HomeMy WebLinkAboutCOW 2010-04-26 Item 5A - Budget - 8 Revenue OptionsCAS NUMBER: 10-036
MTG. DATE
04/05/10
04/26/10
I 0 --0
REVIEWED BY COW Mtg. CA &P Cmte
Utilities Cmte Arts Comm.
DA 1'E:
RECOMMENDATIONS:
SPONSOR /ADMIN. Briefing only.
COMMITTEE
MTG. DATE
04/05/10 I Discussion
COUNCIL AGENDA SYNOPSIS
Initials
Meeting Date Prepared by Mayor's review Council review
04/05/10 SL I I
L
04/26/10 SL I I
AGENDA ITEM TITLE Eight revenue options for addressing budget gap.
CATEGORY Discussion Motion Resolution I I Ordinance Bid Award Public Hearing Other
Mtg Date 04/26/10 Mtg Date Mtg Date Mtg Date Mtg Date Mig Date Mtg Date 04/05/10
SPONSOR Council Mayor Arlin Svcs DCD Finance Fire Legal n P&R Police PW
SPONSOR'S In accordance with Council request and the schedule established at the April 5, 2010
SUMMARY Regular Council meeting, staff is presenting information on eight revenue enhancement
options previously identified by the Council as potential candidates for helping to close the
City's budget gap.
.COST,IMPACT /.FU SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED
$N /A $N /A
Fund Source: N/A
Comments:
ITEM INFORMATION
I ORIGINAL AGENDA DATE: APRIL 5, 2010
F &S Cmte
Parks Comm.
RECORD OF COUNCIL ACTION
ATTACHMENTS
Informational Memorandum dated 04/02/10
Revenue Enhancement Options (8)
ITEM No.
Il Transportation Cmte
Planning Comm.
APPROPRIATION REQUIRED
$N /A
151
152
CITY OF TUKWILA
REVENUE ENHANCEMENT
PROPOSAL AND ASSESSMENT
PROPOSAL: Identify properties that are surplus to the City's current needs and evaluate
potential sales.
DESCRIPTION: The attached table Iists those properties that are currently surplus, and other
properties that are underutilized at this time and could be sold or put to a
different use.
SERVICE
IMPACT: Selling the surplus property could be accomplished with little cost and effort
on the part of City staff. Each property should be reviewed separately to
determine what the highest and best use of the property is, and determine
whether selling the property is warranted.
PROPOSAL
DECISIONS:
There are two major decision points in this proposal.
1) Whether to sell each particular property.
2a) If the decision is to sell, when should that sale take place?
2b) If the decision is to not sell, is there a better use for the property than its
current use?
NEXT STEPS: 1) Decide whether to sell each property.
2a) If the decision is to sell, decide when to sell.
2b) If the decision is to not sell, decide if there is a better use of the property
than its current use.
BUDGET
IMPACT:
ANNUAL REVENUE INCREASE
LESS: COST OF PROGRAM
ADMINISTRATION
2010
2011
$2,470,000
ANNUAL NET INCREASE $2,470,000
(one -time)
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153
154
ALTERNATIVES: In addition to selling these properties, the City could opt to lease them to
interested parties. The total annual lease value of the properties on the table
below is $302,400. If the City leased some or all of these properties, this
would provide an on -going revenue source rather than a one -time inflow of
money from the sale of the property. Leasing the properties would more than
likely incur a property management fee of an as yet undetermined amount.
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Potential Surplus Property
Description /Location
Old Fire Station 53 -12026
42nd Ave S
S 180114W Valley Highway
Old Newporter site 149xx TIB,
just north of Southtowne Auto
Old Library/City Hall
15421 42nd Ave S
14688 Macadam Rd S
`TOTALS;
\tukstore
Current Use
Vacant front building; rear
building used by PD for vehicle
evidence sob-age.
2009 Land
Land SF Assessed Value
3347400300 21,042 526,000.00
Parcel
NC Machinery Generator 3623049037 9,583
storage with month -to -month
agreement and no compensation
to City
Previously intended for 41000130 35,198 950,300
Northfield Car Wash, currently
vacant
Fire Station and vacant library 3365901275 50,530 202,100 539,100
Way Back Inn transitional housin; 0043000270 15,561 54,000
Way Back Inn transitional housin, 7661600270 204,781
115,500
192,000
,S: '-2;019.900,00
2009 Building Estimated Sale
SF Building Value Value
5,608 429,500.00 450,000
250,000
Estimated
Annual Lease
Value
60,000
Constraints
Need to find new space for
PD evidence storage (see
recent F &S committee
agenda for cost to move to
leased space); served by an
old shared septic system;
new sewer and water would
cost $50,000 to install;
Demolition of buildings would
cost $50,000+
50,000 Small corner parcel without
full access; need to research
title (5500 to find
easements
1,000,000 100,000 Appraisal to be done to
determine current value,
500,000 300,000 60,000 One parcel contains FS 52,
old library/city hall, and
Hazelnut Park
1,020 200,000 220,000 14,400 Need to perform a title
search; property may have
been purchased with Open
Space funds; sale value will
be diminished by deed
restrictions.
1,800 287,000 250,000 18,000 Need to perform a title
search; property may have
been purchased with Open
Space funds; sale value will
be diminished by deed
restrictions.
1,419.SO0,0o 1, 0,6011,O0 302,400,00'
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Comments
Lease and sale of existing land and
buildings are constrained by the
existing non conforming use in a
residential zoned area; it is possible
that a Short Plat of three(3) 6500+ SF
lots could sell for 3`$150,000 each
city staff can be used for the process
at low cost.
Certain uses that do not require full and
unrestricted access could find this
property to be of high value to their
business. Any business requiring full
and restricted access should be
encouraged not to pursue this
property.
Tukwila Historical Society is interested
in property; need to look at splitting lot
to possibly save Hazelnut Park and
Protect FS 52.
North and east half of this 4 acre
parcel is classified as a wetland
Page 3
156
CITY OF TUKWILA
REVENUE 1 HANCEMENT
PROPOSAL AND ASSESSMENT
PROPOSAL: Increase property tax assessments through an increase in the City's property
tax levy rate, also known as a levy lid lift.
DESCRIPTION: The City's levy rate for 2010 is $2.67 per $1,000 of assessed value. The City's
overall assessed valuation for 2010 is $4,973,984,133. Each increase of $0.10
per $1,000 of assess value would generate just under $500,000 of additional
property tax revenue. The City's maximum allowable levy rate is $3.10. An
increase from the existing $2.67 to the maximum of $3.10 (an increase of
$0.43) would generate just over $2.1 million in additional revenue.
There are two options for levy lid lifts, both of which require voter approval.
The first option is to increase the levy rate by a set amount or percentage, for
instance, an increase in the levy rate of $0.25 per $1,000. This stated increase
would remain in effect, unchanged through the duration of the lift period,
unless made permanent. This option does not require the purpose of the lid
lift to be stated in the ballot, nor does it have to be for a specific period of
time, although stating a purpose and period of the lift might increase the
chances of voter approval.
The second option is to increase the levy rate initially by a specific rate, then
index future increases for up to six years according to CPI, a specific
percentage, or another method. At the end of the six years, the levy rate in
effect at that time could be made the permanent levy rate if the original
ballot measure indicated as such. A specific purpose must be included in the
ballot title for this type of lid lift. The state statutes regarding this option
require the increased property tax revenue not supplant other revenue. This
would require funding of new programs or services. However, the legislature
recently enacted a lifting of the "non- supplanting" language until January 1,
2012. Levy lid lifts approved before then would not be subject to the non
supplanting limitations.
SERVICE
IMPACT: Implementation of a levy lid lift would require Iittle administrative effort,
with the exception of getting the item on the ballot for voter approval. Once
the lid lift is in place, no other time or expense would be involved with this
new revenue source. The first option above can be placed on any election
date listed in RCW 29A.04.321. The second option above can only be on the
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157
158
PROPOSAL
DECISIONS:
BUDGET
IMPACT:
August primary or November general election dates.
A levy lid lift of $0.10 per $1,000 of assessed value would mean an increase in
property taxes of $30 for an average house of $300,000 value. A levy lid lift of
$0.43 per $1,000 of assessed value would result in an increase in property
taxes of $129 for a home of $300,000 value.
There are four major decisions with this proposal:
1) Determine whether to place a levy lid lift on the ballot for voter approval.
2) Determine what rate increase to include in the ballot language. The
proposed levy lid lift rate could be anywhere from $0.10 to $0.43 per $1,000
of assessed value. This range of increase would generate between $500,000
and $2.1 million in additional property tax revenue.
3) Determine the use of the levy lid lift revenue, and consider placing this
reason /justification in the ballot title.
4) Determine the timing of the ballot measure for voter approval (2010 vs.
2011).
NEXT STEPS: 1) Decide on items 1— 4 above.
2) Set an approximate date for discussion at a Regular Meeting. Work with
City Clerk's office to schedule a public hearing.
ANNUAL REVENUE INCREASE
LESS: COST OF PROGRAM
ADMINISTRATION
ANNUAL NET INCREASE
2010
2011+
$500,000
$50,000*
$450,000
Program administration cost above includes a rough estimate of one -time
costs from King County for placing a levy lid lift on the ballot and
preparation and distribution of ballot information.
ALTERNATIVES: The City could decide to not implement an increase to the existing property
tax levy rate and instead pursue other revenue enhancement or expenditure
reduction options.
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PROPOSAL: Increase property tax assessments through an increase in the City's property
tax levy rate via an EMS levy.
DESCRIPTION: The City's levy rate for 2010 is $2.67 per $1,000 of assessed value. The City's
overall assessed valuation for 2010 is $4,973,984,133. The City's maximum
allowable levy rate is $3.10.
CITY OF TUKWILA
REVENUE ENHANCEMENT
PROPOSAL AND ASSESSMENT
State statutes (RCW 84.52.069) allow for an additional regular property tax
levy for emergency medical services of up to $0.50 per $1,000 of assessed
value. King County currently has a county -wide levy in place for EMS
purposes. The City could assess the difference, or $0.20 per $1,000 of assessed
value. An assessment of $0.20 would generate just under $1,000,000 of
additional property tax revenue at the City's current assessed valuation.
There are two different scenarios for voter approval of an EMS levy. If at
least 60 percent of the voters vote "yes," with a voter turnout of more than 40
percent of the number of people voting in the last general election, the
measure is passed. However, if the voter turnout is 40 percent or less of the
number voting in the last general election, all is not lost. In that case, as long
as the number of "yes" votes is equal to at Ieast 60 percent times 40 percent
of the number of people voting in the last general election, the measure will
pass.
The funds from an EMS levy can only be used for providing emergency
medical care or emergency medical services. The levy can be assessed for
either six consecutive years, ten consecutive years, or permanently. The levy
is subject to the 1% annual limitation on increases, if not already assessed at
the highest allowable rate. An EMS levy is subject to voter referendum at
any time. The levy, though, is not subject to the overall limitation for junior
or senior taxing districts (in this case, the City's limitation of $3.10 per $1,000
of assessed value).
SERVICE
IMPACT: Implementation of an EMS levy would require little administrative effort,
with the exception of getting the item on the ballot for voter approval. Once
the levy is in place, no other time or expense would be involved with this new
revenue source. The levy can be placed on any election date listed in RCW
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159
160
PROPOSAL
DECISIONS:
NEXT STEPS:
BUDGET
IMPACT:
29A.04.321.
An increase of $0.20 per $1,000 of assessed value would result in an increase
in property taxes of $60 for an average home of $300,000 value.
There are four major decisions with this proposal:
1) Determine whether to place an EMS Ievy on the ballot for voter approval.
2) Determine what rate increase to include in the ballot language. The
maximum rate is $0.20 per $1,000 in assess value, and would result in just
under $1,000,000 in additional property tax revenue.
3) Determine the use of the EMS levy revenue, and consider placing this
reason/justification in the ballot title.
4) Determine the timing of the ballot measure for voter approval (2010 vs.
2011).
1) Decide on items 1— 4 above.
2) Set an approximate date for discussion at a Regular Meeting. Work with
City Clerk's office to schedule a public hearing.
ANNUAL REVENUE INCREASE
LESS: COST OF PROGRAM
ADMINISTRATION
ANNUAL NET INCREASE
2010
2011+
$1,000,000
$50,000*
$950,000
Program administration cost above includes a rough estimate of one -time
costs for placing an EMS levy on the ballot.
ALTERNATIVES: The City could decide to not implement an EMS levy and instead pursue
other revenue enhancement or expenditure reduction options.
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CITY OF TUKWILA
REVENUE ENHANCEMENT
PROPOSAL AND ASSESSMENT
PROPOSAL: Develop a land use permit fee structure that would recover the City's full cost to
review applications.
DCD proposes implementing an across the -board fixed fee increase for most
permits while implementing a retainer plus hourly fees process for more complex,
less predictable permit types such as unclassified uses, development agreements,
comprehensive plan amendments and subdivisions. This would avoid the
administrative effort and processing delay involved in tracking hours and issuing
multiple bills to applicants where the revenue increase would be minimal.
DESCRIPTION: Most cities, including Tukwila, use fixed land use fees which are simple to
administer and predictable for applicants, however they do not account for the
extra review time required for complex, controversial or frequently revised
projects. In the past Tukwila has not set land use fees to recover costs, instead we
have surveyed nearby jurisdictions and set our fixed fees around their average
cost, see Attachment A. In 2009 we reset our fees to raise them where they were
lower than average and provide at least a 4% increase over 2008 fees. For 2010
we increased the 2009 rates by 5
The other approach is payment of a retainer at application and then payment of an
hourly fee for any review time in excess of that covered by the retainer. This
requires that staff track their time by project and that we collect additional fees
periodically and prior to permit issuance, increasing administrative costs. The
advantage is that the applicant pays for the full cost of review.
Based on our current salary, benefit and overhead costs staff has developed a
combined hourly cost per planner of $92 for 2011. Other jurisdictions such as
King County and Seattle charge hourly rates of $140 and $250. Many land use
permits are routed to other departments such as Public Works, Building, Fire and
Police so we should also capture their review hours. In addition we would add flat
fees to cover administrative work based on whether the project requires a notice
of application, notice of hearing, mailed staff report packet and notice of decision.
SERVICE Full cost recovery would mean that we would move to a single fee system for all
IMPACT: zones and raise appeal fees to cover staff and hearing examiner costs. We have
historically charged lower fees for many permits on sites in the Low Density
Residential Zone and have kept appeal fees nominal so as not to discourage
legitimate appeals, therefore these permits would need to double or triple in cost.
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161
162
PROPOSAL
DECISIONS:
Under either an hourly, fixed fee or hybrid approach application costs would rise
significantly, in many cases doubling or more. We would need to increase our
nominal pre application conference fee and would no longer be able to credit it
toward a subsequent land use permit application fee.
We suggest instituting a mailing charge of $1 per address per mailing (Notice of
Application, Notice of Hearing) to cover the cost of paper and postage.
Additional new fees have been included in the Noise and Sign Code Ordinances.
There are two major decisions with this proposal:
1) Determine the extent to which Tukwila planning fees will be comparable to
those of surrounding jurisdictions.
2) Determine whether to raise our fixed permit fees, move to an hourly fee system
or develop a hybrid approach.
NEXT STEPS: 1) Decide on items 1 2 above.
2) Set an approximate date for discussion at a Regular Meeting. Work with City
Clerk's office to schedule an appropriate time and method for public input.
BUDGET 2010 2011+
IMPACT: ANNUAL REVENUE INCREASE 100%
LESS: COST OF PROGRAM ADMIN Covered by fees
ANNUAL NET INCREASE 100%
($90,000
$120,000)
Revenue estimates are only for comparison purposes. Actual revenues depend on
the number and type of permits submitted. To be defensible permit fees should
only recover costs incurred to provide review service.
2009 2008 2007
Actual Permit Revenue $86,129 $135,297 $119,944
Estimate w/New Fees $176,203 $252,444 $251,776
Percentage Increase 104% 87% 110%
In addition we could look for ways to increase revenues by offering expedited
ALTERNATIVES: review and reduce costs by streamlining our review processes.
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'Land Use Permit Fees
in Jurisdictions' La
Neighbor
Comparison pederalw
V C' gurien
Auburn $172
D iifere n Tones Gilles
Net
Average Net Difference
Other
of ce
Neigh t DR o $286 1551
for
Plus $516g minor
$1,139 VONA
2010 Tukvilia fees
App eal or `rype
Decision
Binding Site Plan
1mpro nt
Shoreline Substantial
DevvelopMent P?nrt
Short Plat
Short Plat 5-9 lots
Varianc
Appeal of Type 4
Decision r
C7rel iminary nditional Use Permit r m it
n
eating
P
is+ �t4 o 0 C
Rezone Code Text
Zoning
Amen Plat
Subdivisio
(10+ lots
SEPA Checklist
ange
$2,03
$1,050 $1,050 $1 ,2$4
$1,139
$1 449
$1,449
NIA
NIA
($260) $2,000
$453 NIA plus $5170
$3,000 $i201lot
$1301
$4,76
$1- Plus
$1,533 $52tlot $1,550
Plus 110
$80 $259/study $2'
Other
1.DR Zones
$22
$1,340
$2,100
$1,050
$2,100
$115
$2,685
$1,87
$383
785 $2,434 ($1,5g4
$188 ($73'
$225
($260'
$2,685 $2,945 $527
$2,855 $2.402 ($130',
$3830 +13 $4,618
$1050 $2,734 $1684
$818
$1 ,68
$2.033
$1,120
$3,790
$3,790
$3 ,7g1
$288
3,7g1
$4,767
$904 for
$3,665 res
$172
$3,665
$2.25
Upto
$2,446 $1 3,818
$2,25
$2 25
$2,912
$1,59
Kent
PP
Renton
$100
$7�
$1,00
$1,0
$1
$1,000
$960 Plus
$3,919 $761lot $1,0
$50
$2,213
$7F
$215
$2 ,000
$588 multitam $2,00 $2213 Plus $11 NIA plus
Plus $6,000 $1 s
$1 000 or {or{ plus
$4,101 $5411ot $2,000 $2,000 acres 4,500 $1600Iaor_
Plus
$3,000 $10011ot i
Varies
1000
{{tom
__35-1-=400 to 300
upto
$2,252 $3.113
plus
$7 91acre
X2,
Plus
Plu
$2,203 $221lot
\N! varies
from 350
$3,000 to 8000
I $4,29 5
1$4,295
$2,0
NIf
$4,00
1 $1,0
$1,00
$790
164
CITY OF TUKWILA
REVENUE ENHANCEMENT
PROPOSAL AND ASSESSMEN
T
PROPOSAL: Create a Transportation Benefit District (TBD) with funding through a 0.2%
increase in the sales tax rate for the City of Tukwila.
DESCRIPTION: Cities may create a TBD with voter approval after conducting a public
hearing. One of the options available is a 0.2% increase in the local sales tax
rate. During 2009 Tukwila businesses generated just under $1.7 billion in
taxable retail sales. At this level, an increase of 0.2% in the sales tax rate
would generate approximately $3.4 million in additional sales tax receipts.
Revenue collected must be used for qualifying transportation improvements.
These include any transportation improvement contained in any existing
local, state or regional transportation plan that is necessitated by existing or
reasonably foreseeable congestion levels. Maintenance of existing and new
facilities is an eligible expense.
A Transportation Benefit District is a separate quasi municipal corporation
and a separate taxing district from the City. The legislative authority,
Tukwila City Council in this case, would be the governing body of the TBD.
Revenue of the TBD need not be spent as they are collected. The TBD could
fund infrastructure projects by selling bonds and use the sales tax collected
for debt service payments. The TBD may also fund projects through
transportation impact fees, but the City could not then collect transportation
impact fees as well.
SERVICE
IMPACT: Creation of a Transportation Benefit District, and implementation of a 0.2%
sales tax increase, can be accomplished with moderate administrative
burden. The formation of a TBD would be subject to voter approval, so staff
would need to work with the County to get the item on a future ballot.
As a separate legal entity apart from the City, certain administrative
functions would need to be conducted on behalf of the TBD, such as
conducting meetings, maintaining meeting notes, retention of records,
responding to records requests, separately accounting for the TBD revenue
and expenses, etc.
For an average consumer purchase of $100, the increase in sales taxes for
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165
166
PROPOSAL
DECISIONS:
BUDGET
IMPACT:
funding of the TBD would result in an additional $0.20 in sales tax paid.
There are four major decisions with this proposal:
1) Determine whether to place a sales tax funded Transportation Benefit
District on the ballot for voter approval.
2) Determine the boundaries of a TBD. Could be citywide or smaller
geographic area.
3) Determine the use of TBD revenue. The use of TBD revenue must be
stated in the ordinance authorizing the ballot measure.
4) Determine the timing of the ballot measure for voter approval (2010 vs.
2011).
NEXT STEPS: 1) Decide on items 1— 4 above.
2) Set an approximate date for discussion at a Regular Meeting. Work with
City Clerk's office to schedule a public hearing.
ANNUAL REVENUE INCREASE
LESS: COST OF PROGRAM
ADMINISTRATION
ANNUAL NET INCREASE
2010
2011+
$3,400,000
$50,000*
$3,350,000
Program administration cost above includes a rough estimate of one -time
costs for placing a sales tax funded TBD on the ballot. The administrative
costs for operating a separate legal entity, including conducting meetings,
taking minutes, providing for public notification of meetings, separately
accounting for TBD revenue, etc, have not been estimated at this time.
ALTERNATIVES: The City could decide to fund the TBD through another mechanism, such as
a vehicle license fee, an excess property tax Ievy or through vehicle tolls. All
of these options, though, require voter approval. The City could also decide
to not create a TBD at all, and continue to fund such improvements through
an allocation of sales tax receipts.
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CITY OF TUKWILA
REVENUE ENHANCEMENT
PROPOSAL AND ASSESSMENT
PROPOSAL: Increase tax rate on city-run utilities to accomplish a $280,000 increase in
utility tax revenue.
DESCRIPTION: The City adopted Ordinance 2258 on October 19, 2009, enacting a utility tax
of 15% from December 31, 2008 through April 30, 2010, and a rate of 10%
from May 1, 2010 through December 31, 2012. The tax is on the City's water,
sewer and surface water funds. An increase of three percent from May 1,
2010 on would generate approximately $300,000. If the sunset provision is
removed from TMC 3.54.030, the tax would need to be included in cost
assumptions for annual utility rate setting purposes.
SERVICE
IMPACT: Because the utility tax is a tax on the enterprise utility fund itself, and not on
the customers, implementation of the tax, and changes to it, can be
accomplished with minimal administrative burden. When the utility tax was
originally adopted, the goal was to not pass the tax along to customers, but
rather reduce the fund balance in the utility funds. Extension of the utility
tax beyond the sunset period, if Council chooses to do so, will necessitate
building this cost into the rate model for future years that utility customers
pay.
PROPOSAL
DECISIONS:
There are three major decisions with this proposal:
1) Increase current utility tax rate by 3% on the water, sewer and surface
water funds. This would generate approximately $300,000 per year in
revenue ($150,000 for half year in 2010, and $300,000 thereafter).
2) Extend sunset provision in the current utility tax ordinance. Rather than
the current rate of 10% expiring at the end of 2012, it could expire at the end
of the six -year financial planning period in 2015. This would generate
approximately $1 million annually in revenue.
3) Some combination of the above, with a rate increase now through 2012,
then a continuation of the utility tax past 2012 at a rate to be determined by
Council.
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Page 1
167
168
NEXT STEPS: 1) Decide on items 1 3 above.
2) Decide whether to vote to implement this July or next January.
3) Set an approximate date for discussion at a Regular Meeting.
BUDGET
IMPACT:
ANNUAL REVENUE INCREASE
LESS: COST OF PROGRAM
ADMINISTRATION
ANNUAL NET INCREASE
2010 2011+
$150,000 $300,000
$150,000 $300,000
ALTERNATIVES: The City could chose to not implement an increase to the existing tax on city
run utilities and make up this difference either through other revenue
enhancements, or additional expenditure reductions.
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Page 2
CITY OF TUKWILA
REVENUE ENHANCEMENT
PROPOSAL AND ASSESSMENT
PROPOSAL: Increase the fee for business licenses in Tukwila to accomplish a $160,000
increase in business license revenue.
DESCRIPTION: The City last updated its business license fee amounts with Ordinance 2179
on October 15, 2007. Below is a table that illustrates the current and
proposed fee amounts:
of businesses Current Fee Pronosed Fee
Home Occupation 172 $50 $100
0 to 20 Employees 1,898 $100 $150
21 to 50 Employees 222 $150 $300
51 to 100 Employees 67 $200 $400
101+ Employees 63 $300 $600
Total 2,422
The above proposed fees would generate approximately $169,000 of
additional revenue per year. All fee categories would double, with the
exception of the 0 to 20 employee category, which would go from $100 per
license to $150. This is the single largest category of business licenses that the
City issues.
The table at the end of page two illustrates different license fee rates for
businesses with various numbers of employees.
SERVICE
IMPACT: Implementation of a business license fee increase would be minimal by way
of process and staff time. New forms and correspondence are printed each
year with updated information, and the new fees would be included at that
time. It is anticipated we would experience an increase in phone calls, at
least initially, due to the fee increase.
PROPOSAL
DECISIONS:
There are two major decisions with this proposal:
1) The number of employees in each category could be increased or
decreased.
2) The proposed fee for each category could be raised or lowered.
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NEXT STEPS:
Business License Fee Options:
Several different proposals are presented at the bottom of this page.
1) Decide on items 1— 2 above.
2) Decide on whether to vote to implement this July or next January.
3) Set an approximate date for discussion at a Regular Meeting.
Original
of of Proposal
Employees Businesses Current Fee (Above) Option A Option B Option C
0 -5 172 50 100 50 50 50
0 -5 1268 100 150 100 100 100
6 -10 367 100 150 100 100 150
11 -15 162 100 150 150 150 200
16 -20 101 100 150 150 150 250
21 -25 67 150 300 300 300 300
26 -30 47 150 300 300 300 350
31 -50 108 150 300 300 500 400
51 -75 46 200 400 400 500 450
76 -100 21 200 400 400 500 500
101 -150 21 300 600 600 1,000 1,000
151 -250 23 300 600 600 1,000 1,000
251 -500 12 300 600 600 1,000 1,000
501+ 7 300 600 600 1,000 1,000
Total Revenue Generated 264,000 433,100 342,750 396,250 422,050
Increased Revenue (over Current) 169,100 78,750 132,250 158,050
Home occupations
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PROPOSAL:
CITY OF TUKWILA
REVENUE ENHANCEMENT
PROPOSAL AND ASSESSMENT
Enact a Revenue Generating Regulatory License (RGRL) fee, sometimes
known as a head -tax, on businesses operating within the City to accomplish a
$2.5 million increase in revenue in the General Fund.
DESCRIPTION: The RGRL is a supplemental fee, and is charged in addition to the basic
business license fee. Approximately twenty -seven cities in the state impose a
RGRL. State statute allows for a variety of options for implementing the fee,
including per employee, per hour worked, square footage of the business, or
a combination of these or other factors. The statute also allows for a different
fee based on the type of business, so long as every business within a
particular classification is charged the same fee. The City of Seattle last year
repealed their RGRL. The City of Renton imposes a fee of $55 per full time
equivalent employee. The City of Redmond imposes a basic fee of $35 per
employee, plus a surcharge of $55 per employee, for a total fee of $90.
SERVICE
IMPACT: Implementation of a RGRL would have impacts to staff in facilitating the
program, including working with businesses and answering questions
regarding completion of forms, formulas, employee eligibility, compliance,
auditing of fee information as submitted by businesses, etc. It is expected that
administration of an RGRL would require the addition of one full -time
equivalent employee, plus typical supply and equipment costs. Additional
marketing materials, publications, forms and postage would be needed as
well. The projected annual cost of program administration is $150,000.
PROPOSAL
DECISIONS:
The proposal is to implement a fee of $65 per full time equivalent employee.
The fee would generate approximately $2.5 million in gross additional
revenue each year in the General Fund, based on employee count data from
2009, as originally submitted on business license applications.
There are three major decisions with this proposal:
1) Set the fee per FTE at $55.00 or at $65.00. The lower fee ($55) would
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generate $2.1 million and the higher fee ($65) would generate $2.5 million.
2) A portion of the revenue generated could be dedicated to a particular item
in the budget. As an example, 70% of the revenue could be dedicated to the
Arterial Street fund with the remaining 30% going to the General Fund.
3) A future committee of citizens and business representatives could be
formed to provide guidance to the City Council on what rates to set the fee
at, what percentage to dedicate to a particular fund, and when to end the
RGRL.
NEXT STEPS: 1) Decide on items 1 3 above.
2) Decide on whether to vote to implement this July or next January.
3) Set approximate date for Regular Meeting. The City Clerk's office, in
conjunction with the Council President, will finalize the date for the Regular
Meeting as well as public input.
BUDGET
IMPACT:
ANNUAL REVENUE INCREASE
LESS: COST OF PROGRAM
ADMINISTRATION
ANNUAL NET INCREASE
2010
$1,150,000
$75,000
$1,075,000
2011+
$2,500,000
$150,000
$2,350,000
Program administration costs include forms, postage, web site updates,
auditing of returns after they are filed by taxpayers, responding to business
inquiries, concerns and questions, etc.
ALTERNATIVES: The City could chose to not implement a RGRL and make up this difference
either through other revenue enhancements, or additional expenditure
reductions. However, the available options for making up this amount of
revenue are very limited.
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