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HomeMy WebLinkAbout07252005 (2) CITY COUNCIL MINUTES OF THE WORKSHOP SESSION OF July 25, 2005 CALL TO ORDER AND PLEDGE OF ALLEGIANCE The City Council of the City of Port Townsend met in workshop session this twenty- fifth day of July, 2005, at 6:30 p.m. in the Port Townsend temporary Council Chambers in the Cedar Room of the Waterman & Katz Building, Mayor Catharine Robinson presiding. ROLL CALL Council members present at roll call were Frank Benskin, Laurie Medlicott, Catharine Robinson, and Michelle Sandoval. Freida Fenn arrived at 6:35 p.m. Kees Kolff and Geoff Masci were excused. Staff members present were City Manager David Timmons, City Attorney John Watts, and City Clerk Pam Kolacy ADMISSIONS TAX Mr. Timmons reviewed the agenda packet materials and presented background on the admissions tax discussions to date. He noted that there are currently two taxes we could impose but don't and those are a utility tax on cable service and a tax on admissions. He stated that when Port Townsend is compared to other cities across the state, it is important to remember we are a full service city and provide services such as library, fire, and parks, which the vast majority of cities in the state provide through districts. He stated that an admissions tax could address programmatically some functions currently dealt with through the Police Department. The City has not gotten into the issue of charging an equitable fee per community event and in many cases the events don't have the means by which to fund at that level. Staff estimates that a 5% admissions tax would cover the cost of an Events Coordinator on staff and that would have the equivalent of buying back half the time a Police Sergeant spends performing that function and return it to Police duties. Finance Director Michael Legarsky stated that the tax would be administered directly by the city. It would not be remitted to the state first. He characterized this as a tax on the consumer, not the business and said it would be added onto the charge for admissions. City Council Workshop Page 1 July 25, 2005 Mrs. Medlicott asked for an estimate of the cost of software upgrades which would be necessary for the City to administer the tax. Mr. Legarsky estimated it would cost approximately $500. He said the tax would not require a new form, but would be reported on a revised B&O tax form. Ms. Sandoval asked if there is a choice as to where funds are used. Mr. Legarsky said it is the choice of the City and most choose to add the revenue to the General Fund. He stated that this would be the greatest need in Port Townsend. Mr. Timmons stated that it looks as though the funds would cover the cost of an Event Coordinator so would probably be earmarked for that program; depending on the amount of money raised, the excess could be put into a special fund that would go into facilities used for events. Mr. Benskin asked why the City needs to absorb the costs when organizations can't generate enough revenue to cover the City's costs associated with supporting events. He stated that this means it is coming out of everybody's pocket. Mr. Timmons stated that has been the debate for many years - how does the City go about paying costs for the -events. An example is the Wooden Boat Festival which creates about $3,000 - $4,000 in police costs just for their festival. He stated there has been a reluctance to date to charge on a fee basis. Mr. Benskin stated perhaps the council should look at developing a policy that brings those who do events up to speed on paying for them, thus relieving the City of that burden. Ms. Fenn asked for clarification of RCW 35.21.280 (3)(c) regarding a charge for food and refreshment where free entertainment is provided. Mr. Legarsky said he believes that is in place to capture businesses that try to circumvent the admissions tax by raising meal costs to cover entertainment costs. Possibly there would be an admissions tax for a meal in a restaurant or bar with entertainment but no cover charge. Mr. Timmons stated it would be unlikely that would be part of Port Townsend's admissions tax unless it is specifically advertised that a meal includes the price of admission. Ms. Fenn stated there seems to be some discretion as to our applicability and there would need to be a bright line about what those specifics are. Ms. Robinson asked whether it is up to the establishment to determine and report when they have a cover charge; she stated she did not think we could be discretionary as to whom we collect from and we would have to work with the establishments to determine how to collect that tax. City Council Workshop Page 2 July 25, 2005 Mr. Watts stated that if there were no cover charge, no tax would be imposed. Mr. Benskin asked about (3)(e) automobile parking charges if determined according to number of passengers. Mr. Legarsky gave the example of a drive-in movie. Ms. Robinson asked about (d) charge for rental or use of equipment. Mr. Timmons gave an example like the kayak symposium where you pay to get in and then pay a fee to try out the equipment. A local kayak rental business would not be affected for normal business activities. Mr. Benskin stated it seems like a burden on businesses when we would only collect about $50,000. Regarding reporting and collection, Mr. Legarsky stated there would be a category on the B&O return for admissions collected and the business would self-report. The business would collect cash from the consumer at the admissions tax rate and then remit the cash to the city at the time their B&O tax report was due. He also confirmed that it would be possible a business would not meet the minimum receipts necessary to pay B&O tax but would still be subject to the admissions tax. Mr. Timmons confirmed that if initiated, the admissions tax would not be imposed until 2007. He added that the recommendation is to charge the full 5% allowed. In answer to Ms. Sandoval, Mr. Legarsky confirmed that cities, not counties, can impose an admissions tax. Mr. Timmons noted that more communities are turning to a broader array of taxes in response to the property tax initiatives. Mrs. Medlicott expressed her strong support for the tax. She stated it is a pass through tax and not one that she will be habitually paying as a resident but that will be paid by nearly all visitors. She stated the bottom line for her is that our community is used to "playing" without "paying" and we can't afford it any longer. She added that the Finance/Budget Committee unanimously supported the proposal after discussing event fees vs. admissions taxes and decided it is much easier to adopt and administer an admissions tax than an event fee. She stated that one of the biggest groups impacted will be Centrum but it is not Centrum who will pay, but the people who purchase tickets to Centrum events. It is a tax paid by people who utilize a service and seems a reasonable and simple way to recoup the cost of the multiple demands of events on the City. Ms. Robinson noted that the Finance/Budget Committee recommended a stakeholder informational meeting; since the tax would not go into effect until 2007, plenty of education and feedback time are available, Mr. Timmons stated that the goal was to work with the stakeholder group to view the issue from a community perspective rather than an individual perspective and that is City Council Workshop Page 3 July 25, 2005 one reason it might be an option to build an opportunity fund which is dedicated so people can see a return on their investment. Mr. Benskin stated we could enforce the ability through the code to charge for events. They are a drain on manpower and time and a hole that could be plugged. Mr. Timmons said that the city historically has attempted this but hasn't found the political will to charge back all costs of an event to the event promoters. Ms. Fenn stated that there are complications due to the right of free assembly - sometimes people assemble on short notice when organizers don't necessarily know how many will turn out, how large an area will be affected, etc. There are also spontaneous fun assemblies as well as those planned years in advance. Mr. Benskin stated he is referring to planned events, which are put on to make a profit, tax the City's resources, and which need cleaning up after. Mr. Timmons stated that there may be freedom of speech or assembly issues if the City charges for all gatherings. Ms. Sandoval noted that if festivals and the tourist industry are viewed as economic development and draw people here to eat, sleep, and shop, then are we taxing something we are trying to encourage and does that make sense; would it make more sense to tax something we want to discourage. She added that community residents also attend and enjoy many of these events. She stated the City needs to raise funds and do it in a manner least offensive to people. She added that her preference for solving the problem of the street fund would be to fund directly as a levy rather than trying to raise other taxes to supplement the General Fund. She stated that she hopes we are not discouraging the very thing we claim to be encouraging. She also said that she agrees the infrastructure is impacted by visitors and that we need money to support these kinds of needs. Not addressing these needs will impact businesses at some point as well. Mrs. Medlicott stated that if a ticket now costs $10.00 and with the tax costs $10.50, the number of people who won't buy one because of that is very small. She stated that the entire admissions tax is not going to pay for one block of street work but will hopefully pay the cost that events cost the Community. She gave the example of the Fourth of July celebration which resulted in L TAC funding for fireworks, Police and Fire overtime, and porta-potties, all paid for by the City. The cost was probably between $10,000 and $20,000 for an event without a charge for admission. The admissions tax will help offset these kinds of costs. She stated she does not want to see all of those special things have to go away because we can't afford them and she believes we cannot afford to keep them going under the present system. She agrees the Council should be thoughtful but sees little reason not to take the opportunity this affords the City. City Council Workshop Page 4 July 25, 2005 Ms. Fenn stated she is eager for a meeting to be set with all groups in the community that will be affected so the Council can hear what impacts may be that they have not considered; likewise she would like the stakeholders to hear about the difficulties of the City bearing the full burden of costs. She stated she would like to pick and choose somewhat but the state does not allow us to do that. She suggested setting a date for the community forum at the next business meeting. Mr. Timmons stated that staff encourages the Council to look at the issue from the point of view of addressing a community need - and if we can't solve it this way, what is another way to solve the problem? If there are other tools available, we need to hear them. Consensus was to aim for early September for a community meeting. Mrs. Medlicott urged that the meeting be held as soon as possible since marketing plans are made well in advance. ADJOURN There being no further business, the meeting was adjourned at 7:45 pm. Attest: . >~-'--') <~. j /" . ,. . - ' ¡hf ( 1>\/,'-f-'ci '-'y- (/}'\( ;;/:;,. (. . n \ ' J . ~-"' .) .'- Pam Kolacy, City Clerk City Council Workshop Page 5 July 25, 2005