HomeMy WebLinkAboutCOW 2018-08-27 Item 3D - Ordinance/Resolution - Commercial Parking Tax / Appeals Fee ScheduleCOUNCIL AGENDA SYNOPSIS
Iratuds------- ------------------- -------
IVIcetin,g Date
Prepared by
Major:). rCM 'IP
Counal review
07/23/18
VC
08/06/18
VC
Z.
08/27/18
VC
6,:
09/04/18
VC
ITEM INFORMATION
ITEM No.
3.D.
S'I",\ 11: Si'( )NSOR: VICKY CARLSEN
ORM INA], A( ;11\11),\ DiVIT:: 07/23/18
r,\ ),\ LiEm 'nu ,r Amend TMC Chapter 3.48 - Commercial Parking Tax
c; \`I'Ic;()Itl' OlIccusfion
7/23&8/27
1-1 A/lotion
-111gDate
IMI. Resolution
ri Ordinance
E Bid Award
Alls, Dale
f Pub/U. I leciriug
Aft, Date
E Other
MIT Dale
AI u Dile
All,gDale 09/04/18
ililt, Dale 09/04/18
SI'l )Nc. )It — Council A4uyor 111< EDCI) Ill'inunce 'Yre E7 S P&IZ L Police 11FF7 E Court
Sp()NSuieS The Council is being asked to approve the ordinance amending TMC Chapter 3.48 related to
Sr NINIARy commercial parking tax. In addition, an appeal fee is presented via resolution.
RIlviilWIli) liY l.().W. Mtg. E cDN Comm Z Finance Comm. 0 Public Safety Comm.
I 1 Trans &Infrastructure Arts Comm. [ Parks Comm. I Planning Comm.
DATE: 7/17 & 8/21 CoNimiTTEK (:i tAIR: QUINN
RECOMMENDATIONS:
Si,()Nsc)k/A1),\IIN.
OmimiTIEF,
Finance
Unanimous Approval; Forward to Committee of the Whole
COST IMPACT / FUND SOURCE
Au ler, Rr1.111tF1) AMOUNT BUDGETED APPROPRIATION REQUIRED
$ $
Fund Source:
Comments:
MTG. DATE
RECORD OF COUNCIL ACTION
07/23/18
Forward to Regular Meeting
08/06/18
Forward back to Finance Corn for discussion regarding non-profit organizations
MTG. DATE
ATTACHMENTS
07/23/18
Informational Memorandum dated 07/11/18, with attachments
08/6/18
Forward back to Finance Committee
08/27/18
Informational Memorandum dated 8/15/18
Ordinance and Resolution
Minutes from the Finance Committee meeting of 8/21/18
09/4/18
"I i
22
City 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
23
INFORMATIONAL MEMO
Page 2
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 Starfire 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 proiects. 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 Intl 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 (1541h), 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%
343,189
2020, 11
471,885
2021, 15%
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.
24 W:12018 Info Memos\Parking Tax 8.15.18.docx
NOTE: Text shown in underline format (pages 1 and 3) reflects
changes made after the Regular Meeting on August 6, 2018.
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 Council has determined that it is reasonable and in the public
interest for the tax rate to remain at 5% for commercial parking facilities operated by a
nonprofit organization on City -owned property; and
WHEREAS, the City held a duly noticed public hearing on this tax increase on
November 27, 2017;
W: Word Processing\Ordinances\Commercial Parking Tax amended-TMC 3.48 strike-thru 8-13-18
SW:bjs
Page 1 of 6 25
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
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 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 strike-thru 8-13-18
26 SW:bjs
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.
1. For commercial parking businesses operated by nonprofit organizations on
City -owned property, the tax shall be imposed at the rate of 5% of the gross revenues
generated by non-exempt commercial parking charges and fees.
2. For all other commercial parking businesses, tThe tax shall be imposed at
the rate of 8% of the gross revenues generated by non-exempt commercial parking
charges and fees effective January 1, 2019, and then as follows:
January 1, 2020: 11% of the gross revenues generated by non-exempt
commercial parking charges and fees
January 1, 2021: 15% 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.
W: Word Processing\Ordinances\Commercial Parking Tax amended-TMC 3.48 strike-thru 8-13-18
SW:bjs
Page 3 of 6 27
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
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:
3.48.080 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 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:
3.48.090 Liability and Reporting
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
B. 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 of Tukwila Finance
Department.
W: Word Processing\Ordinances\Commercial Parking Tax amended-TMC 3.48 strike-thru 8-13-18
28 SW:bjs
Page 4 of 6
Section 12. TMC Section 3.48.100 is hereby reenacted to read as follows:
3.48.100 Violation/Penalty
It is unlawful for any person, firm or corporation engaged in a Commercial Parking
Business 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:
3.48.110 Appeal Procedure
A. Any person aggrieved by the 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 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 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.
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.
W: Word Processing\Ordinances\Commercial Parking Tax amended-TMC 3.48 strike-thru 8-13-18
SW:bjs
Page 5 of 6 29
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 five days
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 , 2018.
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 strike-thru 8-13-18
30 SW:bjs
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:
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
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Regular Meeting thereof this day of , 2018.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk Verna Seal, 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 7-9-18
SWNC:bjs
Page 1 of 1 31
32
Finance Committee Minutes August 21, 2018
B. Ordinance and Resolution: Updating Commercial Parking Tax
Staff is seeking Council approval of an ordinance and resolution to amend Tukwila Municipal
Code 3.48 to gradually increase the commercial parking tax from 5%to 15% and impose a late
penalty of 10% per month. The Committee of the Whole sent the legislation back to Committee,
asking for information on the legality of exempting nonprofits based upon public comment
received. Staff presented an option that would retain the 5% rate for nonprofits operating on
City property, which would currently apply only to Starfire Sports. Doing so would reduce
projected revenue by approximately $10K in 2019, $21K in 2020, and $36K in 2021. To offset this
revenue loss, the tax could be increased in two steps rather than three, going to 10% in 2019
and 15% in 2020. Councilmember Robertson spoke in favor of exempting Starfire with the two-
step increase. Councilmembers Quinn and Kruller supported exempting Starfire with the three -
step increase. Staff will draft the ordinance reflecting this majority recommendation and
present it to the Committee of the Whole. MAJORITY APPROVAL. FORWARD TO AUGUST 27,
2018 COMMITTEE OF THE WHOLE.
C. Employee Compensation Policy
Staff presented policy recommendations in the areas of above and below market adjustments,
comparable cities, compression, recruitment incentives, and compensation review process for
non -represented employees. Staff also performed a market study with the newly released 2018
salary data from AWC and the results show that the City is still close to the market and
considered competitive. Councilmember Robertson requested that the table in Exhibit A be
updated to include cities +60% assessed valuation. He requested that the table in Exhibit B
include columns showing population and percentage change. Chair Quinn said these should
be additional tables not to replace those already in the Exhibits. DISCUSSION ONLY. RETURN
TO COMMITTEE
D. 2018 2nd Quarter Financial Report
Staff presented the Committee with the City's 2018 2nd Quarter Financial Report which captures
the general state of financial affairs and highlights significant items and trends. General Fund
results are positive with an increase in fund balance of $3.2 million, and revenues of $32.7
million coming in close to budget. Sales tax collected through May reflects a 4%year over year
increase, and admission tax and building permit fees are both strong. Departmental under
expenditures reached almost $2 million. Councilmember Robertson asked that the revenue
table on page 75 call out retail sales tax by itself in a new line or a footnote. Chair Quinn would
like a better understanding of the 3%departmental reductions to be discussed at the upcoming
budget work session. Committee members also asked for an explanation of the decline in utility
tax. DISCUSSION ONLY.
E. 2019-2020 Biennial Budget: City Council
Staff presented the proposal for the 2019-2020 City Council departmental budget, which
includes salaries and wages, benefits, supplies, and services. As the City is transitioning to
Priority Based Budgeting, staff defined the City Council's programs as "Community
Engagement and Events," "Governmental Affairs and Appointments," and "Legislative
Oversight." Budget Oversight may be pulled out into its own category for the purpose of scoring
accurately against the City's strategic goals. The proposed Council budget includes reductions
33