CDN 2017-11-13 Item 2B - Ordinance - Tukwila Municipal Code Amendment: Real Estate Excise Tax (REET)

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Community Development and Neighborhoods Committee FROM: Rachel Bianchi CC: Mayor Ekberg DATE: November 6, 2017 SUBJECT: Modifications to City's Real Estate Excise Tax 1 Allocation ISSUE The Tukwila Municipal Code currently restricts Real Estate Excise Tax (REET) 1 funds allocation to the Land Acquisition, Rec and Park Development Fund 301. Staff would like to amend the code to include Public Safety Plan land acquisition. BACKGROUND Washington State law allows cities and other jurisdictions collecting REET 1 to spend these funds on capital projects, defined in RCW 82.46.010 as: "those public works projects of a local government for planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets; roads; highways; sidewalks; street and road lighting systems; traffic signals; bridges; domestic water systems; storm and sanitary sewer systems; parks; recreational facilities; law enforcement facilities; fire protection facilities; trails; libraries; administrative facilities, judicial facilities, river flood control projects..." In 2015, the state legislature amended the law to also allow jurisdictions to use REET 1 funds for maintenance of capital projects. Jurisdictions may use the greater of $100,000 or 25% of available funds, but not to exceed $1 million per year for such activities. In 1996, the City restricted the allocation of REET 1 funding solely land acquisition and park development. Since 2014, REET has come in more than double the amount budgeted. This year is continuing this trend, with REET 1 receiving $873,000 to date with $400,000 budgeted. Due to REET accumulation at an unexpected rate, the Land Acquisition, Rec and Park Development Fund 301 has in excess of $3.5 million available today. As the City works to implement the Public Safety Plan, and with the realities of cost escalation in this heated development market, the City could choose to use REET 1 funds to develop the City's Public Safety facilities. By doing so, the City has additional funding sources to achieve our Public Safety Plan goals. The attached ordinance amends the Tukwila Municipal Code to include the Public Safety Plan Fund (305), which includes the Justice Center and three fire stations and the City Facilities Fund, which covers the combined City Shops facility. RECOMMENDATION Staff recommends that the Council pass the attached ordinance amending the Tukwila Municipal Code to include the ability to allocate REET 1 funds to the Public Safety Plan. Staff does not recommend using REET 1 for any maintenance needs. ATTACHMENTS Draft ordinance 7