HomeMy WebLinkAboutFS 2011-06-07 Item 2B - Discussion - Revenue Generating Regulatory License (RGRL) City of Tukwila
Jim Haggerton, Mayor
INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
Finance and Safety Committee
FROM: Shawn Hunstock, Finance Director
DATE: June 2, 2011
SUBJECT: Revenue Generating Regulatory License (RGRL) Information
ISSUE
The Finance Department is responding to information requested by members of the
Finance and Safety Committee regarding the Revenue Generating Regulatory License
fee and application to specific types of businesses:
BACKGROUND
At the April 19, 2011 Finance and Safety Committee meeting committee members
requested additional information regarding the following items:
The RGRL exemption in TMC 5.62.040.A.1 for nonprofit organizations, and
specifically the threshold relative to trip generations on infrastructure (roadways).
A breakdown of rental property information relative to the assessment of the
RGRL.
These and another topic will be addressed below.
DISCUSSION
Application of Nonprofit Exemption for the RGRL Fee
Tukwila Municipal Code Section 5.62.040.A.1 provides an exemption from the RGRL
fee of $55 per full -time equivalent employee for IRS 501(c)(3) tax exempt organizations.
The second largest employer in the City is a tax exempt 501(c)(3) organization. There
are currently 73 businesses in Tukwila operating under a non profit exemption
employing over 4,000 employees.
For the largest nonprofit in the City, the Public Works department estimates the p.m.
peak hour trips to be 1,057. The nonprofit paid traffic impact fees for signal
improvements at an intersection adjacent to their property at the time two new buildings
and a parking structure were completed.
Not including governmental agencies, if all of the businesses who qualified for a non-
profit exemption had paid the RGRL fee, the City would have received over $145,000.
One of the options the City Council could decide to implement would be to exempt
nonprofits only below a certain number of full -time equivalent employees. If the City
decided to remove the non profit exemption from businesses with more than 20
employees, it would have generated approximately $133,000 in RGRL fees from 19
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nonprofits. If the exemption applied to businesses with more than 100 employees, the
City would receive approximately $118,000 in RGRL fees from 3 nonprofits.
Committee members also requested information regarding other exemptions or
exceptions made for nonprofit organizations in other parts of the TMC. Below is a
summary of those provisions:
3.08.030.A.3 Gambling Activities Tax
Nonprofits have a different tax rate for punchboards and pulltabs. They pay a tax
rate of 10% of gross winnings less payouts. Other businesses pay a tax rate of
5% of gross receipts.
3.08.030.B.1 —Gambling Activities Tax
Certain nonprofit organizations are exempt from paying taxes on bingo and raffle
activities. These organizations must not have paid management staff, and cannot
have more than $5,000 of net revenue annually, after payouts.
3.08.030.B.2 Gambling Activities Tax
Nonprofit organizations are exempt from paying any tax on any gambling activity
if they donate at least 70% of the tax that would otherwise be due to
organizations serving Tukwila residents.
3.20.010.A.5 Admissions and Entertainment Tax
The admissions tax does not apply to public school activities and other nonprofit
endeavors.
5.12.020.B.5 Peddlers /Solicitors License
Nonprofits engaged in peddling /soliciting activities are exempt from licensing and
fee requirements for a peddler's license.
5.20.010 Social Cardrooms
All social cardrooms are prohibited effective January 1, 2016, with the exception
of those operated by a charitable or nonprofit organization.
5.62.040.A.1 RGRL Fee
Nonprofits are exempt from the RGRL (and business license) fee. The business
license exemption is by reference in TMC 5.04.090.8.
11.08.020.A Short -term Type A Nonprofit Right -of -Way Use Permit
Provides for a fee differential for right -of -way use permits. Nonprofit permits are
Type A and similar for profit permits are Type B. Type A permits are $50 and
Type B are $100.
11.24.030 Banner Permits
Only Tukwila based nonprofit organizations that are City sponsored may hang a
banner above a public right of way.
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16.26.110.6 Fire Impact Fees
Low income housing developed by nonprofit organizations, individuals or housing
authorities is eligible for an exemption from fire impact fees.
16.26.110.6 Park Impact Fees
Low income housing developed by nonprofit organizations, individuals or housing
authorities is eligible for an exemption from park impact fees.
Rental Licenses and RGRL Fees
So far in 2011 a total of 457 rental housing licenses were issued, generating over
$25,000 in licensing revenue to date. Of the 457 rental licenses issued, 37 of the
property owners (8.1%) paid multiple license fees, with 3 licensees paying 5 license
fees.
Of the 457 licenses issued, 227 (49.7 paid RGRL fees totaling more than $14,000.
The primary reason the rest of the rental housing owners did not pay an RGRL fee is
due to the exemption for businesses making less than $12,000 in gross annual income.
Of the 227 that paid an RGRL fee, 200 of those (88.1 paid the minimum RGRL fee of
$55. The highest RGRL fee paid was $275 for two different apartment complexes. Of
the 227 properties that paid an RGRL fee, 11 of those (4.8 paid more than one RGRL
fee. One individual paid 4 RGRL fees.
Interpreter Exemption
Currently the business license and RGRL ordinances require all businesses operating
within the Tukwila city limits to obtain a license and pay the applicable fees unless a
specific exemption applies. During 2010 the City paid 43 different interpreters over
$60,000. Of the 43 interpreters the City paid, 37 of those (86.0 were paid less than
$1,000 in total during the year. One individual was paid more than $36,000. This
individual is the only one of the 43 that would have had to pay the RGRL fee due to the
exemption for businesses making less than $12,000 in gross annual receipts.
Feedback provided by the Municipal Court Judge and Court staff indicates the
interpreters typically do not pay business license or RGRL fees at other courts where
they provide translation services. Due to the small amounts paid the interpreters, Court
staff feels many would not provide service to Tukwila if they had to pay even the
minimum business license fee of $100. The implication of this is that cases requiring
interpreting services would have to be dismissed by the Court.
The City Council could exempt interpreters from paying the business license and /or
RGRL fees, or provide a reduced amount that this type of business would be required to
pay.
RECOMMENDATION
This item is for information only. No recommendation on changes to the RGRL
ordinance is made at this time. Any proposed changes by committee members will be
incorporated into a future agenda item for the Finance and Safety Committee.
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