Broken Arrow City Council
Meeting of: 11-17-2015
To: Mayor and Council Members
From: Office of the City Attorney
Title:
title
Consideration, discussion, possible ratification of a Settlement Agreement and Mutual Release between the Broken Arrow Municipal Authority, Crossland Heavy Contractors, Inc., Crossland Construction Company, Inc., and Oil Capital Electric, LLC regarding the Verdigris Water Treatment Plant
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Background:
Earlier this year, representatives of Oil Capital Electric (OCE), one of the subcontractors of Crossland Heavy Contractors on the Verdigris Water Treatment Plant construction project, advised City of Broken Arrow representatives that it was being audited by the Oklahoma Tax Commission (OTC). The OTC was disallowing the subcontractor's sales tax exemption on the basis that the City had not issued a "Tax Exempt Letter." This Tax Exempt Letter is one which the City of Broken Arrow routinely issues to its contractors to facilitate the purchase of tangible personal property on City contracts without having to pay sales tax. According to various sources, OCE was being audited not just for its work on the Verdigris Water Treatment Plant, but also on projects for other municipal public trusts and several colleges and universities. In response to this audit, a packet of information, including the Tax Exempt Letter, was provided to the OTC.
Unlike most projects managed by the Department of Engineering and Construction, the Broken Arrow Municipal Authority (BAMA), rather than the City of Broken Arrow, was the contracting body. The City of Broken Arrow and all of its Title 60 public trusts are exempt, themselves, from the payment of sales taxes. However, only the City and those public trusts specifically identified in the statute may pass on its exempt status to their contractors. BAMA is not specifically identified in this statute and, therefore, may not pa...
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