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HomeMy WebLinkAboutReg 2013-11-18 Item 6 - Ordinance - TMC Section 5.04.020 "Application and Fees Required" to Amend Residential Rental Business License Fee StructureCOUNCIL AGENDA SYNOPSIS Initials MeetiugDate Prepared by Ma or's review Council review 11/18/13 JP ITEM INFORMATION ITEM No. 6 81 STAFF SPONSOR: JACK PACE ORIG INAL AGENDA DATE: 11/18/13 AGENDA ITEM TITLE An Ordinance amending the Revenue Generating Regulatory License (RGRL) fee regarding rental housing. CATEGORY Discussion Mtg Date 11/18/13 E Motion Mtg Date E Resolution Alt,gDate 1 Ordinance Bid Award Mg Date Public Hearing Mt,gDate I— Other Mt Date Mtg Date 11/18/13 SPONSOR Council Mayor —I HR DCD hit Finance Fire E IT I— P&R Police LI Ply SPONSOR'S The City Council is being asked to approve an Ordinance amending the Revenue SUMMARY Generating Regulatory License (RGRL) fee regarding rental housing. This would exempt properties with 1-4 units from the RGRL fee. REVIEWED BY E COW Mtg. ri CA&P Cmte Utilities Cmte Fl Arts Comm. DATE: 11/05/13 F&S Cmte Transportation Cmte Comm. E Planning Comm. CHAIR: ROBERTSON E Parks COMMITTEE RECOMMENDATIONS: SPoNsoR/ADmiN. CommnTEE Finance Department Unanimous Approval; Forward to Committee of the Whole COST IMPACT / FUND SOURCE EXPENDrruRE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED $ $ $ Fund Source: GENERAL FUND Comments: This would reduce general fund revenue by approximately $11,495 annually. MTG. DATE RECORD OF COUNCIL ACTION 11/18/13 MTG. DATE ATTACHMENTS 11/18/13 Informational Memorandum dated 10/16/13 Draft Ordinance Minutes from the Finance & Safety Committee Meeting of 11/05/13 81 82 T{}: City Tukwila Jim Haggerton, Mayor INFORMATIONAL ����������������UU�� nn�n ��nn^nmn��n n�*n����~ nmn�~u�n��n�«~un�����nmu Mayor Haggerton Finance and Safety Committee FROM: Community Development Finance Department DATE: October 16, 2013 SUBJECT: Revenue Generating Regulatory License (RGRL) fee on Residential Rental Business Licenses ISSUE Revise TMC 5.04.02 to exempt residential rental properties with 1-4 units from the Revenue Generating Regulatory License (RGRL) fee; eliminate the existing RGRL exemption applicable to residential rental properties with gross annual receipts of less than $12,000. BACKGROUND In 2010. the City Clerk's Office processed and issued all business licenses. Residential rental property owners were required to have a business license if they had five or more rental units. No RGRL fees were assessed at that time. In 2011' business licensing was transferred to the Finance Department and the RGRL was adopted as a new fee, the RGRL fee was assessed to all businesses licenses including residential rental business licenses regardless of how many units there were. In general, the RGRL fee is based on a calculation of employee hours worked with a minimum fee of $55. Hovv8v8r, a residential rental property with less than $12,000 of annual gross receipts was exempted from the RGRL fee. The Code Enforcement staff administers the residential rental license program, and the RGRL fee as it pertains to the residential rental licenses. As of January 1, 2011. an applicant was subject to a base license fee of either $50 or $100 depending on the # units in the property plus the RGRL fee based OD full-time equivalent employees. If gross annual revenue is $12'000 or more the RGRL fee of $0.034890 x annual FTE hours must be calculated and paid. This dual fee structure creates confusion to the applicant and requires staff explanation of the RGRL fee and time to address inquiries on how to calculate the amount due. Additiona||y, because of the complexity and time required, verification of eligibility for the $12.000 gross receipt exemption has not been undertaken. Of the 050 rental properties on record in 2012, 0096 or 393 claimed the exemption and paid no RGRL fee. DISCUSSION Changing the RGRL fee exemption from those residential rental properties with gross receipts of less than $12,000 to those residential rental properties with 1-4 units would reduce the Code Enforcement administrative efforts required to explain and follow-up on the fee and will also provide an exemption criterion that is easier to verify. A precedence was set before the RGRL fee was established whereby residential properties of 1-4 units were not treated as businesses. Of the 850 residential rental units on record in 2012, 590 units would fall under this exemption. INFORMATIONAL MEMO Page 2 # of Units Count of Properties FEES Total License RGRL Inspection 1 510 $ 36,113 $ 25,400 $ 7,920 $ 2,800 2 17 1,650 850 660 140 3 21 3,020 1,050 990 980 4 42 4,410 2,100 1,925 385 Sub -total 590 45,193 29,400 11,495 4,305 5+ 60 11,980 6,000 4,895 1,085 TOTAL 650 $ 57,173 $ 35,400 $ 16,390 ! $ 5,390 Of the 590 properties with 1 -4 units, 387 or 66% claimed exemption to the RGRL fee and 198 or 34% paid the minimum RGRL fee of $55. FINANCIAL IMPACT Based on the 2012 results, an exemption of properties with 1 -4 units from the RGRL fee would reduce annual RGRL fee revenue by approximately $11,495. RECOMMENDATION Staff recommends omitting the RGRL fee on 1 -4 units and continuing to collect the RGRL fee on 5 or more units. This would reduce code enforcement staff time needed to explain the fee and assist with calculations and free up time to focus on the program's intent to protect the public health, safety and welfare, and proper maintenance of rental housing. The Council is being asked to approve the ordinance and consider this item at the November 12, 2013 Committee of the Whole meeting and subsequent November 18, 2013 Regular Meeting. ATTACHMENTS Ordinance in draft form 84 DR FT AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING VARIOUS ORDINANCES, AS CODIFIED AT TUKWILA MUNICIPAL CODE SECTION 5.04.020, "APPLICATION AND FEES REQUIRED," TO AMEND THE FEE STRUCTURE ON RESIDENTIAL RENTAL BUSINESS LICENSES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City desires to eliminate the Revenue Generating Regulatory License (RGRL) fee on residential rental business licenses for properties with fewer than five units; and WHEREAS, this policy change would reduce the administrative time spent managing the fee structure for residential rental business licensing and allow more time for the inspection component of the program; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. TMC Section 5.04.020 Amended. Ordinance Nos. 2381 §3, 2356 §2, 2333 §3 and 2315 §1 (part), as codified at Tukwila Municipal Code (TMC) Section 5.04.020, "Application and fees required," are hereby amended to read as follows: 5.04.020 Application and fees required A. Application Required. Any person desiring to establish or conduct any business enterprise or undertaking within the corporate limits of the City shall first apply to the Finance Department for a license to conduct such business. The application shall be upon a form furnished by the Finance Department on which the applicant shall state the company name and address; the nature of the business activity or activities in which he desires to engage; the place where the business will be conducted; the number of employees, whether full or part-time, on the payroll as of January 1, or, if a new business, the number to be employed on the opening date; the Washington State Unified Business Identifier (UBI) number; and other information pertaining to the business as required by the City. Owners of residential rental property are not subject W: Word Processing \Ordinances \Business license fee amended for Residental Rental strike -thru 10 -4 -13 CW:bjs Page 1 of 4 85 to the application requirements in this chapter but shall adhere to the application requirements in TMC Chapter 5.06. B. Fee - General. 1. The application must be accompanied by payment for the amount of the license fee. The license fee for the annual license issued under this chapter shall be $67.00 per full -time equivalent (FTE) employee, which consists+ng of a $12.00 per FTE business license fee plus a $55.00 per FTE Revenue Generating Regulatory License (RGRL) fee. The annual license fee shall be calculated by multiplying the number of full -time equivalent employees that worked in Tukwila during the previous calendar year by the license fee. 2. For owners of residential rental properties with 5 or more units, the annual license fee shall be calculated by combining the total amounts from: a. Multiplying the number of full -time equivalent employees that worked in Tukwila during the previous calendar year by the RGRL fee, and, b. The annual Residential Rental Business fee shall include a License fee as set forth in TMC Chapter Section 5.06.040. 3. It will be the responsibility of the business or residential rental property owner to determine the total number of FTE employees and, if required, demonstrate to the satisfaction of the Finance Director or his /her designee that the calculation and information is -are accurate. Employers without a full year of operating history shall estimate the number of FTE employees that will be employed in a 12 -month period. C. Minimum Fee. There shall be a minimum fee for an annual license of $67.00, which consistsing of a $12.00 business license fee and a $55.00 RGRL fee, except for an entity defined in TMC Section 5.04.090. 1. A business with less than $12,000.00 of annual gross receipts shall pay the minimum license fee. 2. A residential rental property with receipts fewer than 5 units shall be exempt from the RGRL fee, but shall be subject to the Residential Rental Business License fee requirements as set forth in TMC Section 5.06.040. ill .. e 23. An entity engaging in some activities or functions that are exempt from the combined business license fee and some that are not exempt shall pay a license fee based on the number of full -time equivalent employees involved in the functions or activities that are not exempt. 34. An individual person operating more than one business as sole proprietorship or owning more than one residential rental property within the corporate limits of the City shall pay only one RGRL fee, at an amount equal to the highest RGRL fee for any one of the multiple businesses, if not otherwise exempt from paying the license fee pursuant to this chapter. TMC Section 5.04.020.C.34 shall not apply if any W: Word Processing \Ordinances \Business license fee amended for Residental Rental strike -thru 10 -4 -13 CW:bjs 86 Page 2 of 4 one of the businesses or properties owned by the sole proprietor has three or more full - time equivalent employees. 45. If a business has more than one location in Tukwila, the license fee calculation shall include at least the minimum fee for each location. 56. The license fee for a business required to be licensed under this chapter and not located within the City's corporate limits shall be calculated by multiplying the license fee by the number of FTE employees working within the City, but in no event shall the license fee be less than the minimum license fee set forth in this chapter. If the number of FTE employees is not known at the time of renewal, the business shall estimate the maximum number of FTE employees they anticipate working in Tukwila for the 12 -month period subject to licensure. 67. Businesses doing business in the City that have no employees physically working within the City shall pay the minimum fee required under this chapter. 78. Businesses or organizations eligible for a temporary business license pursuant to TMC Section 5.04.010 will be required to pay the minimum $67.00 business license fee unless the applicant is participating at a City- sponsored event or as part of an event held at the Tukwila Community Center. If an applicant is participating at a City- sponsored event or as part of an event held at the Tukwila Community Center, they will be required to complete all application requirements and approvals required by the City's Parks and Recreation Department. D. New Businesses. The license fee for a new business shall be based on the estimated number of FTE employees that will work in Tukwila for a 12 -month period. If, during the license year, the City determines the actual number of employees is significantly different than estimated, the amount of the license fee will be recalculated for the new business. If the revised annual license fee is higher, the business must pay the difference within 30 days after notification is sent by the City. E. Over - Reporting Number of Employees. A business may request that the City refund the license fee overpaid on the basis that the business miscounted the number of FTE employees by an error factor of more than 15 %. The request must be in writing and the City must receive the request and all supporting documentation no later than 60 days after the end of the calendar year in which the error was made. If the City is satisfied the licensee paid an excess business license fee, the City will refund the excess license fee paid by the licensee. F. Under - Reporting of Employees. If the City determines the number of employees was under - reported at the time of application or renewal by an error factor of more than 15 %, the business shall pay the balance of the applicable license fee together with a penalty of 20% of such balance due. The business shall also reimburse the City for any accounting, legal, or administrative expenses incurred by the City in determining the under - reporting or in collecting the additional amounts. The Finance Director shall mail written notice of the amount to be paid and the business shall pay said amount to the City within 30 days of the date written notice is mailed by the City. If W: Word Processing \Ordinances \Business license fee amended for Residental Rental strike -thru 10 -4 -13 CW:bjs Page 3 of 4 87 the City does not receive timely payment, an additional penalty shall be added, applying the schedule for late payments in this chapter. G. Payment by Draft or Check. Payment made by draft or check shall not be deemed a payment of the license fee unless and until the same has been honored in the usual course of business, nor shall acceptance of any such check or draft operate as a quittance or discharge of the fee unless and until the check or draft is honored. Any person who submits a license fee payment by check to the City pursuant to the provisions of this chapter shall be assessed an NSF fee set by the Finance Director if the check is returned unpaid by a bank or other financial institution for insufficient funds in the account or for any other reason. Section 2. Corrections by City Clerk or Code Reviser. 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 3. 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 4. 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 , 2013. ATTEST /AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk APPROVED AS TO FORM BY: Office of the City Attorney Jim Haggerton, Mayor Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number: W: Word Processing \Ordinances \Business license fee amended for Residental Rental strike -thru 10 -4 -13 CW:bjs 88 Page 4 of 4 FINANCE AND SAFETY COMMITTEE Meeting Minutes November 5, 2013 — 5:30 p.m.; Conference Room #3 City of Tulzwila Finance and Safety Committee PRESENT Councilmembers: Dennis Robertson, Chair; De' Sean Quinn and Verna Seal Staff: Guest: David Cline, Peggy McCarthy, Vicky Carlsen, Shelley Kerslake, Chris Flores, Marty Grisham, Jack Pace, Trish Kinlow, Bob Giberson, Gail Labanara, Laurel Humphrey Chuck Parrish CALL TO ORDER: Committee Chair Robertson called the meeting to order at 5:30 p.m. I. PRESENTATIONS No presentations. II. BUSINESS AGENDA A. Grant Acceptance: Emergency Management Performance Staff is seeking Council approval to accept a $58,102.00 Emergency Management Performance grant from the Washington State Military Department and US Department of Homeland Security. This is the third year that the City has been awarded this grant, which will be used to fund 50% of the CERT Coordinator /Public Educator position as well as equipment and supplies for emergency management programs. The grant requires a 50% City match which has been met and exceeded. MAJORITY APPROVAL. FORWARD TO NOVEMBER 18 REGULAR CONSENT AGENDA. B. Interlocal Agreement: Regional Fire Training Consortium Staff is seeking Council approval to enter into an Interlocal Agreement with the Kent Regional Fire Authority (KRFA) that would renew the City's participation in the South King County Training Consortium. The Tukwila Fire Department has belonged to this consortium since January 2012 and it has been of great benefit to the City. After reviewing the last two years of participation, the KRFA is proposing a new fee of $13,800.00 to be applied to overhead and administrative costs. In addition, the two .75 FTE Training Division Captains assigned to the training facility will be increased to .85 FTE. The Fire Department's training budget will absorb these costs, which represent a compromise from the original proposal by the KRFA. MAJORITY APPROVAL. FORWARD TO NOVEMBER 12 COMMITTEE OF THE WHOLE. C. Ordinance: Amending Tukwila Municipal Code Section 2.68.026, Municipal Judge Salary Staff is seeking Council approval of an ordinance that would fix the salary for the Municipal Judge as required by the Revised Code of Washington. This proposal increases the Judge's position from .75 to .85 FTE and calculates the salary at .85 of the salary set for District Court Judges in the Salary Schedule annually adopted by the Washington Citizen's Commission on Salaries for Elected Officials. Benefits will also be prorated at 85 %. It is the Mayor's intention to reappoint Kimberly Walden as Municipal Judge, which will be subject to confirmation by the City Council by a separate action later this month. MAJORITY APPROVAL. FORWARD TO NOVEMBER 12 COMMITTEE OF THE WHOLE. D. Ordinance: Amending Revenue Generating Regulatory License (RGRL) Fee Staff is seeking Council approval of an ordinance that would amend Tukwila Municipal Code 5.04.02 to exempt residential rental properties with 4 or fewer units from the Revenue Generating Regulatory License (RGRL) fee and eliminate the existing RGRL exemption applicable to residential rental properties with gross annual receipts of less than $12,000. This simplified process will have the benefit of reducing Code Enforcement staff time associated with explaining the fee as well as with identifying criteria under the 89 Finance & Safety Committee Minutes November 5, 2013 — Pape 2 current system. While exempting properties with 1 -4 units from the RGRL fee will reduce annual revenue wt. by approximately $11,495, the savings in staff time makes this a cost - effective proposal. Additionally, Code Enforcement staff will have more time to focus on health, safety and maintenance components of ET* rental housing. MAJORITY APPROVAL. FORWARD TO NOVEMBER 18 REGULAR MEETING FOR DISCUSSION UNDER NEW BUSINESS. E. Ordinances: 2014 Property Tax Levy Staff is seeking Council approval of two ordinances: one that would increase the City's Regular Property Tax Levy from 2013, and one that would levy General Taxes. These ordinances are presented to the Council on an annual basis. According to the King County Assessor, the projected assessed value for Tukwila is $4,707,092,379. The allowable levy projected by King County is $14,043,979, representing the maximum 1% increase allowed by law. This is subject to change until the final rate is determined by the County. A levy amount of $14,100,000 is proposed in the draft ordinance and may be adjusted based on that determination. Because the County is now aware that the City has a firemen's pension fund, the City's maximum statutory levy rate is $3.325, pursuant to RCW 27.12.390. This is an increase that gives the City additional capacity for future growth or levy lid lifts. Staff distributed a table indicating actual property tax collection for 2011 -2013 and projections for 2014 -2017. Committee members asked that this table be attached to the information memo for Committee of the Whole discussion. A public hearing is scheduled for November 12, 2013. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 12 COMMITTEE OF THE WHOLE FOR PUBLIC HEARING AND DISCUSSION. F. Budget Legislation 1) Staff is seeking Council approval of a resolution to adopt the 2014 -2019 Financial Planning Model and Capital Improvement Program (CIP). Drafts of these documents were presented to the Council at a workshop on August 28, and the Utilities and Transportation Committees conducted further review in September. Staff reviewed an attachment to the informational memo that lists all of the changes made to the CIP since it was first proposed in August. Committee members asked clarifying questions of items they considered to be large policy questions, including: Fund 104: Bonding of total $5,965,000.00 for the Boeing Access Road over BNRR Bridge Rehabilitation and Interurban Avenue South projects. Committee members and staff agreed that further review of the City's debt policies in general would be valuable, using this as an example. Fund 301/412: Tukwila 205 Levee, Riverton Creek Flap, and Lower Gilliam projects moved from Parks to Surface Water Fund. This will be reviewed further in Committee of the Whole. Additionally, the Utilities Committee has just forwarded to the Committee of the Whole an ordinance amending the definition of Surface Water Management Conveyance Systems to include dikes, levees, and revetments. 2) Staff is seeking Council approval of an ordinance to amend the 2013 Budget. Staff provided an overview of the proposed changes, including new proposals, items over budget, previous Council approvals, revenue backed expenditures, accounting changes, and carryover. A public hearing is scheduled for November 12, 2013. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 12 COMMITTEE OF THE WHOLE FOR PUBLIC HEARING AND DISCUSSION. G. Ordinance: Ethics Code As follow up to the Committee's requests during the October 22 meeting, City Attorney Shelley Kerslake returned with three options for a proposed Ethics Code applicable to elected and appointed officials and City staff. The first option establishes a 5 member Ethics Board comprised of existing Commission Chairs with adjudication of complaints by the City Council. The second option establishes a 5 member Ethics Board comprised of existing Commission Chairs with adjudication of complaints by the Board itself. The third option establishes an Ethics Board comprised of three new appointees by the Council and two by the Mayor with adjudication of complaints by the Board. The Committee discussed the options, and highlights from that discussion are: 90