Building industry members question tax plan

Sisters School Board members may decide to levy an one-time excise tax on new construction and on some remodels within the Sisters School District.

Senate Bill 1036 gives school boards the right to impose the tax, although the tax must be approved by local school board members before it can be adopted within a district.

The new law allows a tax of up to $1 per square foot on residential new construction and up to 50 cents per square foot on non-residential new construction, with a cap of $25,000. The law calls out some exclusions, which, according to Sisters School District Superintendent Elaine Drakulich, include most agricultural construction.

Although the district has the ability to approve the tax, to adopt the tax a school district must have a long-term facilities plan. Revenue from this tax must be earmarked for capital improvements. The funds may also be used to cover costs of "issuance that are issued to finance or refinance capital improvements."

Sisters school board members are scheduled to discuss the new legislation and possibly vote on whether or not to approve the tax during their regular meeting on Tuesday night, December 11. Superintendent Drakulich has already recommended that the school board approve the tax. (See "Sisters School Board eyes new construction tax," The Nugget, November 21, 2007, page 17.)

Community members gathered with school board members and superintendent Drakulich last Tuesday evening, November 27, to discuss the tax. Not everyone thinks that just because the district has the ability to levy the tax, that the tax is necessarily a good idea.

"Not only are we here to do what's best for the school district, I would like to discuss how the tax affects the rest of the community outside of the school district itself," said Michael T. Preedin, a Sisters resident and designer for Sisters building design firm Design Strategies.

"I do not feel that it's fair for the school district to tax people who aren't here yet at a disproportionately higher rate than those of us who are already here," Chris Mayes told The Nugget. Mayes is the president of Design Strategies and has two students in Sisters schools.

"I think it's the entire area's responsibility, not just people moving in," he said.

The philosophy behind the bill is that it will tax new people coming into the school district instead of those who are current property owners who are already taxed by the district.

Preedin does not agree.

"You're adding a tax that only really affects home builders," said Preedin. "It's on new construction, so the tax is going to affect architects, builders, developers, surveyors. It's difficult for me to say, but it's not the community you are imposing the tax on. It's the industry, and the industry is very concerned about that," he said.

Local businessman Fred Ast, who has lived in Sisters since 1979, agrees with Preedin.

"It's not the outside people who are coming in who are paying the tax.

It is the industry itself.

You'll see a lot of people such as myself.

I'm building my third house now.

I'm going to build a fourth one.

These are all ones that I'm living in, moving to one after selling one.

I'm not one of those outside people coming in.

I think there are a lot of people in our community who are going to be doing their own remodels because they can't afford to buy another house in town.

...

All of these building permits are going to come with a cost.

I don't think you can just point a finger and make everybody believe it's just those new people coming in from out of town," said Ast.

"I don't think this tax is going to set real well with a lot of the voting public."

Bill Mintiens, chairman of the Sisters Economic Development Committee also sees the tax as problematic.

"My impression is that it just seems to be a way to pay back the $1.2 million that we owe the state. It certainly doesn't seem like a fair tax to me," he said.

What is your opinion of the new construction tax? Let The Nugget know. E-mail comments to [email protected] or comment online at http://www.nuggetnews.com.