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Home My WebLink AboutCOW 2025-12-08 COMPLETE AGENDA PACKET© Tukwila City Council Agenda 1 A --, o _19©8 .• • COMMITTEE OF THE WHOLE •• Thomas McLeod, Mayor Counci/members: ❖ Mohamed Abdi •3 Armen Papyan Marty Wine, CityAdministrator •3 Dennis Martinez •3 Hannah Hedrick Tosh Sharp, Council President ❖ Joe Torres Camacho •3 Jane Ho N-SITE PRESENCE: TUKWILA CITY HALL COUNCIL CHAMBERS 6200 SOUTHCENTER BOULEVARD EMOTE PARTICIPATION FOR THE PUBLIC: 1-253-292-9750, ACCESS CODE: 670077847# Click here to: Join Microsoft Teams eetinq For Technical Support: 1-206-433-7155 Monday, December 8, 2025; 7:00 PM 1. CALL TO ORDER / PLEDGE OF ALLEGIANCE 2. LAND ACKNOWLEDGEMENT The City of Tukwila is located on the ancestral lands of the Coast Salish people. We acknowledge their continuing connections to land, waters and culture. We pay our respects to their elders past, present and emerging. 3. PUBLIC COMMENTS including comment on items both on and not on the meeting agenda Those wishing to provide public comments may verbally address the City Council site at Tukwila City Hall or via phone or Microsoft Teams for up to 5 inutes both on and not on the meeting agenda. To provide comment via phone or is so Tea s, please email citycouncil@tukwilawa.gov with your name and topic by 5:00 PM on the meeting both on - for items date. and Please clearly indicate that your message is for public comment during the meeting, you will receive further instructions. 4. SPECIAL ISSUES a. Ordinance Amending the Business & Occupancy (B&O) Tax Presentation by Adam Schierenbeck, Senior Fiscal Coordinator b. Quarterly B&O Tax Report Presentation by Adam Schierenbeck, Senior Fiscal Coordinator c. Amendment to Harnett Manor Property Lease Presentation by Stacy Hansen, Human Services Program Coordinator d. Ordinance Recodifying and Enacting the Tukwila Municipal Code (TMC) Presentation by Andy Youn-Barnett, City Clerk e. Overview of 2026 Washington State Legislative Agenda Presentation by Brandon Miles, Director of Strategic Initiatives and Government Relations Pg.1 Pg.35 Pg.37 Pg.47 Pg.53 5. REPORTS a. Mayor b. City Council c. Staff 6. MISCELLANEOUS 7. ADJOURNMENT This agenda is available at Tukwila Council www.tukwilawa.gov, and in alternate formats with advance notice for those with disabilities. and available at www.tukwilawa.gov meetings are audio/video taped, WELCOME TO THE TUKWILA CITY COUNCIL MEETING The Tukwila City Council encourages community participation in the local government process and welcomes attendance and public comment at its meetings. MEETING SCHEDULE Regular Meetings are held at 7:00 p.m. on the 1st and 3rd Mondays of each month. The City Council takes formal action in the form of motions, resolutions and ordinances at Regular Meetings. Committee of the Whole Meetings are held at 7:00 p.m. on the 2nd and 4th Mondays of each month. The City Council considers current issues, discusses policy matters in detail, and coordinates the work of the Council at Committee of the Whole meetings. PUBLIC COMMENTS Members of the public are given the opportunity to address the Council for up to 5 minutes on items both on and not on the meeting agenda during Public Comments. The City Council will also accept comments on an agenda item when the item is presented in the agenda, but speakers are limited to commenting once per item each meeting. When recognized by the Presiding Officer, please go to the podium if on -site or turn on your microphone if attending virtually and state your name clearly for the record. The City Council appreciates hearing from you but may not respond or answer questions during the meeting. Members of the City Council or City staff may follow up with you following the meeting. PUBLIC HEARINGS Public Hearings are required by law before the Council can take action on matters affecting the public interest such as land -use laws, annexations, rezone requests, public safety issues, etc. The City Council Rules of Procedure provide the following guidelines for Public Hearings: 1. City staff will provide a report summarizing and providing context to the issue at hand. 2. City staff shall speak first and be allowed 15 minutes to make a presentation. 3. The applicant is then allowed 15 minutes to make a presentation. 4. Each side is then allowed 5 minutes for rebuttal. 5. After City staff and the applicant have used their speaking time, the Council may ask further clarifying questions of the speakers. 6. Members of the public who wish to address the Council on the hearing topic may speak for 5 minutes each. 7. Speakers are asked to sign in on forms provided by the City Clerk. 8. The Council may ask clarifying questions of speakers and the speakers may respond. 9. Speakers should address their comments to the City Council. 10. If a large number of people wish to speak to the issue, the Council may limit the total amount of comment time dedicated to the Public Hearing. 11. Once the Presiding Officer closes the public hearing, no further comments will be accepted, and the issue is open for Councilmember discussion. 12. Any hearing being held or ordered to be held by the City Council may be continued in the manner as set forth by RCW 42.30.100. For more information about the City Council, including its complete Rules of Procedure, please visit: tt s:// .tu ila aov/e a ents/city-council/ COUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 12/08/25 AJS ITEM INFORMATION ITEM NO. 4.A. STAFF SPONSOR: ADAM SCHIERENBECK ORIGINAL AGENDA DATE: 12/08 AGENDA ITEM TITLE B&O Tax Ordinance - Amendments to Chapter 3.26 TMC CATEGORY 6, Discussion Mtg Date 11/24/25 Motion Mtg Date 12/8/25 Resolution Mtg Date Ordinance Mtg Date 12/15/25 E Bid Award Mtg Date E Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council ❑ Mayor ❑ Admin Svcs ❑ DCD ®.Finance ❑ Fire ❑ P&R ❑ Po/ice ❑ PI SPONSOR'S SUMMARY The Finance Department is seeking to amend Chapter 3.26 TMC pertaining to business and occupation (B&O) tax. The amendments are mandated by the Washington State B&O Tax Model Ordinance effective January 1, 2026. The changes will result in various business activities becoming taxable under the Retailing tax classification, which were formerly taxable under the Service and Other Activities tax classification. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ LTAC DATE: 11/24 ❑ Arts Comm. ►1 Finance & Governance ❑ Planning & Community Dev. ❑ Parks Comm. ❑ Planning Comm. COMMITTEE CHAIR: PAPYAN RECOMMENDATIONS: SPONSOR/ADMIN. Finance Department COMMITTEE Unanimous Approval; Forward to 12/8 Committee of the Whole Meeting COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 12/08 12/15 MTG. DATE ATTACHMENTS 12/08/25 Informational Memorandum dated 10/27/25 A. Draft B&O Tax Ordinance B. 2026 B&O Tax Model Ordinance Redline C. AWC 2026 Changes to Model Ordinance Fact Sheet Minutes from 11/24 F&G Committee Meeting (to be distributed separately) 1 � City of Tukwila Thomas McLeod, Mayor INFORMATIONAL MEMORANDUM TO: Finance && Governance Committee FROM: AanmmBeHNi|8er, Finance Director BY: Adam Schiemambeck,Acting Fiscal Manager CC: Thomas McLeod, Mayor DATE: October 27,2025 ISSUE The Finance Department is recommending amendments to Chapter 3.20of the Tukwila Municipal Code (TMC) concerning business and occupation (B&O) tax. The amendments will align the code with the Washington State B&[)Tax Model Ordinance and will correct 8technical error in the administrative provision pertaining LOtax confidentiality. BACKGROUND RCVV 35.102.040 requires the City to use the mandatory provisions of the nnude| ordinance developed by Washington cities when imposing a B&C) tax. The model ordinance has been amended effective January 1. 2026. in response to Senate Bill (8B) 5814, changing certain activities from the Service and Other Activities tax classification to the Retailing tax classification. Additionally, while the City has adopted an optional provision Ofthe model ordinance relating tO public disclosure and confidentiality Oftax information, @G passed bvthe City council inOrdinance 2727 effective January 1, 2024, a technical correction is required in this section. DISCUSSION Staff are proposing the following 808Dd08O1S to Chapter 3.28 lFIVIC, which 8|igOS the COd8 with the nOOd8| OrdiD8OC8. D9fniti0nCh8mqeS The definition of "sale EU retail" or "retail S8|8" is being @Dl8Dd8d to incorporate changes tOthe t@X8tiOO of professional services, S8|HS of custom SOftVV8Pe, CUSb]OOiz8LiOO OfpreVVhtt3D computer software, and SG|8G of digital goods and digital automated services. The definition of"sale st wholesale" nr"wholesale sale" isbeing amended kzparallel updates to the dOfiOUUOO of retail S8|e pertaining to CUStODl software OrCuStODliz81iOD Ofp[eVV[itteO SOftVv3ne. These changes will result in the following activities being classified as retail sales: *Advertising services; *Live presentations; *Information technology services; *Custom xvebaitedevelopment services; *|nveeUgabon.security, and armored car services; *Temporary staffing services; and *Sales ofcustom software and nustnmizobnnOfprewrittensoftware. INFORMATIONAL MEMO Page 2 Tax Confidentiality TMC section 3.27.220 establishes safeguards for protecting tax information from public disclosure. Subsection (F) of this section explains the repercussions if tax information is improperly disclosed. This subsection is being amended to state that such repercussions apply to employees of the City, whereas it formerly cited employees of the state in error. Financial Impact The business activities impacted by this change have, to date, been taxable under the Service and Other Activities tax classification at a rate of 0.00085. The gross income derived from such services is allocated to Tukwila using a two -factor apportionment method which takes both the company's payroll costs and the customer's location into account. Beginning, January 1, 2026, gross income derived from the business activities that are impacted will be subject to tax under the Retailing classification at a rate of 0.0005 and will be allocated to Tukwila solely based on the location where the activity takes place. Furthermore, the changes may impact only a portion of a company's business activities. The information available to the City, namely amounts reported on tax returns previously filed and information provided on the business license application concerning the business activities of the taxpayer, is not sufficient to determine the financial impact of these changes. FINANCIAL IMPACT Due to the reasons cited above, the financial impact cannot be determined based on the information available. However, the code changes are not expected to have a significant financial impact on B&O tax revenues. RECOMMENDATION The Council is being asked to approve the ordinance and consider this item at the December 8, 2025 Committee of the Whole Meeting and subsequent December 15, 2025 Regular Meeting. ATTACHMENTS A - Draft B&O Tax Ordinance B - 2026 B&O Tax Model Ordinance C - AWC 2026 Changes to Model Ordinance Fact Sheet 3 Attachment A AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON; AMENDING ORDINANCE NO. 2689 §5, AS CODIFIED AT TUKWILA MUNICIPAL CODE (TMC) SECTION 3.26.040, "DEFINITIONS"; AMENDING ORDINANCE NO. 2726 §11, AS CODIFIED AT TMC SECTION 3.27.220; TO ADOPT UPDATED REGULATIONS IN ACCORDANCE WITH THE MODEL ORDINANCE; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE WHEREAS, RCW 35.102.040 requires the City to adopt the mandatory provisions of the model ordinance developed by Washington cities when imposing a business and occupation tax; and WHEREAS, the definition in RCW 82.04.050 for "sale at retail" or "retail sale" and the definition in RCW 82.04.060 for "sale at wholesale" or "wholesale sale" were amended by Senate Bill 5814, resulting in changes to Washington's model ordinance; and WHEREAS, the City has adopted an administrative provision relating to public disclosure and confidentiality of tax information, which requires a technical correction; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. TMC Section 3.26.040 Amended. Ordinance No. 2689 §5, as codified at TMC Section 3.26.040, "Definitions," subparagraph U, is hereby amended to read as follows: 3.26.040 Definitions U. "Sale at retail," "retail sale" 1. "Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of their business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 1 of 9 4 property of or for consumers, other than a sale to a person who presents a resale certificate under RCW 82.04.470 and who: a. Purchases for the purpose of resale as tangible personal property in the regular course of business without intervening use by such person; or b. Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates real or personal property of or for consumers, if such tangible personal property becomes an ingredient or component of such real or personal property without intervening use by such person; or c. Purchases for the purpose of consuming the property purchased in producing for sale a new article of tangible personal property or substance, of which such property becomes an ingredient or component or is a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale; or d. Purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon; or e. Purchases for the purpose of providing the property to consumers as part of competitive telephone service, as defined in RCW 82.04.065 or. The term shall include every sale of tangible personal property which is used or consumed or to be used A9 sale" even though such property is resold or utilized as provided in TMC Section f. Purchases for the purpose of satisfying the person's obligations under an extended warranty as defined in . . . . subsection 8 of this section, if such tangible personal property replaces or becomes an ingredient or component of property covered by the extended warranty without intervening use by such person. The term shall include eve sale of tard.ik 1e ersonal_p oraerty which its ecic r consumed or to be used or consumed in the peo°forrrraotce of any activitydefinedas a `sale at retail" or "retail sale" even thouuji such prop , ty s resold or utilized as provided in (a)). ttlhrou vml) of this subsection following such use. The term also means every sale of mtangible ersonalm ° ro ert to e ons enc mgedm in any businessthat is taxable under RCW 82.04.280(1)(a 82 04.290 and 82.04.2908. 2. "Sale at retail" or "retail sale" also means every sale of tangible personal property to persons engaged in any business activity which is taxable under TMC Section 3.26.050.A.7. 3. The term "sale at retailor "retail sale" includes the sale of or charag umade for personal, business, or professional services ioacludin amounts designated as interest, 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 2 of 9 5 rents, fees, admissions, and other serviGe pemoluments however ....desngndted., received by persons engaging in the following business activities: . _ Information technel Ay training_ services, technical support, and e services including, but not limited to, assisting with network operations and su desk services ini-person training related to hardware or software network s stern supigort services,data entry services, and data processing services rv�c s ..............._. b. Custom website development services. For the purposes of this subsection " development services meanssidevelopment, and subsectAon website gevelop �� a the design, ... support s ma websiteogrovided by a website developer to a customer, or Iinvestigatoonn security services, security rnonitoring_s;f rvi!cessand armored ding but not li- lited to back rorand checks security guard and patrol rvices, personal and event security, armored car transportation of cash and valuables, and security_ system services and monitoring. This does not include locksmith services, or c (3), Jurposes of this .....subsectioin �, fern earar sta firmr services. For tho............ ce.s rnea_ ten�l��orary staffing_ �erv�le-�" " � .us rcv�i' me then businesses„_;_except �t for _...p.�.� _providing_ wr��l<er°°sfroc other im��.� hospitals licensed under chapter 70.41 or 71,12 RCW, for limited periods of time to supj[enienttheir workforce and fill ernployrnent vacancies on a contract or fora fee basis or e Advertising services.. the purposese�.i suL ection1_ "advertising services"" mendrs I.. For of this suihasectlort 3 all digital and ncandidital services related to thae creation, preparation, production, or dissemination of dvvertisements includingkut not limited to: A. Layout, dirt dip ectiorr., _gra hic design, mechanical parntion, pmraduertim nsuupervlsion, placement, referrals ionofadvertising space, and rendering advice concerning the best methods of advertising ducts or services, and Online re erPala se rch ne ,ncnarheting,_and lead generation ...� optimization„ web campaign planning, the acquisition of advertisingspacein the Internet of�wr website traffic for purposes of determining the media, andf....ern©nitoring andevaluation � ._._ a effectiveness o.a ra _._ra_..dvertising carnpaign., ii. "Advertising services" do not include: servicesA. Web hosting and domain name regisfraffcr [ . Services lrendered iin re Batt to the foliowliriq: N. "News eraas defined in RCW 82.04.214o II. Printing; or publishin under RCW 82 04.280i. and III. "Radio and televisio defiined in RC ... 2 .04 (section 1, chapter 9, Laws of broadcasting";mmmw tfmtmiAn this state as 0251; and C. Services rendered in respect to out -of -home advertising„ including; Billboard advertising; street furniture advertising; transit advertlsngm, pl c � � �.M_.._._ �' I � Aace-based 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 3 of 9 6 nc�, such as in- store -store dis is r advertising_or point -of -sale advertising; dynamic or static siggna e at live events,_ namii rights; and faxed signage a.ivertisinge Out -of -home advertisin does not include direct mat or f. Live resentatlens p - including, but not limited to, lectures, seminars, ......._...... worksho s, or courses where _participantsattend either in _person or via the Internet or telecommunications equipment that allows audience rnenabers and the presenter or instructor to c. ve, receive,. and discuss information with each other in reel time. For the r osos of at through (c) and (e c)f this subsection (3), the terms ``scIle at retail" amid `retail salo,, do In at iinclude a sale between members of an affiliated group as defined in 34. "Sale at retail" or "retail sale" shall include the sale of or charge made for tangible personal property consumed and/or for labor and services rendered in respect to the following: a. The installing, repairing, cleaning, altering, imprinting, or improving of tangible personal property of or for consumers, including charges made for the mere use of facilities in respect thereto, but excluding charges made for the use of coin -operated laundry facilities when such facilities are situated in an apartment house, rooming house, or mobile home park for the exclusive use of the tenants thereof, and also excluding sales of laundry service to nonprofit health care facilities, and excluding services rendered in respect to live animals, birds and insects; b. The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for consumers, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, and shall also include the sale of services or charges made for the clearing of land and the moving of earth excepting the mere leveling of land used in commercial farming or agriculture; c. The charge for labor and services rendered in respect to constructing, repairing, or improving any structure upon, above, or under any real property owned by an owner who conveys the property by title, possession, or any other means to the person performing such construction, repair, or improvement for the purpose of performing such construction, repair, or improvement and the property is then reconveyed by title, possession, or any other means to the original owner; d. The sale of or charge made for labor and services rendered in respect to the cleaning, fumigating, razing or moving of existing buildings or structures, but shall not include the charge made for janitorial services; and for purposes of this section the term "janitorial services" shall mean those cleaning and caretaking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery. The term "janitorial services" does not include painting, papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting; 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 4 of 9 7 e. The sale of or charge made for labor and services rendered in respect to automobile towing and similar automotive transportation services, but not in respect to those required to report and pay taxes under chapter 82.16 RCW; f. The sale of and charge made for the furnishing of lodging and all other services, except telephone business and cable service, by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same. For the purposes of this subsection, it shall be presumed that the sale of and charge made for the furnishing of lodging for a continuous period of one month or more to a person is a rental or lease of real property and not a mere license to enjoy the same; g. The installing, repairing, altering, or improving of digital goods for consumers; h. The sale of or charge made for tangible personal property, labor and services to persons taxable under TMC Section 3.26.040.U.3.a, b, c, d, e, f, and g when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property, labor and services may be resold after such use or consumption. Nothing contained in this section shall be construed to modify TMC Section 3.26.040.U.1 and nothing contained in TMC Section 3.26.040.U.1 shall be construed to modify this subsection. 45. "Sale at retail" or "retail sale" shall also include the providing of competitive telephone service to consumers. 56. "Sale at retail" or "retail sale": a. "Sale at retail" or "retail sale" shall also include the sale of prewritten software, custom software, and customization of prewritten computer software to a csnsunter, other than a sale to a person who presents a resale certificate under RCW 82.04.470, regardless of the method of delivery to the end user. For the purposes of this subsection ttmj j, the sale of prewritten computer software includes the sale of or charge made for a key or an enabling or activation code, where the key or code is required to activate prewritten computer software and put the software into use. There is no separate sale of the key or code from the prewritten computer software, regardless of how the sale may be characterized by the vendor or by the purchaser. The term "sale at retail" or "retail sale" does not include the sale of or charge made for: Custom software; or ii, The customization of prewritten software. b,.m (i). The term °"sale at retail" or "retail sale" also includes the charge made to consumers for the right to access and use prewritten computer software,mcustom software, ad customization ofrcuvritten computer software, where possession of the 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 5 of 9 8 software is maintained by the seller or a third party, regardless of whether the charge for the service is on a per use, per user, per license, subscription, or some other basis. A„ The service described in Lb_1(1) of this subsection (6) includes the right to access and use prewritten software„ custom software, and customization of prewritten computer software to perform data processing. For the purposes of this subsection 1L,,-.)101, "data processing" means the systematic performance of operations on data to extract the required information in an appropriate form or to convert the data to usable information. Data processing includes check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities. 67. "Sale at retail" or "retail sale" shall also include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state, the State of Washington, or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind. 78. "Sale at retail" or "retail sale" shall also include the sale of or charge made for an extended warranty to a consumer. For purposes of this subsection, "extended warranty" means an agreement for a specified duration to perform the replacement or repair of tangible personal property at no additional charge or a reduced charge for tangible personal property, labor, or both, or to provide indemnification for the replacement or repair of tangible personal property, based on the occurrence of specified events. The term "extended warranty" does not include an agreement, otherwise meeting the definition of extended warranty in this subsection, if no separate charge is made for the agreement and the value of the agreement is included in the sales price of the tangible personal property covered by the agreement. 89. "Sale at retail" or "retail sale" shall also include the sale of or charge made for labor and services rendered in respect to the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation (government contracting). 910. "Sale at retail" or "retail sale" shall not include the sale of services or charges made for the clearing of land and the moving of earth of or for the United States, any instrumentality thereof, or a county or city housing authority. Nor shall the term include the sale of services or charges made for cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development. 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 6 of 9 9 110. "Sale at retail" or "retail sale" shall not include the sale of or charge made for labor and services rendered for environmental remedial action. 124. O.p "Sale at retail" or "retail sale" shall also include the following sales to consumers of digital goods, digital codes, and digital automated services: af. Sales in which the seller has granted the purchaser the right of permanent use; by'. Sales in which the seller has granted the purchaser a right of use that is less than permanent; cliff. Sales in which the purchaser is not obligated to make continued payment as a condition of the sale; and div. Sales in which the purchaser is obligated to make continued payment as a condition of the sale. (b). A retail sale of digital goods, digital codes, or digital automated services under TMC Section 3.26.040.U.5.b.2 this subsection L12) includes any services provided by the seller exclusively in connection with the digital goods, digital codes, or digital automated services, whether or not a separate charge is made for such services. , � sale of digital goods, digital l codes,.x r digital automated services c . A retar sale of dl rtal oeds� dic ital cubes or di r9oesnot include the followingservices if the sale occursmembers between mebers of an affiliated group as defined 'i n l�C W fit. ©4, 2f�0 ( An v service tl ar61v involved the man effort . hn: human effort originated after customer rears . ste 1 the service b the suw. rW. r and t_,.i e �__i ii. Live presentations, such as lectures, seminars, workshops, or re connectedother_participants v the Internet or c��nf�urs��.__where��r�ic.��ri��......�too artier � arr'ts vAa�_...� telecommunications eguIrmernt, which allows audience members and the . resernter or instructor to give, receive, and discuss Information with each other in real time,. Ill. Advertising services. For purposes of this subsection, "advertising services" means all services directly, related to the creatiorLprepai ationi production, or dissemination ofadvertisements, Advertising services include layout, art direction ra .:.hi�.....md�esi r _mechame chanical l ' r�e� 2 rration.,.M. production supervision„.... placement,..�and rendering advice to a client concerning the best methods of advertisingm that client's products or services. Advertising services also include online referrals, search enginmm. e marketing ng and lean generation optimization, web r,<ymaigp planning,. the acquisition of adverrtisingjace in the Internet media and the monitoring. and evaluation of webs traffic for purposes of determining the effectiveness of an advertising campaign. Advertia'in,q services do not include web hosting services and domain name registrations and.... _.�. .... .._ � _._ ��.._ ._m iv. data processing srvicFor purposes of this subsection, "data gpessln r ice," means a phi lardy automated service provided to a business or other. organization where the primary object of the service is the systematic performance of operations by the service_providermmon data supplied i whole or in part by the customer to 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 7 of 9 10 extract the required information in an appropriate form or to convert the data to usable informatio . Data_processing services inciude chock processing image processirig, form processing, survey rocessin a Toll r cessin claim rocessing„ and similar acfivities. Data pr cessing does not include the service described in subsection LiQl(klof this section, (d). For purposes of this subsection, "permanent" means perpetual or for an indefinite or unspecified length of time. A right of permanent use is presumed to have been granted unless the agreement between the seller and the purchaser specifies or the circumstances surrounding the transaction suggest or indicate that the right to use terminates on the occurrence of a condition subsequent. 132. "Sale at retail" or "retail sale" shall also include the installing, repairing, altering, or improving of digital goods for consumers. Section 2. TMC Section 3.26.040 Amended. Ordinance No. 2689 §5, as codified at TMC Section 3.26.040, "Definitions," subparagraph V, is hereby amended to read as follows: 3.26.040 Definitions "Sale at wholesale," "wholesale sale" means any sale of tangible personal property, digital goods, digital codes, digital automated services, prewritten computer software, custom software, customization of prewritton computer softw.re or services described in TMC Section 3.26.040.U.5.b.i, which is not a retail sale, and any charge made for labor and services rendered for persons who are not consumers, in respect to real or personal property and retail services, if such charge is expressly defined as a retail sale or retail service when rendered to or for consumers. Sale at wholesale also includes the sale of telephone business to another telecommunications company as defined in RCW 80.04.010 for the purpose of resale, as contemplated by RCW 35.21.715. Section 3. TMC Section 3.27.220 Amended. Ordinance No. 2726 §11, as codified at TMC Section 3.27.220, "Public Disclosure — Confidentiality — Information Sharing," subparagraph F, is hereby amended to read as follows: F. Any person acquiring knowledge of any return or tax information in the course of his or her employment with the City and any person acquiring knowledge of any return or tax information as provided under subsection (4), (5), (6), (7), (8), (9), or (11) of this section, who discloses any such return or tax information to another person not entitled to knowledge of such return or tax information under the provisions of this section, is guilty of a misdemeanor. If the person guilty of such violation is an officer or employee of the statecity, such person must forfeit such office or employment and is incapable of holding any public office or employment in this city for a period of two years thereafter. 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. 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Page 8 of 9 11 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 take effect and be in full force on January 1, 2026, 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 , 2025. ATTEST/AUTHENTICATED: Andy Youn-Barnett, CMC, City Clerk Thomas McLeod, Mayor APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Published: Office of the City Attorney 2025 Legislation: B&O Tax Ordinance Version: 11/14/25 Staff: A. Schierenbeck Effective Date: Ordinance Number: Page 9 of 9 12 Attachment B Model Ordinance Final revised version of the City model ordinance for business & occupation tax. Dated October 2025. The legislative intent information contained in the boxes indicates the intent of the ordinance and provide guidance for courts and administrators in the uniform interpretation of the ordinance. They should not be adopted as part of the ordinance, but as a supporting document to the ordinance. While the tax provisions of this chapter are intended to provide a uniform methodology for levying a gross receipts tax on business entities, nothing in this chapter should be construed as limiting a city's ability to levy and collect a business privilege tax on any other basis; such as a tax on square footage, a tax on annualized full-time equivalents [head tax], graduated annual license tax, or any other tax calculated on a basis other than a gross receipts tax [gross income of the business, gross proceeds of sales, or value of products multiplied by rates.] MODEL ORDINANCE CHAPTER . .010 Purpose. [CITY MAY ENACT A "PURPOSE PROVISION" IN THIS SECTION.] .020 Exercise of revenue license power. The provisions of this chapter shall be deemed an exercise of the power of the City to license for revenue. The provisions of this chapter are subject to periodic statutory or administrative rule changes or judicial interpretations of the ordinances or rules. The responsibility rests with the licensee or taxpayer to reconfirm tax computation procedures and remain in compliance with the City code. Legislative intent information This section implements Washington Constitution Article XI, Sec. 12 and RCW 35A.82.020 and 35A.11.020 (code cities); 35.22.280(32) (first class cities); RCW 35.23.440(8) (second class cities); 35.27.370(9) (towns), which give municipalities the authority to license for revenue. In the absence of a legal or constitutional prohibition, municipalities have the power to define taxation categories as they see fit in order to respond to the unique concerns and responsibilities of local government. See Enterprise Leasing v. City of Tacoma, 139 Wn.2d 546 (1999). It is intended that this model ordinance be uniform among the various municipalities adopting it. .028 Administrative Provisions. The administrative provisions contained in chapter shall be fully applicable to the provisions of this chapter except as expressly stated to the contrary herein. .030 Definitions. In construing the provisions of this chapter, the following definitions shall be applied. Words in the singular number shall include the plural, and the plural shall include the singular. "Business." "Business" includes all activities engaged in with the object of gain, benefit, or advantage to the taxpayer or to another person or class, directly or indirectly. (Mandatory) "Business and occupation tax." "Business and occupation tax" or "gross receipts tax" means a tax imposed on or measured by the value of products, the gross income of the business, or the gross proceeds of sales, as the case may be, and that is the legal liability of the business. (Mandatory) "Commercial or industrial use." "Commercial or industrial use" means the following uses of products, including by-products, by the extractor or manufacturer thereof: (1) Any use as a consumer; and (2) The manufacturing of articles, substances or commodities; "Delivery" means the transfer of possession of tangible personal property between the seller and the buyer or the buyer's representative. Delivery to an employee of a buyer is considered delivery to the buyer. Transfer of possession of tangible personal property occurs when the buyer or the buyer's representative first takes Page 1 Model Ordinance October 2025 13 physical control of the property or exercises dominion and control over the property. Dominion and control means the buyer has the ability to put the property to the buyer's own purposes. It means the buyer or the buyer's representative has made the final decision to accept or reject the property, and the seller has no further right to possession of the property and the buyer has no right to return the property to the seller, other than under a warranty contract. A buyer does not exercise dominion and control over tangible personal property merely by arranging for shipment of the property from the seller to itself. A buyer's representative is a person, other than an employee of the buyer, who is authorized in writing by the buyer to receive tangible personal property and take dominion and control by making the final decision to accept or reject the property. Neither a shipping company nor a seller can serve as a buyer's representative. It is immaterial where the contract of sale is negotiated or where the buyer obtains title to the property. Delivery terms and other provisions of the Uniform Commercial Code (Title 62A RCW) do not determine when or where delivery of tangible personal property occurs for purposes of taxation. (Mandatory) "Digital automated service," "digital code," and "digital goods" have the same meaning as in RCW 82.04.192. (Mandatory) "Digital products" means digital goods, digital codes, digital automated services, and the services described in RCW 82.04.050(2)(g) and (6)(b). (Mandatory) "Eligible gross receipts tax." The term "eligible gross receipts tax" means a tax which: (1) Is imposed on the act or privilege of engaging in business activities within section .050; and (2) Is measured by the gross volume of business, in terms of gross receipts and is not an income tax or value added tax; and (3) Is not, pursuant to law or custom, separately stated from the sales price; and (4) Is not a sales or use tax, business license fee, franchise fee, royalty or severance tax measured by volume or weight, or concession charge, or payment for the use and enjoyment of property, property right or a privilege; and (5) Is a tax imposed by a local jurisdiction, whether within or without the State of Washington, and not by a Country, State, Province, or any other non -local jurisdiction above the County level. (Mandatory) [Comment: This definition is worded slightly different from the state's definition (RCW 82.04.440) in that it goes into more detail in describing what constitutes an eligible gross receipts tax. In addition, it makes it very clear that an eligible gross receipts tax for which a credit can be calculated must be imposed at the local level.] "Engaging in business" — (1) The term "engaging in business" means commencing, conducting, or continuing in business, and also the exercise of corporate or franchise powers, as well as liquidating a business when the liquidators thereof hold themselves out to the public as conducting such business. (2) This section sets forth examples of activities that constitute engaging in business in the City, and establishes safe harbors for certain of those activities so that a person who meets the criteria may engage in de minimis business activities in the City without having to register and obtain a business license or pay City business and occupation taxes. The activities listed in this section are illustrative only and are not intended to narrow the definition of "engaging in business" in subsection (1). If an activity is not listed, whether it constitutes engaging in business in the City shall be determined by considering all the facts and circumstances and applicable law. (3) Without being all inclusive, any one of the following activities conducted within the City by a person, or its employee, agent, representative, independent contractor, broker or another acting on its behalf constitutes engaging in business and requires a person to register and obtain a business license. (a) Owning, renting, leasing, maintaining, or having the right to use, or using, tangible personal property, intangible personal property, or real property permanently or temporarily located in the City. (b) Owning, renting, leasing, using, or maintaining, an office, place of business, or other establishment in the City. (c) Soliciting sales. Page 2 14 Model Ordinance October 2025 (d) Making repairs or providing maintenance or service to real or tangible personal property, including warranty work and property maintenance. (e) Providing technical assistance or service, including quality control, product inspections, warranty work, or similar services on or in connection with tangible personal property sold by the person or on its behalf. (f) Installing, constructing, or supervising installation or construction of, real or tangible personal property. (g) Soliciting, negotiating, or approving franchise, license, or other similar agreements. (h) Collecting current or delinquent accounts. (i) Picking up and transporting tangible personal property, solid waste, construction debris, or excavated materials. (j) Providing disinfecting and pest control services, employment and labor pool services, home nursing care, janitorial services, appraising, landscape architectural services, security system services, surveying, and real estate services including the listing of homes and managing real property. (k) Rendering professional services such as those provided by accountants, architects, attorneys, auctioneers, consultants, engineers, professional athletes, barbers, baseball clubs and other sports organizations, chemists, consultants, psychologists, court reporters, dentists, doctors, detectives, laboratory operators, teachers, veterinarians. (I) Meeting with customers or potential customers, even when no sales or orders are solicited at the meetings. (m)Training or recruiting agents, representatives, independent contractors, brokers or others, domiciled or operating on a job in the City, acting on its behalf, or for customers or potential customers. (n) Investigating, resolving, or otherwise assisting in resolving customer complaints. (o) In-store stocking or manipulating products or goods, sold to and owned by a customer, regardless of where sale and delivery of the goods took place. (p) Delivering goods in vehicles owned, rented, leased, used, or maintained by the person or another acting on its behalf. (4) If a person, or its employee, agent, representative, independent contractor, broker or another acting on the person's behalf, engages in no other activities in or with the City but the following, it need not register and obtain a business license and pay tax. (a) Meeting with suppliers of goods and services as a customer. (b) Meeting with government representatives in their official capacity, other than those performing contracting or purchasing functions. (c) Attending meetings, such as board meetings, retreats, seminars, and conferences, or other meetings wherein the person does not provide training in connection with tangible personal property sold by the person or on its behalf. This provision does not apply to any board of director member or attendee engaging in business such as a member of a board of directors who attends a board meeting. (d) Renting tangible or intangible property as a customer when the property is not used in the City. (e) Attending, but not participating in a "trade show" or "multiple vendor events". Persons participating at a trade show shall review the City's trade show or multiple vendor event ordinances. (f) Conducting advertising through the mail. (g) Soliciting sales by phone from a location outside the City. (5) A seller located outside the City merely delivering goods into the City by means of common carrier is not required to register and obtain a business license, provided that it engages in no other business activities in the City. Such activities do not include those in subsection (4). The City expressly intends that engaging in business include any activity sufficient to establish nexus for purposes of applying the tax under the law and the constitutions of the United States and the State of Washington. Nexus is presumed to continue as long as the taxpayer benefits from the activity that constituted the original nexus generating contact or subsequent contacts. (Mandatory) [Comment: Section (2) has been added to the State's definition of engaging in business to give guidelines and parameters to businesses in order for them to better ascertain whether or not they need to license and pay tax to the cities.] Page 3 Model Ordinance October 2025 15 "Extracting." "Extracting" is the activity engaged in by an extractor and is reportable under the extracting classification. [Comment: This definition is not contained in state law; however, RCW 35.102.120 requires that the model ordinance include this definition.] "Extractor." "Extractor" means every person who from the person's own land or from the land of another under a right or license granted by lease or contract, either directly or by contracting with others for the necessary labor or mechanical services, for sale or for commercial or industrial use, mines, quarries, takes or produces coal, oil, natural gas, ore, stone, sand, gravel, clay, mineral or other natural resource product; or fells, cuts or takes timber, Christmas trees, other than plantation Christmas trees, or other natural products; or takes fish, shellfish, or other sea or inland water foods or products. "Extractor" does not include persons performing under contract the necessary labor or mechanical services for others; or persons meeting the definition of farmer. "Extractor for Hire" "Extractor for hire" means a person who performs under contract necessary labor or mechanical services for an extractor. "Gross income of the business." "Gross income of the business" means the value proceeding or accruing by reason of the transaction of the business engaged in and includes gross proceeds of sales, compensation for the rendition of services, gains realized from trading in stocks, bonds, or other evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and other emoluments however designated, all without any deduction on account of the cost of tangible property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses. (Mandatory) "Gross proceeds of sales." "Gross proceeds of sales" means the value proceeding or accruing from the sale of tangible personal property, digital goods, digital codes, digital automated services or for other services rendered, without any deduction on account of the cost of property sold, the cost of materials used, labor costs, interest, discount paid, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses. (Mandatory) "Manufacturing." "Manufacturing" means the activity conducted by a manufacturer and is reported under the manufacturing classification. (Mandatory unless you don't tax manufacturing activities) [Comment: This definition is not contained in state law, however RCW 35.102.120 requires that the model ordinance include this definition.] "Manufacturer," "to manufacture." (1) "Manufacturer" means every person who, either directly or by contracting with others for the necessary labor or mechanical services, manufactures for sale or for commercial or industrial use from the person's own materials or ingredients any products. When the owner of equipment or facilities furnishes, or sells to the customer prior to manufacture, materials or ingredients equal to less than twenty percent (20%) of the total value of all materials or ingredients that become a part of the finished product, the owner of the equipment or facilities will be deemed to be a processor for hire, and not a manufacturer. (Mandatory) (A business not located in this City that is the owner of materials or ingredients processed for it in this City by a processor for hire shall be deemed to be engaged in business as a manufacturer in this City.) (Optional) Comment: This definition differs from that found in RCW 82.04.110. The manufacturing vs. processing for hire language has been included within this definition rather than covered by rule as provided in RCW 82.04.110. The optional portion of this definition is different from the RCW in that the RCW allows for the owner of materials that are processed in Washington to be excluded as a manufacturer. It is presumed that the RCW was written in this way to encourage material owners to bring their materials into Washington to be processed by Washington processors for hire. The State chooses to forego the tax that the owner would pay on the value of the materials under the manufacturing classification. The aluminum and nuclear fuel assembly provisions were excluded since no B & 0 city contains these types of activities. Page 4 16 Model Ordinance October 2025 (2) "To manufacture" means all activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials or ingredients so that as a result thereof a new, different or useful product is produced for sale or commercial or industrial use, and shall include: (a) The production of special made or custom made articles; (b) The production of dental appliances, devices, restorations, substitutes, or other dental laboratory products by a dental laboratory or dental technician; (c) Crushing and/or blending of rock, sand, stone, gravel, or ore; and (d) The producing of articles for sale, or for commercial or industrial use from raw materials or prepared materials by giving such materials, articles, and substances of trade or commerce new forms, qualities, properties or combinations including, but not limited to, such activities as making, fabricating, processing, refining, mixing, slaughtering, packing, aging, curing, mild curing, preserving, canning, and the preparing and freezing of fresh fruits and vegetables. "To manufacture" shall not include the production of digital goods or the production of computer software if the computer software is delivered from the seller to the purchaser by means other than tangible storage media, including the delivery by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser. (Mandatory) Comment: This definition is different from RCW 82.04.120. The cutting, delimbing, and measuring of felled, cut, or taken trees does not usually take place within cities so that was deleted. The RCW also states that some activities which are covered in other special taxing classifications at the State level are not manufacturing. Although some of these activities normally do not take place in cities we included them into manufacturing since they fall within the definition. Manufacturing activities covered in other tax classifications at the State level such as slaughtering, curing, preserving, or canning were included in this definition since the Cities do not have the other classifications. "Person." "Person" means any individual, receiver, administrator, executor, assignee, trustee in bankruptcy, trust, estate, firm, co -partnership, joint venture, club, company, joint stock company, business trust, municipal corporation, political subdivision of the State of Washington, corporation, limited liability company, association, society, or any group of individuals acting as a unit, whether mutual, cooperative, fraternal, non-profit, or otherwise and the United States or any instrumentality thereof. (Mandatory) "Retailing." "Retailing" means the activity of engaging in making sales at retail and is reported under the retailing classification. (Mandatory) Comment: This definition is not contained in state law, however RCW 35.102.120 requires that the model ordinance include this definition. "Retail Service." "Retail service" shall include the sale of or charge made for personal, business, or professional services including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, received by persons engaging in the following business activities: (1) Amusement and recreation services including but not limited to golf, pool, billiards, skating, bowling, swimming, bungee jumping, ski lifts and tows, basketball, racquet ball, handball, squash, tennis, batting cages, day trips for sightseeing purposes, and others, when provided to consumers. "Amusement and recreation services" also include the provision of related facilities such as basketball courts, tennis courts, handball courts, swimming pools, and charges made for providing the opportunity to dance. The term "amusement and recreation services" does not include instructional lessons to learn a particular activity such as tennis lessons, swimming lessons, or archery lessons. (2) Abstract, title insurance, and escrow services; (3) Credit bureau services; (4) Automobile parking and storage garage services; Page 5 Model Ordinance October 2025 17 (5) (6) (7) (8) Landscape maintenance and horticultural services but excluding (i) horticultural services provided to farmers and (ii) pruning, trimming, repairing, removing, and clearing of trees and brush near electric transmission or distribution lines or equipment, if performed by or at the direction of an electric utility; Service charges associated with tickets to professional sporting events; and The following personal services: Physical fitness services, tanning salon services, tattoo parlor services, steam bath services, Turkish bath services, escort services, and dating services. The term shall also include the renting or leasing of tangible personal property to consumers and the rental of equipment with an operator. (Mandatory) Comment: This definition has been removed and separated from the definition of "sale at retail" since many cities have kept these activities taxable at a rate different from their "retailing" rate. The State changed these activities to retail from service a few decades ago. This separation of definitions enables those cities that have historically taxed retail sales and retail services at a different rate to continue to do so. The definition includes more examples under the amusement and recreation subsection than State's definition and these examples originated from the State's rule on amusement and recreation. "Sale," "casual or isolated sale." (1) "Sale" means any transfer of the ownership of, title to, or possession of, property for a valuable consideration and includes any activity classified as a "sale at retail," "retail sale," or "retail service." It includes renting or leasing, conditional sale contracts, leases with option to purchase, and any contract under which possession of the property is given to the purchaser but title is retained by the vendor as security for the payment of the purchase price. It also includes the furnishing of food, drink, or meals for compensation whether consumed upon the premises or not. (2) "Casual or isolated sale" means a sale made by a person who is not engaged in the business of selling the type of property involved on a routine or continuous basis. [Comment: the term "routine or continuous" comes from WAC 458-20-106.] "Sale at retail," "retail sale." (1) "Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of their business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers, other than a sale to a person who presents a resale certificate under RCW 82.04.470 and who: (a) Purchases for the purpose of resale as tangible personal property in the regular course of business without intervening use by such person; or (b) Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates real or personal property of or for consumers, if such tangible personal property becomes an ingredient or component of such real or personal property without intervening use by such person; or (c) Purchases for the purpose of consuming the property purchased in producing for sale a new article of tangible personal property or substance, of which such property becomes an ingredient or component or is a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale; or (d) Purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon; or (e) Purchases for the purpose of providing the property to consumers as part of competitive telephone service, as defined in RCW 82.04.065,. or The term shall include every sale of tangible personal property which is used or consumed or to be used or consumed in the performance of any activity cla"cified as a "sale at retail" or "retail sale" even though such property is resold or utilized as provided in (a), (b), (c), (d), or (e) of this subsection following such usc. (f) Purchases for the purpose of satisfying the person's obligations under an extended warranty as defined in subsection (8)(7) of this section, if such tangible personal property replaces or becomes an Page 6 18 Model Ordinance October 2025 (2) (3) ingredient or component of property covered by the extended warranty without intervening use by such person. The term shall include every sale of tangible personal property which is used or consumed or to be used or consumed in the performance of any activity classified as a "sale at retail" or "retail sale" even though such property is resold or utilized as provided in (a), (b), (c), (d), (e), or (f) of this subsection following such use. The term also means every sale of tangible personal property to persons engaged in any business that is taxable under RCW 82.04.280(1)(a), (b), and (g), 82.04,290, and 82.04.2908. "Sale at retail" or "retail sale" also means every sale of tangible personal property to persons engaged in any business activity which is taxable under .050(1)(g). The term "sale at retail" or "retail sale" includes the sale of or charge made for personal, business, or professional services including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, received by persons engaging in the following business activities: (a) Information technology training services, technical support, and other services including, but not limited to, assisting with network operations and support, help desk services, in -person training related to hardware or software, network system support services, data entry services, and data processing services; or (b) Custom website development services. For the purposes of this subsection (3), "website development services" means the design, development, and support of a website provided by a website developer to a customer; or (c) Investigation, security services, security monitoring services, and armored car services including, but not limited to, background checks, security guard and patrol services, personal and event security, armored car transportation of cash and valuables, and security system services and monitoring. This does not include locksmith services; or (d) Temporary staffing services. For the purposes of this subsection (3), "temporary staffing services" means providing workers to other businesses, except for hospitals licensed under chapter 70.41 or 71.12 RCW, for limited periods of time to supplement their workforce and fill employment vacancies on a contract or for fee basis; or (e) Advertising services. (i) For the purposes of this subsection (3), "advertising services" means all digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements including, but not limited to: (A) Layout, art direction, graphic design, mechanical preparation, production supervision, placement, referrals, acquisition of advertising space, and rendering advice concerning the best methods of advertising products or services; and (B) Online referrals, search engine marketing, and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign. (f) Page 7 (ii) "Advertising services" do not include: (A) Web hosting services and domain name registration; (B) Services rendered in respect to the following: (I) "Newspapers" as defined in RCW 82.04.214; (II) Printing or publishing under RCW 82.04.280; and (III) "Radio and television broadcasting" within this state as defined in RCW 82.04 (section 1, chapter 9, Laws of 2025); and (C) Services rendered in respect to out -of -home advertising, including: Billboard advertising; street furniture advertising; transit advertising; place -based advertising, such as in-store display advertising or point -of -sale advertising; dynamic or static signage at live events; naming rights; and fixed signage advertising. Out -of -home advertising does not include direct mail; or Live presentations including, but not limited to, lectures, seminars, workshops, or courses where participants attend either in person or via the internet or telecommunications equipment that allows Model Ordinance October 2025 19 audience members and the presenter or instructor to give, receive, and discuss information with each other in real time. For the purposes of (a) through (c) and (e) of this subsection (3), the terms "sale at retail" and "retail sale" do not include a sale between members of an affiliated group as defined in RCW 82.04.299(1)(f). (4) "Sale at retail" or "retail sale" shall include the sale of or charge made for tangible personal property consumed and/or for labor and services rendered in respect to the following: (a) The installing, repairing, cleaning, altering, imprinting, or improving of tangible personal property of or for consumers, including charges made for the mere use of facilities in respect thereto, but excluding charges made for the use of coin -operated laundry facilities when such facilities are situated in an apartment house, rooming house, or mobile home park for the exclusive use of the tenants thereof, and also excluding sales of laundry service to nonprofit health care facilities, and excluding services rendered in respect to live animals, birds and insects; (b) The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for consumers, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, and shall also include the sale of services or charges made for the clearing of land and the moving of earth excepting the mere leveling of land used in commercial farming or agriculture; (c) The charge for labor and services rendered in respect to constructing, repairing, or improving any structure upon, above, or under any real property owned by an owner who conveys the property by title, possession, or any other means to the person performing such construction, repair, or improvement for the purpose of performing such construction, repair, or improvement and the property is then reconveyed by title, possession, or any other means to the original owner; (d) The sale of or charge made for labor and services rendered in respect to the cleaning, fumigating, razing or moving of existing buildings or structures, but shall not include the charge made for janitorial services; and for purposes of this section the term "janitorial services" shall mean those cleaning and caretaking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery. The term "janitorial services" does not include painting, papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting; (e) The sale of or charge made for labor and services rendered in respect to automobile towing and similar automotive transportation services, but not in respect to those required to report and pay taxes under chapter 82.16 RCW; (f) The sale of and charge made for the furnishing of lodging and all other services, except telephone business and cable service, by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same. For the purposes of this subsection, it shall be presumed that the sale of and charge made for the furnishing of lodging for a continuous period of one month or more to a person is a rental or lease of real property and not a mere license to enjoy the same; (g) The installing, repairing, altering, or improving of digital goods for consumers; (h) The sale of or charge made for tangible personal property, labor and services to persons taxable under (a), (b), (c), (d), (e), (f), and (g) of this subsection when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property, labor and services may be resold after such use or consumption. Nothing contained in this subsection shall be construed to modify subsection (1) of this section and nothing contained in subsection (1) of this section shall be construed to modify this subsection. (5) "Sale at retail" or "retail sale" shall also include the providing of competitive telephone service to consumers. [Comment: Cities can only include "competitive telephone service" since telephone business is taxed under the utility tax.] Page 8 20 Model Ordinance October 2025 (6) "Sale at retail" or "retail sale" (a) "Sale at retail" or "retail sale" shall also include the sale of prewritten software, custom software, and customization of prewritten computer software to a consumer, other than a sale to a person who presents a resale certificate under RCW 82.04.470, regardless of the method of delivery to the end user. For purposes of this subsection L6.5)(a) the sale of the sale of prewritten computer software includes the sale of or charge made for a key or an enabling or activation code, where the key or code is required to activate prewritten computer software and put the software into use. There is no separate sale of the key or code from the prewritten computer software, regardless of how the sale may characterized by the vendor or by the purchaser. The term "sale at retail" or "retail sale" does not include the sale of or charge made for: (i) Custom software; or (ii) The customization of prewritten software. (b) (iii)fThe term "sale at retail" or "retail sale" also includes the charge made to consumers for the right to access and use prewritten computer software, custom software, and customization of prewritten computer software, where possession of the software is maintained by the seller or a third party, regardless of whether the charge for the service is on a per use, per user, per license, subscription, or some other basis. (ii) (A) The service described in (b)(i) of this subsection 65 includes the right to access and use prewritten software, custom software, and customization of prewritten computer software to perform data processing. (B) For purposes of this subsection (b)(ii) "data processing" means the systematic performance of operations on data to extract the required information in an appropriate form or to convert the data to usable information. Data processing includes check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities. (7) "Sale at retail" or "retail sale" shall also include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state, the State of Washington, or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind. (Public road construction) (8) "Sale at retail" or "retail sale" shall also include the sale of or charge made for an extended warranty to a consumer. For purposes of this subsection, "extended warranty" means an agreement for a specified duration to perform the replacement or repair of tangible personal property at no additional charge or a reduced charge for tangible personal property, labor, or both, or to provide indemnification for the replacement or repair of tangible personal property, based on the occurrence of specified events. The term "extended warranty" does not include an agreement, otherwise meeting the definition of extended warranty in this subsection, if no separate charge is made for the agreement and the value of the agreement is included in the sales price of the tangible personal property covered by the agreement. (9) "Sale at retail" or "retail sale" shall also include the sale of or charge made for labor and services rendered in respect to the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation (government contracting). (10) "Sale at retail" or "retail sale" shall not include the sale of services or charges made for the clearing of land and the moving of earth of or for the United States, any instrumentality thereof, or a county or city housing authority. Nor shall the term include the sale of services or charges made for cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development. [This should be reported under the service and other classification.] (11) "Sale at retail" or "retail sale" shall not include the sale of or charge made for labor and services rendered for environmental remedial action. [This should be reported under the service and other classification.] Page 9 Model Ordinance October 2025 21 (12)(a) "Sale at retail" or "retail sale" shall also include the following sales to consumers of digital goods, digital codes, and digital automated services: (a)-(i) Sales in which the seller has granted the purchaser the right of permanent use; (b-)- ii Sales in which the seller has granted the purchaser a right of use that is less than permanent; (c) (iii) Sales in which the purchaser is not obligated to make continued payment as a condition of the sale; and (d)-(iv) Sales in which the purchaser is obligated to make continued payment as a condition of the sale. (b) A retail sale of digital goods, digital codes, or digital automated services under this subsection [insert reference to section .040(12)5(11)] includes any services provided by the seller exclusively in connection with the digital goods, digital codes, or digital automated services, whether or not a separate charge is made for such services. (c) A retail sale of digital goods, digital codes, or digital automated services does not include the following services if the sale occurs between members of an affiliated group as defined in RCW 82.04.299(1)(f): (i) Any service that primarily involves the application of human effort by the seller, and the human effort originated after the customer requested the service; (ii) Live presentations, such as lectures, seminars, workshops, or courses, where participants are connected to other participants via the internet or telecommunications equipment, which allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time; (iii) Advertising services. For purposes of this subsection, "advertising services" means all services directly related to the creation, preparation, production, or dissemination of advertisements. Advertising services include layout, art direction, graphic design, mechanical preparation, production supervision, placement, and rendering advice to a client concerning the best methods of advertising that client's products or services. Advertising services also include online referrals, search engine marketing and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign. Advertising services do not include web hosting services and domain name registration; and (iv) Data processing services. For purposes of this subsection, "data processing service" means a primarily automated service provided to a business or other organization where the primary object of the service is the systematic performance of operations by the service provider on data supplied in whole or in part by the customer to extract the required information in an appropriate form or to convert the data to usable information. Data processing services include check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities. Data processing does not include the service described in subsection (6)(b) of this section. (d) For purposes of this subsection, "permanent" means perpetual or for an indefinite or unspecified length of time. A right of permanent use is presumed to have been granted unless the agreement between the seller and the purchaser specifies or the circumstances surrounding the transaction suggest or indicate that the right to use terminates on the occurrence of a condition subsequent. (13) "Sale at retail" or "retail sale" shall also include the installing, repairing, altering, or improving of digital goods for consumers. (Mandatory) Comment: This definition is different than RCW 82.04.050. Retail services have been given their own definition. Public road construction and government contracting has been included into this definition since the Cities do not have special tax classifications for those two activities. Environmental or nuclear waste cleanup are assigned to the service and other classification. And the sales to farmers will remain under the retailing classification. The reference to "telephone business and cable service" in subsection (3)(f) has been included to clarify to hotels and motels that such telephone services and cable services are taxable under the utility tax. "Sale at wholesale," "wholesale sale." "Sale at wholesale" or "wholesale sale" means any sale of tangible personal property, digital goods, digital codes, digital automated services, prewritten computer software, custom software, customization of prewritten software to a consumer, or services described in [insert reference Page 10 Model Ordinance October 2025 22 to "sale at retail" section 6(b)(i)], which is not a retail sale, and any charge made for labor and services rendered for persons who are not consumers, in respect to real or personal property and retail services, if such charge is expressly defined as a retail sale or retail service when rendered to or for consumers. Sale at wholesale also includes the sale of telephone business to another telecommunications company as defined in RCW 80.04.010 for the purpose of resale, as contemplated by RCW 35.21.715. (Mandatory) [The last sentence must be included since telephone business would normally be taxed under the utility tax. The wholesale treatment of telephone business to another telecommunications company is dictated by State law.] "Services." [Comment: RCW 35.102.120 requires that the model ordinance include this definition. However, no explicit definition will be included in this Model Ordinance until the RCW contains a definition of "service". In the absence of a definition of "service" in state law, the Cities generally use this term and classification to include those activities that do not fall within one of the other tax classifications used by a city.] "Taxpayer." "Taxpayer" means any "person", as herein defined, required to have a business license under this chapter or liable for the collection of any tax or fee under this chapter, or who engages in any business or who performs any act for which a tax or fee is imposed by this chapter. "Value proceeding or accruing." "Value proceeding or accruing" means the consideration, whether money, credits, rights, or other property expressed in terms of money, a person is entitled to receive or which is actually received or accrued. The term shall be applied, in each case, on a cash receipts or accrual basis according to which method of accounting is regularly employed in keeping the books of the taxpayer. (Mandatory if you have a manufacturing tax) "Value of products." (1) The value of products, including by-products, extracted or manufactured, shall be determined by the gross proceeds derived from the sale thereof whether such sale is at wholesale or at retail, to which shall be added all subsidies and bonuses received from the purchaser or from any other person with respect to the extraction, manufacture, or sale of such products or by-products by the seller. (2) Where such products, including by-products, are extracted or manufactured for commercial or industrial use; and where such products, including by-products, are shipped, transported or transferred out of the City, or to another person, without prior sale or are sold under circumstances such that the gross proceeds from the sale are not indicative of the true value of the subject matter of the sale; the value shall correspond as nearly as possible to the gross proceeds from sales in this state of similar products of like quality and character, and in similar quantities by other taxpayers, plus the amount of subsidies or bonuses ordinarily payable by the purchaser or by any third person with respect to the extraction, manufacture, or sale of such products. In the absence of sales of similar products as a guide to value, such value may be determined upon a cost basis. In such cases, there shall be included every item of cost attributable to the particular article or article extracted or manufactured, including direct and indirect overhead costs. The Director may prescribe rules for the purpose of ascertaining such values. (3) Notwithstanding subsection (2) above, the value of a product manufactured or produced for purposes of serving as a prototype for the development of a new or improved product shall correspond to (a) the retail selling price of such new or improved product when first offered for sale; or (2) the value of materials incorporated into the prototype in cases in which the new or improved product is not offered for sale. Comment: This definition is slightly different than that contained in RCW 82.04.450. The meaning is intended to be the same, and the only difference is in grammatical construction. The model also adds a sentence, taken from WAC 458-20-112, at the end of subsection (2) explaining the use of costs to ascertain the value of the products. (Mandatory if you have manufacturing or extracting tax) "Wholesaling." "Wholesaling" means engaging in the activity of making sales at wholesale, and is reported under the wholesaling classification. (Mandatory) Page 11 Model Ordinance October 2025 23 [Comment: This definition is not contained in state law, however RCW 35.102.120 requires that the model ordinance include this definition.] .050 Imposition of the tax - tax or fee levied. (1) Except as provided in subsection (2) of this section, there is hereby levied upon and shall be collected from every person a tax for the act or privilege of engaging in business activities within the City, whether the person's office or place of business be within or without the City. The tax shall be in amounts to be determined by application of rates against gross proceeds of sale, gross income of business, or value of products, including by-products, as the case may be, as follows: (a) Upon every person engaging within the City in business as an extractor; as to such persons the amount of the tax with respect to such business shall be equal to the value of the products, including by-products, extracted within the city for sale or for commercial or industrial use, multiplied by the rate of of one percent ( ). The measure of the tax is the value of the products, including by-products, so extracted, regardless of the place of sale or the fact that deliveries may be made to points outside the City. (b) Upon every person engaging within the City in business as a manufacturer, as to such persons the amount of the tax with respect to such business shall be equal to the value of the products, including by-products, manufactured within the city, multiplied by the rate of of one percent ( ). The measure of the tax is the value of the products, including by-products, so manufactured, regardless of the place of sale or the fact that deliveries may be made to points outside the City. (c) Upon every person engaging within the City in the business of making sales at wholesale, except persons taxable under subsection _ of this section; as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of such sales of the business without regard to the place of delivery of articles, commodities or merchandise sold, multiplied by the rate of of one percent ( ). (d) Upon every person engaging within the City in the business of making sales at retail, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of such sales of the business, without regard to the place of delivery of articles, commodities or merchandise sold, multiplied by the rate of of one percent ( ). (e) Upon every person engaging within the City in the business of (i) printing, (ii) both printing and publishing newspapers, magazines, periodicals, books, music, and other printed items, (iii) publishing newspapers, magazines and periodicals, (iv) extracting for hire, and (v) processing for hire; as to such persons, the amount of tax on such business shall be equal to the gross income of the business multiplied by the rate of of one percent ( ). (f) Upon every person engaging within the City in the business of making sales of retail services; as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales multiplied by the rate of of one percent ( ). (g) Upon every other person engaging within the City in any business activity other than or in addition to those enumerated in the above subsections; as to such persons, the amount of tax on account of such activities shall be equal to the gross income of the business multiplied by the rate of of one percent ( ). This subsection includes, among others, and without limiting the scope hereof (whether or not title to material used in the performance of such business passes to another by accession, merger or other than by outright sale), persons engaged in the business of developing, or producing custom software or of customizing canned software, producing royalties or commissions, and persons engaged in the business of rendering any type of service which does not constitute a sale at retail, a sale at wholesale, or a retail service. [Comment: Most cities do not use all of the classifications listed above, so they need only adopt those that are imposed within their jurisdictions.] (Mandatory wording for those classifications that are adopted). (2) The gross receipts tax imposed in this section shall not apply to any person whose gross proceeds of sales, gross income of the business, and value of products, including by-products, as the case may be, from all activities conducted within the City during any calendar year is equal to or less than $20,000, or is equal to or less than $5,000 during any quarter if on a quarterly reporting basis. Page 12 24 Model Ordinance October 2025 (Subsection (2) is Mandatory) .060 Doing business with the City. - Repealed effective January 1, 2008. .070 Multiple activities credit when activities take place in one or more cities with eligible gross receipt taxes. (1) Persons who engage in business activities that are within the purview of two (2) or more subsections of .050 shall be taxable under each applicable subsection. (2) Notwithstanding anything to the contrary herein, if imposition of the City's tax would place an undue burden upon interstate commerce or violate constitutional requirements, a taxpayer shall be allowed a credit to the extent necessary to preserve the validity of the City's tax, and still apply the City tax to as much of the taxpayer's activities as may be subject to the City's taxing authority. (3) To take the credit authorized by this section, a taxpayer must be able to document that the amount of tax sought to be credited was paid upon the same gross receipts used in computing the tax against which the credit is applied. (4) Credit for persons that sell in the City products that they extract or manufacture. Persons taxable under the retailing or wholesaling classification with respect to selling products in this City shall be allowed a credit against those taxes for any eligible gross receipts taxes paid (a) with respect to the manufacturing of the products sold in the City, and (b) with respect to the extracting of the products, or the ingredients used in the products, sold in the City. The amount of the credit shall not exceed the tax liability arising under this chapter with respect to the sale of those products. (5) Credit for persons that manufacture products in the City using ingredients they extract. Persons taxable under the manufacturing classification with respect to manufacturing products in this City shall be allowed a credit against those taxes for any eligible gross receipts tax paid with respect to extracting the ingredients of the products manufactured in the City. The amount of the credit shall not exceed the tax liability arising under this chapter with respect to the manufacturing of those products. (6) Credit for persons that sell within the City products that they print, or publish and print. Persons taxable under the retailing or wholesaling classification with respect to selling products in this City shall be allowed a credit against those taxes for any eligible gross receipts taxes paid with respect to the printing, or the printing and publishing, of the products sold within the City. The amount of the credit shall not exceed the tax liability arising under this chapter with respect to the sale of those products. (Mandatory) [Comment: The wording in this section .070 is not quite the same as RCW 35.102.060 (1). Subsection (1) is the same as (a) in RCW 35.102.060. Subsection (2) has the same meaning although the cities add the last phrase that the tax will be subjected to the greatest extent possible. Subsection (3) is not included in RCW 35.102.060—it merely states that the taxpayer must have records or proof that it paid another eligible gross receipts tax to another local jurisdiction. In the case of manufacturing products that have been partially manufactured in another location with an eligible gross receipt tax, the cities have chosen to give a deduction and only tax the incremental increase in the value of the product. This should provide an equal or better treatment to the manufacturer than the credit provision contained in RCW 35.102.060 (1)(d). (Refer to subsection .075(2) below)] Legislative intent information This section provides a tax credit for taxpayers engaged in multiple taxable activities. The section provides a credit against eligible selling or manufacturing taxes imposed by the City for extracting or manufacturing taxes paid to the City or to any other local jurisdiction with respect to the same products. The tax credit does not depend upon whether a person that sells in the City extracts or manufactures in the City or in another jurisdiction to which it has paid an eligible gross receipts tax. The tax credit does not depend on whether a person that manufactures in the City extracts in the City or in another jurisdiction to which it has paid an eligible gross receipts tax. The credit is available to any person that pays an eligible gross receipts tax on the applicable activities, regardless of where it conducts business. The result of this section is that a city in which Page 13 Model Ordinance October 2025 25 selling takes place gives up the tax to the manufacturing jurisdiction and the manufacturing jurisdiction gives up the tax to the extracting jurisdiction, whether those jurisdictions are inside or outside the State of Washington. .075 Deductions to prevent multiple taxation of manufacturing activities and prior to January 1, 2008, transactions involving more than one city with an eligible gross receipts tax. (1) Amounts subject to an eligible gross receipts tax in another city that also maintains nexus over the same activity. For taxes due prior to January 1, 2008, a taxpayer that is subject to an eligible gross receipts tax on the same activity in more than one jurisdiction may be entitled to a deduction as follows: (a) A taxpayer that has paid an eligible gross receipts tax, with respect to a sale of goods or services, to a jurisdiction in which the goods are delivered or the services are provided may deduct an amount equal to the gross receipts used to measure that tax from the measure of the tax owed to the City. (b) Notwithstanding the above, a person that is subject to an eligible gross receipts tax in more than one jurisdiction on the gross income derived from intangibles such as royalties, trademarks, patents, or goodwill shall assign those gross receipts to the jurisdiction where the person is domiciled (its headquarters is located). (c) A taxpayer that has paid an eligible gross receipts tax on the privilege of accepting or executing a contract with another city may deduct an amount equal to the contract price used to measure the tax due to the other city from the measure of the tax owed to the City. (Mandatory) Legislative intent information This section establishes deductions to be applied when a single taxable activity is taxable by more than one jurisdiction that imposes an eligible gross receipts tax for taxes due prior to January 1, 2008. Prior to January 1, 2008, under Washington State Law, more than one city that has established nexus can include 100% of the gross receipts from that transaction in its tax base. However, to eliminate the possibility of the same sale or service being taxed more than once by cities that maintain nexus and an eligible gross receipts tax, the cities have provided this deduction to taxpayers. For taxes due after January 1, 2008, the apportionment provisions in section .077 will provide the mechanism for all activities except manufacturing. Sales. A taxpayer that has paid an eligible gross receipts tax on the sale to the jurisdiction where the product is delivered may deduct the gross receipts used to measure that tax from the measure of the tax owed to another jurisdiction on the sale. If a taxpayer has not paid tax to the jurisdiction where the product is delivered, then no deduction is allowed. The sale shall be taxed by the city where the office or place of business that generated the sale is located. Service. A taxpayer that has paid an eligible gross receipts tax on services to the jurisdiction where the service is performed may deduct the gross receipts used to measure that tax from the measure of the tax owed to another jurisdiction on that service. If a taxpayer has not paid tax to the jurisdiction where the service is performed, then the service income shall be taxed by the city where the office or place of business that generated the sale is located. For both sales and services, the order of taxing rights is delivery city, first; and business office location, second. General Business Activities Other Than Services. The eligible gross receipts tax on income derived from intangibles such as royalties, licenses, trademarks, patents and goodwill, and reportable under the general business classification .050 (7), shall be assigned to the domicile/headquarters office. Conducting Business with Another City. A taxpayer that has paid an eligible gross receipts tax on the privilege of accepting or executing a contract with a city may deduct the contract price used to measure the tax from the measure of the tax owed to another city on the same activity. (2) Person manufacturing products within and without. A person manufacturing products within the City using products manufactured by the same person outside the City may deduct from the measure of the manufacturing tax the value of products manufactured outside the City and included in the measure of an eligible gross receipts tax paid to the other jurisdiction with respect to manufacturing such products. (Mandatory) Page 14 26 Model Ordinance October 2025 .076 Assignment of gross income derived from intangibles. Gross income derived from the sale of intangibles such as royalties, trademarks, patents, or goodwill shall be assigned to the jurisdiction where the person is domiciled (its headquarters is located). .077 Allocation and apportionment of income when activities take place in more than one jurisdiction. Effective January 1, 2008, gross income, other than persons subject to the provisions of chapter 82.14A RCW, shall be allocated and apportioned as follows: (1) Gross income derived from all activities other than those taxed as service or royalties under [insert city code reference to .050(1)(g)] shall be allocated to the location where the activity takes place. (2) In the case of sales of tangible personal property, the activity takes place where delivery to the buyer occurs. (3) In the case of sales of digital products, the activity takes place where delivery to the buyer occurs. The delivery of digital products will be deemed to occur at: (a) The seller's place of business if the purchaser receives the digital product at the seller's place of business; (b) If not received at the seller's place of business, the location where the purchaser or the purchaser's donee, designated as such by the purchaser, receives the digital product, including the location indicated by instructions for delivery to the purchaser or donee, known to the seller; (c) If the location where the purchaser or the purchaser's done receives the digital product is not known, the purchaser's address maintained in the ordinary course of the seller's business when use of this address does not constitute bad faith; (d) If no address for the purchaser is maintained in the ordinary course of the seller's business, the purchaser's address obtained during the consummation of the sale, including the address of a purchaser's payment instrument, if no other address is available, when use of this address does not constitute bad faith; and (e) If no address for the purchaser is obtained during the consummation of the sale, the address where the digital good or digital code is first made available for transmission by the seller or the address from which the digital automated service or service described in RCW 82.04.050 (2)(g) or (6)(b) was provided, disregarding for these purposes any location that merely provided the digital transfer of the product sold. (4) If none of the methods in subsection [insert city code reference to .077(3)] for determining where the delivery of digital products occurs are available after a good faith effort by the taxpayer to apply the methods provided in subsections [insert city code reference to .077(3)(a) through .077(3)(e)], then the city and the taxpayer may mutually agree to employ any other method to effectuate an equitable allocation of income from the sale of digital products. The taxpayer will be responsible for petitioning the city to use an alternative method under this subsection [insert city code reference to .077(D)]. The city may employ an alternative method for allocating the income from the sale of digital products if the methods provided in subsections [insert city code reference to .077(3)(a) through .077(3)(e)] are not available and the taxpayer and the city are unable to mutually agree on an alternative method to effectuate an equitable allocation of income from the sale of digital products. (5) For purposes of subsections [insert city code reference to .077(3)(a) through .077(3)(e)], the following definitions apply: (a) "Digital automated services," "digital codes," and "digital goods" have the same meaning as in RCW 82.04.192; (b) "Digital products" means digital goods, digital codes, digital automated services, and the services described in RCW 82.04.050 (2)(g) and (6)(c); and (c) "Receive" has the same meaning as in RCW 82.32.730. (6) 'Effective January 1, 20201 Gross income derived from activities taxed as services and other activities taxed under [insert city code reference to .050(1)(g)] shall be apportioned to the city by multiplying apportionable income by a fraction, the numerator of which is the payroll factor plus the service income factor and the denominator of which is two. Page 15 Model Ordinance October 2025 27 (7) (a) The payroll factor is a fraction, the numerator of which is the total amount paid in the city during the tax period by the taxpayer for compensation and the denominator of which is the total compensation paid everywhere during the tax period. Compensation is paid in the city if: (i) The individual is primarily assigned within the city; (ii) The individual is not primarily assigned to any place of business for the tax period and the employee performs fifty percent or more of his or her service for the tax period in the city; or (iii) The individual is not primarily assigned to any place of business for the tax period, the individual does not perform fifty percent or more of his or her service in any city and the employee resides in the city. (b) The service income factor is a fraction, the numerator of which is the total service income of the taxpayer in the city during the tax period, and the denominator of which is the total service income of the taxpayer everywhere during the tax period. Service income is in the city if the customer location is in the city. (c) Gross income of the business from engaging in an apportionable activity must be excluded from the denominator of the service income factor if, in respect to such activity, at least some of the activity is performed in the city, and the gross income is attributable under (b) of this subsection (6) to a city or unincorporated area of a county within the United States or to a foreign country in which the taxpayer is not taxable. For purposes of this subsection (6)(c), "not taxable" means that the taxpayer is not subject to a business activities tax by that city or county within the United States or by that foreign country, except that a taxpayer is taxable in a city or county within the United States or in a foreign country in which it would be deemed to have a substantial nexus with the city or county within the United States or with the foreign country under the standards in RCW 35.102.050 regardless of whether that city or county within the United States or that foreign country imposes such a tax. (d) If the allocation and apportionment provisions of this subsection16) do not fairly represent the extent of the taxpayer's business activity in the city the taxpayer may petition for or the tax administrators may require, in respect to all or any part of the taxpayer's business activity, if reasonable: (i) Separate accounting; (ii) The exclusion of any one or more of the factors; (iii) The inclusion of one or more additional factors that will fairly represent the taxpayer's business activity in the city; or (iv) The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income. (e) The party petitioning for, or the tax administrator requiring, the use of any method to effectuate an equitable allocation and apportionment of the taxpayer's income pursuant to subsection (d) of this subsection (6) must prove by a preponderance of the evidence: (i) That the allocation and apportionment provisions of this subsection (6) do not fairly represent the extent of the taxpayer's business activity in the city; and (ii) That the alternative to such provisions is reasonable. The same burden of proof shall apply whether the taxpayer is petitioning for, or the tax administrator is requiring, the use of an alternative, reasonable method to effectuate an equitable allocation and apportionment of the taxpayer's income. (f) If the tax administrator requires any method to effectuate an equitable allocation and apportionment of the taxpayer's income, the tax administrator cannot impose any civil or criminal penalty with reference to the tax due that is attributable to the taxpayer's reasonable reliance solely on the allocation and apportionment provisions of this subsection (6). (g) A taxpayer that has received written permission from the tax administrator to use a reasonable method to effectuate an equitable allocation and apportionment of the taxpayer's income shall not have that permission revoked with respect to transactions and activities that have already occurred unless there has been a material change in, or a material misrepresentation of, the facts provided by the taxpayer upon which the tax administrator reasonably relied in approving a reasonable alternative method. The definitions in this subsection apply throughout this section. (a) "Apportionable income" means the gross income of the business taxable under the service classifications of a city's gross receipts tax, including income received from activities outside the city if Page 16 28 Model Ordinance October 2025 the income would be taxable under the service classification if received from activities within the city, less any exemptions or deductions available. (b) "Business activities tax" means a tax measured by the amount of, or economic results of, business activity conducted in a city or county within the United States or within a foreign country. The term includes taxes measured in whole or in part on net income or gross income or receipts. "Business activities tax" does not include a sales tax, use tax, or a similar transaction tax, imposed on the sale or acquisition of goods or services, whether or not denominated a gross receipts tax or a tax imposed on the privilege of doing business. (c) "Compensation" means wages, salaries, commissions, and any other form of remuneration paid to individuals for personal services that are or would be included in the individual's gross income under the federal internal revenue code. (d) "Customer" means a person or entity to whom the taxpayer makes a sale or renders services or from whom the taxpayer otherwise receives gross income of the business. (e) "Customer location" means the following: (i) For a customer not engaged in business, if the service requires the customer to be physically present, where the service is performed. (ii) For a customer not engaged in business, if the service does not require the customer to be physically present: (A) The customer's residence; or (B) If the customer's residence is not known, the customer's billing/mailing address. (iii) For a customer engaged in business: (A) Where the services are ordered from; (B) At the customer's billing/mailing address if the location from which the services are ordered is not known; or (C) At the customer's commercial domicile if none of the above are known. (f) "Individual" means any individual who, under the usual common law rules applicable in determining the employer -employee relationship, has the status of an employee of that taxpayer. (g) "Primarily assigned" means the business location of the taxpayer where the individual performs his or her duties. (h) "Service -taxable income" or "service income" means gross income of the business subject to tax under either the service or royalty classification. (i) "Tax period" means the calendar year during which tax liability is accrued. If taxes are reported by a taxpayer on a basis more frequent than once per year, taxpayers shall calculate the factors for the previous calendar year for reporting in the current calendar year and correct the reporting for the previous year when the factors are calculated for that year, but not later than the end of the first quarter of the following year. (8) Assignment or apportionment of revenue under this Section shall be made in accordance with and in full compliance with the provisions of the interstate commerce clause of the United States Constitution where applicable. (Mandatory — Effective January 1, 2020) Legislative intent information For tax periods after January 1, 2020, Substitute House Bill 1403 further simplifies the administration of municipal business and occupation tax apportionment by (1) adopting a consistent sourcing hierarchy; (2) adopting market -based sourcing in the income factor; (3) establishing a rule that excludes service receipts from the income factor denominator attributable to jurisdictions where the taxpayer would not be subject to tax; and (4) establishing a consistent burden of proof for application of an alternative apportionment method. There are no changes to the payroll factor. For periods prior to January 1, 2020, the following language is still in effect: Sec. 0.077(6)(b) provides "The service income factor is a fraction, the numerator of which is the total service income of the taxpayer in the city during the tax period, and the denominator of which is the total service income of the taxpayer everywhere during the tax period. Service income is in the city if: Page 17 Model Ordinance October 2025 29 (i) The customer location is in the city; or (ii) The income -producing activity is performed in more than one location and a greater proportion of the service -income -producing activity is performed in the city than in any other location, based on costs of performance, and the taxpayer is not taxable at the customer location; or (iii) The service -income -producing activity is performed within the city, and the taxpayer is not taxable in the customer location." Sec. 0.077(7)(d) provides "Customer location" means the city or unincorporated area of a county where the majority of the contacts between the taxpayer and the customer take place. Sec. 0.077(7)(h) provides "Taxable in the customer location" means either that a taxpayer is subject to a gross receipts tax in the customer location for the privilege of doing business, or that the government where the customer is located has the authority to subject the taxpayer to gross receipts tax regardless of whether, in fact, the government does so. .078 Allocation and apportionment of printing and publishing income when activities take place in more than one jurisdiction. Notwithstanding RCW 35.102.130, effective January 1, 2008, gross income from the activities of printing, and of publishing newspapers, periodicals, or magazines, shall be allocated to the principal place in this state from which the taxpayer's business is directed or managed. As used in this section until December 31, 2023, the activities of printing, and of publishing newspapers, periodicals, or magazines, have the same meanings as attributed to those terms in RCW 82.04.280(1) by the department of revenue. Beginning January 1, 2024, until January 1, 2034, as used in this section, the activities of printing, and of publishing newspapers and periodicals or magazines are those activities to which the exemption in RCW 82.04.759 and the tax rate in RCW 82.04.280(1)(a) apply. Legislative intent information This section is required by RCW 35.102.150 and provides that printing and publishing income shall be allocated to the city in which taxpayer's business is directed or managed. This section is not mandatory for the model ordinance, but the tax treatment is required by RCW 35.102.150. This section defines the sourcing of gross income arising from the activities of printing, and publishing newspapers, periodicals, or magazines. The changes effective January 1, 2024 modify only the definition of printing, and of publishing newspapers and periodicals or newspapers in accordance with ESS2B 5199 (2023). This section does not constitute an adoption of the State of Washington business and occupation tax exemption for gross income arising from the activities of printing, and of publishing newspapers, or the tax rate that applies to the activities of printing and of publishing periodicals or magazines .090 Exemptions. (1) Public utilities. This chapter shall not apply to any person in respect to a business activity with respect to which tax liability is specifically imposed under the provisions of [local utility tax cite]. (2) Investments - dividends from subsidiary corporations. This chapter shall not apply to amounts derived by persons, other than those engaging in banking, loan, security, or other financial businesses, from investments or the use of money as such, and also amounts derived as dividends by a parent from its subsidiary corporations. (3) Insurance business. This chapter shall not apply to amounts received by any person who is an insurer or their appointed insurance producer upon which a tax based on gross premiums is paid to the state pursuant to RCW 48.14.020, and provided further, that the provisions of this subsection shall not exempt any bonding company from tax with respect to gross income derived from the completion of any contract as to which it is a surety, or as to any liability as successor to the liability of the defaulting contractor. (4) Employees. Page 18 30 Model Ordinance October 2025 (a) This chapter shall not apply to any person in respect to the person's employment in the capacity as an employee or servant as distinguished from that of an independent contractor. For the purposes of this subsection, the definition of employee shall include those persons that are defined in the Internal Revenue Code, as hereafter amended. (b) A booth renter is an independent contractor for purposes of this chapter. (5) Amounts derived from sale of real estate. This chapter shall not apply to gross proceeds derived from the sale of real estate. This, however, shall not be construed to allow an exemption of amounts received as commissions from the sale of real estate, nor as fees, handling charges, discounts, interest or similar financial charges resulting from, or relating to, real estate transactions. This chapter shall also not apply to amounts received for the rental of real estate if the rental income is derived from a contract to rent for a continuous period of thirty (30) days or longer. (6) Mortgage brokers' third -party provider services trust accounts. This chapter shall not apply to amounts received from trust accounts to mortgage brokers for the payment of third -party costs if the accounts are operated in a manner consistent with RCW 19.146.050 and any rules adopted by the director of financial institutions. (7) Amounts derived from manufacturing, selling or distributing motor vehicle fuel. This chapter shall not apply to the manufacturing, selling, or distributing motor vehicle fuel, as the term "motor vehicle fuel" is defined in RCW 82.38.020 and exempt under RCW 82.38.280, provided that any fuel not subjected to the state fuel excise tax, or any other applicable deduction or exemption, will be taxable under this chapter. (Mandatory) (8) Amounts derived from liquor, and the sale or distribution of liquor. This chapter shall not apply to liquor as defined in RCW 66.04.010 and exempt in RCW 66.08.120. (Mandatory) (9) Casual and isolated sales. This chapter shall not apply to the gross proceeds derived from casual or isolated sales. (10) Accommodation sales. This chapter shall not apply to sales for resale by persons regularly engaged in the business of making retail sales of the type of property so sold to other persons similarly engaged in the business of selling such property where (1) the amount paid by the buyer does not exceed the amount paid by the seller to the vendor in the acquisition of the article and (2) the sale is made as an accommodation to the buyer to enable the buyer to fill a bona fide existing order of a customer or is made within fourteen days to reimburse in kind a previous accommodation sale by the buyer to the seller. (11) Taxes collected as trust funds. This chapter shall not apply to amounts collected by the taxpayer from third parties to satisfy third party obligations to pay taxes such as the retail sales tax, use tax, and admission tax. .100 Deductions. In computing the license fee or tax, there may be deducted from the measure of tax the following items: (1) Receipts from tangible personal property delivered outside the State. In computing tax, there may be deducted from the measure of tax under retailing or wholesaling amounts derived from the sale of tangible personal property that is delivered by the seller to the buyer or the buyer's representative at a location outside the State of Washington. (Mandatory) (2) Cash discount taken by purchaser. In computing tax, there may be deducted from the measure of tax the cash discount amounts actually taken by the purchaser. This deduction is not allowed in arriving at the taxable amount under the extracting or manufacturing classifications with respect to articles produced or manufactured, the reported values of which, for the purposes of this tax, have been computed according to the "value of product" provisions. (3) Credit losses of accrual basis taxpayers. In computing tax, there may be deducted from the measure of tax the amount of credit losses actually sustained by taxpayers whose regular books of account are kept upon an accrual basis. (4) Constitutional prohibitions. In computing tax, there may be deducted from the measure of the tax amounts derived from business which the City is prohibited from taxing under the Constitution of the State of Washington or the Constitution of the United States. (Mandatory) (5) Receipts from the Sale of Tangible Personal Property and Retail Services Delivered Outside the City but Within Washington. Effective January 1, 2008, amounts included in the gross receipts reported Page 19 Model Ordinance October 2025 31 on the tax return derived from the sale of tangible personal property delivered to the buyer or the buyer's representative outside the City but within the State of Washington may be deducted from the measure of tax under the retailing, retail services, or wholesaling classification. (6) Professional employer services. In computing the tax, a professional employer organization may deduct from the calculation of gross income the gross income of the business derived from performing professional employer services that is equal to the portion of the fee charged to a client that represents the actual cost of wages and salaries, benefits, workers' compensation, payroll taxes, withholding, or other assessments paid to or on behalf of a covered employee by the professional employer organization under a professional employer agreement. (7) Interest on investments or loans secured by mortgages or deeds of trust. In computing tax, to the extent permitted by Chapter 82.14A RCW, there may be deducted from the measure of tax by those engaged in banking, loan, security or other financial businesses, amounts derived from interest received on investments or loans primarily secured by first mortgages or trust deeds on non -transient residential properties. Legislative intent information Subsection (6) is required by RCW 35.102.160 and provides that professional employer organizations may deduct the portion of fees for actual costs of employee wages and other benefits and taxes from gross income. This deduction is not mandatory for the model ordinance, but the tax treatment is required by RCW 35.102.160 and is taken from RCW 82.04.540(2). .120 Tax part of overhead. It is not the intention of this chapter that the taxes or fees herein levied upon persons engaging in business be construed as taxes or fees upon the purchasers or customer, but that such taxes or fees shall be levied upon, and collectible from, the person engaging in the business activities herein designated and that such taxes or fees shall constitute a part of the cost of doing business of such persons. .130 Severability Clause. If any provision of this chapter or its application to any person or circumstance is held invalid, the remainder of the chapter or the application of the provision to other persons or circumstances shall not be affected. Note: The following Items contained in the model ordinance guidelines are omitted from this Core model ordinance. Definitions omitted: (1) Advancement, Reimbursement (2) Agricultural Product (3) Artistic or cultural organization (4) Consumer (5) In this City, within the City (6) Newspaper (7) Non-profit organization or non-profit corporation (8) Office, or Place of business (9) Precious metal bullion or monetized bullion (10) Product, byproduct (11) Royalties (12) Software, canned software, custom software, customization of canned software, master copies, retained rights (13) Tuition fee Sections omitted: (.040) Agency —sales and services by agent, consignee, bailee, factor or auctioneer (.110) Application to City's business activities. Exemptions and Deductions omitted: Page 20 32 Model Ordinance October 2025 Numerous exemptions and deductions —compare with model guidelines to see if you need additional exemptions or deductions. NOTE: Because of the wording contained in Section .050(2), cities should ensure that their licensing or registration section contains the authority to impose the license or registration. Section .050(2) is intended to relieve persons engaging in business activities that total equal to or less than $20,000 from tax obligations — but not from license or registration fee requirements. Page 21 Model Ordinance October 2025 33 Attachment C strong eEties j great state 2026 changes to City B&O Tax Model Ordinance A city workgroup of city finance directors and tax managers met over the summer to review changes needed to the B&O model ordinance in response to SB 5814 changing the taxation of certain activities from services to sales. Now B&O tax cities must adopt mandatory changes to model ordinance with same effective date: January 1, 2026. SB 5814 changed the tax classification for the following services to retail sales: • Advertising services; • Live presentations; • Information technology services; • Custom website development services; • Investigation, security, and armored car services; • Temporary staffing services; and • Sales of custom software and customization of prewritten software. Changes to Model Ordinance The workgroup decided to limit revisions to the model ordinance to changes necessary to implement the state's changes to sales at retail in SB 5814. The model ordinance changes are as follows: • Core model ordinance .030: Definition of "sale at retail" o adds new subsection (3) to incorporate changes to professional services. o (6) updates language related to custom software and customization of prewritten software. o (12) updates language related to digital goods and digital automated services. • Core model ordinance .030: Definition of "sale at wholesale": adds language to parallel updates to software in retail sales (6). • Technical change: .030 "sale at retail": (1) moves misplaced language to correct typo created when extended warranties were added to the model. While SB 5814 also changed the definitions of digital automated services and digital goods, the model ordinance did not need to be updated because the model ordinance incorporates the state's definition by reference to the RCW. Background on the Model Ordinance 53 cities impose a local B&O tax on the gross receipts of businesses engaging in business in their city. Since 2004, cities with local B&O taxes were required to adopt the B&O tax model ordinance with mandatory uniform provisions related to a minimum threshold, tax classification definitions, engaging in business definition, and allocation and apportionment for activities occurring in more than one jurisdiction. (Chapter 35.102 RCW) There are four main classifications: manufacturing, retail sales, wholesale sales, and services, but some cities have additional classifications. The last revision was another technical fix to the B&O tax model ordinance in response to state law changes related to newspapers and took effect January 1, 2023. 34 COUNCIL AGENDA SYNOPSIS Initialr Meeting Date Prepared by Mayor's review Council review 12/8/25 AJS ITEM INFORMATION IrEMNo. 4.B. STAFF SPONSOR: ADAM SCHIERENBECK ORIGINAL AGENDA DATE: AGENDA ITEM TITLE Quarterly B&O Tax Report CATEGORY Discussion Mtg Date 12/8/25 ❑ Motion Mtg Date ❑ Resolution Mtg Date E Ordinance Mtg Date E Bid Award Mtg Date n Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council ❑ Mayor ❑ .Admin Svcs ❑ DCD ®.Finance ❑ Fire ❑ P&R ❑ Po/ice ❑ PW SPONSOR'S SUMMARY A quarterly report is being provided to the city council in accordance with TMC 3.27.170(B) on public safety funding associated with the Business and Occupation Tax. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ Finance & Governance ❑ LTAC ❑ Arts Comm. ❑ Parks Comm. DATE: COMMITTEE CHAIR: Planning & Community Dev. Planning Comm. RECOMMENDATIONS: SPONSOR/ADMIN. Finance Department COMMITTEE COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 12/08/25 MTG. DATE ATTACHMENTS 12/08/25 Informational Memorandum dated 12/1/25 35 City of Tukwila Thomas McLeod, Mayor INFORMATIONAL MEMORANDUM TO: Committee of the Whole FROM: Aaron BeMiller, Finance Director BY: Adam Schierenbeck, Acting Fiscal Manager CC: Thomas McLeod, Mayor DATE: December 1, 2025 SUBJECT: Quarterly Business and Occupation (B&O) Tax Report ISSUE The Finance Department is hereby providing the quarterly report to the city council on funding associated with the Business and Occupation (B&O) Tax. BACKGROUND Tukwila Municipal Code (TMC) 3.27.170(B) requires the Finance Director to provide a quarterly report to City Council on public safety funding associated with the B&O tax levied under Chapter 3.26 TMC. The B&O tax was implemented beginning January 1, 2024, to fund public safety positions, with revenues being allocated to the general fund. B&O tax revenues have been budgeted at $2.4 million annually for both 2025 and 2026. DISCUSSION The total B&O tax revenue for fiscal year (FY) 2025 as of December 1, 2025 is $2,425,086. Based on amounts reported year-to-date, it is reasonable to estimate that B&O tax revenues for FY 2025 will reach $3 million. The forecasted amount for FY 2025 includes one-time back tax payments that will not contribute to ongoing revenue in FY 2026. Given the available data, it is reasonable to project B&O tax revenue for FY 2026 at $2,750,000. Tax Division staff maintain ongoing efforts toward collecting unfiled returns, verifying amounts reported on returns filed, and issuing assessments and refunds where differences are owed. FINANCIAL IMPACT n/a RECOMMENDATION n/a ATTACHMENTS n/a 36 COUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared ly Mayor's review Council review 12/8/25 SH 12/15/25 SH ITEM INFORMATION ITEM No. 4.C. STAFF SPONSOR: STACY HANSEN ORIGINAL AGENDA DATE: 12/8/25 AGENDA ITEM TITLE Hartnett Manor Property Lease amendment CATEGORY n Discussion Mtg Date 12/8/25 Motion Mtg Date 12/15 Resolution Mtg Date Ordinance Mtg Date Bid Award Mtg Date Public Nearing [1 Other Mtg Date Mtg Date SPONSOR ❑ Council ►1 Mayor ❑ Admin Svcs ❑ DCD ❑ Finance ❑Fare El PAR El Police ❑ PIr SPONSOR'S SUMMARY Harnett Manor is a City owned duplex that is utilized as tranistional housing for unsheltered families, in partnership with St. Stephen's Housing Association. The original lease was for one year, expiring on 12-31-25. We are asking the Council to authorize the Mayor's signature on the Hartnett Manor property lease amendment, extending the lease for an additional 3 years (1-1-26 throught 12-31-28) REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ Finance & Governance ❑ Planning & Community Dev. ❑ LTAC DATE: ❑ Arts Comm. ❑ Parks Comm. COMMITTEE CHAIR: ❑ Planning Comm. RECOMMENDATIONS: SPONSOR/ADMIN. Mayor's office/Human Services COM IFIEE Forward to Regular Meeting consent agenda on 12/15/25 COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED $0 AMOUNT BUDGETED $0 APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION MTG. DATE ATTACHMENTS 12/8/25 Informational Memorandum dated 12/2/25 St. Stephen's Housing/Hartnett Manor property lease amendment St. Stephen Housing/Harnett Manor property lease 12/15/25 37 Thomas McLeod, Mayor Mayor's Office - Marty Wine, City Administrator TO: Committee of the Whole FROM: Stacy Hansen, Human Services Program Coordinator CC: Mayor McLeod Director Brandon Miles DATE: December 2, 2025 SUBJECT: Harnett Manor property lease amendment — signature authorization ISSUE The Hartnett Manor property lease is due to expire on 12-31-25. Upon Council's review and authorization, the Mayor may sign this property lease extending it through 12-31-2028. BACKGROUND Hartnett Manor duplex located at 14688 Macadam Rd. S., is a city owned home located on undevelopable land. The non-profit St. Stephen Housing (SSH) provides 90+ days of temporary shelter/transitional housing to unhoused Tukwila families utilizing the Hartnett Manor home. DISCUSSION Staff is asking Council to approve the date extension for three years on the Harnett Manor property lease with St. Stephen Housing and authorize the Mayor's signature on the lease. With the partnership of SSH, case management services are provided to unsheltered families that have at least one minor child. By September 30, 2025, Harnett Manor/SSH had provided 517 bed nights to 14 Tukwila individuals who were unsheltered. FINANCIAL IMPACT There is no financial impact. RECOMMENDATION The Council is being asked to approve the lease agreement and consider forwarding this item to the December 15, 2025, Regular Council Meeting consent agenda. ATTACHMENTS Harnett Manor lease amendment Harnett Manor original lease agreement Tukwila City Hall • 6200 Southcenter Boulevard • Tukwila, WA 98188 • 206-433-1800 • Website: TukwilaWA.gov 38 City of Tukwila 6200 Southcenter Boulevard, Tukwila WA 98188 Agreement Number: CONTRACT FOR SERVICES Amendment # 1 Between the City of Tukwila and St. Stephen Housing for Hartnett Manor located at 14688 Macadam Rd. S., Tukwila, Washington That portion of Contract No. 25-155 between the City of Tukwila and St. Stephen Housing is hereby amended as follows: Section 2: TERM: The term of this lease shall be for three -years, commencing on January 1, 2026 and shall terminate on December 31, 2028, unless sooner terminated as a result of Lessee's default hereunder in accordance with the termination provisions set forth in paragraph 19. All other provisions of the contract shall remain in full force and effect. Dated this day of , 20 City signatures to be obtained by ** Contractor signature to be obtained by City Clerk's Staff ONLY. ** sponsor staff. ** CITY OF TUKWILA CONTRACTOR: Thomas McLeod, Mayor bm ATTEST/AUTHENTICATED: Andy Youn Barnett, City Clerk APPROVED AS TO FORM: Office of the City Attorney By: Printed Name: Title: CA Reviewed May 2020 Page 1 of 1 39 25-155 Council Approval 3/17/25 v�x ��t� � ^�x�� v«*xxwvxvn RESIDENTIAL LEASE AGREEMENT HARTNETT MANOR This lease is made effective January 1` 2025, between the City of Tukwila, m municipal corporation, as "Lessor," and 51 Stephen Housing Association, m Washington nnm-orofd corporation, as "Lessee" (collectively, the "Parties"). W9HEREAS, homelessness continues to be on issue for residents of the City of Tukwila and the greater community stlarge; and WHER(GAS. Lessor, o Washington municipal oorponatinn, has determined that the provision of transitional housing to homeless and impoverished members of the community serves m fundamental governmental purpose as it protects the public health, safety, and welfare; and WHEREAS, Lessee is o Washington non-profit corporation that provides temporary and transitional housing bothe homeless; Now, therefore. the Parties agree as follows: 1. PREMISES: Lessor shall lease to Lessee the Residence currently situated at 14888 Macadam Road Gouth.Tukwila, Washington (^Premmiees''). 2. TERM: The term of this, lease shall be for one year, commencing on January 1. 2025 and ohe|| terminate on December 31, 2025. unless sooner Uaroninobad as a result of Lessee's default hereunder in accordance with the termination prqvimipnsset forth in paragraph 19. The Lessor reserves the right to terminate the |eeaa at its convenience prior to the completion of the one-year term atany time for any reason with 9Odays' prior written notice. 8. POSSESSION: Lessee shall badeemed tm have accepted possession ofthe leased premises in an "'as -is" condition. Lessor has made no representations to Lessee respecting the condition of the lease premises, 4. CONSIDERATION: In consideration of Lessee providing housing to homeless members of the Tukwila community, Lessee may occupy the leased premises rent free for the duration of this Lease; provided. Lessee shall be responsible for costs moaooiabad with or arising out of the maintenance and operation of the leased Premises as set forth in paragraph 6 of this agreement. 5. USE: Lessee shall use the, leased premises to provide temporary single-family dvveUhnga, on m rent- free basis or for income -based rent, for hnnno|eso fano|||os with children whose income falls below 5096 of King County median income and all current uses incidental theretm, and for no other purpose without first obtaining Lessor's prior written consent. For purposes of this provision, "income -,based rent" means rent that does not exceed 30% of a tenant's income, less an allowance for appl'icable utilities. Lessee shall screen all housing applicants to ensure that applicants meet the income qualifications set forth herein. Lessee shall provide Lessor with anannual report each year reflecting data regarding the populations served by Lessee at the Premises. O. MAINTENANCE AND REPAIR RESPONSILIBITY: Lessee shall, when and if needed, at Lessee's sole oxpense, make any and all necessary minor repairs to the Premises and every part thereof. For purposes of this provision, the term "minor repair" means any repair for vvhiob the ourn total of parts and labor is uoder$5,QO0 per occurrence. Lessee shall not be required to pay more than m Page I of 6 40 total of [$5.000] on, minor repairs during the term of this agreement. Lessee ahmU notify Lessor immediately when Lessee has spent a total of$5.00O on minor repairs during the tmmno nf1hi's agreement. Lessee shall also notify Lessor immediately of any needed major repairs or unsafe conditions existing in or around the Premises. Lessor shall, when and if needed, at Lessor's sole expenme, make all necessary major repairs to the Premises and every part thereof. For purposes of this provision, the term "major repoie' means any repair for which the sum total of parts and labor is $5.0O0 or more. Lessee shall maintain the Premises in m nem1, clean, and sanitary condition. Lessee shall surrender the leased Premises to Lessor in good'condition upon the termination of this lease, reasonable wear and tear expected. 7. UTILITIES: Lessee ohoU pay prior to delinquency for all heat, |iBht, water and other utility aen/ioea supplied bzthe Premises. 8. ALTERATIONS AND ADDITIONS BY LESSEE: After obtaining the prior consent ofLessor, Lessee may make, at its sole expense, such additional improvements or, alterations to the leased premises, which it may deem necessary or desirable. Any repairs or new construction by Lessee shall be done in conformity with, plans and specifications approved by Lessor. All work perfo[rumd'mhaU be done in a workmanlike manner and shall become the property of the Lessor. B. LIENS: Lessee oheU keep the leased premises free from any liens arising out of any work perhornled, materials furnished, orob|i0ed|onn incurred by Lessee. 10. INSURANCE- Lessee shall procure and maintain for, the duration of this Lemse, insurance against claims for injuries hopersonsordmmagetm9rnpenyvvhichmnayahae from or|nconnection with the Lessee's operation and use of the |aaaad Premises. Lessee's maintenance of insurance as required by the agreement shall not be construed to limit the liability of the Lessee to the coverage provided by such insurance, or otherwise limit the Lessor's recourse to any remedy available at law or in equity. Lessee shall maintain Commercial Genera[ Liability insurance written with limits no less than $1^000.000 each occurrence, $2.000.000 general mg8neQmtm. Commercial General Liability insurance shall he at least as broad' as Insurance San/ivau Office U8O> occurrence form CG UQ 01 and shall cover premises and contractual liability. The Lessor shall be named as additional an insured omLessee's Commercial General Liability insurance policy using ISO Additional Insured - Managers orLessors ofPremises Form, CG!2O11 orasubstitute endorsement providinga1least ms broad coverage. Lessee shall also maintain property insurance, which shall be written covering the full value of Lessee's property and improvements with no coinsurance provisions. Property insurance, shall be written on an all risk basis. The Lessee's Commercial General Liability insurance policy or policies are to onntmin, or be endorsed to contain that they shall be primary insurance as respect the Lessor. Any |nsuramoe, odf-insunanom, or self -insured pool coverage maintained by the Lessor shall be excess of the Lessee's insurance and shall not contribute with it. Insurance is to be placed' with insurers with a ourn*nt/\.K8. Beat rating ofnot less than A: VU|. Lessee shall furnish the Lessor with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured eDdo[semment, evidencing the insurance requirements of' the Lessee. Lessee, and Lessor hereby release and discharge each other from all n|mima. losses and liabilities arising from or caused by any hazard covered by property insurance on or in connection with the premises or said building. This release shall'apply only to the extent that such claim, loss or liability is covered by insurance. The Laaoaa shall provide the Lessor with written notice of any policy cancellation within two business days of their receipt of such notice. FmUuna on the part of the Lessee to maintain the insurance as required shall constitute a material breach of [ease, upon which the Lessor may, after giving five business days' notice to the Lessee to Page 2 of 6 <wwm* 10-7058-872; 1/13175o0000 10 41 correct the b[maoh, terminate the Lease or, at its disc[atom, procure or renew such, insurance and pay any and all premiums in connection therevvkh, with any sums so expended to be repaid to the Lessor on demand. If the Lessee maintains higher insurance limits than the minimums ohnvvm above, the Lessor shall be insured for the full available lim,its of Commercial General and Excess or Umbrella |iab0Kh/ maintained by the Lesaee, irrespective of whether, such |innhs maintained by the Lessee are greater than those required by this contract or whether any certificate of insurance furnished to the Lessor evidences limits of liability lower than those maintained by the Lessee. During the term of this Lease, the Lessor ohm|[ maintain all-risk property insurance covering the Residence located on the Premises for its full replacement value. Lessee expressly agrees that should damage arise tothe Premises orResidence that is covered by Lessor's insurance but not Leaaee's. Lessee shall reimburse Lessor for the cost ufLessor's deductible. Such reimbursement shall be made within, thirty days of Lessor's written request for reimbursement. 11.UNDEDNyJUF|CATU0N: Lessee shall bear the sole risk for all personal property on the Premises. Lmem#r, its nfficia|s, employees and m8mntn shall not beliable for any injury to or death of any peroon, urdamage tu property' sustained or alleged to have been sustained by Lessee, invitees or others as a result ofany condition (including future uund�iUuna) in, on orabout the Premises, or the improvements comprising any portion of the Premises; or as a result of the Premises becoming out of repair, or caused by fire or by the bursting or leaking of water, gas, sewer or steam pipes, or due to or the result of mold, fungus, water intrusion, asbestos, lead or other toxic materials or chemicals, or due to or the result of any accident from whatsoever cause in and about the Premises. Lessee agrees 10 indemnifv, defend and hold Leosor, and its officia|a, otmff, employees and agents, harmless from any and all claims, liabilities, |ogsea, demnageo, aotions, costs and expenses of any kind (including naoaonmb|e attorneys' fees) arising out of or related to Lessee's use of the Pranliaaa or the operation and/or conduct ofits business or any activity or thing occurring, on orabout the Pnemmioea, and for property damage or bodily injury (including death) suffered on or about the Premises by any peraon, firm or corporation, except to the extent such |uos or damage n*su|Un8 from the gross neg[iQence of the Lessor or a breach of the terms of this Lease. The terms of this Section 11shall survive any expiration ortermination ofthis Lease. The indemnification obligations contained in this 8eot|no 11 shall not bm limited byany worker's compensation benefits ordisability laws, and Lessee hereby waives any immunity that it may have under the Industrial Insurance /\ot. Title 51 RCVVand similar worker's compensation benefits or disability |axxn. Lessee agrees that they have read the above provision and that any questions they had concerning itwere fully explained to their satisfaction by Lessee's attorney or agent. Lessee understands that they will be the party held financially responsible under all conditions and not the City of Tukwila or its mfficia|a, employees, or agents. 12. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this lease or any part thereof, either by operation of law or othenwise, without first obtaining the priorvvrittan consent of Lessor. 13. DEFAULT: Failure by Lessee to observe or perform any of the covenants, conditions, or provisions of this lease, vvhena such failure mheU continue for e period of ben days after written notice from Lessor to cure the dafaolt, shall constitute a default and breach of the |eena by the Lessor. Lessee shall notify Lessor promptly of any default not by its nature necessarily known to Lessor. 14.ACCESS: Lessee shall permit Lessor to enter the leased premises at reasonable times for the purpose of inspecting the leased pnannioas and ascertaining compliance with the provisions hereof by Leaaae, but nothing herein shall be construed as imposing any obligation on Lessor to perform Page 3 of 6 42 any such work orduties. Lessor reserves the right to property inspection and testing for the Lessor's future development purposes. Lessor will give Lessee at least 48 hours' notice in the event ofaccess needed for property testing. 15.COMPLUANCE WITH LAWS, RULES AND REGULATIONS: Lessee shall, atits sole cost and expemse, promptly comply with all |mwm, statutes, prdinmnoes, and governmental n/|ea, regulations or requirements now in force or which may hereafter be in force relating to or affecting the uonditiqna, use, oroccupancy nfthe leased premises. Lessee shall feibhfuU|y observe and comply with the rules and regulations that Lessor shall from time to time promo|ga1e, including, without limitation, those regulations affecting aignagaonthe Property. 16. PERMITS: Lessee ahaN, at its sole cost and empamse, be responsible for obtaining any permits or licenses that are necessary to perform the work and covenants of this lease Agreement. 17.LE/%SEHOL[J EXCISE TAXES: The Parties believe that this Lease is exempt f[onm the requirements ofchapter 82.29A RCVV; hovvemsr, in the event that the! Washington State Auditor's Office determines that leasehold excise tax is ovviog, such costs shall be born by Lessee. In such came. Lessor may make payment of the amount determined to be owed, and Lessee shall reimburse Lessor for such costs within 30 days of receipt of Lessor's request for reimbursement. 18.NOqICEL All notices under this lease shall be in writing and shall be effective when mailed by certified mai'l or delivered to Lessor at the address below stated, or to Lessee at the address below stated ortosuch other address as either party may designate from time totime: LESSOR: CITY (]FTUKVVLLA LESSEE: St, Stephen Housing Association ATTN: yWayor"o(]ffiom 13055 SE192ndStreet G2OOSmu1hnentmrBoulevard Renton, Washington 88O58-76O4 Tuikvv|a.\88nshimQton 98188 19. TERMINATION: Either party has the right to 0amninota this Lease if the other podn is in default of any material obligation, or representation of this Ueeao which default is incapable of cure, or which being capable of cure, is not cured within ten days after receipt of written notice of such default, 2O.GENERAL PROVISIONS: A. TIME US0FTHE ESSENCE OF THIS LEASE. B.lothe event of any action or proceeding brought by either party against the other under this lease. the Prevailing party shall be entitled to recover for the fees of its attorneys in such action or proceeding, including oua10 of appeal, if any, in such enmuurd as the court may adjudge reasonable Attorneys' fees. For the purposes of this provigion, the terms "action"' or "proceeding" shall include a[bitration, admninietratixe, bankrup1cy, and judicial proceedings, including appeals therefrom. C.This lease shall be construed and governed by the laws of the State of Washington. D. Upon termination of this lease, Lessee shall surrender all keys to the Lessor at the place then fixed for notice. 21. AUTHORITY OF LESSEE: Leaeee, and each individual executing this kyone on behalf of bessmm, represent and warrant that s/he is dub authorized to execute and deliver this leeea. and that this lease |obinding upon Lessee |maccordance with its terms. Page 4 of 6 43 22. WAIVER AND FORBEARANCE: No waiver by Lessor of any breach or default by lessee of any of its obligations or agreement or covenants herein, shall be deemed to be a waiver of any subsequent breach or default of the same or any other covenant, agreement or obligation, nor shall forbearance by Lessor to seek remedy for any breach or default of Lessee be deemed a waiver by Lessor or its rights and remedies with respect to such breach or default. THIS LEASE IS SUBJECT TO ACCEPTANCE BY LESSOR. IN WITNESS THEREOF, the parties hereto have executed this Lease the date and year above written. LESSOR: Its: Date: ikati ov- Date: in /20 25 APPROVED AS TO FORM: ,—Signed by: 41...A4 10 40Z— Office of the City Attorney LESEEd by au.u, By 1-13AUbe0A3b9U41F Its: Executive Di rector Date:4/21/2025 10:11 AM PDT Page 5 of 6 {NMM4910-7058-8723;1/13175,000001/} 44 STATE OF WASHINGTON ) ) ss. COUNTY OF KING Oro this 1- day of klcix\ , 2025, personally appeared before me the undersigned, a Notary Public, in and for the State of Washington, duly commissioned and sworn, —voiNnas ti\Aci acy-A , to me known to be the Mayor of the City of Tukwila, a Washington state municipal corporation, that executed the foregoing instrument and acknowledged the said instrument to be the free and voluntary act and deed of said City of Tukwila, for the uses and purposes therein mentioned, and on oath stated that they are authorized to execute the said instrument. written. WITNESS MY HAND AND OFFICIAL SEAL hereto affixed the day and year first above •,\\\\"‘"‘ CA r)cON 25010680 /4080 (Signature of Notary V\QVI))\\Q aav\c,do,u\ (Legibly Print or Stamp Name of Notary) Notary public in and for the State of Washington, residing at 1-04ANAO,, My appointment expires Page 6 of 6 {NMIV14910-7058-8723;1/13175.0000010 45 46 COUNCIL AGENDA SYNOPSIS Initialr Meeting Date Prepared by Mayor's review Council review 12/8/25 AYB 12/15/25 AYB ITEM INFORMATION IrEMNo. 4.D. STAFF SPONSOR: ANDY YOUN-BARNETT ORIGINAL AGENDA DATE: 12/8/25 AGENDA ITEM TITLE Recodification of Tukwila Municipal Code CATEGORY Discussion Mtg Date 12/8/25 ❑ Motion Mtg Date Resolution Mtg Date Ordinance Mtg Date 12/15/25 E Bid Award Mtg Date Public Hearing Mtg Date 12/15/25 ❑ Other Mtg Date SPONSOR ❑ Council n Mayor ❑ .Admin Svcs ❑ DCD ❑ Finance ❑ Fire ❑ P&R ❑ Po/ice ❑ PW SPONSOR'S SUMMARY Recodification of the Tukwila Municipal Code (TMC) from the legacy format to a new, online format requires an ordinance adopting the recodified TMC, per RCW 35A.21.130. A public hearing will be held on December 15, 2025. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ® Finance & Governance ❑ Planning & Community Dev. ❑ LTAC DATE: 11 / 24/ 25 ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. COMMITTEE CHAIR: PAPYAN RECOMMENDATIONS: SPONSOR/ADMIN. City Clerk's Office COMMITTEE Unanimous Approval; Forward to 12/08 C.O.W. Mtg COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED $<10,000 AMOUNT BUDGETED $N/A APPROPRIATION REQUIRED $N/A Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 12/8/25 12/15/25 MTG. DATE ATTACHMENTS 12/8/25 Informational Memorandum Draft Ordinance Exhibit A "Recodified Tukwila Municipal Code" Minutes from the 11/24 F&G Committee (to be distributed separately) 12/15/25 47 � City of Tukwila Thomas McLeod, Mayor INFORU��U��U �� MATIONAL nn�'n�u~u�~ n�n�~n�n��n=��~�n��n�n Finance && Governance Committee Andy Youm-Barmett,City Clerk Mayor McLeod Marty Wine, City Administrator DATE: November 17,2025 SUBJECT: Recodificatiom of the Tukwila Municipal Code ISSUE The City has been using @ legacy fOmn8t of the Tukwila K4UniCip8| Code /"TMC"\ for several decades and recently completed u conversion to an online format. In alignment with RCVV 35A.21.130, this recodification requires an ordinance and public hearing adopting the new TIVIC. BACKGROUND The City Clerk's Office is responsible for the codification of City ordinances into the Cih/a K8UniCip8| Code, as authorized by RCVV 35.21.510. AS part Of the department's efh]dS to streamline resources, implement process efficiencies, and enhance end -user experience, the Clerk's C)fhou identified codification of the TW1C as o key opportunity to improve on existing process while providing enhanced services for both staff and the public. Codification ofordinances is the process bywhich laws are compiled into an orderly,formal code of all enacted |ovvu currently in force. Staff have codified in-house for decades using o legacy SVSt80 and 08iOt8iO 23 individual l[iUHS Sp@DOiO0 OVHr800 p8Q8S of code at any given time, depending OD the DUDlb8[ Of OndiD@OCHS requiring [8COdiDCGtiOO. RHCOdifiC8hOD is 8 labor- intensive pnOQ8SS. and recent releases have typically occurred within 3-0 months after passage due to archaic processes and o high number of complex, large-scale ordinances needing COdifiC@UOD. Delays result iDstaff, businesses, and the public relying OO8code that iSout Ofsync with recently passed ordinances. Earlier this year, the Clerk's Office began work ODtr8DSitiOOiOQour code iO8Donline format, with the QO8| of modernizing the CUrreOtTK8C' making it more 8CC8Ssib|8 to staff and the public. Following 8review Ofproposals from different vendors, General Code was selected 8Sthe most CO0p8tiUVH and COSt-8fheCtiV8 provider for codification services with 8 COOOpr8h8OSiV8 suite Of code features, including: • Anonline code portal * Regularly scheduled code updates, with an option to expedite updates as needed; * Robust search and user engagement capabilities; and * Translation for more than 1OOadditional languages; * Data ana|vtioa and metrics Staff have worked with General Code over the past few months to transition our legacy code into the new online code portal. The reCOdifiC8tiOO p[OCeSS included standardization of language, correction of scrivener's errors, housekeeping on certain code conflicts and inconsistencies, and Chapter/Section renumbering. The recodification package is now complete, and pursuant toRCVV 35A.21.138'staff are bringing forward 8Denacting ordinance iO[OCOdifvand enact the new 7-K8C and adopt the recodified version as the formal and official code moving forward. 48 INFORMATIONAL MEMO Page 2 FINANCIAL IMPACT The costs for codification will bgpaid for through the Technology Fee Fund, and are outlined aa One -Time Costs Conversion Fee Recurring Costs Annual Maintenance Fee $1'185 Codification Fee Page Tables, Graphics, Charts $24(perpogm) $10(Per item) Based OD8ninternal analysis Ofcodification activity(average number Ofpages codified annually) over the past 5years, vveanticipate the financial impact tubeapproximately $5.00U- 10,O00 annually, although the cost may vary in years with high legislative activity. RECOMMENDATION |nalignment with RCVV35A.21.130. City staff recommend this item buforwarded tuthe December 8m Committee of the VVhO|e for first reading and forwarded to the December 15m Regular Meeting for opublic hearing and potential adoption. ATTACHMENTS Draft Ordinance Exhibit A—^F(eoudificaUonPackage" 49 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, RECONFIGURING, RECODIFYING AND ENACTING A NEW MUNICIPAL CODE FOR THE CITY OF TUKWILA PURSUANT TO RCW 35A.21.130; REARRANGING AND RENUMBERING TITLES, CHAPTERS, AND SECTIONS; CONFORMING INTERNAL REFERENCES AND CROSS- REFERENCES ACCORDINGLY; PROVIDING TABLES AND INDICES TO FACILITATE LOCATION AND CONVERSION OF CODE REFERENCES AND MATERIAL; ESTABLISHING AN EFFECTIVE DATE OF DECEMBER 23, 2025 FOR THE NEW CITY OF TUKWILA MUNICIPAL CODE HEREIN ADOPTED; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City of Tukwila Municipal Code ("TMC") has been compiled, adopted, effectuated, altered, and amended over several decades; and WHEREAS, the City desires to modernize the TMC from its current legacy, static format to an interactive, online format to align with best practices, facilitate administrative and legislative management of the TMC, enhance accessibility of the TMC for the public and staff, and better serve the public interest; and WHEREAS, the City desires to recodify and republish the TMC to reestablish a coherent numbering and reference system; rearrange and renumber titles, chapters and sections; and update and coordinate numbering and standard referencing of and within the TMC; and WHEREAS, the City has completed that work, which is reflected by and composed of the new Tukwila Municipal Code Recodification Package, attached hereto and available on the City website and in hard copy at the City Clerk's Office; and WHEREAS, RCW 35A.21.130 requires that compilation, codification, and revision of city codes shall conform with RCW 35.21.500 through RCW 35.21.570; and WHEREAS, a first reading was held on December 8, 2025, and a public hearing was held on December 15, 2025; 2025 Legislation: Recodification of TMC Version: 11/18/25 Staff: A. Youn-Barnett Page 1 of 3 50 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Adoption of Findings of Fact. The City Council finds as follows: The above recitals, set forth as "WHEREAS" clauses, are hereby adopted as Findings of Fact in support of the adoption of this ordinance. Section 2. Adoption of Recodified Tukwila Municipal Code. The Tukwila Municipal Code Recodification Package, attached hereto as Exhibit A, is hereby adopted and enacted as the formal and official City of Tukwila Municipal Code and shall be in full force and effect commencing as of 12:01 a.m. on December 23, 2025. As of the effective date, it shall be known and referenced as the Tukwila Municipal Code (TMC) and may thereafter be further amended and modified pursuant to the City's usual procedures and applicable statutes. Section 3. Prior Tukwila Municipal Code Superseded. The prior Tukwila Municipal Code shall be deemed superseded in all respects as of the effective date specified in Section 2 of this ordinance. 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 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 , 2025. [signature page to follow] 2025 Legislation: Recodification of TMC Version: 11/18/25 Staff: A. Youn-Barnett Page 2 of 3 51 ATTEST/AUTHENTICATED: Andy Youn-Barnett, CMC, City Clerk Thomas McLeod, 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 Exhibit A: Tukwila Municipal Code Recodification Package 2025 Legislation: Recodification of TMC Version: 11/18/25 Staff: A. Youn-Barnett Page 3 of 3 52 COUNCIL AGENDA SYNOPSIS Initialr Meeting Date Prepared by Mayor's review Council review 12/08/25 B)M ITEM INFORMATION IrEMNo. 4.E. STAFF SPONSOR: BRANDON MILES ORIGINAL AGENDA DATE: 12/08/25 AGENDA ITEM TITLE City of Tukwila 2026 Legislative Agenda CATEGORY ❑ Discussion Mtg Date Motion Mtg Date 12/15/25 Resolution Mtg Date E Ordinance Mtg Date E Bid Award Mtg Date n Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council n Mayor ❑ .Admin Svcs ❑ DCD ❑ Finance ❑ Fire ❑ P&R ❑ Po/ice ❑ PW SPONSOR'S SUMMARY Staff will review with the City Council the City of Tukwila 2026 Legislative Agenda. David Foster, the City's State lobbyist, will present to the Council on December 15 a preview of the upcoming session. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ Finance & Governance ❑ LTAC DATE: N/A ❑ Arts Comm. ❑ Parks Comm. Li Planning & Community Dev. ❑ Planning Comm. COMMITTEE CHAIR: N/A RECOMMENDATIONS: SPONSOR/ADMIN. N/A COMMITTEE N/A COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED $N/A AMOUNT BUDGETED $N/A APPROPRIATION REQUIRED $N/A Fund Source: N/A Comments: N/A MTG. DATE RECORD OF COUNCIL ACTION 12/08/25 MTG. DATE ATTACHMENTS 12/08/25 DRAFT City of Tukwila 20265 Legislative Agenda 53 DRAFT ATTACHMENT A City of Tukwila 20265 Legislative Agenda Transportation & Infrastructure ✓ Honor Methrig normirstments mane c Age Ahead Washington, including g hifti g 17 million of future funding 'front the202 -7 df hierrol ni (rack to the 2 25-2 27biennium get to replace the 4211 Ave bridge in the Allentown eighborh od Create stable, reliable infrastructure assistance funding for cities to assist in repairing roads, bridges and other public infrastructure that support economic development and community resiliency. n rvic • Address the housing stability crisis by addressing all aspects of affordable housing, including homeownership for moderate income households and below, preservation of naturally occurring affordable housing, land acquisition to secure permanent affordability, permanent supportive housing, infrastructure around affordable housing developments, and workforce housing. • Fund additional investments in behavioral health, including in -patient and out -patient facilities, as an alternative to jail and align State law with best practices to allow individuals in crisis to receive necessary and life-saving services. C !, C llc�rar �atr;u�r;i�^v trr rarc�c�rr�u rr:4��cr��r-rhle t«�ffi tii��rc ari�rl rr�l �rrlLuifi�iiing cc�rrrrrrnirnial uAr�uct, avgnc„�rllf vrrh�eua reerardc arc acr�g�mrt ficri,ec�a[a_er unit • djlr t iire F 'a i ei,arrity trrrctrte vvl�ia lr cr.ru errtiy it ccuati izrrc errul rrrer iai ai, r,uae an liitgaticrra, fry redt,ucing dvi preii ualtie. nd red recti'n a paarru. on. afire uestrar arrrard ...irrtr a w iate rnd dedicated tc l ffa trail ing anri_a cunpa iarrc:e c it • Ensure affordable, high -quality broadband internet access as defined by SB 5717 is available to all households and businesses to provide educational, entrepreneurial, business and accessibility equity for all Washingtonians to access the internet.. f rc - t 54 Expand funding for co -responding mental health professionals to assist individuals experiencing behavioral health challenges. • Working. ar ith Also ~iador» of Washington Cities and Associatio of Washington CQuntlea,.......wwicto.....madify....and...amend.....$Dme,....01....the......b..urdertsomeie.quitements. requ racf fray aompti c uncle I Vl 01.5 vf r • Allow cities the authority and flexibility to address the fact that growth in the cost of services continue to outstrip revenues. • The state should amend the Law that limits annual property tax growth to 1 percent and work with cities to authorize additional funding flexibility and opportunities at the local level. c t • Implement needs -based funding for allocation of social emotional student support resources and expand fundingfor learning opportunities for summer school students. • Increase funding for homeless students and secondary ELL students. • Incorporate early learning for low-income students as a part of Basic Education. wila Promise Initiative. ri • Ensure the definition of "tourist" in Washington State remains flexible to allow jurisdictions and Lodging Tax Advisory Committees to distribute lodging tax dollars in a manner that best serves each individual community. • Obtain funding for small cities and towns for planning efforts for the FIFA World Cup in cr- tin ry ti • * r. i l s ctivit • Strongly support robust investments into outdoor recreation programs such as the Washington Wildlife & Recreation Program (WWRP), Youth Athletic Facilities (YAF), Aquatic Lands Enhancement Act (ALEA), the Land & Water Conservation Fund (LWCF), and other related programs. their park maintenance needs and backlogs. 55 •; r® . f r • t r • Enact pollciespolicies to prepare to combat climate change, including adequately budgeting for its effects and providing tools to cities to prepare and address the ramifications of flooding, pollution and other key factors. • Continue to invest in workforce education and job training to ensure Washingtonians have access to high qualitynir. _Quahity career and technical education opportunities. • Funding for cities to make green infrastructure investments to reduce greenhouse gas emissions and improve City sustainability efforts.. cr- i. n, • v t . Tr it n - ctivit • Strongly support robust investments into outdoor recreation programs such as the Washington Wildlife & Recreation Program (WWRP), Youth Athletic Facilities (YAF), Aquatic Lands Enhancement Act (ALEA), the Land & Water Conservation Fund (LWCF), and other related programs.. • Advocate for additional investments into the Evergreen Communities program for equitable support of local urban forestry programs that enhance climate resilience, public health, and environmental justice. • Collaboratively support impactful investments into grant programs and organizations that grow and enhance local and regional trail connectivity. • Continue to support equitable funding opportunities that assist local governments with their park maintenance needs and backlogs. 56 Tentative Agenda Schedule MEETING 1 — REGULAR MEETING 2 — C.O.W. MEETING 3 — REGULAR MEETING 4 — C.O.W. DECEMBER 1 December 1, 2025 Work Session December 1, 2025 Regular Meeting DECEMBER 8 December 8, 2025 Committee of the Whole DECEMBER 15 WORK SESSION REGULAR MEETING PRESENTATION - Resolutions of Service Appreciation for outgoing Elected Officials: 1) Councilmember Mohamed Abdi 2) Councilmember Tosh Sharp CONSENT AGENDA - Ordinance updating Equity and Social Justice Commission Membership. - Grant agreement for 2025-2026 Office of Public Defense. - Grant acceptance of King County Open Space River Corridors Grant. - Contract Agreement for 2026-2031 King County Parks Property Tax Levy. - Contract Amendment for Parks Security with B-Force Security Services. - Contract Amendment #25-046 for Olympic Heritage Police Services Compensation with Department of Social & Health Services. - Resolution for Rental Housing Fee. - Lodging Tax Fund Request: City of Tukwila Pac NW Tournament Rebate. - Lease Amendment to Harnett Manor Property. PUBLIC HEARING - Ordinance recodifying and enacting new Tukwila Municipal Code (TMC). UNFINISHED BUSINESS - Ordinance recodifying and enacting new Tukwila Municipal Code (TMC). - Ordinance amending the Business & Occupation (B&O) Tax. - Resolution establishing 2026 Washington State Legislative Agenda. - Contract Amendment for Foster Golf Concessionaire Agreement with Cater 4 You. - Resolution for 2026 Fire Permit Review Fees, DECEMBER 22 MEETING 1— REGULAR MEETING 2 — C.Q.W. MEETING 3 — REGULAR MEETING 4 — C.O.W. , JANUARY 5 JANUARY 12 JANUARY 19 lk. ' „,... ' D A Y ' 1 HAvE-A45-Rwa- i Regular Meeting cancelled. JANUARY 26 57