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HomeMy WebLinkAboutCOW 2019-05-28 Item 5C.1 - Ordinance - Solid Waste Utility Tax and Recycling SurchargeCOUNCIL AGENDA Siwosis Initials Meeting Date Prepared by Mayor's review council review 05/28/19 I-1H , ,/ 06/03/19 HH ITEM INFORMATION ITEM No. 5C.1 STAN, SPONSOR: HENRY HASH ORIGINAL AGENDA DATE: 05/28/19 AGENDA ITEM TITLE Solid Waste Collection Ordinance Amending Solid Waste Utility Tax and Recycling Surcharge CATEGORY Discussion 05/28/19 Motion Date 06/03/19 0 Resolution Mtg Date II Ordinance Ej Bid Award Mtg Date El Public Hearing Mtg Date 0 Other Ails Date Nits Date Mtg Mtg Date 06/03/19 SPONSOR Council Mayor OHR 11DCD DFviance EITS ElPR ECourt Police PIV SPONSOR's Council is being asked to approve two items; 1) Approve an Ordinance amending TMC 3.51 SUMMARY that adjusts the Solid Waste Utility Tax by 10% and, 2) approve a Letter of Understanding with Waste Management of Washington, LLC for additional services and a 5% recyclable cost surcharge. Both items will only impact commercial customers for solid waste collection throughout the City. REVIEWED BY 0 C.O.W. Mtg. CDN Comm 111 Finance Comm. [1] Public Safety Comm. Z Trans &Infrastructure fl Arts Comm. [1] Parks Comm. 1] Planning Comm. DATE: 05/21/19 COMMITTEE CHAIR: ZAK IDAN RECOMMENDATIONS: SPONSOR/ADMIN. COMMITTEE Public Works Department Unanimous Approval; Forward to Committee of he Whole COST IMPACT / FUND SOURCE EXPENDITURE', REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED $0.00 $0.00 $0.00 Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 05/2 9 06/03/19 MTG. DATE ATTACHMENTS 05/23 19 Informational Memorandum dated 05/17/19 Draft Ordinance Draft Letter of Understanding Solid Waste Rate Comparison Tables Draft Additional Garbage Collection Locations Minutes from the Transportation & Infrastructure Committee meeting of 05/21/19 06/03/19 109 110 City of Tukwila Public Works Department - Henry Hash, Director INFORMATIONAL MEMORANDUM TO: FROM: Henry Hash, Public Works Director Xi . BY: Hari Ponnekanti, City Engineer CC: Mayor Allan Ekberg DATE: May 17, 2019 SUBJECT: Solid Waste (Commercial Only) Ordinance Amending Solid Waste Utility Tax Rate and Recycling Surcharge Allan Ekberg, Mayor Transportation and Infrastructure Committee ISSUE There are two separate but related issues: (1) Approve an ordinance to adjust the Solid Waste Utility Tax by 10% and amending TMC 3.51; and (2) Approve a Letter of Understanding with Waste Management of Washington, LLC (WM) for additional services and a 5% Recyclable Cost surcharge. Both issues would only impact commercial users. BACKGROUND — Issue 1: Utility Tax Many causes of asphalt damage exist, leading to roadways needing repair and replacement. Specifically, heavy solid waste vehicles can cause significant damage to road surface and shorten the life of pavement. The expenses to operate and maintain the City's road infrastructure have increased each year. BACKGROUND — Issue 2: Recycling Costs Waste Management (WM) recently made a presentation to the Transportation and Infrastructure Committee about the changes in the global recycling market and the increased costs. In order to offset the additional costs associated with recycling, WM has requested an increase to the recycling rates. DISCUSSION — Issue 1: Utility Tax An existing Solid Waste Utility Tax provides a revenue source to the City's general fund which can be used to fund roadway and roadway related projects. Adjusting the Solid Waste Utility tax is proposed to provide additional revenue to the City where the increased percentage can be used for road maintenance and road related projects. The current solid waste utility tax rate is 6% and it has not been adjusted since 2009. The increase in the Solid Waste Utility Tax would be effective beginning November 1, 2019. DISCUSSION — Issue 2: Recycling Costs Staff recommends that the City approve the 5% Commercial Recyclable Cost surcharge to offset WM's costs associated with the weakening recycling market. The proposed surcharge would be in place for two years, beginning November 1, 2019, but it may be extended with Council approval. Also included with this surcharge, WM will now pick up twice weekly, an additional 20 City -owned garbage containers at locations chosen by the City (see attached location list). FINANCIAL IMPACT The proposed utility tax and the recycling surcharge only apply to commercial users, not residential. With the proposed increases, the solid waste and recycling rates remain below Tukwila's neighboring cities. The following two tables illustrate the impacts of the two proposed increases and compare the proposed rate for Tukwila commercial customers with rates charged by nearby jurisdictions. Additional details can be found in the attachments. WARM EnglOTHER Haii PonnekantilInfaMerno2TIC0521-HRdocx 1 11 Informatione Page 2 Breakdown of Proposed Monthly Increases Size 1- yard Current Tukwila Rate 5% Surcharge 5% Total 10% Utili Rate Tax Proposed Total Rate $70.80 $3,54 $74.34 $7.44 $81.78 .5- yard $99,06 $4, 95 $104.01 $10.40 114.41 2- yard $122.20 $6,11 $128,31 $12.83 3- yard $175.14 $8,76 $183.90 $18.39 141.14 $202.29 4-yard $228,33 11.42 $239.75 $2.3.97 6- yard $323.89 $16.19 $340.08 $34,01 8- yard $424,54 $21,23 263.72 374..09 $445.77 $44.58 Comparison of Monthly Recycling Rate Charges by Jurisdiction Size Proposed SeaTac Newcastle Tukwila Current Tukwila -yard $70.80 $81.78 $109.06 $123.73 5-yard $99.06 2-yard $122.20 3-yard $175.14 4 Yard $228.33 6 Yard 8 Yard $323.89 $424.54 $114.41 $146.74 $169.99 $141.14 $188.78 213.87 $202.29 $270.11 $263,72 74.09 $490 35 $502.40 659.4 $314.37 $385,75 533,30 $669.97 $49035 Des Moines 94.15 7.09 $177,27 $257.65 2 $482.27 $620.99 RECOMMENDATION (1) Staff recommends Council approve the ordinance establishing the Solid Waste Utility Tax at 16%, effective November 1, 2019, and to consider this item at the May 28, 2019 Committee of the Whole and the subsequent June 3, 2019 Regular Meeting. (2) Staff recommends approving a 5% Recycling Rate Surcharge, effective November 1, 2019 for two years, and to consider this item at the May 28, 2019 Committee of the Whole and the subsequent June 3, 2019 Regular Meeting. ATTACHMENTS • Draft Ordinance • Draft Letter of Understanding • Solid waste rate comparison tables • Draft additional garbage collection locations C,S\OTHERTIaru Ponnekam1e11rfoMttm©2TVC052141P.doc+c AN ORDINANCE OF THE CITY COUNCIL e OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE t«IC . 2250 §1 (PART), TO INCREASE THE SOLID WASTE UTILITY" TA PROVIDING FOR SEVERABILITY; AND ESTABLISHIN EFFECTIVE DATE. WHEREAS, the City Council shall periodically re Utility Tax given current economic conditions; and WHEREAS, the heavy vehicles use`tKl,, significant wear and tear, thereby shortening for costly maintenance and repair; andv WHEREAS, the authorized; and WHEREAS, the C without a ne„ reveo he need for a Solid Waste old waste collect ion' impact City streets with n of roads and accelerating the need fled itself 'of all appropriate revenue sources currently e; an aintenarce service levels may suffer a reduction WHEREAS, an increase in the'solid waste utility tax measured by gross income from iden non restial customers�i d expected'to generate additional revenue to help offset the on- going impact of heavy vehicle operations and maintain current road condition levels; and WHEREAS, tl e City Council has determined the public interest is best served by a 10°/Q increase to the waste utility tax, with the increased percentage amount to be designated for road` ain enance and road related projects; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. TMC Section 3,51.020 Amended. Ordinance No, 2250 §1 (part), as codified at Tukwila Municipal Code (TMC) Chapter 3.51.020, "Use and Accountability of Tax Proceeds," is hereby amended to read as follows:. W;. Legislative Development\S©lid Waste Utility Tax increase 7-19 HK:bjs Review and analysis by Barbara Saxton Page 1 of 3 113 3.51,020 Use and Accountability of Tax Proceeds 1. All revenues collected pursuant to this chapter shall be deposited into the General Fund, and shall be used for the funding of City services or capital requirements as the Cfty Council shall direct through its biennial budget process. 2. In addition to the automatic annual review of the Financial Planning Model, the City Council will review the need for rate or other changes as part of the biennial budget process. 3. The City Council shall periodically reconsider the need fo a Solid Waste Utility Tax given current economic conditions. Section 2. TMC Section 3.51.040 Amended. Ordinan o, 2250 §1 (part), as codified at TMC Chapter 3.51.040, "Occupations Subject to Tax Amount," is hereby amended to read as follows: 3.51.040 Occupations Subject to Tax — Amoun A. There is levied upon, and shall be collected From a person because of certain business activities engaged in or carried on in the City + f "ukwila, taxes in the amount to be determined by the application of rates-gven against gross come as follows: B. Upon a person engaged in or ,carrying on the busin collection service, a tax equal to the total gross income from such business'°frpm ;aD cup customers, during the period`forwhich the taxis'due. Section 3. T Year" as codified a 3.51.050 Tax,` commerr ax year for poi) loVrel :e n January ection chapter Ott s of providing solid waste ender yea,r 2009 2020 and beyond of (32 ers' in the City, except residential .050 Amended. Ordinance No. 2250 §1 (part), "Tax 51.050, is hereby amended to read as follows: solid waste utility tax shall commence end December 31, 002020, and thereafter shall end December 31 each year. Section 4 Corrections by City Clerk or Code Reviser. Upon approval of the City Attorney, theClerk and the code reviser are authorized to make necessary corrections to this otdmance, 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 of constitutionality of the remaining portion of this ordinance or its application to any other person or situation. W: Legislative DeveloprnentlSolid Waste Utility Tax increase 5-7-19 HK:bjs Review and analysis by Barbara Saxton Page 2 of 3 114 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. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2019, ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk APPROVED AS TO FORM BY: Rachel B. Turpin, City Attorney W; Legislative Development\Solid Waste Utility Tax increase 5-7-19 HK bjs Review and analysis by Barbara Saxton Pu Efectt Ordinan Page 3 of 3 115 116 City of Tukwila Public Works Department - Henry Hash., l ector June 4, 2019 Mary Evans Area Director, Public Sector Solutions Pacific Northwest/BC Area Waste Management of Washington, Inc. 720 4th Avenue, Suite 400 Kirkland, WA 98033 RE Additional Services and Recyclable Market Surcharge City of Tukwila Contract No. 12-027 Dear Ms. Evans, Allan Ekberg, Mayor The purpose of this Letter of Understanding (LOU')"'is to approve a recyclable market surcharge between the City of Tukwila ("City") and Waste Management of Washington, Inc. ("WM"). City and WM agree to increase commercial rates by five percent (5%), effective November 1, 2019, to reflect increased costs in recyclable processing and marketing. This recyclable surcharge is only approved for a period of two -years, from November 1, 2019 through October 31, 2021, however WM may request to extend the surcharge by providing justification of the need to the City. Any request must be made no later than 90 days prior to the end of the two-year surcharge period and must be approved by both parties. Furthermore, WM agrees to commence twice weekly collection and disposal service for twenty (20) city -owned garbage containers at locations chosen by the City staff for the duration of the Agreement, The City reserves the right to change the locations of these garbage containers. By signing below, the City and Waste Management acknowledge its approval and acceptance of the terms of this LOU and acknowledges that this LOU: (a) creates a legally binding obligation upon the parties, (b) shall be governed and constructed in accordance with the laws of the State of Washington regardless of any conflict of law provisions, (c) sets forth the entire agreement between the City and WM with respect to the subject matter hereof and supersedes all prior negotiations, representations, understandings and agreements with respect to the subject matter hereof, and (d) may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument, 6300 Suiidi r 6300 Sos. ci WA 98188 • 20 433-017,9 Tukwila City Hall 6200 Southcenter Boulevard • Tukwila, WA 98188 • 206-433-1800 • Website: TukwilcWA. av 117 Waste Management Letter of Understanding Page 2 Acknowledged and agreed upon by: CITY OF TUKWILA WASTE MANAGEMENT OF WASHINGTON, INC. By: Its: Its: W \PW Eng1PROJECTSiSolid'Wssie Revised WM LOU Recycling 060419.Docx 6300 B `fdin # 6300 Snutiicenter Boulevard Suf 181.88 0 433-0179 Tukwila City Hall • 6200 Southcenter Boulevard • Tukwila, WA 981 8 • 206-433-1800 • Website; TukwilaWA.gov 118 Commercial Rate Comparison LI a Tukwila (Current) m Tukwila (5% Surcharge + 10% Utility tax) Ei SeaTac Newcastle • Burien a Des Moines 1 YARD 03 03 03 1.11- 1-1 ‘Zt: ON ON 03 1.5 YARD Cil r•-• CO co ON LI LI 2 YARD 3 YARD 01 1/1 ON LI 4-9 ON 03 (N ON ri) 4 YARD a ON ci fn • ON ci 03 ON fr.1 6 YARD p • 8 YARD LI ci no LD $ 70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 $15.65 13.72 0 $17. $31.49 6.2 2 $47.82 44 $29.42 $28.$28.6 25.5r $40.28 10 gal. 20 gal. 35 gal. 64 gal. a Tukwila (Current) SeaTac • Newcastle Burien U Des Moines Rage 10 $59.72 $40. $36.4I 96 gal. Additional City -Owned Garbage Containers 1. Tukwila Intl Blvd — Northbound, (2) cans at the bus stop by KFC and Taco Bell. 2. Tukwila Intl Blvd — Northbound, (2) cans at the bus stop north of S. 148th Street at Pizza Hut. 3, Tukwila Intl Blvd — Northbound, (2) cans at the bus stop north of S. 144th Street by Car Wash. 4. Tukwila Intl Blvd --4 Northbound, (2) cans at the bus stop at S. 140th Street. 5. Tukwila Intl Blvd — Southbound, (2) cans at the bus stop south of S. 141st Street at the Casino. 6. Tukwila Intl Blvd — Southbound, (2) cans at the bus stop south of S. 144th Street at the Market. 7. Tukwila Intl Blvd — Southbound, (2) cans at the bus stop south of S. 148th Street at the Church 8. Tukwila Intl Blvd — (2) cans at the NE & NW intersections with S. 144th Street. S. 144th Street — Westbound, (1) can at the bus stop west of 37th Ave South at the Park. 10. S. 144th Street - Eastbound, (1) can at the bus stop east of 37th Ave South at the Market. 11. S. 144th Street Westbound, (1) can in front of brick structure. 12. S. 144th Street — Eastbound, (1) can in front of brick structure. W:\PW Eng1GTflER\Cyndy Hnighton\TIC Agenda Items15.21-151Wh4 Solid Waste Wily Taxlback up filesiGarbage Can L€calions,doc 121 122 Tronsportotion&InfrostructueCommittee Minutes Moy2l,209 E. Ordinance: Amending Solid Waste Utility Tax Rate & Recycling Rate Surcharge Staff iSseeking Council approval Of8n ordinance that would amend Tukwila Municipal Code 3.51 to increase the Solid Waste Utility Tax by 10% and a Letter of Understanding with Waste Management for additional services and a596Recyclable Cost surcharge. Both changes would impact only commercial customers, not residential. Staff proposes the increase tothe Solid Waste Utility Tax because Ofheavy truck impacts tOroads. The current utility tax rate iSG9h and has not been adjusted since 2OO9. The proposal wit[ raise onestimated $75U'00Oper year which will beintended for road projects. The increase tol6%would beeffective II/l/I9.The 5% Commercial Recyclable Cost surcharge was negotiated with Waste Management to offset its costs associated with the weakening recycling market as described to the Committee in April. The proposed surcharge would be in place for two years,but could be extended in the future. As a tradeoff, Waste Management will begin to pick,:,ulp 20 additional City -owned garbage containers twice weekly. Tukwila's solid waste and recyctJ[n,,,g rates will remain below those of neighboring cities even with these proposed ipqrea',,,ses. Councilmember Kruller asked about specific impacts. At the 1-yard collection level the rate wit[ irncre',ase from $70.80 to $81.78. At the 8-yard level, the rate wit[ go from 4"24"54 to $490.35. Coun' [member McLeod asked how 10% was determined for the tax, and noted that this is,,,,, pother hit to businesses. Staff looked at the City of Kent as a",M,odel, but it WHI be a Council decision. Chair Idan pointed out that the last recital in the ordinance r�eferstothe money being designated for road maintenance and road related, projects, but the in the code is more general, referring to "City services or capital rie`qpirements." He prefer that money raised from this tax be explicitly directed to road improvements. Councitmember Kruller stated that the intent for roads is clear and she prefers �eavingthqftex�ibility int`�ecode. She asked if staff had reached out to the Chamb ce per her­s0gg,&stion at'the last meeting. Staff said the meeting has not,, yet,6&WIrred but will pursue it prior to the Committee of the Whole discussion. Counc,,,flm, mber McLeod asked,for clarification on road improvements in the General Fund. The current policy is that the General Fund subsidizes roads and infrastructure projects and while'the re is not a specific roads 6;,:cgunt, the city does identify all of its revenues and expenditures. Cha'itt.,danstated 4gaJ6,thatfie is' interested in dedicatingthe proposed 16% Solid Waste Ut"I'llity Tax to road improvements and he would like the full Council to discuss this, although he Mill,,,hot be',pre�sent. UNANIMOUS APPROVAL. FORWARD TO MAY 28, 2019 COMMITTEE OF THE WHQLE. UUU. There was no IV. MISCELLANEOUS'',",,-. McMickenPmects � Staff distributed ahandout showing projects andexpendkuresintheMck4ickenHeiehtsneighborhood betvveenI989-2Ol9. 8NSFAccess Chair |dan stated that he would like a Committee discussion schedule for June 18 on the BN3F intermodai access location. Hefeels the Council should make a decision on the location despite not 123