The URL can be used to link to this page

Home My WebLink AboutFIN 2017-08-22 Item 2D - Ordinance/Resolution - Business License FeesCity of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director CC: Mayor Ekberg DATE: August 16, 2017 SUBJECT: Calculation of Business License Fee ISSUE Our City Attorney's has recommended that the City change the way the business license fee is calculated. BACKGROUND At the July 8, 2017, Finance Committee meeting, staff presented a draft ordinance and resolution amending the business license fee structure and providing for a modest inflationary adjustment. Staff recommended a combined rate for full-time employees of $70 and $50 for part-time employees. Full-time has been defined as 30 hours or more per week. There was unanimous approval to forward this item to the July 24, 2017 Committee of the Whole. After discussion at the July 24, 2017, Committee of the Whole, council consensus existed to return this item to the Finance committee for further discussion regarding the part-time fee recommendation. This item was rescheduled for the Finance Committee on August 8, 2017. On August 7, 2017„ our City Attorney's Office notified staff that the City should consider changing the manner in which the business license fee is calculated. Due to the late notice of this recommendation, the Committee was briefed on this matter and there was consensus to bring revised legislation to the August 22, 2017, Finance committee for review. DISCUSSION Pursuant to state law (RCW 35A.82.020), the City is permitted to charge a business license fee for the purposes of generating revenue. Currently, the City charges a "Combined License Fee" that contains a revenue generating fee, as well as a regulatory fee, both of which are based on a calculation related to the number of 'lull time employee equivalent" ("FTE") employees employed by the business. The City Attorneys' Office has recommended that the City eliminate the regulatory component of the fee, in order to address changes in the law that have occurred since the fee structure was adopted. The revised ordinance and resolution reflect elimination of the regulatory component of the fee (so that the fee is no longer a combination of both regulatory and revenue generating fees, and solely a revenue generating fee), and rename the fee a "Business License Fee". The City is still recommending a full-time employee rate of $70, and $50 for part-time employees. 123 RECOMMENDATION The Council is asked to approve the ordinance and resolution and consider this item at the August 28, 2017 Committee of the Whole meeting and subsequent September 5, 2017 Regular Meeting. ATTACHMENTS --Revised Draft Ordinance --Revised Draft Resolution 1 124 I am •'� ! • • • • I WIN J1 til r ` • r w y w • AM 1 0 r ! I • I • i r r a � • ! r r • a MAW WHEREAS, the City has analyzed current business license fees; and WHEREAS, the City has received multiple public comments that the existing business license and revenue generating regulatory license (RGRL) fee calculation based on full-time equivalent (FTE) can be difficult to calculate correctly; and WHEREAS, calculating the fee by "Employee" rather than FTE will simplify the fee calculation process for the public and City staff; 2nd NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: NMI FCMIMII- . • W: Word Process ing\Ordinances\Review business license fee structure strike-thru 8-14-17 bjs Page 1 of 7 125 for 2018 and beyond, and have no impact on Business Licenses issued by the City for 2017. Section 2. TMC Section 5.04.010 Amended. Ordinance Nos. 2496 §1, 2381 §1, 2356 §1, 2333 §1 and 2315 §1 (part), as codified at Tukwila Municipal Code (TMC) Section 5.04.010, Subparagraph 10, are hereby amended to read as follows: Ift, 11101VIN, ft, 1! ME MA a M "'I'affir."WIMIRM 111111117FMIMMMICAT -00 1 ~0 .. -1-1111- - 11.112121=21.*= "A"M KOV11111WD FAM Vml - ............ 1 d T r-.•— fa 4410. "Employee" means and includes each of the following persons who are not required by the City to have his/her/its own separate City of Tukwila business license: a. Any person employed at anv business who performs an part of their duties within the City of Tukwila-, and ab. Any person who is on the business's payroll, and includes all full-time, part-time, and temporary employees or workers; and bc. Self employed peFsens, sole prepFieters, 9Owners, officers, managers, and partners; and twok"It "1111111111VAIM wage from the business.–aR iRdepeRdeRt GeRtraGtor who may be exempt from T ra a — a separate City of Tukwila business4iG. . -. rmine the Business License and Section 3. TMC Section 5.04.020 Amended. Ordinance Nos. 2496 §2, 2425 §1, 2381 §3, 2356 §2, 2333 §3 and 2315 §1 (part), as codified at TMC Section 5.04.020, are hereby amended to read as follows- . I _. -1 .1 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/she 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 W: Word Processi ng\Ord i na n ces\Re view business license fee structure strike-thru 8-14-17 :bjs Page 2 of 7 IM business as required by the City. Owners of residential rental property are not subject 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 the appropriate application fee in accordance with the fee schedule adopted by resolution of the City Council. The license fee for the annual license ( Business License fee) issued under this chapter shall be GaIGulated determined per full tirn equivalent (FTE) emp based on the total number of emplovees, and be Gerwised -_,1 a D_UsSiR866 LiGeRlie fee, [flus -a Iculated in accordance with the fee schedule adopted by resolution of the City Council. 2. It will be the responsibility of the business to determine the total number of FTE employees and, if required, demonstrate to the satisfaction of the Finance Director that the Galraulation and information pertaining to the Gembined Business License fee are is accurate. Businesses without a full year of operating history shall estimate the number of €TE employees that will be employed in a 12 -month period. C. Minimum Fee. There shall be an annual minimum fee for a Glambined Business License, GeMpFiged of a _6161-SiRe— LiGe%e A_R RGRL= fee-, in accordance with the fee schedule adopted by resolution of the City Council. An entity subject to exemption pursuant to TMC Section 5.04.090 may not pay a Combined Business License fee. 1. A business with less than $12,000.00 of annual gross receipts shall pay the minimum license fee. 2. An entity engaging in some activities or functions that are exempt from the Business License fee and some that are not exempt shall pay a ua Business License fee based on the number of FTE employees involved in the functions or activities that are not exempt. 43. If a business has more than one location within the corporate limits of the City, the` -n-m—hined --Business License fee for each location shall be no less than the minimum fee required under this chapter. 54. The CombinedBusiness License fee for a business required to be licensed under this chapter and not located within the City's corporate limits shall be GaIG�dated determined by multiplying the appropriate -Business License fee by the number of F -TE employees working within the City's corporate limits, in accordance with the fee W: Word Processing\OrdinanceslReview business license fee structure strike-thru 8-14-17 :bjs Page 3 of 7 127 schedule adopted by resolution of the City Council. but fln no event shall the Gembined Business License fee be less than the minimum fee set forth in this chapter. If the number of FTE employees is not known at the time of application or renewal of the license, the business shall estimate the maximum number of FTE employees they anticipate working within the City's corporate limits at any time during fcw the 12-month period subject to licensure. 95. Businesses doing business in the City that have no employees physically working within the City's corporate limits shall pay the minimum fee required under this chapter. 7-6. Businesses or organizations eligible for a temporary business license pursuant to TMC Section 5.04.010 will be required to pay the minimum fee under this chapter. This section shall not apply if the applicant is applying for a license related to his/her participation at a City-sponsored event or as part of an event held at the Tukwila Community Center. If the applicant is applying for a license related to his/her participation at a City-sponsored event or as part of an event held at the Tukwila Community Center, the applicant is required to complete all application requirements and approvals required by the City's Parks and Recreation Department. D. New Businesses. The GGmbined Business License fee for a new business shall be based on the estimated number of F-TE- employees that will work in Tukwila for a 12-month period. If, during the first license year for a new business, the City determines the actual number of employees is significantly different than the estimated number identified by the business owner, the amount of theusiness License fee will be recalculated for the new business. If the revised GerAbined Business License fee is higher than the original Go;pb°^Business License fee paid by the business owner for the first license year, the business owner must pay the difference to the City within 30 days after written notice of the amount owed is sent to the business owner by the City. E. Over-reporting of Employees H4urs. In the event the business owner miscounted the number of F-TE employees hours by an error factor of more than 15% and paid an excess Gembined Business License fee as a result, a business may request that the City refund the overpayment. The request must be made in writing to the Finance Department, 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 business owner paid an excess GembiRed Business License fee, the City will refund the excess amount paid to the business owner. F. Under -reporting of Employees Houfs. If, at the time of license renewal, the City determines the business owner under -reported the number of F -TE employees hoUFS for the preceding year by an error factor of more than 15%, the business shall pay the balance of the corrected GE)mWn4e4-Business License fee (calculated as the difference between the paid Gembined -Business License fee and the corrected Gembined-Business License fee)7. tGgetheF W: Word Processing\0rdinancesReview business license fee structure strike-thru 8-14-17 :bjs Page 4 of 7 128 ba,IaRc,-�, The Finance Director shall mail written notice of the balance due to the business owner, and the business shall pay the balance due to the City within 30 days of the date the written notice is mailed by the City. A penalty of 20% of the balance due will be applied if payment is not received within 30 days. if the "'J"' "^-- REA FeG "Y tiMely PaYrHeRt, aR addi*)Ral pe-R-aIVY, b-- -a44e4—,based upeR the iR thig Ghaptel` G. Payment by Draft or Check. Payment made by draft or check shall not be deemed a payment of the Gqmbined Business 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 Gomb#ied-Business License fee unless and until the check or draft is honored. Any person who submits a GembiRed Business 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. W: Word Processing\Ordinances\Review business license fee structure strike-thru 8-14-17 �bjs Page 5 of 7 129 W_ Word Processing\Ordinances\Review business license fee structure strike-thru 8-14-17 :bjs Page 6 of 7 130 Section 6. 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 7. 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 8. 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 and effe PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of " 2017. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Allan Ekberg, Mayor APPROVED AS TO FORM BY: Filed with the City Clerk:. Passed by the City Council: Published: Effective Date: Rachel B. Turpin, City Attorney Ordinance Number: W: Word Processing\0rdinancesReview business license fee structure strike-thru 8-14-17 :bjs Page 7 of 7 131 132 WHEREAS, the City has analyzed current business license fees; and WHEREAS, the City has received multiple public comments that the existing business license and revenue generating regulatory license (RGRL) fee calculation based on full-time equivalent (FTE) can be difficult to calculate correctly; and WHEREAS, calculating the fee by "Employee" rather than FTE will simplify the calculation process for the public and City staff; qtld NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Repealer. Resolution No. 1875 is hereby repealed. Section 2. Fee Schedule. For 1018, Business License fees will be charged 2-4 according to the following schedule: (continued ... ) WAWord ProcessingResolutions\13usiness license fee schedule revised strike-thru 8-14-17 VC:bjs Page 1 of 5 133 ANNUAL BUSINESS LICENSE FEE SCHEDULE Standard Business License fee: �50 per part-time employee* Employee is defined at Tukwila Municipal Code Plus Section 5,04.010(10), copied below. - A "part-time employee" is an employee $70 per full-time eqWlV@1ORt working 29 or less hours per week. employee -W -T9* - A "full-time employee" is an employee working equals total Business License Fee** 30 or more hours per week, **The total Business License fee due affHN4F#-will vary based on the combination of part-time and full-time employees employed by the business. For exam le, a business with one part-time employee and no other employees) will pay a GBusiness License Fee of $50, A business with one full-time employee and no other employees) will pay a Goo �; �a Business License Fee of $70, Minimum Gen+b*ied Business License fee: $50.00 C"', 10. ns and, 11"r,;urje Nli` F1 i__", f ----- ------ V e )n �-il ary, --fl] tri e 1,9 t; e S "V 1 Q of Tukwila, 'DLjSii_1es,_-, s arrl vvo6(,e, . . . ... ........ ..... - - -------- --------- 0"qjj['_', k% t 1 S 0 i-, Vv 1-1 1,_� E, S vy 0 i k I'll rL-''-, L- L) 1, i S SS -- --------- - ----- but not limited to, family members, regardless of whether they receive a wage from the business WAWord Processing\Resolutions\Business license fee schedule revised strike-thru 8-14-17 VC:bjs Page 2 of 5 134 0 CIA -99a. -AM Combined UGe se ke (Business License Fee RGRI= Fee— Gembined LiGense 491 - 3- Fee Multip4ef $67.0 9.03489 (up to 1,920 heurs4 Fee Due - Annual hours equal the total RumbeFef hours wGrked ir; a Galendar yea., —by MaRage% @Rd eRIPlGYeeG iRGl6ldiRg faMily F,- beth full --d p-Ft time— HGUFS WE)F 44444e--Gff. The multiplier equals the GIRRHal GGMbin8d fee d -- -1 ,929, WhiGh is t�e Gtanda,d fi ill time equivaleRt (FT-E) aRRUal rAiAimum fee far GIRY liGeRG iS $67,00, WhiGh iG the fee fOr Up tG 4,929 hquFs weFked --,-+44aF yeaF. Other annual license fees: Adult Cabaret establishment $500.00 + GombiRedbusiness License Fee (per above Adult Cabaret entertainer $75.00 + Combined business License Fee (per above Gali;ulatieH4) Adult Cabaret manager $75.00 Adult Entertainment Cabaret $500.00 + Gam W;ed -Business License Fee (per above establishment ea loGw 1 at i--. ) Adult Entertainment Cabaret $75.00 + G4P+b4ie4-Busine,ss License Fee (per above entertainer M GaIGWlatiGn) Adult Entertainment Cabaret $75.00 manager Vi AWord P rocessi ng \Resolution s\B u sines s license fee schedule revised strike-thru 8-14-17 VC:bjs Page 3 of 5 135 Amusement Center $500-00 + Goy, �-Business License Fee (per above Ga!Gulatioo) Amusement device fee $50.00 per device + GGR;biRed usiness License Fee (per above- Ga1Gu4a#GA) Amusement device removal fee $50.00 per device Amusement device storage fee $10.00 per device per day Appeal Fee $250.00 Cabaret establishment $300,00 + mined Business License Fee (per above ealrsulafiG,n) Contractor based outside of Tukwila Same as Gembined i sines License Fee (per above GaIGUlatio-R) Panoram premises $100.00 Panorarn device $50+00 per device Panorarn operator $725.00 Penalty for late acquisition of If received or postmarked within 0 to 30 days of business license (operating a operation = 5% of license fee business without a valid license) If received or postmarked within 31 to 60 days of operation = 10% of license fee If received or postmarked within 61 to 90 days of operation = 15% of license fee If received or postmarked within 91 to 120 days of operation = 20% of license fee If received or postmarked at 121 days of operation or longer = maximum of 25% of license fee Penalty for late renewal of business If received or postmarked Feb. 1 through Feb. 28 license = 15% of license fee If received or postmarked March 1 through March 31 = 30% of license fee If received or postmarked April 1 or later 45% of license fee Peddler/Solicitor $70.00 Reinstatement of license fee $50.00 Washington State Patrol WATCH $12.00 background check - ------------- - - --- - - . ....... . WAWord Processing\ResolutionslBusiness license fee schedule revised strike-thru 8-14-17 VC:bjs Page 4 of 5 136 PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, al ,2 Regular Meeting thereof this day of ) 2017 Christy O'Flaherty, MMC, City Clerk Filed with the City Clerk: Passed by the City Council: Resolution Number: WAWord Processing\Resolutions\Business license fee schedule revised strike-thru 8-14-17 VC:bjs Page 5 of 5 137 138 Finance Committee Minutes August 8, 2017 D. Ordinance: Amending Municipal Code Chapter 5•o4 Staff is seeking Council approval of an ordinance that would amend Tukwila Municipal Code Chapter 5.04, "Licenses Generally," to replace "FTE" with "employee" regarding the business license fee structure. This item was approved with amendments by the Finance Committee on July 18, 2017, but was referred back to Committee by Committee of the Whole on July 24, 2017. Recent Washington State legislation will require the City to use the State's online business license system within the next few years, and staff recommends changing the current fee schedule to be based upon flat rates per employee totals to streamline the process in preparation for moving to the State system. The proposed ordinance would assess a flat rate of $70 per full-time employee (defined as 30 hours or more each week) and $50 per part-time employee. As follow-up to the Committee of the Whole discussion, staff provided more detail about how $50 for part-time employee was calculated. Since part-time is defined as fewer than 3o hours per week, and 3o hours is 75% of a typical workweek, the proposed part-time rate was derived as 75%ofthe proposed full-time rate rounded down to a whole number. Staff provided an e-mail from Assistant City Attorney Charlotte Archer recommending that the business license fee structure be amended from a "combined business license fee", which includes both a standard license fee plus a revenue generating license fee, to a "single license fee". Since this change wasn't included in the packet, committee members asked to have the legislation return to the next Finance Committee meeting for further review. To address any unintended consequences of changing the fee structure, staff offered to implementthe proposed changes forthe 2018 license year, and return to committee in mid -2o18 for a comprehensive review of the data collected. Committee member McLeod said he preferred a lateral change in fee structure for part-time employees and recommended $35 instead of $50 since we're moving to this model in advance of going live with the State's system. APPROVED 2-1, WITH COMMITTEE MEMBER MCLEOD OPPOSED. FORWARD TO AUGUST 22, 2017 FINANCE COMMITTEE. Resolution: Adopting a Revised Business License Fee Schedule Staff is seeking Council approval of a resolution that would adopt the revised business license fee schedule pursuant to the draft ordinance discussed above. UNANIMOUS APPROVAL. FORWARD TO AUGUST 22, 2017 FINANCE COMMITTEE. III. MISCELLANEOUS Adjourned at 6:20 P.M. j, Committee Chair Approval Minutes by SW 139 140 Finance Committee Minutes August 8, 2017 D. Ordinance: Amending Municipal Code Chapter 5•o4 Staff is seeking Council approval of an ordinance that would amend Tukwila Municipal Code Chapter 5.04, "Licenses Generally," to replace "FTE" with "employee" regarding the business license fee structure. This item was approved with amendments by the Finance Committee on July 18, 2017, but was referred back to Committee by Committee of the Whole on July 24, 2017. Recent Washington State legislation will require the City to use the State's online business license system within the next few years, and staff recommends changing the current fee schedule to be based upon flat rates per employee totals to streamline the process in preparation for moving to the State system. The proposed ordinance would assess a flat rate of $70 per full-time employee (defined as 30 hours or more each week) and $50 per part-time employee. As follow-up to the Committee of the Whole discussion, staff provided more detail about how $50 for part-time employee was calculated. Since part-time is defined as fewer than 3o hours per week, and 3o hours is 75% of a typical workweek, the proposed part-time rate was derived as 75%ofthe proposed full-time rate rounded down to a whole number. Staff provided an e-mail from Assistant City Attorney Charlotte Archer recommending that the business license fee structure be amended from a "combined business license fee", which includes both a standard license fee plus a revenue generating license fee, to a "single license fee". Since this change wasn't included in the packet, committee members asked to have the legislation return to the next Finance Committee meeting for further review. To address any unintended consequences of changing the fee structure, staff offered to implementthe proposed changes forthe 2018 license year, and return to committee in mid -2o18 for a comprehensive review of the data collected. Committee member McLeod said he preferred a lateral change in fee structure for part-time employees and recommended $35 instead of $50 since we're moving to this model in advance of going live with the State's system. APPROVED 2-1, WITH COMMITTEE MEMBER MCLEOD OPPOSED. FORWARD TO AUGUST 22, 2017 FINANCE COMMITTEE. Resolution: Adopting a Revised Business License Fee Schedule Staff is seeking Council approval of a resolution that would adopt the revised business license fee schedule pursuant to the draft ordinance discussed above. UNANIMOUS APPROVAL. FORWARD TO AUGUST 22, 2017 FINANCE COMMITTEE. III. MISCELLANEOUS Adjourned at 6:20 P.M. j, Committee Chair Approval Minutes by SW 141