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 22, 2016 SUBJECT: Lodging Tax Approval Process ISSUE The City charges a 1 % special excise tax on the sale of or charge made for overnight lodging stays. The use of these funds is limited to tourism promotion. The following memo outlines the steps the City must follow in order to expend these funds, as provided by State law. Staff is seeking input from the City Council on the process for awarding lodging tax funds in 2017 and beyond. BACKGROUND As required by Revised Code of Washington (RCW) 67.28.1815, the City deposits lodging tax funds into a special fund and uses the funds, "...solely for the purpose of paying all or any part of the cost of tourism, promotion, acquisition of tourism related facilities, or operation of tourism - related facilities'." These funds are used to support a variety of tourism promotion activities by the City and third parties, such as the Museum of Flight and Starfire Sports. RCW 67.28.1816 limits the entities eligible to apply for direct lodging tax funding to the following: 1. Cities, towns, and counties of Washington State; 2. Convention and Visitors Bureaus; 3. Public Facilities Districts; and 4. Non -Profits organized as either a 501(c)(3) or 501(c)(6). Approving lodging tax expenditures is a two-step process involving both the City's Lodging Tax Advisory Committee (LTAC) and the City Council. As discussed below, State Law provides considerable authority to the City's LTAC is reviewing and approving request to use lodging tax funds. Lodging Tax Advisory Committee In 1997, the legislature authorized the creation of local lodging tax advisory committees to review and comment on any new lodging tax, increase in the tax rate, repeal of an exemption or change in the use of the lodging tax revenue (RCW 67.28.1817). The City of Tukwila's LTAC was created via Council Resolution No. 1381 and the membership of the committee expanded via Council Resolution No.1533. Membership of the City's LTAC includes: • Four businesses where the lodging tax is collected, such as hotels and motels; • Four businesses or organizations engaged in activities eligible to be funded by the tax, such as non -profits, entertainment destinations, retailers and restaurants; and ' See memo entitled "Permitted Use of Lodging Tax Funds," dated August 30, 2016, which provides more details on allowable expenditures of lodging tax funds. M.