(1)(a) Except as otherwise provided in subsection (3) of this section, the governing body of any city or village shall have power to require any individual whose primary residence or person who owns a place of business which is within the limits of the city or village and that owns and operates a motor vehicle within such limits to pay an annual motor vehicle fee and to require the payment of such fee upon the change of ownership of such vehicle. All such fees which may be provided for under this subsection shall be used exclusively for constructing, repairing, maintaining, or improving streets, roads, alleys, public ways, or parts thereof or for the amortization of bonded indebtedness when created for such purposes.

(b) To ensure compatibility with the Vehicle Title and Registration System maintained by the Department of Motor Vehicles:

(i) Any city or village that collects the annual motor vehicle fee authorized under this section shall use the plate types listed under section 60-3,104 and, as applicable, weight categories listed under the Motor Vehicle Registration Act when reporting information to the Vehicle Title and Registration System; and

(ii) Any city or village that adopts an annual motor vehicle fee under this section or that modifies an existing motor vehicle fee shall notify the Department of Motor Vehicles of such new or modified fee within ten business days after the passage of the ordinance authorizing such new or modified fee and at least sixty days prior to the implementation of such new or modified fee.

(2) No motor vehicle fee shall be required under this section if (a) a vehicle is used or stored but temporarily in such city or village for a period of six months or less in a twelve-month period, (b) an individual does not have a primary residence or a person does not own a place of business within the limits of the city or village and does not own and operate a motor vehicle within the limits of the city or village, or (c) an individual is a full-time student attending a postsecondary institution within the limits of the city or village and the motor vehicle’s situs under the Motor Vehicle Certificate of Title Act is different from the place at which he or she is attending such institution.

(3) After December 31, 2012, no motor vehicle fee shall be required of any individual whose primary residence is or person who owns a place of business within the extraterritorial zoning jurisdiction of such city or village.

(4) The fee shall be paid to the county treasurer of the county in which such city or village is located when the registration fees as provided in the Motor Vehicle Registration Act are paid. Such fees shall be credited by the county treasurer to the road fund of such city or village.

(5) For purposes of this section:

(a) Limits of the city or village includes the extraterritorial zoning jurisdiction of such city or village; and

(b) Person includes bodies corporate, societies, communities, the public generally, individuals, partnerships, limited liability companies, joint-stock companies, cooperatives, and associations. Person does not include any federal, state, or local government or any political subdivision thereof.