Chapter 4.64

RESIDENTIAL CONSTRUCTION TAX

Sections:

• 4.64.010 Chapter title and purpose. 4.64.020 Definitions.

• 4.64.030 Exemptions.

• 4.64.031 Exemption - Construction in certain redevelopment project areas.

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

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

• 4.64.034 Additional exemption - Construction in the enterprise zone.

• 4.64.035 Suspension - Very low income households.

• 4.64.036 Additional exemption - The Evergreen Specific Plan Fire and Housing Incentive Zone.

• 4.64.040 Imposition of tax.

• 4.64.050 Tax rates - Schedule.

The county recorder shall administer this chapter in conformity with the provisions of Part 6.7 of Division 2 of the Revenue and Taxation Code and the provisions of any county ordinance adopted pursuant thereto. (Prior code § 15000.8.)

• 4.64.060 Time of payment.

• 4.64.070 Place of payment.

• 4.64.080 Refunds and procedures.

• 4.64.090 Use of tax revenue - Residential construction tax contribution fund.

• 4.64.100 Use of tax revenue - Residential construction tax contribution fund.

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

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

• (Prior code § 16100.)

Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter.

• A. "Building" means any structure having a roof constructed for the support, shelter or enclosure of persons, animals, chattels or property of any kind. A mobilehome shall not be deemed a building.

• B. "Construct" means the putting together, assembling, erecting or altering of construction materials, components or modules into a structure, or portion of a structure, and includes the improvement of land as a mobilehome lot.

• C. "Dwelling unit" means a building, or portion of a building, planned or designed for use as a residence for one family only, living independently of other families or persons, and having its own bathroom and housekeeping facilities included in said unit (e.g., a one-family dwelling, each dwelling unit in a two-family dwelling, and each dwelling in a multiple dwelling).

• D. "Family" means:

  1. One person living alone;

  2. Two or more persons living together, all of whom are related to one another by blood, marriage or adoption; provided that any person related by blood or adoption to one spouse shall be deemed related to all other persons related to such spouse by blood or adoption and shall also be deemed related to the

other spouse and to all other persons related to such other spouse by blood or adoption; or

3. If they do not come under the provisions of subdivision 2 above, a group of not more than five persons living together.

• E. "Floor area" means the area of the several floors of a building included within the surrounding exterior walls of a building, or portion thereof, exclusive of vent shafts and courts. The floor area of a building, or portion thereof, not provided with surrounding exterior walls shall be the usable area under the horizontal projection of the roof or floor above.

• F. "Mobilehome" means a vehicle designed and equipped for human habitation, including but not limited to travel trailers, camp cars, recreational vehicles, tent trailers, motor homes, etc.

• G. "Mobilehome lot" means any area or portion of a mobilehome park designated, designed, or used for the occupancy of one mobilehome on a temporary, semipermanent, or permanent basis.

• H. "Mobilehome park" means any area or tract of land where one or more mobilehome lots are rented or leased or held out for rent or lease to accommodate mobilehomes used for human habitation.

• I. "Multiple dwelling" means a building, or any part thereof, which is planned or designed for use for three or more dwelling units.

• J. "One-family dwelling" means a detached building which is planned or designed exclusively for use as one dwelling unit.

• K. "Person" means any domestic or foreign corporation, firm, association, syndicate, joint stock company, partnership of any kind, joint venture, Massachusetts business or common law trust, society or individual.

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• L. "Structure" means anything constructed which is supported directly or indirectly on the ground (at, above or below the surface of the ground).

• M. "Two-family dwelling" means a building, or any part thereof, which is planned or designed for use for two dwelling units.

• (Prior code §§ 16101, 16101.1 - 16101.13.)

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

• A. The city, 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 of California;

• C. Construction of off-street parking facilities planned or designed for use solely in conjunction with and for the benefit of dwelling units or mobilehome lots;

• D. The following floor areas to the extent that they are planned or designed for use in conjunction with and for the benefit of any dwelling units or mobilehome lots; hallways; laundry rooms; storage areas; areas for heating, cooling, ventilating, maintenance and utility services equipment; restroom and shower room areas; patios; areas for recreation and recreation facilities;

• E. Enlargement, remodeling and/or alteration of a one-family dwelling, dwelling unit or units, but only if the number of dwelling units there is not increased. If the number of dwelling units in the building is increased, then the tax imposed under this chapter shall apply to such increased number of dwelling units;

• F. Reconstruction of a one-family dwelling, dwelling unit or units 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 any other applicable law shall not be deemed a cause over which the owner has no control), but only if the number of dwelling units is not increased. If the number of dwelling units is increased, then the tax imposed under this chapter shall apply to such increased number of dwelling units.

• (Prior code § 16106.)

• A. The tax imposed under this chapter shall not apply to construction of any one-family dwelling, dwelling unit or units, or any mobilehome lot (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 a 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 § 16106.1; Ords. 20020, 23650.)

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Until January 1, 1986 (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 one-family dwelling, dwelling unit or units, or any mobilehome lot (hereinafter collectively referred to in this section as "improvement") on a site in the JulianStockton 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 a 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.)

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

• B. 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. For multifamily housing projects other than single-room occupancy housing, "dwelling unit" shall have the meaning

set out in Section 4.54.020.C. For singleroom occupancy housing, "dwelling unit" means each residential unit contained in the single-room occupancy housing structure.

3. "Multifamily housing project" means:

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

   • b. Single-room occupancy housing.

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

5. "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.

6. "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.

• C. 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

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  - 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.

• D. 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.)

• A. The collection of the tax imposed under this chapter, to the extent not already suspended, shall be suspended and shall not be collected with respect to the construction of any dwelling units 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. 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 hereinabove provided, shall not apply to any parcel of land or structure within said enterprise zone in which a member of the San José council, serving in that capacity, has a financial interest on June 22, 1993.

• (Ords. 22443, 24148, 24417.)

• 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 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 or structure 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 or structure 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 4.64.036.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 resolution of acceptance 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.)

An excise tax, at the rates thereinafter set forth in this chapter, is hereby imposed, in addition to that imposed by Chapter 4.54 of this Code, upon every person who constructs, or causes to be constructed, any one-family dwelling, dwelling unit or

units, or any mobilehome lot in the city, in which said person has an equity or title or other interest either as owner, lessee or otherwise. (Prior code § 16102.)

The rates of the tax imposed under this chapter are as follows:

• A. The amount of tax imposed for the construction of any one-family dwelling, dwelling unit or units shall be due and payable at the time a building permit is issued to construct the same, and the amount of tax imposed for the construction of any mobilehome lot shall be due and payable at the time a permit is issued to

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• construct and install electrical or plumbing equipment to service such mobilehome lot (whichever permit is issued first).

• B. Notwithstanding the foregoing provisions, the time of payment of the tax may be deferred to a time not later than the date the city authorizes the installation of the electrical meter for the one-family dwelling, dwelling unit or units or mobilehome lot for which the tax is due, upon receipt by the city from the person to whom such permit was issued of a surety bond in a form satisfactory to the city attorney securing the payment of the tax on a date before the city authorizes the installation of the electrical meter for the one-family dwelling, dwelling unit or units or mobilehome lot for which the tax is due.

• C. Furthermore, notwithstanding any and all of the foregoing provisions, the time of payment may be deferred to a date certain by the city council upon adoption of a resolution finding that immediate occupancy is in the public interest and that said council intends that any such tax due and owing shall be paid by city or exempted. City shall authorize the installation of said electrical meters and shall authorize the occupancy of said dwellings upon adoption of said resolution.

(Prior code § 16104; Ord. 20706.)

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 § 16105.)

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 § 16104.1; Ord. 27787.)

• A. All of the taxes collected under this chapter shall be placed and deposited into a special fund which is hereby created and established for such purpose and which shall be known as the "Residential Construction Tax Contribution Fund." Such taxes so placed and deposited in said fund shall be expended for the following purposes and under the following conditions, to wit:

  1. Contribution to persons who have constructed, pursuant to the requirement of the City of San José ("constructed" shall for the purposes of this section include reinforced or thickened) at their sole cost and expense public streets, highways and expressways, or portions of such streets, highways or expressways within the City of San José, ninety feet or more in width, in connection with existing or proposed residential or mobilehome park development for which proposed development the taxes imposed by this chapter are required to be paid for a portion of the costs of such construction at the rate of one dollar and fifty cents per square foot for construction of new eligible improvements, and for reinforcement or thickening of existing eligible improvements, at the rate of ten cents per square foot per inch of thickness, eligible improvements as used herein being grading, subbase, treated base alternate, and paving constructed on lanes used exclusively for leftturn vehicular movement and on that portion of a street from the centerline to a point thirty feet from the owner's property line. Such contributions shall be made only to the extent that sufficient moneys are present in said fund to effect such contribution.

  2. Such contribution shall be made as such taxes are deposited in said fund and on the basis of a priority list containing the

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names of the persons who constructed such eligible improvements, the square footage of such eligible improvements, and the amount of contribution to be made to such person established by the director of public works in the order in which the eligible improvements are accepted by city. Such contribution shall be made in such a manner that the person first on the priority list shall receive full contribution for eligible improvements at the rate above provided (subject to the sufficiency of money in the said fund) before any contribution is made to the person who is second on the priority list. If the taxes in the said fund at a given time are insufficient to make contribution in full for eligible improvements at the rate above provided to a person who is first in priority at such time, such taxes as are available shall be paid to him, and as additional taxes are deposited in said fund they shall be paid to such person until he receives contribution in full for the eligible improvements at the rate above provided.

d at a given time are insufficient to make contribution in full for eligible improvements at the rate above provided to a person who is first in priority at such time, such taxes as are available shall be paid to him, and as additional taxes are deposited in said fund they shall be paid to such person until he receives contribution in full for the eligible improvements at the rate above provided.

3. Nothing herein shall be deemed to prevent the city council from authorizing short-term loans of funds in the residential construction tax contribution fund to the sanitary sewer connection fee fund or any other special fund of the city upon such terms and conditions as are approved in advance by the council.

• B. Any person who has constructed eligible improvements pursuant to plans for the improvement of public streets and expressways in connection with the development of a subdivision, as that term is defined in Section 19.08.440 of the San José Municipal Code, which plans have been approved by the City of San José between April 17, 1974, and the effective date of Ordinance No. 17710, who has not received a contribution from city toward the costs of such eligible improvements and who is not

required to pay the taxes imposed by this chapter in connection with the development of such subdivision because building permits or permits to construct and install electrical or plumbing equipment to service a mobilehome lot have been issued in connection with the development of such subdivision before the effective date of this article may, by paying the taxes imposed hereunder which would otherwise have applied to him had such building permits or permits to construct and install electrical or plumbing equipment to service a mobilehome lot in such subdivision not been issued before the effective date of this article, not more than sixty days after the effective date of Ordinance No. 17710, be eligible for contribution for the construction costs of eligible improvements in such subdivision at the rate above provided, the order of his priority being based on the date the eligible improvements were accepted by the City of San José. In no event shall any contribution to any person be made unless and to the extent that sufficient moneys are available in the said fund, and then only subject to and in conformance with the above conditions and limitations and in the order above set forth.

at the rate above provided, the order of his priority being based on the date the eligible improvements were accepted by the City of San José. In no event shall any contribution to any person be made unless and to the extent that sufficient moneys are available in the said fund, and then only subject to and in conformance with the above conditions and limitations and in the order above set forth.

• C. Any person who has repaid, after the effective date of Section 14.13.020 of the San José Municipal Code, the city its improvement costs as required by and pursuant to said Section 14.13.020 for the construction by city of improvements in connection with existing or proposed residential or mobilehome park development, and who has paid the taxes imposed hereunder at the time of the development of such residential or mobilehome park shall, for the purposes of this section, be considered to be a person who has constructed pursuant to the requirement of the City of San José, eligible improvements, and eligible for contribution for the construction costs of those eligible improvements constructed by the city in connection with such existing or proposed residential or mobilehome park development at the

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rate above provided, the order of this priority being based on the date payment to city of city's improvement costs pursuant to said Section 14.13.020 was made. In no event shall any contribution to any person be made unless and to the extent that sufficient moneys are available in the said fund and then only subject to and in conformance with the above conditions and limitations and in the order above set forth.

D. Nothing herein shall be deemed to imply that the contributions made hereunder by the City of San José are made to discharge a legal debt or obligation on the part of the City of San José, or that the City of San José has a legal debt or obligation to make such contribution. Nothing herein shall prevent the City of San José (in its sole discretion and without any obligation or duty to do so) from contributing money to any person for the construction of eligible improvements from other appropriate sources including, but not limited to, gas tax funds, under such circumstances and subject to such conditions as the City of San José may determine.

(Prior code § 16107; Ords. 19630, 20829.)

Notwithstanding Section 4.64.090, commencing October 30, 1990, the city council shall expend monies received from the taxes imposed under Section 4.64.040 after October 30, 1990, as hereafter provided.

• A. All of the taxes collected under this chapter shall be placed and deposited into a special fund which is hereby created and established for such purpose and which shall be known as the "residential construction tax contribution fund." Such taxes so placed and deposited in said fund shall be expended for the following purposes and under the following conditions:

  1. Rebate for certain construction. a. Contribution to persons who have constructed, pursuant to

the requirements of the City of San José, at their sole cost and expense, public streets, highways and expressways, or portions thereof, within the City of San José, ninety feet or more in width, in connection with or contiguous to existing or proposed residential or mobilehome park development for which proposed development the taxes imposed by this chapter are required to be paid.

• b. Contribution to pay the costs of maintenance of public streets, highways and expressways, or portions of such streets, highways and expressways within the City of San José contiguous to existing or proposed residential mobilehome park development.

• c. The portion of the costs of construction to be reimbursed for construction of new eligible improvements and for maintenance of existing eligible improvements shall be set by resolution of council. Any contribution or reimbursement of costs shall be made only to the extent that sufficient moneys are present in said fund to effect such contribution.

• d. Such contribution shall be made as such taxes are deposited in said fund and on the basis of a priority list containing the names of the persons who constructed such eligible improvements, the square footage of such eligible improvements, and the amount of contribution to be made to such

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person established by the director of public works in the order in which the eligible improvements are accepted by city.

  - i. Such contribution shall be made in such a manner that the person first on the priority list shall receive full contribution for eligible improvements at the rate above provided (subject to the sufficiency of money in the said fund) before any contribution is made to the person who is next in order on the priority list. 

  - ii. If the taxes in the said fund at a given time are insufficient to make contribution in full for eligible improvements at the rate above provided to a person who is first in priority at such time, such taxes as are available shall be paid to him or her, and as additional taxes are deposited in said fund they shall be paid to such person until he or she receives contribution in full for the eligible improvements at the rate above provided. 

2. Direct Payment by City.

• a. To pay the costs of construction of landscaped median islands, or portions thereof, in residential areas of the city and construction of eligible improvements along frontage of unimproved real property that, in the opinion of the director

of public works, may be required prior to residential development.

  - b. To pay for the costs of maintenance of public streets, highways and expressways, or portions of such streets, highways and expressways within the City of San José in connection with or contiguous to existing or, in the opinion of the director of public works, future residential or mobilehome park development. 

3. Nothing herein shall be deemed to prevent the city council from authorizing short-term loans of funds in the residential construction tax contribution fund to the sanitary sewer connection fee fund or any other fund of the city upon such terms and conditions as are approved by resolution of the council.

• B. The term "constructed" shall for the purposes of this section include the terms "reinforced" or "thickened." "Eligible improvements" as used herein means grading, subbase, treated base alternate, construction of landscaped median islands, and paving constructed on lanes used exclusively for left-turn vehicular movement and on that portion of a street from the centerline to a point thirty feet from the owner's property line.

• C. For purposes of this section, the term "maintenance" means reinforcement, thickening, patching and repairing of eligible improvements on public streets, highways and expressways or portions thereof.

• D. Any person who has repaid the city its improvement costs as required by and pursuant to Section 14.13.020 for the construction by city of eligible improvements in connection with or contiguous

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  - to existing or proposed residential or mobilehome park development, and who has paid the taxes imposed hereunder at the time of the development of such residential or mobilehome park shall, for the purposes of this section, be considered to be a person who has constructed pursuant to the requirement of the City of San José, eligible improvements, and eligible for contribution in accordance with Subsection A above. 

• E. Nothing herein shall be deemed to imply that the contributions made hereunder by the City of San José are made to discharge a legal debt or obligation on the part of the City of San José, or that the City of San José has a legal debt or obligation to make such contribution. Nothing herein shall prevent the City of San José fin its sole discretion and without any obligation or duty to do so) from contributing money to any person for the construction of eligible improvements from other appropriate sources including, but not limited to, gas tax funds, under such circumstances and subject to such conditions as the City of San José may determine.

• (Ord. 23649.)