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Home My WebLink AboutFIN 2025-10-27 Item 1D - Ordinances - 2026 Property Tax LeviesCity of Tukwila Thomas McLeod, Mayor INFORMATIONAL MEMORANDUM TO: Tukwila City Council FROM: Aaron BeMiller, Finance Director BY: Tony Cullerton, Deputy Finance Director CC: Thomas McLeod, Mayor & Marty Wine, City Administrator DATE: October 20, 2025 ,(1RevOsed .......Oct b i....'.....25) SUBJECT: 2026 Property Tax Levy Public Hearing ISSUE Continued discussion and public hearing on the proposed 2026 Regular and Excess Property Tax Levies. BACKGROUND Pursuant to RCW 84.55.120, a public hearing is required prior to adopting the City's annual property tax levy. The hearing is scheduled for October 20, 2025. On September 18, 2025, the City received notice that Tukwila's 2025 assessed valuation for 2026 is projected to total $9,827,593,190. The ordinances establishing the 2026 property tax levy will include both the General (Regular) Levy and the Excess Levy related to the Public Safety Plan approved by voters at the November 8, 2016 General Election. To implement the plan, the City issued $36.5 million in bonds in 2016, with debt service beginning in 2017. The remaining voter -approved bonds were issued in October 2019. The excess levy will continue annually until the bonds are repaid in full —December 2036 for the 2016 issue and December 2039 for the 2019 issue. The total excess levy requirement for 2026 is $5,059,475, which represents the annual debt service obligation for both bond issuances. DISCUSSION .1..Iheu e Os no new liu t,u rn Uli,n ex: eetod f ilhlis e.nveu s .lu .m ilhhe CliffC, .neiill leeiiin IIhe11 . We MOO address .estli,u s Levy Amount Both the assessed valuation and allowable levy amount are subject to adjustment until final certification of the levy rate by the King County Department of Assessments. For ordinance preparation, a general levy amount of $12,459,905 will be used. Should the final allowable levy be different than this amount, the King County Department of Assessments will automatically adjust the certified levy and no further Council action will be required. 51 INFORMATIONAL MEMO Page 2 Levy Limit Under RCW 27.12.390, the maximum statutory levy rate for cities is $3.60 per $1,000 of assessed value, less any regular levy made by a library district. Additionally, RCW 41.16.060 authorizes an additional levy of $0.225 per $1,000 of assessed value for cities maintaining a firemen's pension fund. Due to the 1% levy limitation, the preliminary levy rate for the City of Tukwila is projected at $1.26785 per $1,000 of assessed valuation for collections in 2026. For purposes of the ordinance, the excess levy amount is proposed at $5,059,475 to fund 2026 debt service for the Unlimited Tax General Obligation (UTGO) Bonds issued in 2016 and 2019. Should the final assessed valuation differ from this amount, the King County Department of Assessments will automatically adjust the certified levy, and no further Council action will be required. All voter -authorized bonds associated with the Public Safety Plan have now been issued. For 2026, the calculated rate for the regular levy $1.2678 per $1,000 of assessed valuation, and $0.51722 per $1,000 of assessed valuation for the excess levy. RECOMMENDATION The City Council is being asked to approve the ordinances adopting the General Property Tax Levy and the Excess Property Tax Levy ATTACHMENTS Presentation Draft Ordinances (2) 52 Public Hearing 2026 Property Tax Levy Finance Department 1 October 20, 2025 • Overview of 2026 Property Tax Levies • Regular (General) and Excess (Debt Service) Levies • $6 million in unlevied banked capacity Overview of 2026 Property Tax Levies • Regular Levy — Supports city services • Excess Levy — Pays voter -approved bond debt • Rates set by King County Assessor based on certified AV Regular Property Tax Levy Assessed Valuation (2025 for 2026 collections): $9.83B Maximum Allowable Levy: $18.46M Proposed 2026 Levy: $12.46M Preliminary Rate: $1.27 per $1,000 Assessed Valuation Proposed 2026 Levy ($12.41/Assessed Value ($9.8 B) x 1,000 _ $1.27 Prior year rate: $1.24 • Funds Public Safety Plan Bonds (2016 & 2019) • Bonds: $33.0 mill in 2016 + additional 2019 issuance $37.8 mill • 2026 Levy requirement for debt service payment $5.06M • Final Maturities: 2036 (2016 bonds), 2039 (2019 bonds) Impact to Property Owners Example - Home Value: $600,000 $600,000/1,000 = $600 $600 x 1.2678 = $762 $600 x 0.52 = $312 Regular Levy: $1.27 -* $762 Excess Levy: $0.52 -* $312 Total City Portion: i$1,074/year Impact to Property Owners 2024 % 2025 % Diff Tukwila School District 32.6% 33.5% 0.9% State Schools 23.4% 20.8% -2.6% City of Tukwila 22.3% 15.9% -6.4% King County 12.4% 12.6% 0.2% Puget Sound Regional Fire 0.0% 8.3% 8.3% Other 5.3% 5.4% 0.1% Library 2.7% 2.3% -0.4% Tukwila Pool 1.4% 1.4% 0.0% Total 100.0% 100.0% Other: County Flood Zone Port of Seattle EMS Sound Transit Property Tax Budget 2025 2026 Highest Lawful Levy 17,999,228 18,459,905 Unlevied Amount (6,000,000) (6,000,000) Proposed Levy - Property Tax Revenue 11,999,228 12,459,905 Assessed Value 9,650,575,475 9,827,593,190 Estimated Levy Rate 1.24 1.27 City Portion of Total Property Tax 15.9% • Revenue capacity (regular levy) available but not • Reflects fiscal restraint and taxpayer consideration 1. Public Hearing (October 2025) 2. Council Review (October / November 2025) 3. Adoption of Levy Ordinances (November 2025) • Regular Property Tax Levy • Excess Property Tax Levy • $6M banked capacity reflects fiscal prudence • Compliant with RCW 84.55 and 84.52 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, RELATING TO PROPERTY TAXES; FIXING THE 2026 GENERAL PROPERTY TAX LEVY FOR THE CITY OF TUKWILA REGULAR LEVY, COMMENCING JANUARY 1, 2026, ON ALL PROPERTY, BOTH REAL AND PERSONAL, IN COMPLIANCE WITH RCW 84.55.120; PRESERVING FUTURE LEVY CAPACITY; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City of Tukwila has properly given notice of a public hearing held on October 20, 2025, to consider the ad valorem tax levy for 2026 collections pursuant to RCW 84.55.120; and WHEREAS, the King County Assessor provided a preliminary estimated assessed value of taxable real property in the City of Tukwila of $9,827,593,190, which is subject to adjustment for senior citizens exemptions as provided for in RCW 84.36.381 and for omitted assessments as provided for in RCW 84.40.080; and WHEREAS, under state law, a local government may not increase its property tax collections by more than 1 % from the previous year or the change in IPD (Implicit Price Deflator), whichever is less; and WHEREAS, the IPD rate of inflation for property tax collections due in 2026 is 2.44%; and WHEREAS, after such hearing and after duly considering all relevant evidence and testimony presented, the City Council has determined that the City of Tukwila will increase property tax collections from the previous year's actual collections by $460,677, or 3.84%, which excludes any increase resulting from additions of new constructions and improvements to property, any increase in the value of state -assessed property, and amounts authorized by law as a result of any annexations that have occurred and refunds 2025 Legislation: 2026 Regular Tax Levy Version: 10/8/25 Staff: A. BeMiller 64 Page 1 of 3 made, in order to discharge the expected expenses and obligations of the City in its best interest; and WHEREAS, the City Council desires to protect the City's future levy capacity pursuant to RCW 84.55.092, calculated in future years as though the maximum lawful levy amount allowed by state law had been levied; and WHEREAS, the City is required to certify the amount to be raised by taxation on assessed valuation with the clerk of the county legislative authority by November 30, 2025; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. General 2026 Property Tax Levy Authorized. The annual amount of general property tax levy necessary to raise the amount of revenues required by City of Tukwila for expenditure during calendar year 2026 is hereby levied upon all real and personal property subject to taxation in the City of Tukwila as set forth in the table below. Est. Assessed Value (AV) for collections in 2026 2026 Highest Lawful Collections 2026 Budgeted Collections Dollar ($) Decrease from 2026 Highest Lawful Collections % Decrease from 2026 Highest Lawful Collections Est. Levy Rate per $1,000 AV for 2026 Collections $ Increase over 2025 Collections % Increase over 2025 Collections 9,827,593,190 18,459,905 12,459,905 (6,000,000) -32.50288% 1.26785 460,677 0.03839 Section 2. The amount set forth in section 1 is hereby levied upon all real and personal property in accordance with certified assessed values and completed tax rolls of the City of Tukwila for collection in 2026. That estimated property tax levy amount is intended: (a) to include 67.49712% of the City's 2026 highest lawful levy amount of $18, 459, 905; (b) to include any additional amounts allowed under (i) the new construction, improvements to property and state-assed property provisions of RCW 84.55.010 and (ii) as provided pursuant to RCW 84.55.070, the refund provisions of Chapter 84.68 and 84.69 RCW, and Upon certification of property values for 2026 collections, the Assessor shall adjust and finalize the levy rate per $1,000 of Assessed Valuation to meet the revenues as provided in Sections 1 and 2. 2025 Legislation: 2026 Regular Tax Levy Version: 10/8/25 Staff: A. BeMiller Page 2 of 3 65 Section 3. Any unused general property levy capacity for the 2026 tax year is reserved for future levy as provided by RCW 84.55.092, calculated in future years as though the maximum lawful levy amount allowed by state law had been levied. Section 4. Corrections by City Clerk or Code Reviser Authorized. Upon approval of the City Attorney, the City Clerk and the code reviser are authorized to make necessary corrections to this ordinance, including the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; or ordinance numbering and section/subsection numbering. Section 5. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 6. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City and shall take effect and be in full force on January 1, 2026. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2025. ATTEST/AUTHENTICATED: Andy Youn-Barnett, CMC, City Clerk Thomas McLeod, Mayor APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Office of the City Attorney 2025 Legislation: 2026 Regular Tax Levy Version: 10/8/25 Staff: A. BeMiller Ordinance Number: Page 3 of 3 66 AN ORDINANCE OF THE CITY OF TUKWILA, WASHINGTON, SETTING THE VOTER APPROVED EXCESS BOND LEVY AMOUNT FOR BUDGET YEAR 2026 FOR THE PURPOSE OF PAYING DEBT SERVICE ON THE CITY'S UNLIMITED TAX GENERAL OBLIGATION BONDS ISSUED IN 2016 AND 2019 TO IMPLEMENT THE CITY'S PUBLIC SAFETY PLAN, AS REQUIRED BY LAW; PROVIDING FOR CORRECTIONS AND SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, on November 8, 2016, voters approved a $77.385 million bond measure to implement the City's Public Safety Plan to include funding a Justice Center, rebuilding three (3) fire stations, and providing fire apparatus and life -safety equipment replacement; and WHEREAS, the City, pursuant to the Bond Authorization and Ordinance No. 2514 adopted on November21, 2016, authorized the issuance and sale of $36,500,000 principal amount of the City's Unlimited Tax General Obligation Bonds, and pursuant to Ordinance No. 2610 adopted on July 15, 2019, authorized the issuance and sale of $40,885,000 principal amount of the City's Unlimited Tax General Obligation Bonds, 2019 (collectively, the "Bonds"); and WHEREAS, in 2016, the City issued debt in the amount of $32,990,000 with final maturity in 2036, and in 2019, issued debt in the amount of $37,770,000 with a final maturity in 2038; and WHEREAS, the City has determined an excess property tax levy in the amount of $5,059,475 must be levied in the year 2025 and collected in the year 2026 to provide the funds necessary to pay the debt service requirements on the Bonds in the year 2026; and WHEREAS, on October 20, 2025, the Tukwila City Council, following adequate public notice, held a public hearing to consider the City of Tukwila Excess Bond levy for 2026 collections; and 2025 Legislation: 2026 Excess Levy Version: 10/8/25 Staff: A. BeMiller Page 1 of 3 67 WHEREAS, pursuant to RCW 84.52.070(2), the City is required to certify the amount to be raised by taxation on assessed valuation with the Clerk of the County legislative authority by November 30 each year; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Excess Tax Levy Authorized. A voter approved excess levy is authorized to be collected in 2026 to pay debt service on the City's Unlimited Tax General Obligation ("UTGO") Bonds. The levy for collections in 2026 is $5,059,475, for debt service payments in 2026, as shown below: 2016 UTGO Bond Debt Service $2,737,925 2019 UTGO Bond Debt Service $2,321,550 Total Excess Levy $5,059,475 The excess levy is levied for the purpose of making debt service payments on the UTGO Bonds sold to finance costs related to implementation of the City's Public Safety Plan, as submitted to the qualified electors of the City at a special election held on November 8, 2016. Section 2. Collection. This ordinance shall be certified to the proper County Officials, as provided by law, and taxes here levied shall be collected to pay to the Finance Director of the City of Tukwila at the time and in the manner provided by the laws of the State of Washington for the collection of taxes of non -chartered code cities. Section 3. Corrections by City Clerk or Code Reviser Authorized. Upon approval of the City Attorney, the City Clerk and the code reviser are authorized to make necessary corrections to this ordinance, including the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; or ordinance numbering and section/ subsection numbering. Section 4. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 5. Effective Date. This Ordinance or a summary thereof shall be published in the official newspaper of the City and shall take effect and be in full force and effect five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2025. 2025 Legislation: 2026 Excess Levy Version: 10/8/25 [signature page to follow] Staff: A. BeMiller 68 Page 2 of 3 ATTEST/AUTHENTICATED: Andy Youn-Barnett, CMC, City Clerk APPROVED AS TO FORM BY: Office of the City Attorney 2025 Legislation: 2026 Excess Levy Version: 10/8/25 Thomas McLeod, Mayor Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number: Staff: A. BeMiller Page 3 of 3 69