PED 2020-08-17 Item 1C - LTAC - Lodging Tax Allowable Uses and Process for Using

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance and Safety Committee FROM: Brandon J. Miles, Business Relations Manager CC: Mayor Ekberg DATE: September 23, 2016 SUBJECT: Permitted Uses of Lodging Tax Funds. ISSUE The City charges a 1 % special excise tax on the sale of or charge made for overnight lodging stays. State law limits how these funds can be used. This memo outlines the limits on the use of lodging tax and discusses permitted and prohibited use of the funds'. BACKGROUND Revised Code of Washington (RCW) 67.28.1815 limits the use of lodging tax funds as follows: [A]II revenue from taxes imposed under this chapter shall be credited to a special fund in the treasury of the municipality imposing such tax and used solely for the purpose of paying all or any part of the cost of tourism2 promotion 3, acquisition of tourism -related facilities, or operation of tourism -related facilities. RCW 67.28.1816 goes into further detail about permitted expenditures of lodging tax funds, specifying: Lodging tax revenues under this chapter may be used, directly by any municipality or indirectly through a convention and visitors bureau or destination marketing organization for. - (a) Tourism marketing; ' RCW 67.28 places strict limits on the type of entities eligible to receive lodging tax funds. Additionally, approving expenditures of lodging tax funds is a two-step process, requiring review by the City's Lodging Tax Advisory Committee and City Council. State Law gives considerable authority to the City's Lodging Tax Advisory Committee in reviewing and approving funding requests. For more information on entities eligible to receive funding and the process for awarding funds, see the memo dated September 22, 2016, entitled, "Lodging Tax Approval Process." 2 RCW 67.28.080 defines "Tourism" as "economic activity resulting from tourists, which may include sales of overnight lodging, meals, tours, gifts, or souvenirs." 3 RCW 67.28.080 (6) defines "Tourism promotion" as "...activities, operations, and expenditures designed to increase tourism, including but not limited to advertising, publicizing, or otherwise distributing information for the purpose of attracting and welcoming tourists; developing strategies to expand tourism; operating tourism promotion agencies; and funding the marketing of or the operation of special events and festivals designed to attract tourists." 4 RCW 67.28.080 (1) provides the following definition of "Acquisition" ..."includes, but is not limited to, siting, acquisition, design, construction, refurbishing, expansion, repair, and improvement, including paying or securing the payment of all or any portion of general obligation bonds, leases, revenue bonds, or other obligations issued or incurred for such purpose or purposes under this chapter." 57