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HomeMy WebLinkAboutCOW 2024-10-28 Item 5A / 6A - Public Hearing - Ordinances on 2025 Tax Levy LegislationCOUNCIL AGENDA SYNOPSIS nitials Meeting Date Prepared by Mayor's review Council review 10/28/24 Tony ITEM INFORMATION ITEM No. 5.A. 6.A. STAFF SPONSOR: TONY CULLERTON ORIGINAL AGENDA DATE: 10/28/24 AGENDA ITEM TITLE Ordinances adopting 2024 property tax levy. CATEGORY ® Discussion Mt Date 10/28/24 ❑ Motion Mtg Date ❑ Resolution Mtg Date Ordinance Mtg Date ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council ❑ Mayor ❑ Admin Svcs ❑ DCD ® Finance ❑ Fire ❑ P&R ❑ Police ❑ Pik SPONSOR'S SUMMARY City Council is being asked to approve two ordinances that will adopt both the regular levy and excess levy for 2025. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ Finance & Governance ❑ Planning & Community Dev. ❑ LTAC ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. DATE: 10/28/24 COMMITTEE CHAIR: N/A RECOMMENDATIONS: SPONSOR/ADMIN. Finance COMMII"IEE Discussion only COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 10/28/24 MTG. DATE ATTACHMENTS 10/28/24 Informational Memorandum dated 10/28/24 Draft Ordinances (2) Preliminary Levy Limit Workshet - 2025 Tax Roll Levy Public Hearing PowerPoint 87 88 City of Tukwila Thomas McLeod, Mayor Finance Department TO: CC: FROM: BY: DATE: SUBJECT: ISSUE INFORMATIONAL MEMORANDUM Finance & Governance Committee Mayor McLeod Aaron BeMiller, Finance Director Tony Cullerton, Deputy Finance Director October 28, 2024 2025 Property Tax Levy Approval of ordinances adjusting the regular levy from the previous year and adopting the g eneral and excess property tax levies for 2025. BACKGROUND Due to the City's recent decision to join the Regional Fire Authority, it is now able to return approximately $6 million to taxpayers through reduced property collections. A Public Hearing for adoption of the 2025 property tax levy is required by RCW 84.55.120. The Hearing is scheduled for October 28t", 2024. The City was notified on September 26, 2024, that the assessed value for Tukwila for 2025 is projected to be $9,561,329,345. The ordinance to set the general tax levy also includes the excess levy related to the Public Safety Plan that voters approved on the November 8, 2016, general election. The City sold $36.5 million of bonds in 2016, and debt service repayment began in 2017. The remaining voter -approved bonds were sold in October 2019. The excess levy for both bond issues will be assessed for as long as the bonds are outstanding; the final payment for the 2016 issue is scheduled for December 2036 and the final payment for the 2019 issue is scheduled for December 2039. The total excess levy requirement for 2025 debt service is $4,931,725. DISCUSSION Levy Amount The assessed value and the allowable levy are subject to change until final levy rate determination. A last year's actual regular levy amount of $17,999,228 will be used for the ordinance. If the final allowable levy is less than the ordinance amount, 89 King County Department of Assessments will adjust the ordinance amount to the final allowable levy amount and no further action by the Council will be required. Also included in the tax levy ordinance is an excess levy in the amount of $4,931,725 for debt service related to the unlimited tax obligation bonds that were sold at the end of 2016 and in 2019. All voter -approved bonds have now been issued. Levy Limit RCW 27.12.390 allows for a maximum statutory levy rate for cities at $3.60 per $1,000 of assessed value, less the actual regular levy made by a library district. RCW 41.16.060 also allows for an additional levy of $0.225 if a city has a firemen's pension fund. The maximum allowable levy for 2025 is estimated to be $3.59032. However, due to the reduction in tax collected in the form of a property tax give back City's preliminary levy rate for 2025 at $1.25497 per $1,000 of assessed value. RECOMMENDATION The City Council is being asked to approve the ordinance adopting the General Tax Levy and the ordinance showing the dollar and percent change from the previous year. ATTACHMENTS Draft Ordinances (2) Preliminary Levy Limit Worksheet-2024 Tax Roll 90 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, LEVYING THE NERAL TAXES FOR THE CITY OF TUKWILA IN KING COU OR THE FISCAL YEAR COMMENCING JANUARY 1, 202 LL PROPERTY, BOTH REAL AND PERSONAL, IN SAI Y, AT IS SUBJECT TO TAXATION FOR THE PURPOS F PAYING SUFFICIENT REVENUE TO CARRY ON THE VICES OF THE SEVERAL DEPARTMENTS OF SAID CITY F ENSUING YEAR, WITH AN EXCESS PROPERTY TAX LE OR THE PURPOSE OF PAYING DEBT SERVICE E Y'S UNLIMITED TAX GENERAL OBLIGATION BO • ' IN 2016 AND 2019, AS REQUIRED BY LAW; PROVI �T F . ' SEVERABILITY; AND ESTABLISHING AN EFFECT! 'ATE. WHEREAS, the City CouN of the City of Tukwila has considered the City's anticipated financial requirements fn2 1.nd the amounts necessary and available to be raised by ad valorem taxes on real, perscipal and utility property; and WHEREAS, the following sentence is provided for information only: The maximum Statutory Levy Rate for the City of Tukwila, as allowed by RCW 84.52.043, is $2.325, which is comprised of the $3.60 City base rate, less $0.50 for the Library District, less $1.00 for the Regional Fire Authority, plus $0.225 for the Firemen's Pension Fund as allowed by RCW 41.16.060; and WHEREAS, the City, pursuant to Ordinance No. 2514 passed on November 21, 2016, authorized the issuance and sale of $36,500,000 principal amount of the City's Unlimited Tax General Obligation Bonds, 2016 and pursuant to Ordinance No. 2610 passed on July 15, 2019, authorized the issuance and sale of $40,885,000 principal amount of the City's Unlimited General Obligation Bonds, 2019 (together the "Bonds"); and has determined that to provide the money necessary to pay the debt service requirements on the Bonds in the year 2025, an excess property tax levy in the amount of $4,931,725 for the Bonds must be levied in year 2024, and collected in year 2025; and WHEREAS, the final assessed valuation calculation has been determined; 2024 Legislation: General Tax Levy + Excess Version: 10/14/24 Staff: A. BeMiller Page 1 of 3 91 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Regular and Excess Tax Levy. A. There shall be and hereby is levied on all real, personal and utility property in the City of Tukwila, in King County, whose estimated assessed valuation is $9,528,451,965, current taxes for the ensuing year commencing January 1, 2025, in the amounts specified below: Regular Tax Levy Excess Tax Levy Rate $1.25 $0.52 Amount $ 11,999,228 $ 4,931,725 B. The said taxes herein provided for are levied for th rpose of payment upon the general bonded indebtedness of the City of Tukwila, General Fund, and for the maintenance of the departments of the municipal gove a the City of Tukwila for the fiscal year beginning January 1, 2025. The regular levy inc s new construction and improvements to property, estimated to be $45, , a r -levy o r year refunds in the estimated amount of $60,651, and any increas he e of state -assessed property. C. The excess levy is levied for unlimited tax obligation bonds sold to f Plan, as submitted to the qualified elec November 8, 2016. Section 2. Collection. as provided by law, and taxes of the City of Tukwila Washington for the c purpo' f debt service payments on the ted to the City's Public Safety ity at a special election held on I be certified to the proper County officials, be collected to pay to the Finance Director d in the manner provided by the laws of the State of r non -chartered code cities. Section 3. C. -ctions y City Clerk or Code Reviser Authorized. Upon approval of the City At . ey, • City Clerk and the code reviser are authorized to make necessary corrections t. 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 4. 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 5. 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 and effect January 1, 2025. 2024 Legislation: General Tax Levy + Excess Version: 10/14/24 Staff: A. BeMiller 92 Page 2 of 3 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 Dat Ordinance Office of the City Attorney 2024 Legislation: General Tax Levy + Excess Version: 10/14/24 Staff: A. BeMiller Page 3 of 3 93 94 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, RELATING TO PROPERTY TAXES; DECREASING THE 2025 GENERAL PROPERTY TAX LEVY FOR THE CITY OF TUKWI A REGULAR LEVY FROM THE PREVIOUS YEAR, COM CING JANUARY 1, 2025, ON ALL PROPERTY, BOTH AL AND PERSONAL, IN COMPLIANCE WITH RC1I11 84.55.120; PRESERVING FUTURE LEVY CAPACITY; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City of Tukwila has proper'I given notice of a public hearing held on October 28, 2024, to consider the ad valorem tax levy for 2025 collections pursuant to RCW 84.55.120; and WHEREAS, the King County Assessor provided a preliminary estimated assessed value of taxable real property in the City of Tukwila of $9,561,329,345, which is subject to adjustment for senior citizens exemptions as provided for in RCW 84.36.381 and for omitted assessments as provided for in RCW 84.40.080; and WHEREAS, under state law, a local government may not increase its property tax collections by more than 1 % from the previous year or the change in Implicit Price Deflator (IPD), whichever is less; and WHEREAS, the IPD rate of inflation for property tax collections due in 2025 is 2.57%; and WHEREAS, the City Council desires to provide property tax relief to fulfill the commitment made to voters upon annexation of the City into the Puget Sound Regional Fire Authority; and WHEREAS, after such hearing and after duly considering all relevant evidence and testimony presented, the City Council has determined that the City of Tukwila will reduce property tax collections from the previous year's actual collections by $5,864,228, or 32.48%, which excludes any increase resulting from additions of new constructions and 2024 Legislation: Regular Tax Levy Decrease Version: 10/9/24 Staff: A. BeMiller Page 1 of 3 95 improvements to property, any increase in the value of state -assessed property, and amounts authorized by law as a result of any annexations that have occurred and refunds made, in order to discharge the expected expenses and obligations of the City in its best interest; and WHEREAS, the City Council desires to protect the City's future levy capacity pursuant to RCW 84.55.092, calculated in future years as though the maximum lawful levy amount allowed by state law had been levied; and WHEREAS, the City is required to certify the amount to be raised by taxation on assessed valuation with the clerk of the county legislative authority by November 30, 2024; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. The annual amount of general property tax levy necessary to raise the amount of revenues required by the City of Tukwila for expenditure during calendar year 2025 is hereby levied upon all real and personal property subject to taxation in the City of Tukwila as set forth in the table below. 2025 GENERAL PROPERTY TAX LEVY Use of Funds Estimated Levy Rate Estimated Levy Amount General Levy 1.26741 $12,153,000 Section 2. The estimated general property tax levy amount set forth in Section 1 is hereby levied upon all real and personal property in accordance with certified assessed values and completed tax rolls of the City of Tukwila for collection in 2025. That estimated general property tax levy amount is intended: (a) to include 67.82551% of the City's 2024 highest lawful levy amount of $17,918,038; (b) to include any additional amounts allowed under (i) the new construction, improvements to property and state -assessed property provisions of RCW 84.55.010 and (ii) as provided pursuant to RCW 84.55.070, the refund provisions of chapters 84.68 and 84.69 RCW; and (c) to exclude any amounts in excess of the 2025 maximum levy amount resulting from application of the limit factor, plus those additional amounts described in paragraph (b) above; and shall be adjusted by the King County Assessor when property values are certified. Section 3. Any unused general property tax levy capacity for the 2025 tax year is reserved for future levy as provided by RCW 84.55.092, calculated in future years as though the maximum lawful levy amount allowed by state law had been levied. 2024 Legislation: Regular Tax Levy Decrease Version: 10/9/24 Staff: A. BeMiller 96 Page 2 of 3 Section 4. 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 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 or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 6. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City and shall be in full force and effect on January 1, 2025. PASSED BY THE CITY COUNCIL OF THE CITKWILA, WASHINGTON, at a Regular Meeting thereof this day of ATTEST/AUTHENTICATED: Andy Youn, CMC, City Clerk V om. McLeod, Mayor , 2024. APPROVED AS TO FORM : 'led with the City Clerk: assed by the City Council: Published: Effective Date: Ordinance Number: Office of the City Attor 2024 Legislation: Regular Tax Levy Decrease Version: 10/9/24 Staff: A. BeMiller Page 3 of 3 97 98 Preliminary Worksheet 09.26.2024 TAXING DISTRICT City of Tukwila 2024 Levy for 2025 Taxes IPD: 1.02570 A. Highest regular tax which could have been lawfully levied beginning with the 1985 levy (refund levy not included). Year 2024 17,918,038 x 1.01000 = 18,097,218 Highest Lawful Levy Since 1985 Limit Factor/Max Increase 101% B. Current year's assessed value of new construction, improvements, and wind turbines, solar, biomass, and geothermal facilities in original districts before annexation occurred times last year's levy rate (if an error occurred or an error correction was made in the previous year, use the rate that would have been levied had no error occurred). 23,829,352 * 1.89534 - 1,000 = 45,165 A.V. Last Year's Levy Rate C. Tax Increment finance area increment AV increase (RCW 84.55.010(1)€) (value included in B & D cannot be included in C) 0 * 1.89534 - 1,000 = 0 A.V. Last Year's Levy Rate D. Current year's state assessed property value less last year's state assessed property value. The remainder is to be multiplied by last year's regular levy rate (or the rate that should have been levied). 0 - 225,204,285 = 0 Current Year's A.V. Previous Year's A.V. 0 1.89534 ÷ 1,000 = 0 Remainder from Line D Last Year's Levy Rate E. Regular property tax limit: A+B+C+D = 18,142,383 Parts F through H are used in calculating the additional levy limit due to annexation. F. To find the rate to be used in F, take the levy limit as shown in Line E above and divide it by the current assessed value of the district, excluding the annexed area. 18,142,383 - 9,561,329,345 * 1,000 = 1.89747 Total in Line E Assessed Value Less Annexed AV G. Annexed area's current assessed value including new construction and improvements, times the rate in Line E. 0 * 1.89747 - 1,000 = 0 Annexed Area's A.V. Last Year's Levy Rate H. Regular property tax limit including annexation E+G = 18,142,383 I. 1st Year Lid Lift & Limit Factor>1% J. Statutory maximum calculation Only enter fire/RFA rate, library rate, & firefighter pension fund rate for cities annexed to a fire/RFA or library or has a firefighter pension fund. 3.60000 - 0.91045 - 0.25380 + 0.22500 = 2.66075 District base levy Fire or RFA Rate Library Rate Firefighter Pension Fund Statutory Rate Limit rate 9,561,329,345 * 2.66075 - 1,000 = 25,440,307 Regular Levy AV Reg Statutory Rate Limit Reg Statutory Amount 9,528,451,965 * 0.00000 - 1,000 = 0 Excess Levy AV Excess Statutory Rate Limit Excess Statutory Amount 25,440,307 Statutory Amount K. Highest Lawful Levy For This Tax Year (Lesser of H+I and J) = 18,142,383 L. New highest lawful levy since 1985 (Lesser of H+I and J minus C, unless A (before limit factor 18,142,383 increase) is greater than Lesser of H+I and J minus C, then A before the limit factor increase M. Lesser of J and K 18,142,383 N. Refunds 60,651 O. Total: M+N (unless stat max) 18,203,034 P. Levy Corrections Year of Error: 1. Minus amount over levied (if applicable) 0 2. Plus amount under levied (if applicable) 0 Q. Total Allowable Levy 18,203,034 R. Tax Base For Regular Levy 1. Total district taxable value (including state -assessed property, and excluding boats, timber 9,561,329,345 assessed value, and the senior citizen exemption for the regular levy) S. Tax Base for Excess, Voted Bond Levies and Sr Exempt Lid Lifts 2. Excess AV 9,528,451,965 3. Plus Timber Assessed Value (TAV) 0 4. Tax base for excess and voted bond levies (2+3) 9,528,451,965 T. Increase Information 1. Levy rate based on allowable levy 1.90381 2. Last year's ACTUAL regular levy 17,999,228 3. Dollar Increase over last year other than New Construction (-) Annexation 97,990 4. Percent Increase over last year other than New Construction (-) Annexation 0.54441% 10/02/24 2:04 PM 99 100 Whole Meeting- Levy Public Hearing CITY OF TUKWILA 2025-26 1 1.1.1b BUDGE 1 DEVELOPMENT PROCESS o October 28, 2024 - Committee Of the The City of opportunity, the community of choice. O N 2025 & 2026 General Fund Proposed Revenues General Fund Revenues 2024 Adopted 2025 Proposed 2026 Proposed $ Change 24 - 25 % Change 24-25 Taxes 56, 404, 000 51, 976, 379 53, 854, 765 (4,427,621) -7.8% Licenses & Permits 5,088,743 5,430,700 5,541,455 341,957 6.7% Intergovernmental 7,432,484 5,313,474 5,232,020 (2,119,010) -28.5% Charges for Services 2,841,121 2,612,121 2,461,020 (229,000) -8.1% Miscellaneous 2,165,495 1,448,363 1,428,954 (717,132) -33.1% Indirect Allocation 2,963,517 3,111,694 3,267,278 148,177 5.0% Transfers In 1,787,849 1,494,619 1,419,637 (293,230) -16.4% Land Sale 4,700,000 5,000,000 4,700,000 N/A Total GF Revenue 78,683,209 76,087,350 78,205,129 (2,595,859) -3.3% City of Tukwila 2025-26 Budget Development 2 2025 Proposed Revenue by Percent Transfers In, 2.0% Indirect Allocation, 4.1 % Miscellaneous, 1.9% Charges for Services, 3.4% Intergovernmental, 7.0% Licenses & Permits, 7.1% PP' Land Sale, 6.2% Taxes, 68.3% City of Tukwila 2025-26 Budget Development 3 Levy Collections —City Levies Only (estimate) Property Value $ 500,000 $ 600,000 $ 700,000 $ 800,000 Regular Levy Rate 1.25497 1.25497 1.25497 1.25497 Annual Tax Collected $ 627 $ 753 $ 878 $ 1,004 Excess Levy Rate 0.51758 0.51758 0.51758 0.51758 Tax Collected $ 259 $ 311 $ 362 $ 414 Total City Levy $ 886 $ 1,064 $ 1,241 $ 1,418 City of Tukwila 2025-26 Budget Development 4 City Regular Levy Comparative —Tax Savings from Levy Reduction (estimate) Property Value $ 500,000 $ 600,000 $ 700,000 $ 800,000 Regular Levy Rate Annual Tax Collected 1.25497 1.25497 1.25497 1.25497 $ 627 $ 753 $ 878 $ 1,004 Regular Levy No Bank 1.90382 1.90382 1.90382 1.90382 Annual Tax Collected $ 952 $ 1,142 $ 1,333 $ 1,523 Saving from banking $ 324 $ 389 $ 454 $ 519 City of Tukwila 2025-26 Budget Development 5 Wrap Up/Q&A ICity of Tukwila 2025-26 Budget Development 6