HomeMy WebLinkAboutReg 2016-10-17 Item 5A - Motion - Approval Process for Lodging Tax Funding RequestsMy— A NJ U0, 15A K,
Meetin
,g Date
Prepared �y
mqy9f 1� review
review
CPUIV .
10/10/16
BJM
❑ Resolution
Mt
,g Date
❑ Ordinance
Mtg Date
10/17/16
BJM
E] Otber
Mtg Date
SPONSOR ❑ Council M Mayor ❑ HR ❑ DCD ❑ Finance ❑ Fire ❑ TS ❑ P&R ❑ Police ❑ PIV
SPONSOR'S The City charges a 1% special excise tax on the sale of or charge made for overnight
SUMMARY lodging. State law limits the use of these funds to tourism promotion and requires a
process for reviewing requests to use lodging tax funds. Staff is seeking input from the
City Council on the process for future applications to use lodging tax funds and will also
provide a briefing on allowable uses for lodging tax funds.
RFviFDM1D BY ❑ cow Mtg. ❑ CA&P Cmte ❑ F&S Cmte ❑ Transportation Cmte
❑ Utilities Cmte ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm.
DATE: 10/4/16 COMMITTEE CHAIR: SEAL
RECOMMENDATIONS:
SPONSOR/ADMIN. Mayor's Office/ Economic Development
COMMITTEE Unanimous Approval; Forward to Committee of the Whole
COST IMPACT / FUND SOURCE
V
Fund Source: N/A
Comments: NIA
MTG. DATE
RECORD OF COUNCIL ACTION
10/10/16
ITEM INFORMATION
ITE►NO.
5.A.
95
ISTAFF SPONSOR: B. MILES
I ORIGINAL AGENDA DATE: 10/10/16
AGENDA ITEM TITLE Lodging Tax: Approval Process and Permitted Uses of Lodging Tax Funds.
CATEGORY 0 Discussion
Mtg Date 10110116
N Motion
Mt
,g Date 10117116
❑ Resolution
Mt
,g Date
❑ Ordinance
Mtg Date
n .Bid Award
Mt g Date
❑ Public Hearing
Mt g Date
E] Otber
Mtg Date
SPONSOR ❑ Council M Mayor ❑ HR ❑ DCD ❑ Finance ❑ Fire ❑ TS ❑ P&R ❑ Police ❑ PIV
SPONSOR'S The City charges a 1% special excise tax on the sale of or charge made for overnight
SUMMARY lodging. State law limits the use of these funds to tourism promotion and requires a
process for reviewing requests to use lodging tax funds. Staff is seeking input from the
City Council on the process for future applications to use lodging tax funds and will also
provide a briefing on allowable uses for lodging tax funds.
RFviFDM1D BY ❑ cow Mtg. ❑ CA&P Cmte ❑ F&S Cmte ❑ Transportation Cmte
❑ Utilities Cmte ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm.
DATE: 10/4/16 COMMITTEE CHAIR: SEAL
RECOMMENDATIONS:
SPONSOR/ADMIN. Mayor's Office/ Economic Development
COMMITTEE Unanimous Approval; Forward to Committee of the Whole
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$0 $0 $0
Fund Source: N/A
Comments: NIA
MTG. DATE
RECORD OF COUNCIL ACTION
10/10/16
Forward to Regular Meeting
I
---
MTG.DATE]
ATTACHMENTS
10/10116
Informational Memorandum "Lodging Tax Approval Process," dated 9/22/16
2016 Lodging Tax Funding Application
Informational Memorandum "Permitted Uses of Lodging Tax Funds," dated 9/23/16
Minutes from the Finance and Safety Committee meeting of 10/4/16 (Unavailable)
10/17/16
Informational Memorandum dated 9/22/16, plus attachments
Minutes. from the Finance and Safety Committee meeting of 10/4/16
95
City 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 a 1 % special excise tax on the sale of or 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 by Revised Code of Washington (RCW) 67.28.1815, the City deposits lodging tax
funds into a special fund and uses the funds, "...solely for the purpose of paying all or any part
of the cost of tourism, promotion, acquisition of tourism related facilities, or operation of tourism -
related facilities'." These funds are used to support a variety of tourism promotion activities by
the City and third parties, such as the Museum of Flight and Starfire Sports. RCW 67.28.1816
limits the entities eligible to apply for direct lodging tax funding to the following:
1. Cities, towns, and counties of Washington State;
2. Convention and Visitors Bureaus;
3. Public Facilities Districts; and
4. Non - Profits organized as either a 501(c)(3) 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. As discussed below, State Law provides
considerable authority to the City's LTAC is reviewing and approving request to use lodging tax
funds.
Lodaina Tax Advisory Committee
In 1997, the legislature authorized the creation of local lodging tax advisory committees to
review and comment on any new lodging tax, increase in the tax rate, repeal of an exemption or
change in the use of the lodging tax revenue (RCW 67.28.1817). The City of Tukwila's LTAC
was created via Council Resolution No. 1381 and the membership of the committee expanded
via Council Resolution No. 1533. Membership of the City's LTAC includes:
• Four businesses where the lodging tax is collected, such as hotels and motels;
• Four businesses or organizations engaged in activities eligible to be funded by the tax,
such as non - profits, entertainment destinations, retailers and restaurants; and
See memo entitled "Permitted Use of Lodging Tax Funds," dated August 30, 2016, which provides more
details on allowable expenditures of lodging tax funds. 97
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://mrsc.org/cetmedia/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.
98 ZACouncil Agenda ItemsWayor's Office \LTAC Businesseswemo 1, Process for Lodging Tax Funds.docx
INFORMATIONAL MEMO
Page 3
oViOk]D is not binding on the City, this opinion provides h8|DfU| guidance and would be
considered persuasive authority should a court ever examine this issue.
DISCUSSION
Staff would like Council concurrence for approving kodging tax funding request iD2017and
beyond, asoutlined below. This proposed process is consistent with adopted City Council
process for |8giSh]bv8 UBnnS. RC\N 67.18. and the AG'G Office |nfODn@| Opinion.
1. Applications 1O use lodging tax funds are made directly tVthe LT/\C, via its designated
staff member in the Mayor's Office. The City accepts applications OO8 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 D[@i several opening meeting, if the LT/\C: wants additional time k} consider 8n
application. |fLTAC recommends iO the City Council that the application be approved it
must recommend a specific dollar amount. Should LTAC recommend an application not
b8 approved it will cease moving forward.
3. The application and LTAC's approval recommendation is then forwarded to Finance and
Safety for its review.
4. Finance and Safety reviews and then forwards its recommendation to the full City
{|OVOci|.
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 is required.
8. If the Council desires to modify the amount to be provided to a specific requestor, the
City Council must provide 45-days' notice 1Vthe 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 t0 the City Council O[ choose not iO comment. After the
45-day period had concluded, the City Council could take final action, after considering
the LTAC'8 comment letter.
7. The City enters into 8 service Or sponsorship agreement with the [8qu8GtOr. If the
amount 0fthe agreement iG over $4O.00Oii would require review by the City Council,
following the City Council's adopted process for review Ofagreements.
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
*2O1G Lodging Tax Fund Application.
Z:\CouncUAgenda ItemsWayor'sOffice\LTABusinesses\Memo1. Process for Lodging Tax Funds.docx
100
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:
I 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:
101
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?
17
102
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?
3
103
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?
104
F.
FINANCE AND SAFETY COMMITTEE
Meeting Minutes
City Council Finance and Safety Committee
October 4, 2016 - 5:30 p.m. - Hazelnut Conference Room, City Hall
Councilmembers: Verna Sea[, Chair; Dennis Robertson, Kate Krutter
Staff- David Cline, Mike Villa, Marty Grisham, Brandon Miles, Gail Labanara, Peggy
McCarthy, Vicky Cartsen, Jake Berry, Derek Speck, Laurel Humphrey
Guest: Jerry Thornton, Community Police Advisory Board member
CALL TO ORDER: Chair Seat called the meeting to order at 5:30 p.m.
I. PRESENTATIONS
11. BUSINESS AGENDA
A. Intertocal Agreement: South King County Fire Training Consortium
Staff is seeking Council approval of an intertocat agreement to continue participation in the
South King County Fire Training Consortium in the amount of $52,108.00 for a term from January
1, 2017 through December 31, 2019. Participation in the Consortium has continued to be
beneficial to the Fire Department and to the City. UNANIMOUS APPROVAL. FORWARD TO
OCTOBER 10, 2016 COMMITTEE OF THE WHOLE.
B. Resolution: Orderine the Cancellation of Past Due Accounts Receivable
Staff is seeking Council approval of the annual resolution that would declare the cancellation of
uncollectibie accounts receivable. The total for this year includes false alarm fees equaling
$411.07, miscellaneous billings equaling $46,724.68 and NSF checks equaling $544.71 for a total
of $47,680.46. Counci[member Robertson asked for additional detail regarding the fire re-
inspection fees at Amara Pointe Apartments back in 2013. UNANIMOUS APPROVAL. FORWARD
TO OCTOBER 17, 2016 REGULAR CONSENT AGENDA.
C. Lodging Tax Approval Process
Staff is seeking Council approval of a proposed process for approval of lodging tax applications.
The City collects a 1% excise tax on overnight lodging stays which can be spent on tourism
promotion if approved by the Lodging Tax Advisory Committee (LTAC) and the City Council. The
Washington State Attorney General recently issued an informal opinion that municipalities could
change the dollar amounts recommended by the lodging tax advisory committee if the advisory
committee is given 45 days' notice before the City Council takes final action. This differs from
past interpretation of state law and Tukwila's practice in which the Council only approved or
denied recommendations from LTAC.
105
Finance and Safety Committee Minutes ........................................................................................... ......................October4, 2016
Staff is proposing a modified process to accommodate the new Attorney General opinion. If the
Council desires to modify the amount to be provided to an applicant, the City will provide 45
days' notice to LTAC before taking final action. LTAC will meet during this time to consider the
Council's modification and provide a comment letter or choose not to comment. After the 45 day
period the City Council could take final action, and the City would enter into agreement with the
applicant. Committee members discussed the proposal as well as the current LTAC practice to
accept applications on a rolling basis throughout the year. UNANIMOUS APPROVAL. FORWARD
TO OCTOBER 10, 2016 COMMITTEE OF THE WHOLE.
D. Permitted Uses of Lodging Tax Funds
Staff provided an overview of the legally permitted uses of lodging tax funds, which is outlined in
Revised Code of Washington 67.28.1815. Proceeds from the tax can be used for activities,
operations or expenditures designed to increase tourism or welcome tourists to the City.
Tourism can include those who travel from other areas to stay overnight in Tukwila as well as
those who travel to Tukwila for the day. Economic activity from residents is not considered
tourism. Committee members and staff discussed examples of allowable and disallowable uses.
INFORMATION ONLY. FORWARD TO OCTOBER 10, 2016 COMMITTEE OF THE WHOLE.
E. Proposed 2017 -2018 Biennial Budget: Lodging Tax
The lodging tax fund is undergoing change due to the transition of Seattle Southside Visitor
Services to the Seattle Southside Regional Tourism Authority (SSRTA). Staff is projecting
revenues of $733,000 for 2017 and $755,000 for 2018, reflecting a 3% growth estimate. The
proposed budget includes expenditures in three categories: operations, day marketing, and third
party applications. Councilmember Kruller encouraged staff to consider ways to include Tukwila
International Boulevard business owners in tourism and marketing activities. Staff noted that
day marketing analysis will kick off with a survey and Council input is desired. DISCUSSION
ONLY. FORWARD TO OCTOBER 10, 2016 COMMITTEE OF THE WHOLE.
F. Budget Review - Multiple Departments
Pursuant to the process requested by Council earlier this year, sections of the proposed 2017-
2018 budget are being presented to standing Council Committees prior to moving forward
through the full Council review process. Staff presented proposed 2017 -2018 budgets for the
following departments and funds: Police Department, Drug Seizure Fund, Fire Department,
Public Safety Plan Funds. Committee members discussed the proposals as detailed in the
agenda packet. Staff noted that cell phone costs are going to remain in individual City
Departments and not be reallocated to the Technology and Innovation Services Department as
previously suggested. Chair Seal spoke to the importance of ensuring overtime estimates for
Police and Fire are as accurate as possible in order to avoid a major amendment as happened
in 2015. She also stressed the importance of retaining adequate funding for training. The
Committee recommended thatthe CIP page for "Relocate Fire Station 51" remove the reference
to "satellite station." They also requested that the CIP page for "City Hall Facilities" be removed
as there is no funding plan within the timeframe of the CIP. COMMITTEE DISCUSSION.
FORWARD TO OCTOBER 24, 2016 COMMITTEE OF THE WHOLE WITH REQUESTED CHANGES.
106