HomeMy WebLinkAboutFIN 2017-11-21 Item 2D - Ordinance/Resolution - Commercial Parking Tax LegislationTO:
City of Tukwila
INFORMATIONAL MEMORANDUM
Mayor Ekberg
Finance Committee
FROM: Peggy McCarthy, Finance Director
BY: Sherry Wright, Senior Fiscal Coordinator
DATE: November 21, 2017
SUBJECT: Revisions to Tukwila Municipal Code 3.48 - Commercial Parking Tax
Allan Ekberg, Mayor
ISSUE
Recommendation for Council to modify TMC 3.48 to (1) increase the commercial parking tax rate,
and (2) add a penalty for late payment.
BACKGROUND
In 1998, the Tukwila City Council adopted Ordinance 1852 which provided for a 5 percent tax to
be levied on gross revenues generated by commercial parking lots in the city. According to
Municipal Research & Services Center (MRSC), Tukwila is one of only six entities in Washington
that currently levies a tax on commercial parking. The common feature of cities that levy this tax
is proximity to a major transportation system, such as an airport or ferry terminal.
TMC requires that parking taxes be remitted on or before the last day of the month following the
month during which the taxes were collected. However, the municipal code does not outline a
penalty for late payments, which provides no incentive for payments to be made on time.
ANALYSIS
The 5% commercial parking tax has been in effect since 1998 without a rate increase. Staff
recommends increasing the levy from 5% to 15%. This increase will keep the rate comparable to
tax rates in surrounding jurisdictions (see Attachment A). In addition, over 50% of the parking
taxes in Tukwila were paid late. Implementing a 10% late fee would encourage businesses to
submit taxes on time and provide the City with a more predictable cash flow, and bring the parking
tax penalty in line with the penalties assessed for other city taxes (See Attachment C).
FINANCIAL IMPACT
Attachment B highlights the impacts to revenue if the City were to increase the tax rate from 5%
to 15%. Currently, the 5% rate results in just under $215,000 in revenue per year. A rate
increase to 15% would result in approximately $643,000, or $428,000 in additional revenue,
assuming all other factors remain the same. The late fee is intended to encourage timely
payment of taxes, and for purposes of discussion, it is assumed that adding a late payment
penalty will not result in additional revenues.
In accordance with State law, parking tax revenues are currently deposited into Fund 104,
Arterial Street Fund, and are restricted for transportation purposes. Any additional revenue
received based on a change in city code would continue to be restricted for the same purpose
and would be designated for transportation projects that currently have unidentified funding.
77
INFORMATIONAL MEMO
Page 2
RECOMMENDATION
Council is being asked to approve the parking tax ordinance and fee resolution, and consider this
item at the November 27 Committee of the Whole meeting and subsequent December 4 Regular
Meeting.
ATTACHMENTS
A. Comparison of Cities Levying Commercial Parking Tax
B. Financial Implications of Amending TMC 3.48
C. Comparison of Tukwila Taxes and Late Fees
D. Draft ordinance repealing Ordinance 1852 and reenacting TMC Chapter 3.48
E. Resolution adding appeal fee
78
ATTACHMENT A
Comparison of Cities Levying Commercial Parking Tax
Entity Levying Tax
Tax Rate
No Limit
Tax Due Date
May be monthly, quarterly,
or annual
Penalty for Late Payment
Each muncipality may
develop own rules
State (RCW 82.80.030)
Bainbridge Island
30%
Quarterly
10% per month
Bremerton
15%
Quarterly
<30 days = 10%
31-60 days = 15%
>61 days = 20%
Mukilteo
8% or 25% (depends on
location)
Quarterly
10% per month
SeaTac
$3 per vehicle
Monthly
None
Seattle
12.50%
Quarterly
5% - 29% (varies according to
RCW 82.32.090)
Tukwila
(current)
5%
Monthly
None
Tukwila
(Proposed)
15%
Monthly
10% per month
W:\1Users\Sherry\Finance Committee\Commercial Parking Tax -City Comparison A - City Comparison
00
O
ATTACHMENT B
Financial Implications of Amending TMC 3.48
CURRENT
COMMERCIAL PARKING TAX REVENUE
PROPOSED
Tax Rate = 5%
Tax Paid Late
CURRENT
Total
Tax Paid On -Time
jan
Tax Paid Late
Late Fee (n/a)
-
Total
tp
p
N
jan
-
3,495
55,762
10,964
-
-
14,459
feb
apr
9,038
-
9,549
-
may
18,587
mar
-
4,535
jun
4,252
-
-
8,787
apr
56,049
14,725
-
10,872
-
53,297
25,597
may
53,297
6,882
53,741
14,411
-
53,741
21,293
jun
-
6,240
49,184
11,624
-
-
17,864
jul
dec
7,304
-
11,379
-
total
18,683
aug
$ -
7,599
10,167
-
17,766
sep
7,621
10,292
-
17,914
oct
6,384
10,011
-
16,395
nov
18,436
10,230
-
28,666
dec
8,322
-
-
8,322
total
$
100,580
$
113,751
$ -
$
214,331
PROPOSED
Tax Rate = 15%
Late Fe - 10%
COMMERCIAL PARKING TAX REVENUE
PROPOSED
Tax Paid On -Time
Tax Paid Late
Late Fee (10%)1
Total
up
G
N
jan
43,377
-
-
43,377
feb
55,762
-
-
55,762
mar
26,360
-
-
26,360
apr
76,791
-
-
76,791
may
63,878
-
-
63,878
jun
53,591
-
-
53,591
jul
56,049
-
-
56,049
aug
53,297
-
-
53,297
sep
53,741
-
-
53,741
oct
49,184
-
-
49,184
nov
85,999
-
-
85,999
dec
24,966
-
-
24,966
total
$ 642,994
$ -
$ -
$ 642,994
1 It is assumed that taxes will be paid on time if a late payment penalty is enacted.
W:\lUsers\Sherry\Finance Committee\Commercial Parking Tax -City Comparison
Prior
Collections
2016
214,331
2015
193,486
2014
143,535
2013
155,860
2012
149,081
00
N
ATTACHMENT C
Comparison of Tukwila Taxes & Late Fees
TMC
Chapter
Enacted
in
Tax
Rate
Collection
Period
Due
Date
Late Fee
Assessed After
Late Fee Amount
GAMBLING TAX 3.08
1997
From 2% to 20%
depending on type
of activity
Quarterly
On or before last day of
month following quarter in
which tax was collected
15 days late
10% per month
ADMISSIONS &
ENTERTAINMENT TAX 3.20
1995
5%
Monthly
On or before last day of
month following month in
which tax was collected
1 day late
10% per month
COMMERCIAL
PARKING TAX 3.48
1998
5%
Monthly
On or before last day of
month following month in
which tax was collected
n/a
n/a
UTILITY TAX
(electric, gas, telephone, or 3.50
cable tv)
2002
6% (2007 +)
5% (2005-2006)
4% (2003-2004)
Monthly (small
entitles may file
annually)
On or before last day of
month following month in
which tax was collected
15 days late
10% per month
SOLID WASTE UTILITY
TAX
3.51
2009
6%
Monthly
On or before last day of
month following month in
which tax was collected
15 days late
10% per month
REET #1 3.56
.a■
1986
0.25%
Monthly
Within 30 days of sale
1 day late
1% interest per
month from time of
sale until date of
payment
REET #2
3.60
1999
0.25%
Monthly
Within 30 days of sale
1 day late
1% interest per
month from time of
sale until date of
payment
W:\lUsers\Sherry\Finance Committee\Commercial Parking Tax -City Comparison
C - All City Taxes
84
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, REPEALING ORDINANCE NO.
1852; REENACTING TUKWILA MUNICIPAL CODE CHAPTER
3.48, "COMMERCIAL PARKING TAX," RELATING TO THE
LOCAL OPTION TRANSPORTATION TAX TO INCREASE THE
TAX RATE AND ADOPT A PENALTY FOR LATE PAYMENT;
PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN
EFFECTIVE DATE.
WHEREAS, pursuant to RCW 82.80.030, the City of Tukwila is authorized to fix and
impose a parking tax on all persons engaged in a commercial parking business within its
respective jurisdiction; and
WHEREAS, in 1998 the Tukwila City Council adopted Ordinance No. 1852, pursuant
to RCW 82.80.030, to levy a 5% parking tax on all commercial parking businesses within
the City; and
WHEREAS, the City Council has determined that a rate increase is warranted as the
City has a substantial need to increase tax revenue in order to discharge the expected
expenses and obligations of the City, and based on review of neighboring cities' tax rates,
and noting that the current tax rate has not been altered since its adoption 20 years ago;
and
WHEREAS, in addition to a rate increase, the Council desires the adoption of a
penalty for late payment, as the timely payment of the tax is difficult to enforce absent a
late penalty and nearly 50% of parking taxes in 2016 were remitted to the City after the
due date, and it is standard practice for City taxes to include a penalty for late payment in
order to provide stability for the City's budgeting purposes; and
WHEREAS, the City held a duly noticed public hearing on this tax increase on
November 27, 2017;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
W: Word Processing\Ordinances\Commercial Parking Tax amended -TMC 3.48 11-8-17
SW:bjs
Page 1 of 6
85
Section 1. Repealer. Ordinance No. 1852, as codified at Tukwila Municipal Code
Chapter 3.48, is hereby repealed in its entirety.
Section 2. TMC Chapter 3.48 Reenacted. Tukwila Municipal Code (TMC) Chapter
3.48 is hereby reenacted to read as follows:
CHAPTER 3.48
COMMERCIAL PARKING TAX
Sections:
3.48.010 Definitions
3.48.020 Exemptions
3.48.030 Local Option Transportation Tax Imposed
3.48.040 Tax in Addition to Other License Fees or Taxes
3.48.050 Exempt Vehicles
3.48.060 Taxes Collected by Business Operators
3.48.070 Late Penalty
3.48.080 Use of Fund
3.48.090 Application Liability and Reporting
3.48.100 Violation/Penalty
3.48.110 Appeal Procedure
Section 3. TMC Section 3.48.010 is hereby reenacted to read as follows:
3.48.010 Definitions
The following definitions shall apply throughout this chapter:
1. "Commercial parking business" means the ownership, lease, operation or
management of a commercial parking lot in which fees are charged for parking.
2. "Commercial parking" means any transaction or arrangement whereby a
vehicle is parked and a fee is charged for parking or allowing the vehicle to be parked.
Commercial parking shall include instances where a fee is charged specifically
for the parking of a vehicle. This shall include any business which uses part or all of its
area to park vehicles for a fee where no other service, lodging or business is being
provided or conducted in conjunction with the parking of the vehicle.
Commercial parking shall also include instances such as when a guest of a hotel,
motel or other lodging establishment is allowed to park or leave his/her vehicle before or
after his or her lodging or business stay there so that, for a fee, the guest's vehicle is
parked at the hotel, motel or other lodging establishment during days when the guest is
no longer staying there.
W: Word Processing\Ordinances\Commercial Parking Tax amended -TMC 3.48 11-8-17
SW:bjs
86
Page 2 of 6
Section 4. TMC Section 3.48.020 is hereby reenacted to read as follows:
3.48.020 Exemptions
The following exemptions to the commercial parking tax are allowed:
1. Local employee parking, with parking spaces provided or reserved for use
by an employee who works within the City, where the employee parks his or her vehicle
in connection with his or her employment, without regard to whether arrangements or
payment for the parking is made by the employee or by his or her employer.
2. Apartments and condominiums, where parking is provided in conjunction
with arrangements for residential living spaces.
3. Offices, retail establishments, warehouses and industrial buildings,
where parking is provided in association with tenant arrangements for the use of such
facilities.
Section 5. TMC Section 3.48.030 is hereby reenacted to read as follows:
3.48.030 Local Option Transportation Tax Imposed
There is hereby levied a special local option transportation tax to be imposed in
connection with commercial parking businesses within the City. The tax shall be imposed
at the rate of 6°% 1 5% of the gross revenues generated by non-exempt commercial
parking charges and fees.
Section 6. TMC Section 3.48.040 is hereby reenacted to read as follows:
3.48.040 Tax in Addition to Other License Fees or Taxes
The tax levied under this chapter shall be in addition to any license fee or tax imposed
or levied under any law, statute or ordinance whether imposed or levied by the City, State
or other governmental entity or political subdivision.
Section 7. TMC Section 3.48.050 is hereby reenacted to read as follows:
3.48.050 Exempt Vehicles
The tax shall not be levied on vehicles with official State disabled person decals;
government vehicles which are exempt from tax, and tax-exempt carpool vehicles.
Section 8. TMC Section 3.48.060 is hereby reenacted to read as follows:
3.48.060 Taxes Collected by Business Operators
Taxes imposed herein shall be collected by the operators of the commercial parking
businesses, and shall be due and payable to the City in monthly installments. The
operators of the commercial parking businesses shall remit to the City the local option
transportation taxes collected on or before the last day of the month following the month
W: Word Processing\Ordinances\Commercial Parking Tax amended -TMC 3.48 11-8-17
SW:bjs
Page 3 of 6
87
during which the taxes were collected. The City shall be authorized to review and inspect
financial records involving activities of businesses which are taxable by this tax, at least
quarterly each year.
Section 9. TMC Section 3.48.070 is hereby established to read as follows:
3.48.070 Late Penalty
If a Commercial Parking Business subject to this tax fails to pay any tax required by
this chapter within 15 days after the due date thereof, there shall be added to such tax a
penalty of 10% of the tax per month for each month overdue, which shall be added to the
amount of the tax due.
Section 10. TMC Section 3.48.080 is hereby reenacted to read as follows:
3.48.070080 Use of Fund
All revenues, assessments and other charges generated and collected as local option
transportation taxes shall be placed in the City's 104 Bridge and Arterial Street Fund, to
be used for transportation purposes within the Transportation Element of the Tukwila
Comprehensive Transportation Plan, in accordance with RCW 82.80.070; and to be used
for administration of the tax, including those activities of the City in keeping and tracking
records, financial reports and other documents, reviewing filings and compiling reports by
commercial parking businesses, and other activities involved in collection and
enforcement of the tax.
Section 11. TMC Section 3.48.090 is hereby reenacted to read as follows:
3.48.080090 Liability and Reporting
A. Any commercial parking business shall procure from the City an annual
certificate of registration, the fcc for which shall initially be $1.00, and it shall be posted in
a conspicuous place in the office of such a business. Annual renewals will be provided
without a fee.
B. The applicant for a certificate of rcgistration shall furnish the Finance Director
of such tax.
A. All officers, directors and managers of any organization or association operating
a Commercial Parking Business, including owners and lessees of a parking facility used
for Commercial Parking, shall be jointly and severally liable for the payment of said tax,
penalties, and any fine imposed under this chapter
W: Word Processing\Ordinances\Commercial Parking Tax amended -TMC 3.48 11-8-17
SW:bjs
88
Page 4 of 6
GB. The Finance Director shall have the power to adopt rules and regulations not
inconsistent with the terms of this chapter for carrying out and enforcing the payment,
collection and remittance of the tax herein levied; and a copy of the rules and regulations
shall be on file and available for public examination in the City Clcrk's officcCity of Tukwila
Finance Department.
Section 12. TMC Section 3.48.100 is hereby reenacted to read as follows:
3.48.490100 Violation/Penalty
It is unlawful for any person, firm or corporation engaged in a Ceommercial pParking
I4Business to fail or refuse to collect and remit parking taxes as required by the provisions
of this chapter or to gain for himself or herself some advantage or benefit from the tax,
whether direct or indirect. Any such violation shall constitute a misdemeanor and shall
be punishable by a fine not to exceed $1,000 and/or by imprisonment not exceeding 90
days. Any such fine shall be in addition to any tax and penalties required.
Section 13. TMC Section 3.48.110 is hereby established to read as follows:
3.48.00110 Appeal Procedure
A. Any person aggrieved by the amount calculation of the tax determined to be due
to the City pursuant to this chapter may appeal to the Finance Director or his/her designee
from such determination by filing a written notice of appeal with the City Clerk within 20
calendar days from the date on which such person was given notice of the tax. The notice
of appeal must state the grounds for appeal, including a detailed explanation of why the
amount of the tax was incorrect. The Finance Director or designee shall, as soon as
the date of the hearing review the basis for the appeal, and may request clarification from
the appellant. After the review is complete, the Finance Director or designee shall issue
an administrative decision that may sustain or modify the amount of tax owed. Notice of
the administrative decision shall be sent to the appellant by certified mail within 10 days
of issuance.
B. The appellant, if aggrieved by the decision of the Finance Director or designee,
may then appeal to the City Hearing Examiner within 20 calendar days of the date of -the
administrative decision is mailed to the appellant. The notice of appeal must state the
grounds for appeal, including a detailed explanation of why the administrative decision is
incorrect. The notice of appeal must be accompanied by an Appeal Fee in accordance
with the fee schedule adopted by resolution of the City Council.
C. Upon timely filing of a notice of appeal, the Finance Director shall schedule a
hearing on the appeal before the City's Hearing Examiner. The hearing shall be
conducted no later than 30 days from the date of the notice of appeal, unless an extension
is agreed to by the appellant or otherwise ordered by the Hearing Examiner for good
cause shown. Notice of the hearing and the appeal shall be given to the appellant by
certified mail at least five days prior to the date of the hearing.
W: Word Processing\Ordinances\Commercial Parking Tax amended -TMC 3.48 11-8-17
SW:bjs
Page 5 of 6
89
D. The hearing shall be governed by the City of Tukwila Hearing Examiner's
procedural rules. The hearing shall be de novo. The decision of the City's Hearing
Examiner or other hearing body shall be based upon a preponderance of the evidence. The
burden of proof shall be on the appellant. The Hearing Examiner or other hearing body
may affirm, reverse or modify the Finance Director's decision.
E. Within 20 business days, excluding holidays recognized by the City of Tukwila,
from the date of the hearing on an appeal under this section, the Hearing Examiner shall
issue a written decision which shall set forth the reasons therefor.
Section 14. 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 15. 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 16. 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 on January
1, 2018 after passage and publication as provided by law.
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
APPROVED AS TO FORM BY:
Rachel B. Turpin, City Attorney
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
W: Word Processing\Ordinances\Commercial Parking Tax amended -TMC 3.48 11-8-17
SW:bjs
90
Page 6 of 6
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, ADOPTING A FEE SCHEDULE FOR TUKWILA
MUNICIPAL CODE CHAPTER 3.48, "COMMERCIAL PARKING TAX."
WHEREAS, the City Council intends to remove specific amounts for fees and
charges from the Tukwila Municipal Code in favor of a City-wide fee resolution; and
WHEREAS, the updated commercial parking tax ordinance references an appeal
process, including an appeal fee, which will be included as part of the City-wide fee
resolution;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. Fee Schedule. The following fee shall be charged to appellants by the
City of Tukwila Finance Department to appeal a commercial parking tax decision:
Type of appeal
Fee
Hearing Examiner Appeal Fee
TMC 3.48.110
$250.00
Section 2. Effective Date. The fee schedule contained in this resolution shall be
effective as of January 1, 2018.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
ata Regular Meeting thereof this day of , 2017.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk Dennis Robertson, Council President
APPROVED AS TO FORM BY:
Filed with the City Clerk:
Passed by the City Council:
Resolution Number:
Rachel B. Turpin, City Attorney
W:\Word Processing\Resolutions\Commercial parking tax appeal fee schedule 11-14-17
SW:bjs
Page 1 of 1
91