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City of Tukwila
Planning & Economic
Development Committee
Thomas McLeod, Chair
Kathy Hougardy
Zak Idan
Distribution:
T. McLeod
K. Hougardy
Z. Idan
D. Quinn
Mayor Ekberg
D. Cline
R. Bianchi
C. O’Flaherty
A. Youn
L. Humphrey
AGENDA
MONDAY, OCTOBER 5, 2020 – 5:30 PM
HAZELNUT CONFERENCE ROOM
(At east entrance of City Hall)
THIS MEETING WILL NOT BE CONDUCTED AT CITY FACILITIES
BASED ON THE GOVERNOR’S PROCLAMATION 20-28.
THE PHONE NUMBER FOR THE PUBLIC TO LISTEN TO THIS
MEETING IS: 1-253-292-9750, Access Code 548948654#
Item Recommended Action Page
1. BUSINESS AGENDA
a. An ordinance on House Bill 1590 – Local Sales and
Use Tax for Affordable Housing.
Meredith Sampson, Assistant Planner
b. Tourism funding:
(1) Lodging tax – Six-year financial model.
(2) Lodging tax – New initiatives.
Brandon Miles, Business Relations Manager
c. Process for land sales.
Derek Speck, Economic Development Administrator
2. MISCELLANEOUS
a. Forward to 10/5 Regular
Meeting New Business.
b. Discussion only.
c. Discussion only.
Pg.1
Pg.15
Next Scheduled Meeting: October 19, 2020
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning & Economic Development Committee
FROM: Minnie Dhaliwal, Deputy Director of Department of Community
Development
BY: Meredith Sampson, Associate Planner
CC: Mayor Ekberg
DATE: October 5, 2020
SUBJECT: HB 1590
ISSUE
Does Tukwila want to participate in legislation that will increase the City’s sales tax by .1% to be
used toward local investments in affordable housing and related services?
BACKGROUND
During the 2020 legislative session, the state approved HB 1590 (RCW 82.14.530) which allows
the legislative authority of a county or a city to impose one tenth of one percent (.1%) local sales
and use tax, without voter approval, for affordable housing and related services. Previously this
tax could be imposed only if approved by a majority of county or city voters. HB 1590 took effect
on June 11, 2020. The legislation provides that if counties do not implement the tax by
September 30, 2020, then cities have the opportunity to implement the tax.
King County can only impose this tax if they plan to spend at least 30% of the revenue collected
through the sales tax increase within any city with a population greater than 60,000 people
located in King County within that city’s boundaries. If the county imposes the tax after a city
does, the county must credit the city as well as enter into an interlocal agreement with that city
to determine how the services and provisions described below will be allocated and funded in
the city.
A minimum of 60% of the revenue collected from this tax must be used for the following:
1. Constructing affordable housing, which may include new units of affordable housing
within an existing structure, and facilities providing housing-related services.
2. Constructing mental and behavioral health-related facilities.
3. Funding the operations and maintenance costs of new units of affordable housing and
facilities where housing-related programs are provided, or newly constructed evaluation
and treatment centers.
The affordable housing units and facilities providing housing-related services may only be
provided to people whose income is at or below 60% of the area median income (AMI) for King
County and who fall into one of the following groups:
People with behavioral health disabilities
Veterans
Senior Citizens
Homeless, or at-risk of being homeless families with children
Unaccompanied youth or young adults
People with disabilities
1
INFORMATIONAL MEMO
Page 2
Domestic violence survivors
The remainder of the revenue collected from this tax must be used for the operation, delivery, or
evaluation of mental and behavioral health treatment programs and services or housing-related
services.
Additionally, the county or city imposing the tax has the authority to issue general obligation or
revenue bonds and they may use or pledge up to 50% of the revenue collected for repayment of
the bonds to finance the provision or construction of affordable housing, facilities where
housing-related programs are provided, or evaluation and treatment centers. Revenue collected
from this tax can be used to offset reductions in state or federal funds for the purposes
described above. A maximum of 10% of the revenue collected from this tax may be used to
supplant existing local funds.
DISCUSSION
King County did not opt to participate in HB 1590 before the September 30, 2020 deadline,
giving cities within the county the opportunity to participate themselves. However, the budget
proposal that King County Council is considering includes a measure that proposes the King
County Council enact the 0.1% sales tax increase as authorized by HB 1590, to fund a $400
million investment in permanent housing for the chronically homeless – those HUD defines as
residing in a place not meant for human habitation for at least year, and with a serious physical
or behavioral health issues. The new funding would provide a place to call home for about 2,000
people, and, with State legislative approval, take advantage of the current favorable real estate
market to make an immediate difference in people’s lives. (State legislative approval is needed
because the bill as written only applies to new construction. King County would like to purchase
existing structures to provide more housing for chronically homeless individuals. It is reasonable
to assume that if King County gets this fix that it would be applicable to all participating
jurisdictions.) State Representative Cindy Ryu and State Senator Patty Kuderer will sponsor
legislation to allow jurisdictions to purchase distressed motels, hotels, nursing homes and other
facilities.
The key decisions that Tukwila must make are:
1. Does the City want to participate?
Participation in HB 1590 will increase the sales tax in Tukwila by .1%--or one tenth of
one percent. Tukwila’s expected revenue is $2.2 million based on 2019 data. This tax
can be imposed by council manic authority, with no vote necessary by Tukwila residents.
If Tukwila participates in HB 1590 prior to King County participating, King County must
provide a credit against its tax for the full amount of the tax imposed by Tukwila. The bill
stipulates that King County can only impose this tax if they plan to spend at least 30% of
the revenue collected through the sales tax increase within any city with a population
greater than 60,000 people, which does not include Tukwila. If Tukwila does not
participate in HB 1590 and King County does choose to participate, the County will
decide how to use the revenue collected.
2. How does the City want to use the revenue?
2
INFORMATIONAL MEMO
Page 3
This decision does not need to be made at this time. If the Council decides to pass an
ordinance, staff will come back to the Committee with a process for determining how the
revenue will be used.
The funds collected can be used to:
Construct affordable housing, which may include new units of affordable housing within
an existing structure, and facilities providing housing-related services.
Construct mental and behavioral health-related facilities.
Fund the operations and maintenance costs of new units of affordable housing and
facilities where housing-related programs are provided, or newly constructed evaluation
and treatment centers.
3. What are the deadlines for adopting legislation?
To participate, Tukwila must adopt an ordinance prior to King County acting on the legislation.
King County Executive, Dow Constantine, proposed 2021-2022 budget includes enacting the
.1% sales tax increase for the County.
FINANCIAL IMPACT
Tukwila’s expected revenue from HB 1590 is $2.2 million based on the sales tax collected in
2019.
RECOMMENDATION
Staff recommends that the Planning and Economic Development Committee discuss this item
and provide direction to either further discuss this item at the Regular Meeting on October 5,
2020 and/or discuss this at the Committee of the Whole meeting on October 12, 2020.
ATTACHMENTS
A. House Bill 1590
B. Draft Ordinance
3
4
CERTIFICATION OF ENROLLMENT
HOUSE BILL 1590
Chapter 222, Laws of 2020
66th Legislature
2020 Regular Session
AFFORDABLE HOUSING SALES AND USE TAX--COUNCILMANIC AUTHORITY
EFFECTIVE DATE: June 11, 2020
Passed by the House March 9, 2020
Yeas 52 Nays 44
LAURIE JINKINS
Speaker of the House of
Representatives
Passed by the Senate March 6, 2020
Yeas 27 Nays 21
CYRUS HABIB
President of the Senate
CERTIFICATE
I, Bernard Dean, Chief Clerk of the
House of Representatives of the
State of Washington, do hereby
certify that the attached is HOUSE
BILL 1590 as passed by the House of
Representatives and the Senate on
the dates hereon set forth.
BERNARD DEAN
Chief Clerk
Approved March 31, 2020 10:44 AM FILED
March 31, 2020
JAY INSLEE
Governor of the State of Washington
Secretary of State
State of Washington
5
6
AN ACT Relating to allowing the local sales and use tax for1
affordable housing to be imposed by a councilmanic authority; and2
amending RCW 82.14.530.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 82.14.530 and 2015 3rd sp.s. c 24 s 701 are each5
amended to read as follows:6
(1)(a)(i) A county legislative authority may submit an7
authorizing proposition to the county voters at a special or general8
election and, if the proposition is approved by a majority of persons9
voting, impose a sales and use tax in accordance with the terms of10
this chapter. The title of each ballot measure must clearly state the11
purposes for which the proposed sales and use tax will be used. The12
rate of tax under this section may not exceed one-tenth of one13
percent of the selling price in the case of a sales tax, or value of14
the article used, in the case of a use tax.15
(ii) As an alternative to the authority provided in (a)(i) of16
this subsection, a county legislative authority may impose, without a17
proposition approved by a majority of persons voting, a sales and use18
tax in accordance with the terms of this chapter. The rate of tax19
under this section may not exceed one-tenth of one percent of the20
HOUSE BILL 1590
AS AMENDED BY THE SENATE
Passed Legislature - 2020 Regular Session
State of Washington 66th Legislature 2019 Regular Session
By Representatives Doglio, Dolan, Macri, Cody, Gregerson, Wylie,
Appleton, Robinson, Ormsby, Frame, and Davis
Read first time 01/24/19. Referred to Committee on Housing,
Community Development & Veterans.
p. 1 HB 1590.SL7
selling price in the case of a sales tax, or value of the article1
used, in the case of a use tax.2
(b)(i) If a county ((with a population of one million five3
hundred thousand or less has not imposed)) does not impose the full4
tax rate authorized under (a) of this subsection ((within two years5
of October 9, 2015)) by September 30, 2020, any city legislative6
authority located in that county may ((submit)):7
(A) Submit an authorizing proposition to the city voters at a8
special or general election and, if the proposition is approved by a9
majority of persons voting, impose the whole or remainder of the10
sales and use tax rate in accordance with the terms of this chapter.11
The title of each ballot measure must clearly state the purposes for12
which the proposed sales and use tax will be used;13
(B) Impose, without a proposition approved by a majority of14
persons voting, the whole or remainder of the sales and use tax rate15
in accordance with the terms of this chapter.16
(ii) The rate of tax under this section may not exceed one-tenth17
of one percent of the selling price in the case of a sales tax, or18
value of the article used, in the case of a use tax.19
(((ii) If a)) (iii) A county with a population of greater than20
one million five hundred thousand ((has not imposed the full)) may21
impose the tax authorized under (a)(ii) of this subsection ((within22
three years of October 9, 2015, any city legislative authority)) only23
if the county plans to spend at least thirty percent of the moneys24
collected under this section that are attributable to taxable25
activities or events within any city with a population greater than26
sixty thousand located in that county ((may submit an authorizing27
proposition to the city voters at a special or general election and,28
if the proposition is approved by a majority of persons voting,29
impose the whole or remainder of the sales and use tax rate in30
accordance with the terms of this chapter. The title of each ballot31
measure must clearly state the purposes for which the proposed sales32
and use tax will be used. The rate of tax under this section may not33
exceed one-tenth of one percent of the selling price in the case of a34
sales tax, or value of the article used, in the case of a use tax))35
within that city's boundaries.36
(c) If a county imposes a tax authorized under (a) of this37
subsection after a city located in that county has imposed the tax38
authorized under (b) of this subsection, the county must provide a39
credit against its tax for the full amount of tax imposed by a city.40
p. 2 HB 1590.SL8
(d) The taxes authorized in this subsection are in addition to1
any other taxes authorized by law and must be collected from persons2
who are taxable by the state under chapters 82.08 and 82.12 RCW upon3
the occurrence of any taxable event within the county for a county's4
tax and within a city for a city's tax.5
(2)(a) Notwithstanding subsection (4) of this section, a minimum6
of sixty percent of the moneys collected under this section must be7
used for the following purposes:8
(i) Constructing affordable housing, which may include new units9
of affordable housing within an existing structure, and facilities10
providing housing-related services; or11
(ii) Constructing mental and behavioral health-related12
facilities; or13
(iii) Funding the operations and maintenance costs of new units14
of affordable housing and facilities where housing-related programs15
are provided, or newly constructed evaluation and treatment centers.16
(b) The affordable housing and facilities providing housing-17
related programs in (a)(i) of this subsection may only be provided to18
persons within any of the following population groups whose income is19
at or below sixty percent of the median income of the county imposing20
the tax:21
(i) Persons with ((mental illness)) behavioral health22
disabilities;23
(ii) Veterans;24
(iii) Senior citizens;25
(iv) Homeless, or at-risk of being homeless, families with26
children;27
(v) Unaccompanied homeless youth or young adults;28
(vi) Persons with disabilities; or29
(vii) Domestic violence survivors.30
(c) The remainder of the moneys collected under this section must31
be used for the operation, delivery, or evaluation of mental and32
behavioral health treatment programs and services or housing-related33
services.34
(3) A county that imposes the tax under this section must consult35
with a city before the county may construct any of the facilities36
authorized under subsection (2)(a) of this section within the city37
limits.38
(4) A county that has not imposed the tax authorized under RCW39
82.14.460 prior to October 9, 2015, but imposes the tax authorized40
p. 3 HB 1590.SL9
under this section after a city in that county has imposed the tax1
authorized under RCW 82.14.460 prior to October 9, 2015, must enter2
into an interlocal agreement with that city to determine how the3
services and provisions described in subsection (2) of this section4
will be allocated and funded in the city.5
(5) To carry out the purposes of subsection (2)(a) and (b) of6
this section, the legislative authority of the county or city7
imposing the tax has the authority to issue general obligation or8
revenue bonds within the limitations now or hereafter prescribed by9
the laws of this state, and may use, and is authorized to pledge, up10
to fifty percent of the moneys collected under this section for11
repayment of such bonds, in order to finance the provision or12
construction of affordable housing, facilities where housing-related13
programs are provided, or evaluation and treatment centers described14
in subsection (2)(a)(iii) of this section.15
(6)(a) Moneys collected under this section may be used to offset16
reductions in state or federal funds for the purposes described in17
subsection (2) of this section.18
(b) No more than ten percent of the moneys collected under this19
section may be used to supplant existing local funds.20
Passed by the House March 9, 2020.
Passed by the Senate March 6, 2020.
Approved by the Governor March 31, 2020.
Filed in Office of Secretary of State March 31, 2020.
--- END ---
p. 4 HB 1590.SL10
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AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, RELATING TO TAXATION;
IMPOSING THE ADDITIONAL LOCAL SALES AND USE TAX
UNDER RCW 82.14.530 TO FUND INVESTMENTS IN
AFFORDABLE AND SUPPORTIVE HOUSING AND HOUSING
RELATED SERVICES, INCLUDING MENTAL AND BEHAVIORAL
HEALTH RELATED FACILITIES, TO BE CODIFIED AT CHAPTER
3.15 OF THE TUKWILA MUNICIPAL CODE; PROVIDING FOR
SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, Tukwila’s Comprehensive Plan states that almost half of City residents are
burdened by housing costs, paying more than 30% of their income for housing; and
WHEREAS, Goal 3.2 of Tukwila’s Comprehensive Plan is that the City of Tukwila has
safe, healthy, and affordable homes for all residents; and
WHEREAS, Goal 3.3 of Tukwila’s Comprehensive Plan is that the City of Tukwila
supports and collaborates with other jurisdictions and organizations to assess housing
needs, coordinate funding, and preserve and create affordable housing opportunities; and
WHEREAS, an implementation strategy in Tukwila’s Comprehensive Plan is to support
and encourage legislation at the County, State, and federal level that promotes affordable
housing goals; and
WHEREAS, House Bill 1590 was approved by the Washington State Legislature in
2020 and grants councilmanic authority to implement a sales tax based affordable
housing levy; and
WHEREAS, the State legislation provides that any county may impose this sales tax;
and any city may impose this sales tax after September 30, 2020 if the county has not
imposed the full 0.1% first; and
WHEREAS, a minimum of 60% of the revenue collected from the tax must be used
for constructing affordable housing, constructing mental and behavioral health-related
facilities, or funding the operations and maintenance costs of new units of affordable
housing and facilities where housing related programs are provided; and the remainder
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of the funds collected can be used for the operation, delivery or evaluation of mental and
behavioral health treatment programs and services or housing related services; and
WHEREAS, the facilities and programs funded through the levy must serve
individuals whose income is below 60% Area Median Income (AMI) of the county
imposing the tax and fall within the following population groups: persons with behavioral
health disabilities; veterans; senior citizens; homeless or at risk of being homeless,
families with children; unaccompanied homeless youth or young adults; persons with
disabilities; or domestic violence survivors; and
WHEREAS, no more than 10% of the moneys collected under this ordinance may be
used to supplant existing local funds; and
WHEREAS, if King County imposes this tax after a city located within that county has
imposed this tax, the county must provide a credit against its tax for the full amount imposed
by the city; and
WHEREAS, RCW 82.14.530 authorizes the City of Tukwila to issue general obligation
or revenue bonds to carry out the purposes of the legislation and to pledge up to 50% of
the moneys collected for repayment of such bonds, in order to finance the provision or
construction of affordable housing facilities or evaluation and treatment centers; and
WHEREAS, the City of Tukwila intends to impose the .1% (one tenth of one percent)
local sales and use tax authorized under RCW 82.14.530;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. Chapter 3.15 of the Tukwila Municipal Code Established. A chapter
of the Tukwila Municipal Code entitled “Sales and Use Tax for Affordable and Supportive
Housing and Services,” to be codified as Tukwila Municipal Code (TMC) Chapter 3.15, is
hereby established to read as follows:
CHAPTER 3.15
ADDITIONAL SALES AND USE TAX FOR AFFORDABLE AND
SUPPORTIVE HOUSING AND SERVICES
Sections:
3.15.010 Imposition of Additional Sales and Use Tax for Affordable and
Supportive Housing and Related Services
3.15.020 Purposes of Tax
3.15.030 Administration and Collection – Statutory Compliance
Section 2. Regulations Established. TMC Section 3.15.010, “Imposition of
Additional Sales and Use Tax for Affordable and Supportive Housing and Related Services,”
is hereby established to read as follows:
3.15.010 Imposition of Additional Sales and Use Tax for Affordable and Supportive
Housing and Related Services
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A. The additional sales and use tax shall be imposed at a rate of .1% (one-tenth of
one percent) of the selling price in the case of a sales tax, or value of the article used, in the
case of a use tax, as authorized by Chapter 222, Laws of 2020, which are codified in RCW
82.14.530, upon every taxable event, as defined in RCW 82.14, occurring within the City
of Tukwila. The tax shall be imposed upon and collected from those persons from whom
the state sales tax or use tax is collected pursuant to Chapters 82.08 and 82.12 RCW.
B. The rate of the tax imposed by TMC Section 3.15.010 shall be .1% (one-
tenth of one percent) of the selling price or value of the article used, as the case may be.
Section 3. Regulations Established. TMC Section 3.15.020, “Purposes of Tax,” is
hereby established to read as follows:
3.15.020 Purposes of Tax
A. The City must use a minimum of 60% of the moneys collected under TMC
Section 3.15.010 only for the following purposes and in accordance with RCW 82.14.530:
1. Constructing affordable housing, which may include new units of affordable
housing within an existing structure, and facilities providing housing-related services; or
2. Constructing mental and behavioral health-related facilities; or
3. Funding the operations and maintenance costs of new units of affordable
housing and facilities where housing-related programs are provided, or newly constructed
evaluation and treatment centers.
B. The housing and services provided under TMC Section 3.15.020 may only be
provided to persons within any of the following population groups whose income is at or
below 60% of the median income of King County:
1. Persons with behavioral health disabilities;
2. Veterans;
3. Senior citizens;
4. Homeless, or at-risk of being homeless, families with children;
5. Unaccompanied homeless youth or young adults;
6. Persons with disabilities; or
7. Domestic violence survivors.
C. The remainder of the moneys collected under this section must be used for the
operation, delivery, or evaluation of mental and behavioral health treatment programs and
services or housing-related services.
D. To carry out the purposes of RCW 82.14.530, the legislative authority of the city
imposing the tax has the authority to issue general obligation or revenue bonds within the
limitations now or hereafter prescribed by the laws of this state, and may use, and is
authorized to pledge, up to 50% of the moneys collected under this section for repayment
of such bonds, in order to finance the provision or construction of affordable housing,
facilities where housing-related programs are provided, or evaluation and treatment
centers.
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Section 4. Regulations Established. TMC Section 3.15.030, “Administration and
Collection – Statutory Compliance,” is hereby established to read as follows:
3.15.030 Administration and Collection – Statutory Compliance
The administration and collection of the tax imposed by TMC Chapter 3.15 shall be
in accordance with the provisions of Washington State Legislature Chapter 222, Laws of
2020, which shall be codified in Chapter 82.14 RCW.
Section 5. The Finance Director is authorized to provide any necessary notice to the
Department of Revenue to effectuate the tax enacted by this ordinance and to execute,
for and on behalf of the City of Tukwila, any necessary agreement with the Department
of Revenue for the collection and administration of the tax enacted by this ordinance.
Section 6. Corrections by City Clerk or Code Reviser Authorized. 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 7. 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 8. 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 ____________________, 2020.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk Allan Ekberg, Mayor
APPROVED AS TO FORM BY: Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
Office of the City Attorney
14
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning and Economic Development Committee
FROM: Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: September 28, 2020
SUBJECT: Lodging Tax Six Year Financial Model
ISSUE
Discussion of the lodging tax six-year financial model and possible funding reductions due to
COVID-19
BACKGROUND
The City of Tukwila collects a 1% lodging tax on all eligible stays in Tukwila hotels, motels, and
Airbnbs. Washington State law limits the use of lodging tax funds to tourism promotion activities.
Funds collected can be used by the City or third parties to help bring tourists (both day and night
tourists) to the City.
State Law allows the City to use lodging tax funds as follows:
Tourism marketing;
Marketing and operations of special events and festivals designed to attract tourists;
Operations and capital expenditures of tourism-related facilities owned or operated by a
municipality or a public facilities district; or
Operations of tourism-related facilities owned or operated by nonprofit organizations.
Historically, the City has used lodging tax funds for a variety of activities including providing
funds to Seattle Southside Regional Tourism Authority, the Museum of Flight, Starfire Sports,
Seattle Southside Chamber of Commerce, and the City of Tukwila. Funds have been used for a
variety of activities, such as marketing, small festivals, and sponsorship of tourist related events.
In 2019 the City collected $819,000 in lodging tax. The City ended 2019 with approximately $1.9
million of funds on hand. For 2020 the City is forecasting a significant drop in lodging tax funds
due to COVID-19. Staff is now forecasting that lodging tax fund revenues will only be about
$400,000 in 2020. Unspent will remain in the City’s lodging tax funds and can be used in future
years. State law does not allow lodging tax funds to be used to support City general operations.
The table below outlines approved lodging tax applications for 2019:
Applicant Activity Funded Total Amount New Activity
for 2019?
Seattle Southside
Regional Tourism
Authority (SSRTA)
Destination
Marketing
activities, focused
on tourists
outside 50 miles
of the City.
$202,500 No, the City has
provided this
amount of
funding annually
to SSRTA over
the last five
years.
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Starfire Sports Marketing for
soccer events
and tournaments.
$44,500 No, the City has
provided lodging
tax funds to
Starfire Sports
for a number of
years. The
amount varies
year to year.
Museum of Flight
(MoF)
50th anniversary
exhibit of the
Apollo 11 moon
landing.
$100,000 No, the City has
had previous
agreements with
MoF for lodging
tax funds. The
amounts
provided per
year have
ranged between
$35,000 and
$100,000.
City of Tukwila 2019 Rave Green
Run
$10,000 No, the Cityalso
sponsored this
event in 2018.
City of Tukwila General
Administration
(Funding for staff
time, operations
associated with
the lodging tax
program, and
indirect fee
allocation to the
general fund.
$116,525 No, the City has
since 2017 an
application for
this item.
City of Tukwila International Food
Truck Rally (two
separate events).
$10,402 Yes.
City of Tukwila International
Rugby Promotion
$15,459 Yes
City of Tukwila Southcenter 50 $7,500 (2019
expenditures
only).
Yes
City of Tukwila Southcenter Art $40,000 Yes
City of Tukwila Tukwila Pond
Master Plan
$125,000 Yes
Six Year Financial Model
Starting in 2019 the City began to use a six-year financial model to guide the lodging tax
program. The six-year financial model is used as a roadmap and is not a binding document for
how the City will award funds. The updated six-year financial model is attached with this memo.
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INFORMATIONAL MEMO
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The following are the key highlights of the draft six-year financial model:
Revenue
Projected revenue through 2025 are shown, including the original, pre-COVID-19 anticipated
revenue. Staff is forecasting a drastic reduction in lodging tax revenue due to a decrease in
traveler spending. Just like after September 11 terror attacks, it will likely take a number of years
for traveler spending to resume to its pre-COVID-19 levels.
Expenses
Expenses have been categorized into four major categories, with specific sub-categories under
the major categories. A discussion of the specific sub-categories is provided below.
Marketing, Sales, and Sponsorships
Contracted DMO Services
The City contracts for services from Seattle Southside Regional Tourism Authority (SSRTA) a
destination marketing organization (DMO) to market the City to tourists outside of the 50 miles
radius1. SSRTA provides a critical service marketing the City under the “Seattle Southside”
name. The City also have a relationship with Visit Seattle, which provides DMO services for the
entire county.
In 2019 the City provided $202,500 to SSRTA to support SSRTA’s activities promoting the City.
These funds are combined with TPA funds generated in the cities of SeaTac and Des Moines,
as well as lodging tax funds from those two cities. SSRTA has budgeted ending 2021 with just
over $3.7 million of funds on hand.
Total Forecasted Expenditures through 2025: $1,012,500
Sponsorships (MoF, Starfire Sports, etc)
Third parties, such as the Museum of Flight and Starfire Sports, are eligible to apply to receive
lodging tax funds directly from the City. If awarded by the City, the City will enter a sponsorship
agreement with the City to receive the funds and to outline the benefits provided to City from the
sponsorship.
Total Forecasted Expenditures through 2025: $610,000
Small Events (Tukwila Days, Spice Bridge, Juneteenth, etc.)
A small amount of funds has been allocated to help support and develop events in the City.
These events would likely be produced and held by third parties, with financial assistance
provided by the City. These small events can provide enormous benefit in helping the City
develop a tourist entity.
Total Forecasted Expenditures through 2025: $65,000
1 The 50‐mile radius is used because its generally believed that people who live more than 50 miles away from the
City are more likely to visit the City as overnight guests versus coming just for the day.
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Experience Tukwila, Branding and Marketing, Visitors
In 2020 the City launched digital platforms to promote the City to visitors, prospective
businesses, and to help improve the overall image of the City. The digital platforms include
Facebook, Twitter, Instagram, LinkedIn, and a dedicated website (currently under development).
There will be ongoing costs to maintain these digital assets and to provide up to date images
and stories promoting the City.
Total Forecasted Expenditures through 2025: $388,375
World Cup Planning and Activation
The United, Canada, and Mexico will host the FIFA World Cup in 2026. Given Seattle’s strong
soccer fan base it is anticipated that Seattle may host several of the soccer matches. Should
this occur tens of thousands of fans from throughout the globe will come to Seattle to watch
these games. In addition, it is highly likely that Starfire Sports will be used by teams for training.
With its proximity to Sea-Tac Airport and Starfire Sports, Tukwila could see a large influx of
tourists for the World Cup. Staff has allocated funds to help with planning and preparation.
Total Forecasted Expenditures through 2025: $180,000
COVID-19 Response
SavingLocalKC.com
SavingLocalKC.com is a countywide initiative to help drive sales to businesses impacted by
COVID-19 and the associated stay home orders. Staff is not anticipating provided lodging tax
funds for SavingLocalKC.com after 2020.
Total Forecasted Expenditures through 2025: $154,170 (2020 funds)
SSRTA Emergency Funds
As part of COVID-19 recovery, SSRTA requested funds to help market the region to meetings.
The funds provided by the City will go to a rebate program for meetings booked in the City.
Total Forecasted Expenditures through 2025: $70,000
Showare Sponsorship
When COVID-19 hit the region the City of Kent enacted a spending freeze which impacted all
funds, including its lodging tax program. The City of Tukwila and City of Kent have discussed a
partnership program in which events would be held at Showare and their hotel stays would be in
Tukwila hotels. Groups that stay in Tukwila would be eligible for a rebate for each night booked
in Tukwila.
Total Forecasted Expenditures through 2025: $20,000
Seattle Southside Chamber of Commerce
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The Seattle Southside Chamber of Commerce launched the “Soundside Promise” initiative to
help businesses recover from COVID-19. The City of Tukwila is a supporter and the City
Council approved a lodging tax request from the Chamber to support the initiative.
Total Forecasted Expenditures through 2025: $50,000
Destination Development
Wayfinding Plan Development and Installation
At the September 21, 2020 PED meeting staff provided an outline of a proposed initiative to
develop a wayfinding plan for the tourist areas of the City. PED expressed interest in moving
forward with developing a wayfinding plan and future installation of signage. The six-year
financial model includes funds to complete the master plan and installation of some signage.
Total Forecasted Expenditures through 2025: $450,000
Southcenter Art Investment
In 2020 the LTAC and City Council approved a lodging tax application for the City’s Parks
Department to develop an arts plan and to develop initial art along Baker Blvd. Baker Blvd was
chosen because it has been identified as an event street and because it is part of the pedestrian
spine connecting the commuter rail station to Westfield Southcenter. Additional funds have been
allocated to install art throughout Southcenter, which will help create a better tourist destination.
Total Forecasted Expenditures through 2025: $339,400
Tukwila Pond
The City has long identified Tukwila Pond as a future amenity for the Southcenter District. The
first step in turning the Pond vision into a reality is to complete a master plan. In 2019 LTAC and
the City Council approved $125,000 to the City’s Parks Department to complete the Plan. This
work is anticipated to begin in 2020 and conclude in 2021. Staff has allocated funds in 2020 and
2021 to complete the Master Plan. Additional funds are shown in outlying years to be used for
additional studies and park improvements. The funds allocated by lodging tax are not sufficient
to complete all the anticipated future work needed for the Pond, other funds from the City and/or
grants will be needed. Lodging tax funds could be used as a match to help secure additional
sources of funds.
Total Forecasted Expenditures through 2025: $725,000
General Administration
Salary and Benefits
The lodging tax funds supports .5 FTE in the Economic Development Office. The half time staff
member is responsible for overseeing the City’s tourist program, administering the lodging tax
funding program, and staffing the LTAC. The salary and benefits shown were provided by the
City’s Finance Department.
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City Overhead
State law allows the City to charge special funds, such as the lodging tax, an indirect cost
allocation. The indirect cost allocation reimburses the general fund for costs associated for
support the lodging tax funds. These costs include legal, facilities, technology services, fleet,
and accounts payable. The indirect costs included in the six-year financial model was provided
by the City’s Finance Department.
Administrative
The City includes funds for direct administrative costs associated with the City’s work on
promoting the City and management of the tourism program. These costs include travel,
parking, registration for events, training, and educational materials. These funds are provided
for any staff or elected official engaged in tourism related activities or events. The funds also
include membership to several national and reginal organizations which enhance the City’s
ability to bring tourist to the City.
Total Forecasted Expenditures through 2025: $130,000
DISCUSSION
COVID-19 will have a severe impact on the City’s lodging tax program over the next six years.
Staff is not anticipating that lodging tax revenue will return to their pre-COVID-19 levels until
2025. Since 2014 the City has built up a considerable ending fund balance for the lodging tax.
There is currently just over $1.9 million of lodging tax funds available for the City to spend. This
ending fund balance can be used to continue the City’s investment in its tourist economy, even
with the pullback in lodging tax collection. However, by 2024 the City will have used its ending
fund balance and will no longer be able to support many of the initiatives identified above. Staff
believes it would be prudent now to update the six-year financial model in order to avoid having
to make drastic budget modifications in the future.
Next Steps
Staff is requesting input from the Committee on modifications to the six-year financial model in
order to address the forecasted budget deficit starting in 2024. Staff will come back to PED at
the next meeting to address in more detail the three possible items identified above and any
other suggestions from the Committee. This information will ultimately be used by staff and PED
in the preparation of the final six-year financial model.
FINANCIAL IMPACT
None. The six-year financial model is a planning document only and does not authorize any
expenditure of lodging tax funds.
RECOMMENDATION
Discussion Only.
ATTACHMENTS
Draft Six Year Financial Plan
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City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning and Economic Development Committee
FROM: Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: September 28, 2020
SUBJECT: Lodging Tax New Initiatives
ISSUE
Discussion of possible new initiatives for the lodging tax program.
BACKGROUND
The City of Tukwila collects a 1% lodging tax on all eligible stays in Tukwila hotels, motels, and
Airbnbs. Washington State law limits the use of lodging tax funds to tourism promotion activities.
Funds collected can be used by the City or third parties to help bring tourists (both day and night
tourists) to the Cityi.
State Law allows the City to use lodging tax funds as follows:
Tourism marketing;
Marketing and operations of special events and festivals designed to attract tourists;
Operations and capital expenditures of tourism-related facilities owned or operated by a
municipality or a public facilities district; or
Operations of tourism-related facilities owned or operated by nonprofit organizations.
Third parties can request the lodging tax directly or the City can also request the funds on the
organization’s behalf. Any third-party obtaining lodging tax funds from the City must enter a
service contract with the City.
DISCUSSION
Staff is working with PED and the Lodging Tax Advisory Committee (LTAC) to prepare a six-
year financial model for the lodging tax program. As part of this model, staff would like to identify
possible new initiatives. These new initiatives will be categorized and then placed into the
appropriate line item within the six-year financial model.
Based upon previous discussions with the City Council, LTAC, and community members, staff
has identified the following new activities:
1. Funding of more art throughout the City.
2. More events within the City, specifically along Tukwila International Blvd.
3. A Tukwila signature event.
4. Marketing and promoting the City better within the region.
5. Exploring opportunities with the cities of Renton and Kent, specifically focused on
aerospace and technology groups (KentValleyWa.com)
6. Overall business attraction.
What else should be consider adding to the six-year financial model?
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INFORMATIONAL MEMO
Page 2
https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/CC Docs/Old W/2020 Info Memos/Lodging Tax, New Intiatives.doc
FINANCIAL IMPACT
None. The six-year financial model is a planning document only and does not authorize any
expenditure of lodging tax funds.
RECOMMENDATION
Discussion only. Staff would suggest that the Committee Chair report out at the full Council
about new initiatives and invite other councilmembers to provide their ideas to staff.
ATTACHMENTS
None.
24