. 27895 provides, "Section 4.46.039.9 shall be effective retroactive to November 1, 2006 for taxes that were due to the City during the period between

November 1, 2006 and the effective date of this Ordinance. Any taxes paid for building permits which are issued between November 1, 2006 and the effective date of this Ordinance which would have otherwise qualified for suspension under Section 4.46.039.9 as amended by this Ordinance, shall be eligible for a refund if the person or entity which paid the taxes applies for a refund after the effective date of this Ordinance but not later than January 31, 2007."

• A. The collection of the tax imposed under this chapter to the extent not already suspended shall, with respect to construction of tenant improvement and equipment installations, be reduced to the same rate as charged to structures used for industrial purposes under Section 4.46.050A.3 of this Code.

• B. Tenant improvement and equipment installations means:

  1. Tenant improvements to office, research and development uses, as defined in Section 20.200.818 of this Code;

  2. Tenant improvements to data centers uses, as defined in Section 20.200.265 of this Code;

  3. Installation of solar photovoltaic systems, as defined in Section 20.200.1165 of this Code.

• C. This section shall be effective retroactively from April 1, 2017 until March 31, 2019.

• (Ords. 29032, 29374, 29897.)

• A. The collection of one hundred percent of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and the tax shall not be collected with respect to construction of one downtown commercial high rise structure as provided in this section.

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• B. A "downtown commercial high rise structure" means a new structure that is one hundred fifty feet or higher located in the downtown planned growth area as designated in the San José 2040 General Plan to be used for commercial purposes, as defined in this chapter.

• C. The suspension shall apply to the first downtown commercial high rise structure for which a building permit has been issued in the downtown planned growth area from January 1, 2015 through and including May 31, 2017, provided that the downtown commercial high rise structure meets each of the following:

  1. A completed application for a development permit has been filed with the director of planning, building and code enforcement on or before December 31, 2016. A development permit for purposes of this section shall be as defined in Title 20 of the San José Municipal Code; and

  2. A building permit for the construction of the downtown commercial high rise structure has been issued on or before May 31, 2017.

  3. All building permits for the construction of the downtown commercial high rise structure have been issued on or before December 31, 2018.

• D. In the event that the downtown commercial or industrial structure that was eligible for the suspension provided for in this section has not been issued all building permits issued on or before December 31, 2018, then one percent of one hundred percent of the valuation determined and used by the building official of the building or structure, or portion thereof of the tax shall be paid to the building official prior to the issuance of building permits issued after December 31, 2018 so long as the use of the commercial high rise qualifies as an office, research and development use, as defined in Section 20.200.818 of this Code. All building permits issued after December 31, 2018 for the commercial high rise structure that do not

meet the definition of used as an office, research and development use, as defined in Section 20.200.818 of this Code shall pay the full amount of the tax.

• E. The suspension set forth in Subsection A shall be effective until December 31, 2019.

• (Ords. 29798, 29822.)

• A. The collection of the tax imposed under this chapter to the extent not already suspended shall, with respect to construction of data centers, be reduced to the same rate as charged to structures used for industrial purposes under Section 4.46.050A.3 of this Code.

• B. For purposes of this section, "data centers" means data centers as defined in Section 20.200.265 of this Code.

• C. This section shall be effective from April 1, 2019 until March 31, 2024.

• (Ord. 29897.)

• A. The collection of the tax imposed under this Chapter, to the extent not already suspended, shall be suspended as follows:

  1. The collection of fifty percent (50%) of the tax imposed under this Chapter, to the extent not already suspended, shall be suspended during the periods set out below, and the tax shall not be collected with respect to construction of the first 1,800 residential units within a Qualified Multifamily Housing Incentive Program Project as provided in this Section, that also obtain a City building permit by December 31, 2025.

  2. Beginning January 1, 2026, the collection of twenty-five percent (25%) of the tax imposed under this Chapter, to the extent not already suspended, shall be suspended during the periods set out below, and the tax shall not be collected with

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  - respect to construction of up to 8,539 additional residential units within a Qualified Multifamily Housing Incentive Program Project as provided in this Section. 

3. For a Qualified Multifamily Housing Incentive Program Project that includes both residential uses and non-residential uses the tax suspensions above shall only apply to the residential uses therein.

• B. "Qualified Multifamily Housing Incentive Program Project" means the projects eligible for the temporary Multifamily Housing Incentive Program identified in Resolution No. RES2024-420, adopted by the City Council on December 10, 2024.

• C. Qualified Multifamily Housing Incentive Program Projects shall remain eligible until the expiration of the planning permit, including any extensions.

• D. Eligible projects may be modified and remain eligible for the Qualified Multifamily Housing Incentive Program under certain conditions. A project must submit an application for modification of the project to the City by December 31, 2025. To remain eligible, the modification must result in the project maintaining a density of at least 50 DU/AC. The modified project must obtain a building permit 12 months after planning approval of the modified project and pass a first inspection six months after building permit issuance to remain eligible for the Qualified Multifamily Housing Incentive Program.

• E. If a Qualified Multifamily Housing Incentive Program Project that was eligible for the reduction as provided for in this Section has not met the applicable deadlines as set out in this Section, then the full amount of the tax shall be paid to the Building Official prior to the issuance of a certificate of occupancy, including a temporary certificate of occupancy.

• F. The City Manager is authorized to execute on behalf of the City Project Completion Agreements with developers of Qualified Multifam-

ily Housing Incentive Program Project that are consistent with the requirements of this Section.

Any person who enters into a Project Completion Agreement for the tax suspension pursuant to this Section is encouraged to make good faith efforts to:

1. Comply with the State of California's apprenticeship program requirement that at least sixteen and seven tenth's percent (16.7%) of the hours worked on the Qualified Multifamily Housing Incentive Program Project must be worked by registered apprentices from approved apprenticeship training programs;

   2. Ensure that twenty-five percent (25%) of the registered apprentices working on the Qualified Multifamily Housing Incentive Program Project have a barrier to employment such as being homeless, a veteran or an at-risk youth; and

   3. Post or cause the posting of bids for subcontracting work on the Qualified Multifamily Housing Incentive Program Project on websites such as the Bay Area Builders Exchange for subcontractors to be able to access work for workers in the nine (9) Bay Area counties.

• (Ords. 31160, 31201.)

• A. An excise tax, at the rate hereinafter set forth in this chapter is hereby imposed upon every person who constructs, erects, enlarges, alters, repairs, moves, improves, or converts (hereinafter collectively referred to as "constructs"), or causes to be constructed, any building or structure, or portion thereof, in the city, in which said person has an equity or title or other interest either as owner or lessee or otherwise, where such construction requires the issuance of a building permit under Chapter 17.04 of this Code.

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• B. The tax imposed under this chapter is in addition to the taxes imposed under Chapters 4.54 and 4.64 of this Code.

• (Ord. 16202.)

• A. The rate of tax imposed under this chapter shall be based on construction valuation derived from the most current building valuation data table published by the International Code Council (ICC), or its successor, at the time the rate is being updated (Building Valuation Data Table) and shall be calculated as follows:

  1. One and three-quarters percent of eightyeight percent of the valuation determined and used by the building official, if the building or structure, or portion thereof, is designed or intended to be used for residential purposes;

  2. One and one-half percent of one hundred percent of the valuation determined and used by the building official, if the building or structure, or portion thereof, is designed or intended to be used for commercial purposes.

  3. One percent of one hundred percent of the valuation determined and used by the building official, if the building or structure, or portion thereof, is designed or intended to be used for industrial purposes; and

  4. The rates imposed under Subsections 1, 2 and 3 above shall be imposed according to the following methodology:

     • a. The building official shall establish the residential, commercial and industrial valuation rates on or before the city fiscal year. Each rate will be effective until a new rate is set. The "average" rate shown in the sections for "residential - multiple and one and two family, Type VB Construction" of the building valuation data table shall be used in imposing the residential rate.

     • b. The valuation rate utilized will be derived from the building valuation data table.

     • c. The valuation rate will be rounded to the nearest fifty-cent increment.

     • d. The regional modifier will not be used in calculating the valuation rate.

     • e. The entire valuation will be utilized in calculating the taxes for each project.

     • f. For the construction of commercial or industrial shell buildings, eighty percent of the valuation established above or the construction bid cost, whichever is higher, shall be used.

     • g. For alteration, remodeling or repair of any residential, commercial or industrial construction projects, twenty percent of the valuation established above or the construction bid cost, whichever is higher, shall be used.

• B. For the purposes of Subsection A of this section:

  1. If the building or structure or portion thereof is designed or intended to be used for more than one purpose, the rate of tax shall be applied in accordance with the following rules:

     • a. In the case where a building permit is issued for improvements to construct a building shell only for an industrial use and no tenant improvements have been determined for uses within the building, the rate of tax for industrial use may be applied for the entire structure, subject to reassessment in accordance with Subsections b. and c. below.

     • b. For each portion of a building or structure for which a building permit for the first tenant improvements for that portion of the build-

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ing is issued, the rate of tax for the use designated for those tenant improvements shall be applied.

• c. In the case where the rate of tax for an industrial uses was paid at the time of issuance of the building shell and a building permit for first tenant improvements for a use other than an industrial use is being issued, then the rate of tax for the non-industrial use shall also include a reassessment of the rate of tax applicable to a portion of the assessment of the building shell which is proportional to the square footage of the tenant improvements for the non-industrial use to the total square footage of the building or structure.

• d. In the case where there are secondary non-industrial uses which directly support the industrial uses designated for a parcel (campus) containing more than one building and there is a single business which directly operates both uses in conjunction with each other, then such secondary non-industrial uses shall be assessed at the rate of tax for industrial uses.

2. All buildings or structures or portions thereof shall be deemed to be designated or intended to be used for residential, commercial or industrial purposes or for two or more of such purposes.

3. "Used for industrial purposes" means:

   • a. Used for one of the following purposes:

     • i. Laboratories, including bioscience laboratories, devoted exclusively to research, product development and testing, engineering development, and sales development.

     • ii. Manufacturing facilities.

   • iii. Photographic processing and developing.

   • iv. Miniwarehouses.

   • v. Production, preservation and preparation of food products for human consumption, excluding public dining.

   • vi. Trade and business schools.

   • vii. Repair, cleaning, and servicing of commercial or industrial equipment or products.

   • viii. Storage, warehousing and distribution establishments.

   • ix. Construction and corporation yards.

   • x. Repair and cleaning of vehicles, including boats, excluding gasoline service stations and repair shops, installation of tire, battery, brake, muffler and shock absorber, and wheel aligning.

   • xi. Nine and eighteen-hole golf courses.

• b. Used for a use for which the city council has approved a development agreement by ordinance because the city council determined, among other required findings, that the proposed development will make a substantial contribution to the economic development of the city, in that it will have as its primary use: research, experimental and engineering laboratories, wholesale sales, manufacturing, repair and servicing of industrial and commercial equipment, printing, or general business offices, consistent with Title 20 of this Code, or in the case of a development where there is no development agreement, the city council has determined a use to be an industrial use for the purposes of

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  - collection of the tax imposed by this chapter in a special ordinance adopted by the city council.

4. "Used for commercial purposes" means used for a use which, under said Title 20, is first permitted (with or without a conditional use permit) in the general commercial district (GC), as such order of restrictiveness is set forth in Section 20.10.060 of this Code, except those uses set forth in the following Subdivision 5. as being residential uses.

   5. "Used for residential purposes" means used for any of the following uses: Onefamily dwellings, two-family dwellings, multiple dwellings, boardinghouses, lodging houses, guesthouses, residential care facilities for six or fewer persons, family day care homes for six or fewer children, and automobile trailer parks, as said terms are used in Chapter 20.200.

• C. The suspension on the collection of taxes provided for in Subsection B.3.b. of this section shall be in effect for such period set forth in the ordinance granting the suspension.

(Prior code § 16203; Ords. 21254, 22630, 26895, 27132, 28601.)

Taxes imposed under this chapter shall be paid to the building official of the city at the office of the building department in the San José City Hall. (Prior code § 16205.)

The amount of tax imposed under this chapter for the construction of any building or structure, or portion thereof, shall be due and payable at the time a building permit is issued to construct the same, provided that there shall be a refund of the tax in the event the permit expires or is revoked before the building or structure or portion thereof is constructed, and provided that there shall be a refund of any tax paid by a person who is exempt from payment of the tax pursuant to this chapter. (Prior code § 16204; Ord. 18369.)

Whenever the amount of any tax, penalty or interest has been overpaid, paid more than once, or has been erroneously, or illegally collected or received by the city under this chapter, it may be refunded to the person who paid the tax provided that a written claim for refund is filed with the building official, and the provisions of Chapter 4.82 are satisfied.

(Prior code § 16204.1; Ords. 18824, 27787.)

• A. Within one year after the adoption of the resolution of the city council designating a building or structure as a historic landmark pursuant to Chapter 13.48 of Title 13 of this municipal code, the property owner shall be entitled to a refund of taxes paid with respect to the building or structure pursuant to this chapter if:

  1. The taxes would not have been due pursuant to Section 4.46.030.F. had the building or structure been designated as a landmark at the time the building permits were issued; and

  2. The building permits were issued no more than one year prior to the date that the building or structure was designated a landmark;

  3. The property owner applies for the refund within one year after the date of the adoption of the resolution designating the building or structure as a historic landmark.

• B. Any refund shall be processed pursuant to Section 4.46.080.

• (Ord. 25803.)

• A. All of the taxes collected under this chapter shall be expended for the acquisition of lands and interests in land for, and the construction, reconstruction, replacement, widening, modification and alteration (but not maintenance and repair) of existing and proposed city streets

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shown as arterials and major collectors on the Land Use/Transportation Diagram of the General Plan 1975, San José, California, dated December, 1975, as the same may be amended from time to time, including, but not by way of limitation, separation structures, bridges and culverts for such streets, and traffic-control and lighting systems therefor. As used above in this section, "maintenance and repair" means work done on existing streets to make the same useable and safe but which does not increase their capacity either as to volume of vehicular traffic or vehicular load above that for which they were theretofore designed.

• B. All taxes collected under this chapter shall be placed in the "building and structure construction tax fund" which is hereby established, and shall be used for the purposes and in the manner set forth in this section. The director of finance shall establish and keep such accounts as may be necessary to account for said taxes.

• (Prior code § 16207.)