What is the License/Excise Tax
The Road Financing Plan was developed to provide a funding mechanism for the City of Lee’s Summit’s major street network and involves three (3) revenue sources: ½ cent transportation sales tax, ½ cent capital improvements sales tax, and the road excise tax (or license tax). The license tax was approved by the voters of Lee’s Summit on November 4, 1997 and became effecting on April 1, 1998. This license tax is a form of an infrastructure impact fee on applicable developments that require building permits, which result in additional vehicle trips. These funds are used for streets, roads, bridges, and other related improvements.
The License Tax Application is due at the time of building permit application.
License Tax Calculation
These additional vehicle trips are calculated during the afternoon time period when traffic volume on adjacent streets is highest. The license tax is calculated by multiplying the number of units times the trip rate to determine the total trips generated. The total trips generated is then multiplied by the tax rate producing the total tax liability.
Step 1: Number of Units x Trip Rate = Total Trips
Step 2: Total Trips x Tax Rate = Total Tax Liability
To determine the number of units you must first determine the appropriate landuse for the project. The City of Lee’s Summit has adopted a Trip Generation Table which was developed from the most recent version of the ITE Trip Generation Manual and covers the most common types of development in the City. For uses not listed on the standard table, staff will utilize information in the ITE Manual to find a comparable use. If there is no comparable use, applicants may submit data for consideration of similar developments or conduct traffic studies to determine the number of trips created by specific uses. In residential developments, vehicle trips are based on the number of living units while commercial developments are based on trips per 1,000 square feet of building area. The tax rate for each landuse is provided on the Trip Generation Table below.
This information is provided only as a guide to calculating the License/Excise Tax. Please contact the Development Services Department at 816.969.1200 for final determination of landuse and license tax calculations.
License Tax Payment
For residential development, the license tax is paid prior to or at the time of building permit issuance.
There are several payment options for payment of the license tax for non-residential development. These options are as follows.
- The license tax can be paid prior to issuance of the building permit.
- The license tax payment can be deferred to a later date, but must be paid prior to receiving a temporary or final Certificate of Occupancy on a structure.
- The license tax payment can be deferred to the tenant finish permits on a shell building developments.
- The license tax can be placed on a four (4) year payment plan. Contact the Development Services Staff at 816.969.1200 for additional information on this arrangement.
License Tax Credits
The applicant may request a tax credit for the development based on the following categories:
- Public Body - A credit in the amount of the full tax will be granted for development constructed by, or by a building contractor on behalf of, a public body for its governmental use.
- School District - A credit in the amount of the full tax will be granted for development constructed by, or by a building contractor on behalf of, a school district of the state.
- Damaged Facility - A credit in the amount of the full tax will be granted for development rebuilding an involuntarily damaged or destroyed building, provided that such building does not result in additional vehicle trips.
- Development Agreement - A credit in the amount of the full tax will be granted for development constructed by, or by a building contractor on behalf of, a person which has entered into a development agreement with the City, executed and dated prior to the enactment of the Ordinance imposing the license tax, wherein the agreement provides a specific provision that the person shall not be required to make a financial contribution beyond the terms of the agreement for street improvements and the commitment of the agreement involved street improvements to enhance the City's overall street network.
- Tax Exempt Entities - A credit in the amount of the full tax will be granted for development constructed by, or by a building contractor on behalf of, an entity that is not subject to any federal, state, or local taxes including sales, income, personal property, real property, use license, and earnings taxes.
- Underutilized Facilities - A credit in the amount of the full tax will be granted for a building contractor requesting a building permit required for utilization of a currently underutilized facility within an existing approved building. Underutilized shall mean a building not fully occupied or being used to full capacity. Existing underutilized buildings would be inclusive of existing shall building structures requiring only a tenant finish building permit including the existing approved underground shell building space.
- Change of Use (full) - A credit in the amount of the full tax will be granted to a building contractor that requests a building permit that is required for a change of use within an existing building that does not change the general landuse category of the building (e.g. residential versus non residential).
- Change of Use (partial) - A partial credit will be granted to a building contractor that requests a building permit that is required for a change of use from residential to non residential, the credit shall only be granted for the number of trips that were generated by the previous residential building during the p.m. peak time period and the new trips generated by the non residential use shall be subject to the tax.
- Redevelopment - A partial credit will be granted to a building contractor that requests a building permit that results in the redevelopment of property. Redevelopment shall apply to development activity that results in the demolition of one or more buildings and the subsequent construction of one or more new buildings on the property, provided that the complete building permit application for a building permit to construct the new building(s) to replace the existing building(s) is filed within six (6) months following demolition of the existing building(s). The credit shall only be granted for the number of trips that were generated by the previous building(s) during the p.m. peak time period and the new additional trips generated by the new buildings shall be subject to the tax.
The City will determine eligibility for the requested credit. Contact the Development Services staff at 816.969.1200 for additional information regarding license tax credits.