ORDINANCE _________________

AN ORDINANCE relating to the business license tax and other taxes; amending the tax code to allow a deduction for grants, contracts and sub-awards received as compensation for or to support life sciences research and development; adding a new subsection to Seattle Municipal Code Section 5.45.100 in connection therewith.

WHEREAS, Seattle's life sciences community, including nonprofit and private sector research entities, is conducting work that serves the greater public good and producing research products that are made available to the broader academic and scientific community; and

WHEREAS, Seattle's life sciences community receives government grants, contracts and sub-awards to support their research and development activities; and

WHEREAS, the contractual form of government grants and awards has been evolving, placing an additional emphasis on specific deliverable products and potentially subjecting some of this funding to the City's gross receipts tax; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Section 5.45.100 of the Seattle Municipal Code, last amended by Ordinance 123704, is amended by adding a new subsection as follows:

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5.45.100 W. Organizations Conducting Life Sciences Research and Development.

Funding provided to non-profit and private sector entities and their sub-recipients as compensation for research and development, or to support research and development, in the life sciences by the United States, State of Washington, local or municipal government or any instrumentality thereof may be deducted from the measure of tax.

Section 2. The deduction established by Section 1 shall expire five years after the effective date of the ordinance codified by this Chapter unless extended by City Council by ordinance. The City Council will consider such an extension after evaluating both the fiscal and policy impacts of the deduction. This evaluation, which will include both an estimate of foregone revenues and an assessment of how grant applications and awards have been affected by the deduction, will be completed by the Department of Finance and Administrative Services and Council Central Staff 54 months after the effective date or the ordinance to ensure sufficient time for legislative action on any proposed extension.

Section 3. The Director shall establish rules under the authority of SMC 5.55.165 for taxpayers to report gross receipts which are eligible for the deduction provided in Section 1.

Section 4. This ordinance shall take effect and be in force 30 days after its approval by the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it shall take effect as provided by Seattle Municipal Code Section 1.04.020.

Passed by the City Council the ____ day of ________________________, 2012, and signed by me in open session in authentication of its passage this

_____ day of ___________________, 2012.

_________________________________

President __________of the City Council

Approved by me this ____ day of _____________________, 2012.

_________________________________

Michael McGinn, Mayor

Filed by me this ____ day of __________________________, 2011.

____________________________________

Monica Martinez Simmons, City Clerk

(Seal)

Gigi Gilman/Ben Noble/Betsy Graef FAS/Leg Life Science B&O Deduction ORD April 26, 2012 Version # 8