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42-6203. Rates of tax

A. Except as otherwise provided in this section, if a lease of a government property improvement was entered into before June 1, 2010, or if a development agreement, ordinance or resolution was approved by the governing body of the government lessor before June 1, 2010 that authorized a lease on the occurrence of specified conditions and the lease was entered into within ten years after the date the development agreement was entered into or the ordinance or resolution was approved by the governing body:

1. The tax authorized by this article shall be levied and collected at the following rates:

(a) One dollar per square foot of gross building space for office buildings with one floor above ground.

(b) One dollar twenty-five cents per square foot of gross building space for office buildings with more than one but fewer than eight floors above ground.

(c) One dollar seventy-five cents per square foot of gross building space for office buildings with eight floors or more above ground.

(d) One dollar fifty cents per square foot of retail building space, including space that is devoted to the sale of tangible personal property, restaurants, health clubs, hair salons, dry cleaners, travel agencies and other retail services.

(e) One dollar fifty cents per square foot of hotel or motel building space.

(f) Seventy-five cents per square foot of warehouse or industrial building space.

(g) Fifty cents per square foot of residential rental building space.

(h) One hundred dollars per parking space located in a parking garage or deck.

(i) One dollar per square foot of all other government property improvements not included in subdivisions (a) through (h) of this paragraph.

2. The tax rate for government property improvements for which the original certificate of occupancy was issued:

(a) At least ten years but less than twenty years before the date the tax is due is eighty per cent of the rate provided in paragraph 1 of this subsection.

(b) At least twenty years but less than thirty years before the date the tax is due is sixty per cent of the rate provided in paragraph 1 of this subsection.

(c) At least thirty but less than forty years before the date the tax is due is forty per cent of the rate provided in paragraph 1 of this subsection.

(d) At least forty but less than fifty years before the date the tax is due is twenty per cent of the rate provided in paragraph 1 of this subsection.

(e) Fifty or more years before the date the tax is due is zero.

3. If no certificate of occupancy can be located, dated aerial photographs or other evidence of substantial completion may be used to determine the age of the building for purposes of paragraph 2 of this subsection.

4. A lease or development agreement, originally subject to this subsection, that is subsequently amended remains subject to this subsection if the amended lease or development agreement meets all of the following requirements:

(a) The government lessor determines that the amendment furthers the original purpose of the lease or development agreement.

(b) Any land added under the amendment is contiguous to the land under the original lease or development agreement and does not increase the land area under the original lease or development agreement by more than fifty per cent.

(c) Any government property improvement added under the amendment does not increase the area of gross building space of government property improvements under the original lease or development agreement by more than one hundred per cent.

B. Except as otherwise provided in this section, if a lease of a government property improvement does not meet the conditions for applying subsection A of this section:

1. Subject to paragraphs 2 and 3 of this subsection, the tax authorized by this article shall be levied and collected at the following base rates, which apply through December 31, 2011:

(a) Two dollars per square foot of gross building space for office buildings with one floor above ground.

(b) Two dollars thirty cents per square foot of gross building space for office buildings with more than one but fewer than eight floors above ground.

(c) Three dollars ten cents per square foot of gross building space for office buildings with eight floors or more above ground.

(d) Two dollars fifty-one cents per square foot of retail building space, including space that is devoted to the sale of tangible personal property, restaurants, health clubs, hair salons, dry cleaners, travel agencies and other retail services.

(e) Two dollars per square foot of hotel or motel building space.

(f) One dollar thirty-five cents per square foot of warehouse or industrial building space.

(g) Seventy-six cents per square foot of residential rental building space.

(h) Two hundred dollars per parking space located in a parking garage or deck.

(i) Two dollars per square foot of all other government property improvements not included in subdivisions (a) through (h) of this paragraph.

2. If, in the tax year in which the lease of the government property improvement is entered into, the aggregate of all ad valorem property tax rates of all taxing jurisdictions in which the government property improvement is located is within ninety per cent and one hundred ten per cent of the countywide average combined property tax rates, the rate of tax prescribed by paragraph 1 of this subsection, as currently adjusted pursuant to paragraph 3 of this subsection, applies with respect to that government property improvement. If, in the tax year in which the lease of the government property improvement is entered into, the aggregate of all ad valorem property tax rates of all taxing jurisdictions in which the government property improvement is located is less than ninety per cent of the countywide average combined property tax rates, the rate of tax prescribed by paragraph 1 of this subsection, as currently adjusted pursuant to paragraph 3 of this subsection, shall be reduced by ten per cent.

3. On or before December 1, 2011 and December 1 of each year thereafter, for all government property leases that are subject to this subsection the department of revenue shall adjust the tax rates that apply under paragraphs 1 and 2 of this subsection in the following calendar year for each property use according to the average annual positive or negative percentage change for the two most recent fiscal years in the producer price index for new construction or its successor index published by the United States bureau of labor statistics. On or before December 15 of each year, the department shall post the adjusted rates for the following calendar year on its official website and transmit the adjusted rates to each county treasurer.

C. The tax rate for a government property improvement that was constructed pursuant to a lease or development agreement entered into from and after June 30, 1996 and that is located outside a slum or blighted area established pursuant to title 36, chapter 12, article 3 is one and one-half times the rate established by subsections A and B of this section.

D. Within the first twenty years after the issuance of the original certificate of occupancy, the tax rate on the use or occupancy of a government property improvement is twenty per cent of the rate established in subsections A and B of this section for any of the following:

1. Government property improvements that are subject to leases or agreements that were entered into before April 1, 1985, and options and rights contained in the leases or agreements.

2. Government property improvements that are subject to leases entered into based on a redevelopment contract, as defined in section 36-1471, entered into before April 1, 1985.

3. Government property improvements that are subject to leases entered into based on an agreement for a redevelopment project for which federal grant monies have been received and that was entered into before April 1, 1985.

4. Government property improvements that are located at an airport that was owned on or before January 1, 1988 by a county having a population of four hundred thousand persons or less or by a city or town that is located in a county having a population of four hundred thousand persons or less if the property is used primarily for manufacturing, retail, distribution, research or commercial purposes. For the purposes of this paragraph, "commercial" includes facilities for office, recreational, hotel, motel and service uses.

E. Within the first ten years after the issuance of the certificate of occupancy, the tax rate on the use or occupancy of a government property improvement that is located in a slum or blighted area established pursuant to title 36, chapter 12, article 3, that resulted or will result in an increase in property value of at least one hundred per cent and that is not eligible for abatement pursuant to section 42-6209 is eighty per cent of the rate established in subsections A and B of this section.

F. The tax rate to be applied under subsection A or B of this section shall be determined by the predominant use to which the government property improvement is devoted, except that in all cases the tax rate prescribed by subsection A, paragraph 1, subdivision (h) or subsection B, paragraph 1, subdivision (h) of this section shall be applied to any parking garage or deck. If there is no single predominant use, the tax shall be determined by applying the appropriate tax rate to the building space devoted to each use identified in that subsection. For the purposes of this subsection, in applying the tax rates under subsection A of this section the functional area of a government property improvement does not include subsidiary, auxiliary or servient areas such as lobbies, stairwells, mechanical rooms and meeting and banquet rooms. For the purposes of this subsection, "predominant use" means the use to which eighty-five per cent or more of the functional area of a government property improvement is devoted.

G. Prime lessees of government property improvements who become taxable or whose taxable status terminates during the calendar year in which the taxes are due, including prime lessees subject to exemption or abatement under sections 42-6208 and 42-6209, shall pay tax for that calendar year on a pro rata basis.