PED 2020-11-16 Item 1D - Briefing - 2021 Tourism Promotion Area Interlocal Agreement

Browse Search

City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Planning and Economic Development Committee FROM: Brandon Miles, Business Relations Manager CC: Mayor Ekberg DATE: November 10, 2020 SUBJECT: 2021 Tourism Promotion Area Interlocal Agreement Review ISSUE On October 5 Planning and Economic Development Committee asked staff to create a workplan item to conduct a review of the Tourism Promotion Area (TPA) Interlocal Agreement in 2021. Staff is following up on this request with additional detail and background. BACKGROUND Tourism Promotion Area Interlocal Aareement In 2014 the Cities of Tukwila, Des Moines, and SeaTac executed an interlocal agreement ("TPA ILA)" to form a Tourism Promotion Area (TPA) to cover the combined boundaries of the three cities. Under Washington State law most municipalities in King County cannot form their own TPAs and must partner with at least one other jurisdiction'. Through the TPA ILA the cities agreed that the City of SeaTac would serve as the legislative authority for the TPA area. In 2014, after receiving a petition from hoteliers, the City of SeaTac formally adopted a resolution setting out a TPA fee in the three -city area. The total fee was $2 per night per eligible hotel stay in a hotel or motel with at least 90 rooms2. The $2 rate was the maximum permitted under the current State law. State law was recently amended to allow the rate to go up to $5 per night, provided 60% of the businesses that would pay the increase petition for the increase and it is approved by the legislative authority. Per the TPA ILA, 100% of the TPA fee, less a one percent administrative charge by the Department of Revenue, goes to Seattle Southside Regional Tourism Authority (SSRTA) for tourism promotion efforts in the three city area under the "Seattle Southside" brand. In 2019, SSRTA received just over $3.96 million from the TPA fee. The agreement provides a 20 -year term; however, any member City can withdraw from the TPA ILA by providing one year's notice to the other members. In addition, like any agreement, the signatories to the TPA ILA can mutually agree to amend the agreement at any time. ' The City of Federal Way was able to carve an exemption to allow it to form its own TPA without the need to partner with another jurisdiction. 2 The TPA fee is a flat fee, while the lodging tax is a percentage. This allows the TPA to collect higher revenue than the lodging tax when rates are low. For example, a room at a hotel going for $100 a night would only provide $1 in lodging tax funds, while the TPA gets the full $2. 109