HomeMy WebLinkAboutTIC 2019-06-18 Item 2B - Ordinance / Letter of Understanding - Utility Tax Rate / Recycling Surcharge for Commercial Solid Waste with Waste ManagementPublic Works Department - Henry Hash, Director
INFORMATIONAL EMORANDUM
TO:
FROM: Henry Hash, Public Works Director
BY: Hari Ponnekanti, City Engineer
CC: Mayor Allan Ekberg
DATE: June 14, 2019
SUBJECT: Solid Waste (Commercial Only)
Transportation and Infrastructure Committee
Allan Ekberg, Mayor
Ordinance Amending Solid Waste Utility Tax Rate and Recycling Surcharge
ISSUE
There are two separate but related issues: (1) Approve an ordinance to adjust the Solid Waste Utility Tax
by 10% (in two increments) 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 implemented in two increments with the first
increase from 6% to 11% effective beginning November 1, 2019 and the second increase from 11% to
16% effective July 1, 2020.
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. 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.
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. 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
1 9
1113VVStore PVV Common$TW Eng OTHER\ Hari Ponnekanti InfoMemoTIC0618-HP.docx
Informational Memo
Page 2
Breakdown of Proposed Monthly Increases
Size
Current
Tukwila
Rate
Existing
6%
Utility tax
5%
Recycling
Surcharge
Effective
Nov, 2019
Increase
5% Utility Tax
Effective Nov,
2019
Rate Increase
5% Utility Tax
Effective
July, 2020
Total Rate
Including
Including
increase in utility
tax and proposed
surcharge
1- yard
$70.80
$4.25
$3.54
$3.54
$3.54
$85.66
1.5- yard
$99.06
$5.94
$4.95
$4.95
$4.95
$119.86
2- yard
$122.20
$7.33
$6.11
$6.11
$6.11
$134.20
3- yard
$175.14
$10.51
$8.76
$8.76
$8.76
$211.92
4-yard
$228.33
$13.70
$11.42
$11.42
$11.42
$276.28
6- yard
$323.89
$19.98
$16.19
$16.19
$16.19
$391.91
8- yard
$424.54
$25.47
$21.23
$21.23
$21.23
$513.69
Comparison of Monthly Recycling Rate Charges by Jurisdiction
Size
Current
Tukwila
Proposed
Tukwila
SeaTac
Newcastle
Burien
Des
Moines
1-yard
$70.80
$85.66
$109.06
$123.73
$94.63
$94.15
1.5-yard
$99.06
$119.86
$146.74
$169.99
$137.03
$137.09
2-yard
$122.20
$134.20
$188.78
$213.87
$176.14
$177.27
3-yard
$175.14
$211.92
$270.11
$314.37
$254.39
$257.65
4 Yard
$228.33
$276,28
$351.59
$385.75
$312.91
$332.53
6 Yard
$323.89
$391.91
$502.40
$533.30
$449.68
$482.27
8 Yard
$424.54
$513.69
$659.41
$669.97
$573.31
$620.99
RECOMMENDATION
(1) Staff recommends Council approve the ordinance establishing the Solid Waste Utility Tax at 11%,
effective November 1, 2019, and thereby to 16% effective July 1, 2020 and to consider this item at the
July 8, 2019 Committee of the Whole and the subsequent July 15, 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 July 8, 2019 Committee of the Whole and the subsequent July 15,
2019 Regular Meeting.
ATTACHMENTS
• Draft Ordinance
• Draft Letter of Understanding
• Solid waste rate comparison tables
• Draft additional garbage collection locations
\\PWStore\PW CommonSTW Eng \ OTHER \Hari Ponnekanti \InfoMemoTIC0618-HP.docx
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2250
§1 (PART), TO INCREASE THE SOLID WASTE UTILITY TAX;
PROVIDING FOR SEVERABILITY; AND E,TABLISHING AN
EFFECTIVE DATE.
WHEREAS, the City Council shall periodically reconsider the need for a Solid Waste
Utility Tax given current economic conditions; and
WHEREAS, the heavy vehicles used for solid waste collection impact City streets with
significant wear and tear, thereby shortening the tile span of roads and accelerating the need
for costly maintenance and repair; and
WHEREAS, the City has availed itself of all appropriate revenue sources currently
authorized; and
WHEREAS, the City's basic rcod maintenance service levels may suffer a reduction
without a new source of revenue,. and
WHEREAS, an increase in the solid waste utility tax measured by gross income from
non-residential customers expected to generate additional revenue to help offset the on-
going impact of heavy vehicie operations and maintain current road condition levels; and
WHEREAS, the City Council has determined the public interest is best served by a 10%
increase to the existing 6°/0 solid waste utility tax, with the increased percentage amount to
be designated for road maintenance and road related projects; and,
HER AS, incrementally increasing the solid waste utility tax t 11°/o on November 1,
thpg to 1,6Y(Lon July 1410Z0_, will allow oustomers_time_to ad[gst to the iper_easosi
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
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Page 1 of 3
21
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:
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 City Council shall direct through its biennial budget process.
a. The revenues shall be used as follows:
6y0 shali _remain in the Gefteral_Fund,arid_suay_be Used for any City
P
ose,
f_21 The remaining revenues may remain in the General Fu
b dedicated to maintain and re. air Cit streets.
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 s mperiodically rec the-rwe4-redew reviewthe rate
for a Solid Waste Utility Tax given current economic conditions.
Section 2. TMC Section 3.51.040 Arne ded. Ordinance No. 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 — Amount
NThere is levied upon, and shall be collected from a person because of certain
business activities engaged in or carried on in the City of Tukwila, taxes in the amount to be
determined by the application of rates given against gross income as follows:
B, Upon a person engaged in or carrying on the business of providing solid waste
collection service, a tax equal to 16-% 6% fof-the-calendar-yeaf 2020-and-beyond-of the total
gross income from such business from all customers in the City, except residential
customers, during the period for which the tax is due. On November 1, 2019, said tax rate
shalUncrease to 11%, and shall then increase to 167 effective July 1, 202t/
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22
Section 3. TMC Section 3.51.050 Amended. Ordinance No. 2250 §1 (part), "Tax
Year," as codified at TMC Chapter 3.51.050, is hereby amended to read as follows:
3.51.050 Tax Year
The tax year for purposes of this +n ;-cease-in--the-solid waste utility tax shall commence
XDecember aci ear except f r o in tax eriods
�a � J a n �.A �r�. ��1 a w� d e u� a� e ne �31 ee�wee_ for the to I B ow9ee�� ee�e.�.��
h" i�ber 1 2019 to Jrl���e 30 2020, r1d July 1, �l� constitut��� se�arate tax srlods: Ncav�
o December 31, 202 N r 20-1-9-i —end--Dec-em-t>er_-31, 020, and
ha-I4-eemm odce---on-January 1 ai d--e�-yd--en-D-ece tuber ,1-eaek - e
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 of constitutionality of the
remaining portion of this ordinance or its application to any other person or situation.
Section 6. Effective Date. This ordinance °a summary thereof shall be published
in the official newspaper of the City, and s1 take effect and be in full force five days
after passage and publication a provided by haw.
PASSED BY THE CITY COUNCIL Oi 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
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
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23
Allan Ekberg, Mayor
Public Works Department - Henry Hash, Director
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,
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 Building 6300 Southcenter Boulevard Suite 100 • Tukwila, WA 98188 • 206-433-0179
Tukwila City Hall • 6200 Southcenter Boulevard • Tukwila, WA 98188 • 206-433-1800 • Website: TukwilaWA.gov
24
Waste Management
Letter of Understanding
Page 2
Acknowledged and agreed upon by:
CITY OF TUKWILA WASTE MANAGEMENT OF
WASHINGTON, INC.
By: By:
Its: Its:
W: PW Eng \PROJECTS \ Solid Waste\WM LOU Recycling 060419.Docx
6300 Building • 6300 Southcenter Boulevard Suite 100 o Tukwila, WA 98188 0 206-433-0179
Tukwila City Hall • 6200 Southcenter Boulevard • Tukwila, WA 98188 • 206-433-1800 • Website: TukwilaWA.gov
25
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• Tukwila (Current) N Tukwila (5% Surcharge + 16% Utility tax) I SeaTac Newcastle • Burien • Des Moines
m
1 YARD
1.5 YARD
2 YARD
3 YARD
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$ 70.00
$ 60.00
$50.00
$30.00
$20.00
$Eaa
10 gal,
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20 gal..
35 gal.
Tukwila (Current) a SeaTac a Newcastle
$47.82
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Burien II Des Moines
Page 10
$36.4
$59.72
40.
96 gal.
Trash Pick-up Locations
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 — 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.
9. 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.
28
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