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HomeMy WebLinkAboutCOW 2009-09-14 Item 4G - Ordinance - Solid Waste Utility Tax COUNCIL AGENDA SYNOPSIS vJ ILA 1,1' �J�` q s ITEM No. \y Nleeting Date Initials by I Mayor s review I Council review V t 09/14/09 1 SH I mo- I /Ii -vkiL 09/21/09 I SH 290= I I I G. ITEM INFORMATION I CAS NUMBeR: 09-130 ORIGINAL AGI,NDADATE: SEPTEMBER 14, 2009 AGFNDA I'll I T1'11,1. An ordinance establishing new regulations implementing a solid waste utility tax. C.\1'I Discussion Motion I 'Resolution Ordinance Bid Award n Public Hearing Other illtg Date 09/14/09 Mtg Date 11itg Date Mlltg Date 09/21/09 illtg Date Mtg Date Mtg Date SPONSOR Council Mayor Adm Svcs DCD Finance Fire Legal P &R [J Police PlV SPONSOR'S The ordinance creates regulations in new TMC Chapter 3.51 implementing a solid waste SUMMARY utility tax. The tax is being proposed at a rate of six percent for non residential customers only. The Council is being asked to approve the ordinance creating a solid waste utility tax. Ri \'11. :WV1 BY COW Mtg. CA &P Cmte F &S Cmte I I Transportation Cmte Utilities Cmte Arts Comm. Parks Comm. E Planning Comm. DATE: 9/9/09 RECOMMENDATIONS: SPONSOR /ADMIN. Finance Department COMMITTEE Unanimous Approval; Forward to C.O.W. COST IMPACT FUND SOURCE EYPI,NDITURI REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: 1 MTG. DATE 1 RECORD OF COUNCIL ACTION 9/14/09 9/21/09 I MTG. DATE ATTACHMENTS 9/14/09 Informational Memorandum dated 9/1/09 Ordinance in Draft Form Projected Solid Waste Utility Tax Revenue spreadsheet Minutes from Finance and Safety Committee meeting of 9/9/09 9/21/09 TO: FROM: DATE: SUBJECT: ISSUE BACKGROUND DISCUSSION RECOMMENDATION City of Tukwila INFORMATIONAL MEMORANDUM Mayor Haggerton Rhonda Berry Finance and Safety Committee Shawn Hunstock, Finance Director Mfr September 1, 2009 Solid Waste Utility Tax Jim Haggerton, Mayor The City is in need of increasing revenue and reducing expenditures in an attempt to address our current revenue shortfalls, particularly in the area of sales tax receipts. Sales tax receipts are currently over 26% behind budget for the year, and over 23% behind where we were at the same time a year ago. In addition to expenditure reductions already implemented by departments, including an across the -board three percent reduction, additional revenue sources are needed to offset declines in sales tax receipts and other revenue sources. The City currently taxes electricity, gas and telephone utilities at the statutory maximum of six percent. The tax rate on cable television is six percent, which is generally recommended to be consistent with other utility taxes. The City does not currently have a tax on water, sewer, surface water or solid waste utilities. In an effort to generate addition revenue in light of the City's current budget situation, administration is recommending adoption of a solid waste utility tax. The tax is also in recognition of the cost of maintenance of City streets given the nature of solid waste collection, the size and type of equipment used, and the normal wear and tear on our streets by that equipment. A tax rate of six percent is recommended. Administration also proposes taxing only commercial and industrial customers. Residential customers only account for approximately eight percent of solid waste revenue in Tukwila according to Allied Waste, the City's contracted solid waste collection provider. The Council is being asked to approve the attached ordinance adopting a solid waste utility tax. INFORMATIONAL MEMO Page 2 This item is scheduled to be discussed at the September 9, 2009 Finance and Safety Committee meeting, the September 14, 2009 Committee of the Whole meeting and subsequent September 21, 2009 Regular Meeting. ATTACHMENTS Draft Ordinance Projected Solid Waste Utility Tax Revenue spreadsheet H: \SolidWasteUtilityTaxl nfoMemo.doc DRAFT AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ESTABLISHING NEW REGULATIONS REGARDING SOLID WASTE UTILITY TAX; 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 solid waste utility tax measured by gross income from non residential customers is expected to generate sufficient revenue to maintain current levels of City services; and WHEREAS, the City Council has determined the public interest is best served by the implementation of a solid waste utility tax; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Regulations Established. Tukwila Municipal Code Chapter 3.51, "Solid Waste Utility Tax," is hereby established to read as follows: W:\ Word Processing \Ordinances \Solid Waste Utility Tax.doc 5H:ksn 09 /09/2009 CHAPTER 3.51 SOLID WASTE UTILITY TAX Sections: 3.51.010 Solid Waste Utility Tax 3.51.020 Use and Accountability of Tax Proceeds 3.51.030 Definitions 3.51.040 Occupations Subject to Tax Amount 3.51.050 Tax Year 3.51.060 Exceptions and Deductions 3.51.070 Monthly Installments 3.51.080 Taxpayers' Records 3.51.090 Failure to Make Returns or to Pay the Tax in Full 3.51.100 Penalty for Delinquent Payment 3.51.110 Overpayment of Tax 3.51.120 Noncompliance Penalty 3.51.130 Appeal 3.51.140 Finance Director to Make Rules 3.51.150 Referendum Procedure Page 1 of 5 3.51.010 Solid Waste Utility Tax The tax provided for in this chapter shall be known as the "solid waste utility tax," and is levied upon the privilege of conducting a solid waste collection business within the City of Tukwila, effective October 1, 2009. 3.51.020 Use and Accountability of Tax Proceeds 1. All revenues collected pursuant to this chapter shall be deposited into the General Fund, and shall be used for the funding of City services or capital requirements as the Council shall direct through its biennial budget process. 2. In addition to the automatic annual review of the Financial Planning Model, the City Council will review the need for rate or other changes as part of the biennial budget process. 3.51.030 Definitions As used in this chapter, unless the context or subject matter clearly requires otherwise, the words or phrases defined in this chapter shall have the indicated meanings. 1. "Solid waste" means all putrescible and nonputrescible solid and semi -solid wastes, including but not limited to, garbage, rubbish, ashes, industrial wastes, swill, sewage sludge, demolition and construction waste, abandoned vehicles or parts thereof, and recyclable materials. 2. "Solid waste collection business" means every person who receives solid waste or recyclable materials for transfer, storage, or disposal, including but not limited to, all collection services, public or private solid waste disposal sites, transfer stations, and similar operations. 3. "Finance Director" means the Finance Director of the City of Tukwila, Washington, or his or her designee. 4. "Gross income" means the value proceeding or accruing from the performance of the particular business involved, including gross proceeds of sales, compensation for the rendition of services, and receipts (including all sums earned or charged, whether received or not) by reason of investment in the business engaged in (excluding rentals, receipts or proceeds from the use or sale of real property or any interest therein and proceeds from the sale of notes, bonds, mortgages or other evidences of indebtedness, or stocks and the like), all without any deduction on account of the cost of property sold, the cost of materials used, labor costs, taxes, interest or discount paid, delivery costs or any expenses whatsoever, and without any deduction on account of losses. 5. "Person" means any person, firm, corporation, association, or entity of any type engaged in a business subject to taxation under this ordinance. 6. "Residential customers" means any customer of the solid waste collection provider for residential type customers of single- family residential structures, including mobile homes- and duplexes, tri- plexes and four plexes where each residential unit is billed individually, except that the term does not include multiple -unit residences with five or more attached or unattached units billed collectively. 3.51.040 Occupations Subject to Tax Amount There is levied upon, and shall be collected from a person because of certain business activities engaged in or carried on in the City of Tukwila, taxes in the amount to be determined by the application of rates given against gross income as follows: W:\ Word Processing Ordinances \Solid Waste Utility Tax.doc SH:ksn 09 /09/2009 Page 2 of 5 Upon a person engaged in or carrying on the business of providing solid waste collection service, a tax equal to 6% for the calendar year 2009 and beyond of the total gross income from such business from all customers in the City, except residential customers, during the period for which the tax is due. 3.51.050 Tax Year The tax year for purposes of this solid waste utility tax shall commence October 1, 2009 and end December 31, 2009, and thereafter shall commence on January 1 and end on December 31 each year. 3.51.060 Exceptions and Deductions There is excepted and deducted from the total gross income upon which the tax is computed: 1. That part of the total gross income derived from business which the City is prohibited from taxing under the constitution or laws of the United States and the constitution or laws of the State of Washington. 2. Adjustments made to a billing or customer account in order to reverse a billing or charge that was not properly a debt of the customer. 3. Cash discounts allowed and actually granted to customers of the taxpayer during the tax year. 4. Uncollectible debts written off the taxpayer's books during the tax year. If subsequently collected, the income shall be reported for the period in which collected. 3.51.070 Monthly Installments The tax imposed by TMC 3.51.040 shall be due and payable in monthly installments, and remittance therefor shall be made on or before the last day of the month following the end of the monthly period in which the tax is accrued. Annual returns for smaller entities may be allowed upon advance written approval from the Finance Director. On or before said due date, the taxpayer shall file with the Finance Director a written return upon such form and setting forth such information as the Finance Director shall reasonably require relating to the accurate computation and collection of this tax, together with the payment of the amount. 3.51.080 Taxpayer's Records Each taxpayer shall keep records reflecting the amount of the taxpayer's gross income on sales and services within the City, and such records shall be open at all reasonable times for the inspection of the Finance Director or his or her designee to verify information provided on any utility tax return or to determine whether such return is required to be filed. 3.51.090 Failure to Make Returns or to Pay the Tax in Full If a taxpayer fails, neglects, or refuses to make his, her or its return as and when required by this chapter, the Finance Director is authorized to determine the amount of the tax payable under provisions of TMC 3.51.040, and to notify such taxpayer of the amount so determined. The amount so fixed shall thereupon be the tax and be immediately due and payable, together with penalty and interest. Delinquent taxes, including any penalties, are subject to an interest charge of 12% per year on the unpaid balance from the date any such taxes became due as provided in TMC 3.51.070. W: \Word Processing \Ordinances \Solid Waste Utility Tax.doc SH:ksn 09/09/2009 Page 3 of 5 3.51.100 Penalty for Delinquent Payment If a person subject to this tax fails to pay any tax required by this chapter within 15 days after the due date thereof, there shall be added to such tax a penalty of 10% of the amount of such tax. Any tax due under this chapter that is unpaid and all interest and penalties thereon shall constitute a debt to the City. The City may, at its discretion, pursuant to Chapter 19.16 RCW, use a collection agency to collect such taxes, interest and penalties owed or assessed, or it may seek collection by court proceedings, which remedies shall be in addition to all other remedies. 3.51.110 Overpayment of Tax Money paid to the City through error or otherwise not in payment of the tax imposed by this chapter, or in excess of such tax shall, upon discovery, be credited against any tax due or to become due from such taxpayer hereunder, provided however, that overpayments extending beyond one year prior to notifying the City shall not be refunded. If such taxpayer has ceased doing business in the City, any such overpayment shall be refunded to the taxpayer. 3.51.120 Noncompliance Penalty A. No person subject to this chapter shall fail or refuse to file tax returns or to pay tax when due, nor shall any person make a false statement or representation in or in connection with any such tax return, or otherwise violate or refuse to comply with this chapter or with any rule promulgated pursuant to TMC 3.51.140. B. In addition to the interest and delinquent filing penalties set forth above, a willful violation of or failure to comply with this chapter is a civil infraction, subject to a cumulative fine of up to $250 for each day that a violation continues. All penalties imposed under this chapter shall constitute a debt to the City. The city may, at its discretion, pursuant to Chapter 19.16 RCW, use a collection agency to collect taxes, interest, and penalties owed or assessed pursuant to this chapter, or the City may seek collection by court proceedings, which remedies shall be in addition to all other remedies. 3.51.130 Appeal A taxpayer aggrieved by the amount of the tax, penalties, interest, or civil infraction fine determined to be due by the Finance Director or his or her designee under the provisions of this chapter may appeal such determination to the City of Tukwila's City Administrator or his or her designee. Taxpayers shall be required to remit the amounts determined to be due under this chapter prior to filing an appeal. 3.51.140 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. 3.51.150 Referendum Procedure The provisions of this chapter are subject to the referendum procedure as follows: 1. A referendum petition seeking to repeal this ordinance shall be filed with the City Clerk, who shall be designated the person to receive petitions of all types, within seven days of the passage by the City Council of this ordinance or publication thereof, whichever is later. W:\ Word Processing \Ordinances \Solid Waste Utility Tax.doc SH:ksn 09/09/2009 Page 4 of 5 2. Within ten days, the City Clerk shall confer with the petitioner concerning the form and style of the petition, issue an identification number for the petition, and cause to be written a ballot title for the measure. 3. The ballot title shall be posed as a question, so that an affirmative answer to the question and an affirmative vote on the measure results in the tax or tax rate increase being imposed, and a negative answer to the question and a negative vote on the measure results in the tax or tax rate increase not being imposed. The petitioner shall be notified of the identification number and ballot title within this ten -day period. 4. After notification of the identification number and ballot title, the petitioner shall have 30 days in which to secure on petition forms the signatures of not less than 15% of the registered voters of the City and to file the signed petitions with the City Clerk. 5. Each petition form shall contain the ballot title and the full text of the measure to be referred. The City Clerk shall verify the sufficiency of the signatures on the petitions. If sufficient valid signatures are properly submitted, the City Clerk shall cause the referendum measure to be submitted to the City voters at the next election within the City or at a special election as provided pursuant to RCW 35.17.260(2). 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 or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force 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 2009. ATTEST /AUTHENTICATED: Christy O'Flaherty, CMC, City Clerk APPROVED AS TO FORM BY: Office of the City Attorney W: \Word Processing Ordinances \Solid Waste Utility Tax.doc SH:ksn 09/09/2009 Jim Haggerton, Mayor Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number: Page 5 of 5 City of Tukwila Projected Solid Waste Utility Tax Revenue Customer Jan -07 Feb -07 Mar -07 Apr -07 May -07 Jun -07 Jul -07 Auq -07 Sep -07 Oct -07 Nov -07 Dec -07 Total Revenue Commercial $264,896.94 $267,338.06 $272,881.17 $282,615.51 $285,175.43 $282,281.80 $285,476.92 $287,795.99 $288,708.47 $295,948.30 $297,103.96 $293,337.89 $3,403,560.44 55.62% Industrial $168,640.64 $169,784.95 $183,639.34 $176,859.80 $199,524.03 $196,365.70 $182,691.71 $194,797.16 $182,374.66 $201,331.18 $185,272.23 $173,419.14 $2,214,700.54 36.19% Residential $41,828.11 $38,377.92 $42,084.66 $41,385.26 $42,399.52 $40,868.45 $41,728.61 $42,261.00 $41,506.62 $43,420.21 $42,341.99 $43,084.29 $501,286.64 8.19% $6,119,547.62 Solid Waste Utility Tax* All customers Annual Growth Biennial Tax Rate Revenue Rate Revenue 3.00% $14,260.97 $14,265.03 $14,958.16 $15,025.82 $15,812.97 $15,585.48 $15,296.92 $15,745.62 $15,377.69 $16,220.99 $15,741.55 $15,295.24 $183,586.43 3.00% $383,860.86 4.00% $19,014.63 $19,020.04 $19,944.21 $20,034.42 $21,083.96 $20,780.64 $20,395.89 $20,994.17 $20,503.59 $21,627.99 $20,988.73 $20,393.65 $244,781.90 3.00% $511,814.48 5.00% $23,768.28 $23,775.05 $24,930.26 $25,043.03 $26,354.95 $25,975.80 $25,494.86 $26,242.71 $25,629.49 $27,034.98 $26,235.91 $25,492.07 $305,977.38 3.00% $639,768.11 6.00% $28,521.94 $28,530.06 $29,916.31 $30,051.63 $31,625.94 $31,170.96 $30,593.83 $31,491.25 $30,755.39 $32,441.98 $31,483.09 $30,590.48 $367,172.86 3.00% $767,721.73 7.00% $33,275.60 $33,285.07 $34,902.36 $35,060.24 $36,896.93 $36,366.12 $35,692.81 $36,739.79 $35,881.28 $37,848.98 $36,730.27 $35,688.89 $428,368.33 3.00% $895,675.35 8.00% $38,029.26 $38,040.07 $39,888.41 $40,068.85 $42,167.92 $41,561.28 $40,791.78 $41,988.33 $41,007.18 $43,255.98 $41,977.45 $40,787.31 $489,563.81 3.00% $1,023,628.97 Solid Waste Utility Tax* Without residential Annual Growth Biennial Tax Rate Revenue Rate Revenue 3.00% $13,006.13 $13,113.69 $13,695.62 $13,784.26 $14,540.98 $14,359.43 $14,045.06 $14,477.79 $14,132.49 $14,918.38 $14,471.29 $14,002.71 $168,547.83 3.00% $352,416.66 4.00% $17,341.50 $17,484.92 $18,260.82 $18,379.01 $19,387.98 $19,145.90 $18,726.75 $19,303.73 $18,843.33 $19,891.18 $19,295.05 $18,670.28 $224,730.44 3.00% $469,888.88 5.00% $21,676.88 $21,856.15 $22,826.03 $22,973.77 $24,234.97 $23,932.38 $23,408.43 $24,129.66 $23,554.16 $24,863.97 $24,118.81 $23,337.85 $280,913.05 3.00% $587,361.09 6.00% $26,012.25 $26,227.38 $27,391.23 $27,568.52 $29,081.97 $28,718.85 $28,090.12 $28,955.59 $28,264.99 $29,836.77 $28,942.57 $28,005.42 $337,095.66 3.00% $704,833.31 7.00% $30,347.63 $30,598.61 $31,956.44 $32,163.27 $33,928.96 $33,505.33 $32,771.80 $33,781.52 $32,975.82 $34,809.56 $33,766.33 $32,672.99 $393,278.27 3.00% $822,305.53 8.00% $34,683.01 $34,969.84 $36,521.64 $36,758.02 $38,775.96 $38,291.80 $37,453.49 $38,607.45 $37,686.65 $39,782.36 $38,590.10 $37,340.56 $449,460.88 3.00% $939,777.75 To be determined if this should be a utility tax or franchise fee. Tax Rate Difference 3.00% $31,444.21 4.00% $41,925.61 5.00% $52,407.01 6.00% $62,888.41 7.00% $73,369.82 8.00% $83,851.22 Finance Safety Committee Minutes September 9, 2009 Pape 2 B. Seattle Southside Visitor Center Lease Staff is seeking full Council direction regarding a new office location. Seattle Southside Visitor Center's current lease ended on August 31, 2009 and is now continuing on a month -to -month basis. After a lengthy review of available office space locations, staff has selected the two best alternatives and is now seeking Council selection of a preferred alternative. Staff recommends moving the SSVS offices to a new location at 3100 South 176 Street, in SeaTac. Staff indicated that in 2002 Tukwila and the City of SeaTac entered into an Interlocal Agreement for joint tourism and marketing services for the combined cities under the program title Seattle Southside Visitors Services. The partnership between the two cities has been mutually beneficial, and SeaTac is committed to assisting SSVS with acquiring a new space that will benefit both cities. Jeff Robinson, City of SeaTac Economic Development Administrator, indicated at their Hotel -Motel Advisory Committee (HMAC) meeting, the Committee indicated they have authorized the expenditure of a not to exceed $50,000 for moving and tenant improvements, if SSVS were to acquire a new office location in SeaTac. Preserving the partnership between the two cities is the most important factor of the request. UNANIMOUS APPROVAL. FORWARD TO SEPTEMBER 14 COW FOR DISCUSSION. C. Solid Waste Utility Tax Ordinance Staff is seeking full Council approval for a six percent solid waste utility tax on gross receipts of any solid waste and recycling activities within the City limits on commercial accounts. Residential accounts, defined as a single- family residential structure, including mobile homes and duplexes, tri- plexes and four plexes, are not included. Condominium and apartment complexes are classified as a commercial account. The City is in need of increasing revenue and reducing expenditures in an attempt to address our current revenue shortfalls. The City currently taxes electricity, gas and telephone utilities at the maximum of six percent. The tax is also in recognition of the cost of maintenance of City streets given the nature of solid waste collection, the size and type of equipment used and the normal wear and tear on our streets by that equipment. In 2008, a survey was conducted by the Association of Washington Cities indicating over 140 cities tax solid waste at the six percent level. Staff has based their recommendation on the AWC Survey results. Current rates for a 6 -yard container are $57.37, with a six percent increase, the new rate would be $60.81, which equals an increase of $3.44 per month. A 6 -yard container is a common size used at multi family complexes. The Committee reviewed and discussed the impacts to the rental population. The Committee was unanimous regarding the six percent utility tax and the Commercial Residential definitions. Committee Chair Linder requested the information relating to the amount of the increase per month is published in the next Hazelnut. UNANIMOUS APPROVAL. FORWARD TO SEPTEMBER 14 COW FOR DISCUSSION. D. New Checking Account. Shawn reviewed the history of the Finance Department's implementation of an armored car service several months ago with daily pickup and delivery to U.S. Bank, eliminating the need for Finance staff to drive to the bank each day. The Municipal Court utilizes Wells Fargo Bank for their banking. The current contract with the armored car service is for U.S. Bank. It was decided that the Court staff would drive their deposit to Wells Fargo daily, rather than contract with a separate armored car service, at an increased expense. The Municipal Court has now indicated they would like to change banks from Wells Fargo Bank to U.S. Bank effective October 1, 2009. The primary reason for this change is to enable the Court to take advantage of the armored car service currently that is being provided by Finance. INFORMATION ONLY.