HomeMy WebLinkAboutReg 2024-06-17 Item 5C - Ordinance - TMC Chapter 3.14 "Sales and Use Tax for Affordable Housing"ITEM INFORMATION
STAFF SPONSOR: LAUREL HUMPHREY ORIGINAL AGENDA DATE: 6/17/24
AGENDA ITEM TITLE Ordinance amending Tukwila Municipal Code 3.14, Sales & Use Tax for Affordable
Housing
CATEGORY Discussion Motion Resolution Ordinance Bid Award Public Hearing Other
Mtg Date Mtg Date Mtg Date Mtg Date 6/17/24 Mtg Date Mtg Date Mtg Date
SPONSOR Council Mayor Admin Svcs DCD Finance Fire P&R Police PW
SPONSOR’S
SUMMARY The draft ordinance amends TMC 3.14 to accommodate flexibility for future changes to
Washington State Law regarding the affordable housing sales and use tax.
REVIEWED BY Trans&Infrastructure Svcs Community Svcs/Safety Finance & Governance Planning & Community Dev.
LTAC Arts Comm. Parks Comm. Planning Comm.
DATE: 6/10/24 COMMITTEE CHAIR: MARTINEZ
RECOMMENDATIONS:
SPONSOR/ADMIN.
COMMITTEE
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$0 $ $
Fund Source:
Comments:
MTG. DATE RECORD OF COUNCIL ACTION
6/17/24
MTG. DATE ATTACHMENTS
6/17/24 Information Memo
Draft ordinance
Minutes from the 6/10 PCD Committee meeting
COUNCIL AGENDA SYNOPSIS
----------------------------------Initials --------------------------------- ITEM NO.
Meeting Date Prepared by Mayor’s review Council review
6/17/24 LH
Unanimous approval; forward to Regular Meeting Consent Agenda
5.C.
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City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning & Community Development Committee
FROM: Laurel Humphrey, Legislative Analyst
DATE: June 4, 2024
SUBJECT: Ordinance amending TMC 3.14, Sales & Use Tax for Affordable Housing
BACKGROUND
The proposed ordinance amends Tukwila Municipal Code Chapter 3.14 to accommodate
flexibility for future changes to Washington State Law regarding the affordable housing sales
tax.
DISCUSSION
During the 2019 legislative session, the state approved HB 1406 which is a local revenue
sharing program that allows local governments to collect a portion of state sales tax to
address affordable housing. In September 2019 the City Council adopted Ordinance 2613 and
Resolution 1966 to allow the city’s participation in this legislation, with the intention of
pooling a portion of the proceeds with the South King Housing and Homelessness Partners,
also established in 2019 via interlocal agreement. The City currently contributes 70% of HB
1406 proceeds to the SKHHP Housing Capital Fund.
Since the passage of HB 1406, the state legislature has made changes to the provisions of the
tax:
•SSB 5604 was adopted in the 2023 legislative session and added administrative costs not to exceed 10% of the annual distribution to the list of allowable uses of the tax.
•SB 6173 was adopted in the 2024 legislative session and increased the homeownership average median income threshold from 60% to up to 80% for the development of
af fordable housing intended for owner occupancy.
Staff recommends amending the Municipal Code in such a way that removes some of the
detail and instead points to Washington State law as it exists now and is amended in the
future. RCW 82.14.540, which allows the collection of the 1406 revenues and dictates
allowable uses, is likely to continue to change over time and this approach will allow the city
to accommodate future changes without requiring code amendments each time. City and
SKHHP staff will continue to monitor legislative changes to the tax for impacts to Tukwila and
its use of the revenue, and will keep the City Council apprised.
RECOMMENDATION
Staff recommends Committee approval of the ordinance to forward to the June 17, 2024
Regular Consent Agenda.
ATTACHMENTS
1. Draft ordinance
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2024 Legislation: Amendments to TMC 3.14 Page 1 of 4
Version: 6/4/24
Staff: L. Humphrey
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AMENDING ORDINANCE NO.
2613, AS CODIFIED AT TUKWILA MUNICIPAL CODE (TMC)
CHAPTER 3.14, “SALES AND USE TAX FOR AFFORDABLE
HOUSING,” AUTHORIZING THE MAXIMUM CAPACITY OF A
LOCAL SALES AND USE TAX TO FUND INVESTMENTS IN
AFFORDABLE AND SUPPORTIVE HOUSING; PROVIDING
FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE
DATE.
WHEREAS, pursuant to Ordinance No. 2613, the City Council authorized the maximum
capacity of a local sales and use tax to fund investments in affordable and supportive
housing as authorized by Chapter 338, Laws of 2019; and
WHEREAS, the local sales and use tax is credited against the state sales and use tax
so that the total tax paid by the consumer does not increase; and
WHEREAS, since 2019, the City of Tukwila has been a member of the South King
Housing and Homelessness Partners (SKHHP) and contributes a portion of its SHB 1406
revenue to the SKHHP Housing Capital Fund; and
WHEREAS, in 2023, the Washington State Legislature passed Substitute Senate Bill
(SSB) 5604, allowing cities to retain up to 10 percent of the tax for administrative costs; and
WHEREAS, in 2024, the Washington State Legislature passed Senate Bill (SB) 6173,
allowing cities imposing the tax to provide housing and services to persons whose income
is at or below 80% of the median income if the housing and services support the
development of affordable housing intended for owner occupancy; and
WHEREAS, the City Council desires to amend Tukwila Municipal Code (TMC)
Chapter 3.14 in accordance with the changes to state law effectuated by SSB 5604 and
SB 6173 and to establish flexibility to accommodate future changes in state law;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
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2024 Legislation: Amendments to TMC 3.14 Page 2 of 4
Version: 6/4/24
Staff: L. Humphrey
Section 1. TMC Section 3.14.010 Amended. Ordinance No. 2613 §2, as codified at
TMC Section 3.14.010, “Imposition of Sales and Use Tax for Affordable Housing,” is hereby
amended to read as follows:
3.14.010 Imposition of Sales and Use Tax for Affordable Housing
A. There is imposed a sales and use tax as authorized by Washington State
Legislature Chapter 338, Laws of 2019, as now enacted and hereafter amended, which
shall be codified in Chapter 82.14 RCW, upon every taxable event, as defined in Chapter
82.14 RCW, 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 Chapter 82.08 and 82.12 RCW.
B.The rate of the tax imposed by TMC Section 3.14.010 shall be 0.0073 percent of
the selling price or value of the article used.
C. The tax imposed under TMC Section 3.14.010 shall be deducted from the
amount of tax otherwise required to be collected or paid to the Department of Revenue
under Chapter 82.08 or 82.12 RCW. The Department of Revenue will perform the
collection of such taxes on behalf of the City of Tukwila at no cost to the City.
D. The Department of Revenue will calculate the maximum amount of tax
distributions for the City of Tukwila based on the taxable retail sales in the City in State
Fiscal Year 2019, and the tax imposed under TMC Section 3.14.010 will cease to be
distributed to the City of Tukwila for the remainder of any State Fiscal Year in which the
amount of tax exceeds the maximum amount of tax distributions for the City as properly
calculated by the Department of Revenue. Distributions to the City of Tukwila that have
ceased during a State Fiscal Year shall resume at the beginning of the next State Fiscal
Year.
Section 2. TMC Section 3.14.020 Amended. Ordinance No. 2613 §3, as codified at
TMC Section 3.14.020, “Purpose of Tax,” is hereby amended to read as follows:
3.14.020 Purpose of Tax
A.The City may use the moneys collected by the tax imposed under TMC Section
3.14.010 or bonds issued only, as allowed by Washington State Legislature Chapter 338,
Laws of 2019, as now enacted and hereafter amended. , for the following purposes:
1. Acquiring, rehabilitating, or constructing affordable housing, which may
include new units of affordable housing within an existing structure or facilities providing
supportive housing services under RCW 71.24.385; and
2. Providing the operations and maintenance costs of new units of affordable
or supportive housing; and
3. Providing rental assistance to tenants.
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2024 Legislation: Amendments to TMC 3.14 Page 3 of 4
Version: 6/4/24
Staff: L. Humphrey
B. The housing and services provided under TMC Section 3.14.020 may only be
provided to persons whose income is at or below 60 percent of the median income of the
City.
C. In determining the use of funds under TMC Section 3.14.020, the City must
consider the income of the individuals and families to be served, the leveraging of the
resources made available under TMC Section 3.14.010, and the housing needs within
the City.
D. The Finance Director must report annually to the Washington State Department
of Commerce, in accordance with the Department’s rules, on the collection and use of the
revenue from the tax imposed under TMC Section 3.14.010.
E. The tax imposed by the City under TMC Section 3.14.010 will expire 20 years
after the date on which the tax is first imposed. The Finance Director shall provide notice
to the City Council and the Mayor of the expiration date of the tax each year beginning
three years before the expiration date, and shall also promptly notify the City Council and
the Mayor of any changes to the expiration date.
Section 3. TMC Section 3.14.030 Amended. Ordinance No. 2613 §4, as codified at
TMC Section 3.14.030, “Administration and Collection – Statutory Compliance,” is hereby
amended to read as follows:
3.14.030 Administration and Collection – Statutory Compliance
The administration and collection of the tax imposed by Chapter 3.14 shall be in
accordance with the provisions of Washington State Legislature Chapter 338, Laws of
2019, as now enacted and hereafter amended, which shall be codified in Chapter 82.14
RCW.
Section 4. 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 5. 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 6. 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.
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2024 Legislation: Amendments to TMC 3.14 Page 4 of 4
Version: 6/4/24
Staff: L. Humphrey
Section 7. 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 ____________________, 2024.
ATTEST/AUTHENTICATED:
Andy Youn, CMC, City Clerk Thomas McLeod, Mayor
APPROVED AS TO FORM BY: Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Office of the City Attorney Ordinance Number:
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City of Tukwila
City Council Planning & Community Development Committee
Meeting Minutes
June 10, 2024, 5:30 p.m. – Hybrid Meeting; Hazelnut Conference Room & MS Teams
Councilmembers Present: Dennis Martinez, Chair; Tosh Sharp, Armen Papyan
Staff Present: Marty Wine, Nora Gierloff, Lee Sipe, Nick Morton, Kari Sand, Isaac Gloor,
Max Baker, Laurel Humphrey
Chair Martinez called the meeting to order at 5:30 p.m.
BUSINESS AGENDA
A.Ordinance: Tukwila Municipal Code 3.14 “Sales and Use Tax for Affordable Housing”
Staff is seeking approval of an ordinance to amend TMC 3.14 to accommodate flexibility for
recent and future changes to state law regarding the tax.
Committee Recommendation
Unanimous approval. Forward to June 17, 2024 Regular Consent Agenda
B.Ordinance: Tenant Protections
Committee members discussed the draft ordinance relating to tenant protections.
Item(s) for follow-up:
•Research possibility of adding threshold to distinguish small scale landlords from
large companies.
•Provide information on cost of ballot measures.
Committee Recommendation
Discussion only. Forward to future work session.
C.Permit Review Contract Amendments
Staff is seeking approval of a contract amendment with BHC Consulting LLC to increase the
not to exceed limit from $150K to $300K, and to extend it through 2025. Staff is also seeking
approval of an amendment with Reid Middleton to increase the not to exceed limit from
$150K to $300K. These amendments will accommodate permit activity and funding comes
from permit fees.
Committee Recommendation
Unanimous approval. Forward to June 17, 2024 Regular Consent Agenda
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