HomeMy WebLinkAboutFS 2016-10-04 Item 2C.1 - Budget - Lodging Tax Update: Approval ProcessCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance and Safety Committee
FROM: Brandon J'Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: September 22, 2016
SUBJECT: Lodging Tax Approval Process
ISSUE
The City charges 81% special excise tax OO the sale OfV[ charge made for overnight lodging
stays. The use of these funds is limited to tourism promotion. The following memo outlines the
steps the City must follow in order to expend these funds, as provided by State law. Staff is
seeking input from the City Council on the process for awarding lodging tax funds in 2017 and
beyond.
BACKGROUND
AS required bv Revised Code Of Washington (ACVV) G7.281815' the City deposits lodging tax
funds into 8 special fund and uses the funds, "...yok*h/ for the purpose Of paying all D/@nKpart
Df the cost of tourism, promotion, acquisition Of&]urismrB63/Bdt3CilitieG\O/opera&oDVf&]u/ism'
Re6a&9dt@Cilities/ ."ThesefundSRr8U8Rdk}GVppOrt8v8rietvOfiOUriGDlpnDrn0ii0DGctiviUesbv
the City and third parties, such as the Museum of Flight and Starfire Sports. RCVVG7.28.1G1G
limits the gnUbeS eligible to apply for direct |OdQiDQ tax funding tO the following:
1. Cities, towns, and counties [d Washington State;
2. Convention and Visitors Bureaus;
8. Public Facilities Districts; and
4. Non- Profits organized as either a 501(c)(8) Or 501 (c)(6).
Approving lodging tax expenditures is a two-step process involving both the City's Lodging Tax
Advisory Committee (LTAC) and the City Council. A8 discussed below, State Law provides
considerable authority to the City's LTAC is reviewing and approving request to use lodging tax
funds.
L0daiDa Tax AdvGO[VCommittee
|D19Q7' the legislature authorized the creation Of local lodging tax advisory committees 8J
review and comment on any new lodging tax, increase in the tax rate, repeal of an exemption or
change iO the use Cf the lodging tax revenue (RCVVR7.28.1817).The City Ofl[Ukvv|8'GLTAC
was C[8@i8d via CDUDCi| Resolution yJO. 1881 and the 0Oe0b8[ShiD of the committee expanded
via Council R8GO|U|iOD y4O.1583. Membership Ofthe City's LTAC includes:
* Four businesses where the lodging tax iG collected, such @O hotels and motels;
• FOU[ buSin8SS8G or organizations engaged in activities eligible to be funded by the tax,
such as non-profits, entertainment destinations, retailers and restaurants; and
1 See memo entitled "Permitted Use of Lodging Tax Funds," dated August 30, 2016, which provides more
details on allowable expenditures of lodging tax funds. 29
INFORMATIONAL MEMO
Page 2
• One City elected official, traditionally the Council President, who serves as the chair of the
LTAC.
In 2013, the legislature amended RCW 67.28.1816 and expanded the role of the local lodging
tax advisory committees. Now, in municipalities with a population of over 5,000, requests to use
lodging tax funds — including requests by the municipality itself — must be submitted directly to
the lodging tax advisory committee. This means that the City of Tukwila must submit an
application to the LTAC to expend lodging tax funds for City of Tukwila activities.
The lodging tax advisory committees review the applications for funding in a public meeting and
then forwards a list of candidates to the municipality for final action (RCW 67.28.1816). As part
of the application process, a requestor must provide to the City estimates on how the lodging
tax funds will result in increase in the number of people traveling for businesses or pleasure on
a trip.
Citv Council Review Process in 2016
In June of 2016, staff took funding request applications reviewed by the City's LTAC to the
Finance and Safety Committee. After Finance and Safety review, the applications were
forwarded to the Committee of the Whole for discussion and review and then forwarded to a
Regular City Council meeting for final action. Once the Council approved the funding requests,
the recipients entered into service contracts with the City.
Washinaton State Attornev General's Informal Opinion
As part of the 2016 applications, reviewed by the City Council in June of this year, staff informed
the City Council that the Council had two options with each application: (1) The Council could
concur with the City's LTAC and agree to fund an application as presented or (2) the City
Council could choose not to fund a specific application. Staff informed Council it could not
change the specific dollar amounts recommended by the LTAC based on interpretations of
RCW 67.28 provided by Municipal Research Service Center and the Association of Washington
Cities.
On August 17, 2016, the Washington State Attorney General's Office ( "AG's Office ") issued an
informal opinion regarding whether a municipality could change the dollar amounts
recommended by the local lodging tax advisory committee. 2 The AG's Office opined that a
municipality can change specific dollar amounts recommended by the lodging tax advisory
committee, provided the municipality waits 45 -days before taking final action and that the
lodging tax advisory committee is provided an opportunity to comment on the revised dollar
amount.3 However, the AG's Office cautioned that a municipality cannot choose to fund a
funding request which was not approved by the LTAC. While an informal Attorney General
2 See AG's Informal Opinion dated August 17, 2016, available at http:Hmrsc.org/getmedia/0562599b-
d073-4b55- 8817 -daal b9cf39a3 /w3ag081616.aspx.
3 Specifically, the Opinion states:
When awarding lodging tax revenues pursuant to RCW 67.28.1816(2)(b)(ii), a municipality may
award amounts different from the local lodging tax advisory committee's recommended amounts,
but only after satisfying the procedural requirements of RCW 67.28.1817(2), according to which
the municipality must submit its proposed change to the advisory committee for review and
comment at least forty -five days before final action on the proposal.
30 Z: \Council Agenda Items\Mayors Office \LTAC Businesses \Memo 1, Process for Lodging Tax Funds.docx
INFORMATIONAL MEMO
Page 3
opinion kS not binding OO the City, this opinion provides helpful guidance and would b8
considered persuasive authority should a court ever examine this issue.
DISCUSSION
Staff would like Council concurrence for approving kodging tax funding request in2017 and
beyond, 88 outlined below. This proposed process iS consistent with adopted City Council
process for |egiG|8Uv8 it8Dl8. RCVV 67.18` and the AG'S Office |DfOrOO8| Opinion.
1. Applications k} use lodging tax funds are made directly tDthe LT/\C' via its designated
staff member in the Mayor's Office. The City accepts applications on a rolling basis in
order to respond to proposed activities and events, which might arise during the year.
2. The LTAC reviews the applications for use of lodging tax funds at an open public
meeting or at several opening meeting, if the LTAC wants additional time to consider an
@DD|iC8U0D. |fLTAC recommends tO the City Council that the application b8 approved it
must recommend a specific dollar amount. Should LTAC recommend Rn application not
b8 approved iƒ will cease moving forward.
8. The application and LTAC's approval recommendation is then forwarded to Finance and
Safety for its review.
4. FiDROC8 and Safety reviews and then fOnxG}ndG its recommendation tO the full City
Council.
5. The full Council reviews and then takes final action on the funding request. If the
Council concurs with LTAC's recommended amount, no further Council action on the
application isrequired.
6. If the Council desires to modify the amount to be provided to a specific requestor, the
City Council must provide 45-days' notice to the LTAC before taking final action. During
this 45-day period, the LTAC will meet and consider the City Council's modification and
either provide 8 comment letter tO the City Council 0[ choose not to comment. After the
45-day period had concluded, the City Council could take final action, after considering
the LTAC'G comment letter.
7. The City enters into a service or sponsorship agreement with the requestor. If the
amount of the agreement is over $40,000 it would require review by the City Council,
following the City Council's adopted process for review of agreements.
RECOMMENDATION
Forward to the October 10, 2016 Committee of the Whole meeting for briefing and discussion.
Staff will bring a motion forward to the October 17, 2016 Regular Council meeting adopting a
process for approval Of lodging tax applications.
ATTACHMENTS
* 2016 Lodging Tax Fund Application.
Z:\Counci|Agenda ItemsWayor's0ffice\LTAC Businesses\Memo1. Process for Lodging Tax Funds.docx
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Application to the City of Tukwila for Use of 2016 Lodging Tax Funds
Event or Activity Name (if applicable):
Amount of Lodging Tax Requested:
Applicant Organization:
Federal Tax ID Number:
Mailing Address:
Primary Contact Name:
Primary Contact Phone:
Primary Contact Email Address:
Check all the service categories that apply to this application:
Tourism promotion or marketing.
Operation of a special event or festival designed to attract tourists.
✓ Operation of a tourism - related facility owned or operated by a non - profit organization.
Operation and /or capital costs of a tourism - related facility owned by a municipality or a public
facilities district.
Check which one of the following applies to your agency:
✓ Non - Profit (Note: Attach a copy of your current non - profit corporate registration from the
Washington Secretary of State Office)
Public Agency
For Profit Agency /Business (Washington State UBI Number: )
I am an authorized agent of the organization /agency applying for funding. I understand that:
• 1 am proposing a tourism - related service for 2016. If awarded, my organization intends to enter
into a services contract with the City; provide liability insurance for the duration of the contract
naming the City as additional insured and in an amount determined by the City; and file for a
permit for use of City property, if applicable.
• My agency will be required to submit a report documenting economic impact results in a
format determined by the City.
Signature:
Printed or Typed Name:
Date:
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1) Describe your tourism - related activity or event.
2) If an event, list the event name, date(s), and projected overall attendance.
3) Is your event /activity /facility focusing on attracting overnight tourists, day tourists, or both?
4) Describe why visitors will travel to Tukwila to attend your event /activity /facility.
5) Describe the geographic target of the visitors you hope to attract (locally, regionally,
nationally, and /or internationally).
6) Describe the prior success of your event /activity /facility in attracting tourists
7) If this your first time holding the event /activity /facility provide background on why you think
it will be successful.
8) Describe the media strategy you employ to promote your event /activity /facility to attract
overnight and /or day tourists? Please list any digital or print media (newsletters, e- blasts,
social media, etc.) your agency uses or intends to use to promote your event /activity /facility.
9) Describe how you will promote lodging establishments, restaurants, retailers, and
entertainment establishments in the City of Tukwila.
10) Is the City able to use your digital and print media for collaborative marketing?
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11) Measurements and Metrics
As a direct result of your proposed tourism - related service, provide an estimate of:
a. Overall attendance at your proposed event /activity /facility
b. Number of people who will travel fewer than 50 miles for your
event /activity
c. Number of people who will travel more than 50 miles for your
event /activity
d. Of the people who travel more than 50 miles, the number of people
who will travel from another country or state
e. Of the people who travel more than 50 miles, the number of people
who will stay overnight in Tukwila.
f. Of the people staying overnight, the number of people who will stay in
PAID accommodations (hotel /motel /bed- breakfast) in Tukwila [or
Southside Region].
g. Number of paid lodging room nights resulting from your proposed
event/ activity /facility (for example: 25 paid rooms on Friday and 50
paid rooms on Saturday = 75 paid lodging room nights)
12) What methodologies did you use to calculate the estimates and what methodologies will you
use to track outcomes, such as total participants, estimated visitor spending, etc?
13) Are you applying for lodging tax funds from another community? If so, which communities
and in what amounts?
14) Are you applying funding from Seattle Southside Regional Tourism Authority (SSRTA)? If so, in
what amount?
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15) What is the overall budget for your event /activity /facility? What percent of the budget are
you requesting from the City of Tukwila?
16) What will you cut from your proposal or do differently if full funding for your request is not
available or recommended?
0
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