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

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INFORMATIONAL MEMO Page 2 (b) The marketing and operations of special events and festivals designed to attract tourists; (c) Supporting the operations and capital expenditures of tourism -related facilities5 owned or operated by a municipality or a public facilities district created under chapters.. and.3........102 RCW, or (d) Supporting the operations of tourism -related facilities owned or operated by nonprofit organizations described under 26 U. S. C. Sec. 501(c) (3) and 26 U. S. C. Sec. 501(c)(6) of the internal revenue code of 1986, as amended. DISCUSSION Several Councilmembers have inquired about permissible uses of lodging tax funds. Based upon the limitations outlined above, staff would like to provide some guidance on the future use of lodging tax funds. A simple question that can be asked to help determine if lodging tax funds can be used is "Is the activity, operation or expenditure designed to increase tourism or welcome tourists to the City?" If the answer is yes, then lodging tax might be able to be used after further analysis of the specific funding request. Tourism could include people who travel and stay overnight in the City (overnight visitors) or those who travel to the Tukwila for the day (day visitors). Economic activity from Tukwila residents would not be considered tourism. The following lists examples of activities, operations and expenditures that would likely be eligible for lodging tax funding. This is not intended to be an exhaustive list. • Marketing and advertising intended to bring overnight visitors to the City. • Marketing and advertising intended to bring day visitors to the City. • Installation of new "way finding" signs for tourists and installation of City identification signs. • Sponsoring, operating, and marketing of special events or festivals, either by the City or third parties, if designed to bring tourists to the City. • Installation of banners on street poles or across city streets if either welcoming tourists to the City or promoting upcoming events. • Capital improvements, such as park improvements or trail improvements, designed to be used primarily by tourists. • Maintenance of parks primarily used by tourists, such as Fort Dent Park or the Green River trail. 5 RCW 67.28.080 (7) defines "Tourism -related facility" as, "...real or tangible personal property with a usable life of three or more years, or constructed with volunteer labor that is: (a)(i) Owned by a public entity; (ii) owned by a nonprofit organization described under section 501(c)(3) of the federal internal revenue code of 1986, as amended; or (iii) owned by a nonprofit organization described under section 501(c)(6) of the federal internal revenue code of 1986, as amended, a business organization, destination marketing organization, main street organization, lodging association, or chamber of commerce and (b) used to support tourism, performing arts, or to accommodate tourist activities." 58 C:\Users\Brandon-m\AppData\Local\Microsoft\Windows\INetCache\Content.Outlook\LWDZNIVO\Memo 2 Eligable Activites.dou