HomeMy WebLinkAboutFIN 2018-08-21 Item 2B - Discussion - Commercial Parking Tax LegislationCity 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 15, 2018
SUBJECT: Revisions to Tukwila Municipal Code 3.48 — Commercial Parking Tax
(Updated from August 6, 2018 Committee of the Whole meeting)
ISSUE
Recommendation for Council to modify Tukwila Municipal Code (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 five percent tax
to be levied on gross revenues generated by commercial parking lots in the City. Since the
adoption of the Ordinance, the taxation rate has remained unchanged. A public hearing on
proposed revisions was held on November 21, 2017 and the draft ordinance has been further
revised based upon comments at the hearing.
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, and so there is no incentive for payments to be made on time.
DISCUSSION
The initial proposed revision included a rate change from 5% to 15%, with the new rate effective
January 1, 2018. That Ordinance has been revised to include a more gradual schedule of
increase, shown below.
• January 1, 2019 8% tax
• January 1, 2020 11 % tax
• January 1, 2021 15% tax
•
This change alleviates most of the concerns heard from the business community.
In addition, over 50% of parking taxes in Tukwila were paid late. Implementing a 10% late fee
would encourage businesses to submit taxes on time, improving the predictability of cash flow,
and bringing the parking tax penalty in line with penalties assessed for other City taxes.
Follow up after August 6, 2018 Committee of the Whole
Starfire Sports spoke at the August 6, 2016 meeting asking for relief from the proposed increase
in parking taxes. Staff was requested to have a legal review associated with non-profit agencies
and parking taxes.
After legal review, it was determined that there is nothing that would prohibit the City from
allowing for a different tax rate for non-profit agencies. Per RCW 82.80.030(2)(e) "The tax rate
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varies with zoning or location of the facility, the duration of the parking, the time of entry or exit,
the type or use of the vehicle, or other reasonable factors."
Staff is recommending that the ordinance be modified to set the tax rate at 5% for commercial
parking facilities operated by nonprofit agencies on City owned properties. Changing the tax
rate for Star -fire would result in a reduction in projected revenue of approximately $10 thousand
in 2019, $21 thousand in 2020, and $36 thousand in 2021.
Another option to consider would be to increase the parking tax rate in two steps rather than
three. Effective January 2019 the rate could increase to 10% and January 2020 the rate could
increase to 15%. This would replace revenue lost if Starfire is capped at 5% and would
increase funding available for roadway projects. The following chart shows possible parking tax
revenue under different scenarios.
Potential Parking Tax Revenue (Based on 2017 revenue)
2019 2020 2021
Current tax rate of 5% $ 214,000 $ 214,000 $ 214,000
Proposed 3 step increase (8%, 11%, 15%)
(Starfire not capped at 5%) 343,000 472,000 643,000
Proposed 3 step increase (8%, 11%, 15%°)
(Starfire capped at 5%) 333,000 451,000 607,000
Proposed 2 step increase (10%, 15%)
(Starfire not capped at 5%) 429,000 643,000 643,000
Proposed 2 step increase (10%,'15%)
(Starfire capped at 5%0) 411,000 607,000 ` 607,000`
The City currently collects parking tax revenue from the following parking establishments:
SeaTac Hotel Embassy, CHA Tukwila Doubletree Int'l Gateway E, Courtyard by Marriott, RT
Hotels Econo Lodge, RT Hotels SeaTac NE, Washington Towers, CHA Tukwila, Starfire Sports,
Republic Parking (Sounder stations), Republic Parking (154th), Shuttle Park Two, Diamond
Parking Svcs.
FINANCIAL IMPACT
The following projected revenues are based on 2017 tax revenues collected at the 5% rate.
2017 Actuals
$ 214,493
Projected Annual Commercial Parking Tax Revenue
January 2019, 8% 2020, 11% 2021, 15%
$ 343,189 $ 471,885 $ 643,479
RECOMMENDATION
The City Council is being asked to give policy direction on the options described above for
incorporation into the draft ordinance for Committee of the Whole review.
54 W:12018 Info Memos\Parking Tax 8.15.18.docx