HomeMy WebLinkAboutReg 2009-10-19 Item 4J - Ordinance - Water, Sewer and Surface Water Utility Taxes COUNCIL AGENDA SYNOPSIS
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ITEM INFORMATION
CAS NUMBER 09-150 1 ORIGINAL AC;I:ND, \D,VI'I: OCTOBER 12, 2009
.\(;KNI).\ hlE\I Trri,K An ordinance establishing new regulations regarding water, sewer and surface
water utility taxes.
C 1'1 is )R1' Di.re•tt-r-rion [Motion U Resolution Ordinance U Bid Amard n Pub /ic Heart' no Other
AItg Date 10/12/09 [lltg Date [lltg Date Rltg Date 10/19/09 ilitg Date illtg Date [lltg Date
SPc) tic )R I Council Mczyar Adm Svcs DCD .Finance Fire Legal n P &R Police Plt%
Si )NsoR'S This ordinance creates new regulations in new TMC Chapter 3.54 implementing a utility
Su.`I.`l \R\ tax on the water, sewer and surface water funds. The utility tax would be on the gross
revenue of the utility funds, rather than on the utility customers.
The Council is being asked to approve the ordinance creating a utility tax on the water,
sewer and surface water funds.
RI:\'II?\ \%I,I) BY COW Mtg. Li CA &P Cmte F &S Cmte Transportation Cmte
1 Utilities Cmte n Arts Comm. Parks Comm. 1 1 Planning Comm.
DATE: 10/6/09
RECOMMENDATIONS:
SPONSOR/ADMIN. Finance Department
COMMITrlr,l? Unanimous Approval; Forward to C.O.W.
COST IMPACT FUND SOURCE
EyP1?NDI1•lIRI? RI;c>UIRI?I) AMOUNT BUDGETED APPROPRIATION REQUIRED
Fund Source:
Comments:
MTG. DATE RECORD OF COUNCIL ACTION
10/12/09 Forward to Next Regular Meeting with Changes to Ordinance
10/19/09
MTG. DATE 1 ATTACHMENTS
10/12/09 I Informational Memorandum dated 10/2/09
Ordinance in draft form
Minutes from Finance and Safety Committee meeting of 10/06/09
10/19/09 Revised _Informational Memorandum dated 10/13/09
Ordinance in strike -thru underline format
TO:
City of Tukwila
INFORMATIONAL MEMORANDUM
Mayor Haggerton
Rhonda Berry
Finance and Safety Committee
FROM: Shawn Hunstock, Finance Director
DATE: October 13, 2009
SUBJECT: Draft Utility Tax Ordinance
ISSUE
The City is in need of funding for emergency planning and response costs in the event of a
flood. Such planning directly relates to conditions at the Howard Hanson Dam.
BACKGROUND
Jim Haggerton, Mayor
The City recently declared an emergency due to conditions at the Howard Hanson Dam,
and the likelihood given those conditions that the U.S. Army Corps of Engineers, which
operates the dam, could release large amounts of water to prevent further damage to the
dam in the event of high rainfall.
The City's Emergency Management Coordinator, Hillman Mitchell, is recommending
specific measures be taken to prepare for a possible flood during the coming flood season.
Such measures include placement of sandbags and other materials on top of publically
owned levies throughout the City. The initial cost estimate of purchasing the necessary
materials and equipment, and placement on those materials on top of the levies, is in the
range of $2.1 million to $2.5 million. The City will also incur costs related to completion of an
emergency response plan in the coming weeks, as well as other planning costs. The exact
cost of these other items is unknown at this time, but could exceed a few hundred thousand
dollars.
The City received information recently indicating the materials placed on top of the levy
could stay in place for up to five years with appropriate maintenance. The large sandbags
will need to be covered to protect them from UV rays, and a few bags may need to be
moved if placed in or near the public right -of -way, but most of the bags will be able to stay
were they are initially placed.
The costs identified above will be necessary regardless of whether there is an actual flood
event or not. These estimates do not include the cost of response to an actual event, which
would obviously be significant, not to mention the potential cost of repairs to City
infrastructure.
INFORMATIONAL MEMO
Page 2
DISCUSSION
The administration is recommending a utility tax on the water, sewer and surface water
funds to pay for the cost of preparedness and possible response over the next several
months. The expectation at this time is that the tax would not be passed on to customers of
these utilities. The tax rate would be 15% effective December 31, 2008 through April 30,
2010. This initially higher rate is due to the cost over the next few months of raising the level
of the levies, as well as the cost of completion of planning efforts. A utility tax of 10% would
remain in place to fund on -going planning and possible response costs for such natural
disasters in the future. The 10% utility tax is scheduled to expire as of December 31, 2012,
but could be changed before then, or extended at any time. It is anticipated that a long -term
fix for the dam could take several years, and the City would incur significant costs each year
during the flood season to prepare for a possible event.
It should be noted that the City continues to pursue any and all external funding for the
steps now being considered. It is not known at this time if these expenses will be
reimbursable absent an actual flooding event. Should such expenses be reimbursed, the
City will have the option of replenishing the utility funds for taxes collected to pay for flood
related expenses.
A utility tax on the water, sewer and surface water funds is considered appropriate to
preserve, protect, and if necessary repair, such utility infrastructure throughout the City. The
cost of not taking such measures now and potentially repairing this infrastructure later would
greatly exceed the cost of measures now being planned, not to mention the health and
safety issues that would result if the City were to not prepare as now planned for a possible
flood.
RECOMMENDATION
The Council is being asked to approve the attached ordinance adopting a utility tax on the
water, sewer and surface water funds effective December 31, 2008.
This item was discussed at the October 5, 2009 Finance and Safety Committee meeting,
and the October 12, 2009 Committee of the Whole meeting. It is scheduled for
consideration at the October 19, 2009 Regular Meeting.
ATTACHMENT
Draft Ordinance in strike -thru underline format
W:12009 I n foMemos\Uti lityTaxRevised. doc
DRAFT
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, ESTABLISHING NEW REGULATIONS, TO BE CODIFIED
AT TUKWILA MUNICIPAL CODE CHAPTER 3.54, REGARDING WATER,
SEWER AND SURFACE WATER UTILITY TAXES; PROVIDING FOR
SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City Council has determined the Financial Planning Model
demonstrates there is projected to be a deficit balance in the General Government Funds
by 2011; and
WHEREAS, the City has availed itself of all appropriate revenue sources currently
authorized and has reduced expenditures by 3% in the General Fund; and
WHEREAS, the basic City service levels could suffer a reduction without a new
source of revenue; and
WHEREAS, implementation of a tax on the City's water, sewer and surface water
utilities measured by gross earnings is expected to generate eufficicntadditional
revenue to help maintain current levels of City services; and
WHEREAS, the City Council desires to accelerate the collection of the utility tax
imposed herein; and
'WHEREAS, the City Council has determined the public interest is best served by the
implementation of a tax on the City's water, sewer and surface water utilities;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. Regulations Established. Tukwila Municipal Code Chapter 3.54, "City
Utility Tax," is hereby established to read as follows:
CHAPTER 3.54
CITY UTILITY TAX
Sections:
3.54.010 City Utility Tax
3.54.020 Definitions
3.54.030 Tax Rate
3.54.040 Tax Year
3.54.050 Exceptions and Deductions
3.54.060 Finance Director to Make Rules
3.54.010 City Utility Tax
There is hereby imposed a tax to be levied on and after Qet-eher 1, 2009December 31,
2008, against and upon the gross earnings of the water, sewer and surface water utility
funds and on all water, sewer and surface water utilities at the rates set forth in this
chapter. The tax shall, however, be subordinate to any payments required to be made
by any of said utility funds from said gross earnings into any fund or funds heretofore
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or hereafter created for the payment of and interest on revenue bonds of the City
heretofore or hereafter issued.
3.54.020 Definitions
As used in this chapter, unless the context or subject matter clearly requires
otherwise, the words or phrases defined in this section shall have the indicated
meanings.
1. "Finance Director" means the Finance Director of the City of Tukwila,
Washington, or his or her designee.
2. "Gross earnings" means the consideration, whether money, credits, rights or
property expressed in terms of money, proceeding or accruing by reason of the
transaction of business and includes gross proceeds of sales, compensation for rendition
of services, gains realized from interest, rents, royalties, fees, commissions, dividends
and other emoluments, however designated, all without any deduction on account of
cost of property sold, materials used, labor, interest, losses, discount and any other
expense whatsoever.
3. "Sewer service" means any connection to the City sewer system and shall be
further defined by customer class.
4. "Surface water service" means any connection to the City surface water or storm
drainage system and shall be further defined by customer class.
5. "Water service" means any connection to the City water system and shall be
further defined by customer class.
3.54.030 Tax Rate
There is levied upon water, sewer and surface water utilities, taxes in the amount to
be determined by the application of rates given against gross earnings as follows:
1. Upon the City water, sewer and surface water funds, a tax equal to 3515% of the
total gross revenue from such business from all customers in the City during the period
for which the tax is due. Such tax shall be effective from October 1, 2009December 31,
2008 through —April 30, 2010.
2. Upon the City water, sewer and surface water funds, a tax equal to 10% of the
total gross revenue from such business from all customers in the City during the period
for which the tax is due. Such tax shall be effective from May 1, 2010 through
December 31, 2012.
3.54.040 Tax Year
The tax year for purposes of this water, sewer and surface water utility tax shall
commence Oct 1 ,200-9December 31, 2008 and -end Deeer 1sea 22f09 -and thereafter
shall commence on January 1 and end on December 31 each year.
3.54.050 Exceptions and Deductions
In computing the gross earnings tax due under the provisions of this chapter, there
shall be deducted from the measure of the tax the following items:
1. Uncollected accounts, if the books of the utility are on an accrual basis as
distinguished from a cash basis.
2. Amounts received through contemplated or actual condemnation proceedings or
in account of any federal, state or local public works project.
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3. Amounts received as compensation or reimbursement for damages to or
protection of any property of the utility.
4. Contributions for or in aid of construction.
5. Amounts collected as sales tax.
6. Amounts received from surcharge to water rates charged outside City limits
users for system improvements necessary to meet City standards.
3.54.060 Finance Director to Make Rules
The Finance Director shall have the power to adopt and enforce rules and
regulations not inconsistent with this chapter or with the law for the purposes of
carrying out the provisions thereof.
Section 2. 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 3. Effective Date.This Ordinance shall be published in the official newspaper of the
City. shall take effect and be in full force five (51 days after the date of publication. and shall be
retroactively applied to taxes savable beginning December 31. 2008.. This ordinance or a
effect and be in full force five da-yo after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Special Rem ular Meeting thereof this day of
2009.
ATTEST/ AUTHENTICATED:
Christy O'Flaherty, CMC, City Clerk
APPROVED AS TO FORM BY:
I Office of the City Attorney
SH•k;n 10/132009
Jim Haggerton, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
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