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Home My WebLink AboutCOW 2011-08-22 Item 4D - Ordinance - Gambling Tax Rate Increase Based on Number of Social Card RoomsCOUNCIL AGENDA SYNOPSIS Initials ITEM NO. Meeting Date Prepared by t14 s review Counci� 08/22/11 I MH 4.D. ITEM INFORMATION CAS Nui\jt3t.R: 11-085 1 STAFF' SPONSOR: ORIGINALAGI?,NDA DATI-;: 8 /22/11 AGI ND;\ I'rr:>\rt TiTj Gambling tax rate increase based on the number of social card rooms in the City. C\ I'1?GORY Discussion Motion Resolution Ordinance BidAivard Public Hearing Other lZtg Dote 8122111 Mt g Date Mtg Date Mtg Date Ml� Dale Mtg Date tl2tg Date SPO NSOR Council Mayor HR DCD .Finance Fire IT P &R Police PW SPONSOR'S Ordinance 2323 required all commercial social card rooms to cease operation by January 1, SUMMARY 2016. At the August 8, 2011 Committee of the Whole meeting, the Council asked staff to draft an ordinance based on a taxing structure to be based on the number of social card rooms within the City. RI?\ ji :M /i?D RY cow Mtg. CA &P Cmte F&S Cmte Transportation Cmte Utilities Cmte Arts Comm. Parks Comm. Planning Comm. DATE: COMMITTEE CHAIR: RECOMMENDATIONS: SPONSOR /ADMIN. City Attorney /City Council C0MMI'1- I'IJ1- Forward Issue to Committee of the Whole COST IMPACT FUND SOURCE ExI)I,;N1)ITUR13 RL?Ouiiu'1D AMOUNT BUDGETED APPROPRIATION REQUIRED $2.1 million $0 Fund Source: Connnents: Retains the existing revenue stream from gaming uses MTG. DATE I RECORD OF COUNCIL ACTION 8/22/11 MTG.DATEI ATTACHMENTS 8/22/11 I Informational Memorandum dated 8/16/11 Ordinance in draft form 93 x City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton City Council FROM: Shelley Kerslake, City Attorney DATE: August 16, 2011 SUBJECT: Gambling Tax Rate Increase based on the Number of Social Card Rooms in the City ISSUE The City's gambling tax on social card rooms. BACKGROUND This ordinance will increase the gambling tax rate on social card rooms based on the number of such establishments operating in the City. DISCUSSION Tukwila currently taxes social card game businesses at 20 percent, which is the maximum allowed tax rate. See TMC 3.08.030(A)(4). It is our understanding that no business pays pursuant to this rate. Tukwila currently taxes public card rooms operated as a commercial stimulant at 1.0 percent. See TMC 3.08.030(A)(5). State law does not contain a distinction between social card rooms and public card rooms for taxation purposes. This ordinance will eliminate the distinction in tax treatment between social card rooms and public card rooms and will tax both under a graduated tax rate based on the number of such establishments operating in the City, as follows: Number of Public Card Rooms Tax Rate 5 or less 10% 6 15% More than 6 20% Pursuant to this ordinance, the tax rate on card rooms increases as the number of such establishments operating in the City increases. The rationale behind this ordinance is to deter new card room establishments from opening in the City because it will increase the tax rate for all such establishments. In addition, this proposed ordinance would repeal Ordinance 2323 and the five -year sunset provision. RECOMMENDATION The City Attorney's Office makes no recommendation regarding adoption of this ordinance, as this is a policy decision for the Council. 95 INFORMATIONAL MEMO Page 2 ATTACHMENT Ordinance establishing the gambling tax rate increase based on the numher of social card rooms operating in the City. F:\APPS \CIV TUKWILA \Memo \MFMO Gambling Tax Increase for Public Card Rooms Council Pa.doc •o AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 1809 §1 (PART) TO REMOVE THE DISTINCTION BETWEEN SOCIAL AND PUBLIC CARD ROOMS, AMENDING VARIOUS ORDINANCES TO INCREASE THE TAX ON CERTAIN GAMBLING ACTIVITIES UPON CERTAIN TRIGGERS, REPEALING ORDINANCE NO. 2323 §2, AS CODIFIED AT TUKWILA MUNICIPAL CODE CHAPTER 5.20, "CERTAIN GAMBLING ACTIVITIES PROHIBITED PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, on February 22, 2011, the Tukwila City Council passed Ordinance No. 2323, which allowed social /public card rooms citywide until December 31, 2015, after which social /public card rooms conducted as a commercial stimulant would thereafter be prohibited effective January 1, 2016; and WHEREAS, the social card rooms operating in Tukwila generate significant gambling tax revenues for the City; and WHEREAS, there is a cost to patrol and enforce City codes related to gambling; and WHEREAS, the more card rooms operated as a commercial stimulant, the more City costs increase; and WHEREAS, pursuant to the City Council's power to tax certain activities for revenue purposes as set forth in RCW 9.46.110, the City Council now desires to increase the tax levied on any social card room operated as a commercial stimulant, upon certain conditions, by amending Tukwila Municipal Code (TMC) Section 3.08.030.A.4; and WHEREAS, the City Council further desires to repeal Ordinance No. 2323 §2; and WHEREAS, the City desires to make its code consistent with state law regarding the class of taxpayers for each gambling activity; and W: Word Processing \Ordinances \Gambling tax amended upon certain triggers 8 -16 -11 SK:bjs Page 1 of 4 97 WHEREAS, state law does not distinguish between social and public card rooms, for taxation purposes; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. TMC Section 3.08.010, "Statutory Provisions Incorporated by Reference," Amended. Ordinance No. 1809 §1 (part), as codified at TMC Section 3.08.010, is hereby amended to read as follows: The provisions of Chapter 218, Laws of Washington, 1973 First Extraordinary Session, as amended by Chapters 135 and 155, Laws of Washington, Third Extraordinary Session 1974, are incorporated in total by reference as though fully set forth, and in particular, the definitions as contained in Section 2, Chapter 218, Laws of 1973, First Extraordinary Session, as amended, relating, among others, to "amusement games," "bingo," "raffles," "gambling," "punchboards," "pulltabs," and "social card games.," Section 2. TMC Section 3.08.030, "Tax Rates," Amended. Ordinance Nos. 2230 §1, 2150 §1, 1891 §1 and 1809 §1 (part), as codified at TMC Section 3.08.030, are hereby amended to read as follows: A. Pursuant to RCW 9.46.110 and RCW 9.46.120, as amended by the Laws of Washington, effective July 27, 1997, there is levied upon all persons, associations and organizations who have been duly licensed by the Washington State Gambling Commission, as authorized by law, the following tax: 1. Bingo games and raffles: To conduct or operate any bingo games and raffles, a tax rate of 5% of the gross revenue received therefrom, less the actual amount paid by such person, association or organization for or as prizes. 2. Amusement game: To conduct any amusement game, a tax rate of 2% of the gross revenue received therefrom, less the actual amount paid by such person, association or organization for or as prizes. 3. Punchboards or pulltabs: For the conduct or operation of any punchboards or pulltabs, a tax rate of 5% of the gross receipts from such activities for commercial stimulant operators (taverns, restaurants, etc.); and a tax rate of 10% on the gross receipts less the amount paid out as prizes for charitable or nonprofit organizations. 4. Social card games: a. For the conduct or operation of any premises or facility used to play social card games, a tax rate of-2" 10% of the gross receipts received therefrom; provided that when the number of card rooms in the Citv exceeds five, the tax rate shall increase to 15% of the qross receipts received therefrom. Additionaliv, when the number of card rooms exceeds six, the tax rate shall increase to 20% of the qross receipts received therefrom. W: Word Processing \Ordinances \Gambling tax amended upon certain triggers 8 -16 -11 SK:bjs Page 2 of 4 b. For purposes of this provision, the issuance of a certificate of occupancv for a social card room shall trigger the increase in the number of social card rooms in the Citv. After a certificate of occupancy is issued which triggers the increased tax rate, the Finance Director or his or her designee, shall notifv the social card rooms of the increased rate and that rate shall be said thereafter by all card rooms in this tax categorv. startina the financial quarter after notification. r- 0% of the gFe6s reGe reGeiyed theFefFem B. Non Profit Organizations. 1. No tax shall be imposed under the authority of TMC Chapter 3.08 on bingo or raffles when such activities or any combination thereof are conducted by any bona fide charitable or nonprofit organization as defined in RCW 9.46.0209, which organization has no paid or management personnel, and has gross income from bingo and raffles, or any combination thereof, not exceeding $5,000 per year, less the amount paid for or as prizes. 2. The Finance Director may waive the tax due each quarter from a bona fide charitable or nonprofit organization as defined in RCW 9.46.0209. This waiver may occur only if the charitable or nonprofit organization demonstrates by clear and convincing documentation that an amount equal to at least 70% of the tax due the City, as computed pursuant to TMC Section 3.08.030, will be donated to charitable nonprofit organizations serving the City whose purpose is to provide programs or facilities for meeting the basic health, education, welfare, or other needs of the residents of the City. Failure to donate at least 70% of the tax due the City will result in revocation of the waiver and the disqualification of the bona fide charitable or nonprofit organization to receive a waiver for future tax payments. Section 3. Repealer. Ordinance No. 2323 §2, as codified at TMC Chapter 5.20, "Certain Gambling Activities Prohibited," is hereby repealed. Section 4. 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 5. 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 6. 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 five days after passage and publication as provided by law. W: Word Processing \Ordinances \Gambling tax amended upon certain triggers 8 -16 -11 SK:bjs Page 3 of 4 PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of 2011. ATTEST /AUTHENTICATED: Christy O'Flaherty, CMC, City Clerk APPROVED AS TO FORM BY: Shelley M. Kerslake, City Attorney Jim Haggerton, Mayor Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number: W: Word Processing \Ordinances \Gambling tax amended upon certain triggers 8 -16 -11 SK:bjs Page 4 of 4 I I �1