HomeMy WebLinkAbout4368ORDINANCE NO. 4368
AN ORDINANCE of the City Council of the
City of Kent, Washington, amending section
3.28.050 of the Kent City Code to extend the square
footage component of the City of Kent business and
occupation tax to include outdoor warehousing
activities.
RECITALS
A. The City has developed into a major manufacturing and
warehousing hub. As the City Council noted when it first adopted business
and occupation (B&O) and square footage taxes, changes in sales tax and
property tax laws prevent the City from receiving sufficient revenue from
warehousing activities to support the transportation infrastructure needed
to serve those activities.
B. While typical warehousing activities occurring within a
confined, indoor structure have always been subject to the City's square
footage tax, similar activities conducted outdoors have not. The simple fact
that some goods and commodities do not require indoor storage has
resulted in similar business activities being taxed differently.
C. This ordinance amends the City's square footage tax provisions
to ensure that all warehousing activities, regardless of whether they are
conducted indoors or outside, are subject to the same tax rate. It will also
Amend KCC 3.28.O5O -
Re: Outdoor Warehousing
1
ensure that those businesses conducting outdoor warehousing operations,
such as transloading goods between modes of transportation, are paying
their fair share to maintain, repair, and operate the City's transportation
and infrastructure network.
D. The extension of these taxes is intended to generate necessary
additional revenue to maintain, repair, and operate the City's transportation
network, and in order to fairly allocate the cost of maintaining that
infrastructure to those business entities that contribute most to the use and
degradation of City streets.
NOW, THEREFORE, THE CIry COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
ORDINANCE
SECTION 7, - Amendment - KCC 3.28.050. Section 3.28.050 of the
Kent City Code, related to City business and occupation taxes and entitled
"Imposition of the tax - Tax or fee levied", is hereby amended as follows:
Sec. 3.28.O5O. Imposition of the tax - Tax or fee levied. Except
as provided in subsection (C) 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 the gross proceeds of sale, gross
income of business, or value of products, including byproducts, and by
application of rates against the square footage of business office or facility
space within the city, as the case may be, as follows:
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2
A, Gross receipts tax.
1. 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 byproducts,
extracted within the city for sale or for commercial or industrial use,
multiplied by the rate of O.L52 hundredths of one percent (0.00152) through
December 3t, 2O2L, and multiplied by the rate of 0.200 hundredths of one
percent (0.002) effective January L, 2022. The measure of the tax is the
value of the products, including byproducts, so extracted, regardless of the
place of sale or the fact that deliveries may be made to points outside the
city.
2. 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
byproducts, manufactured within the city, multiplied by the rate of 0.046
hundredths of one percent (0.00046) through December 3L, 2O2L, and
multiplied by the rate of 0.100 hundredths of one percent (0.001) effective
January L, 2022. The measure of the tax is the value of the products,
including byproducts, so manufactured, regardless of the place of sale or the
fact that deliveries may be made to points outside the city.
3. Upon every person engaging within the city in the business of
making sales at wholesale, 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 0.152
hundredths of one percent (0.00152) through December 3L, 2019, and
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3
multiplied by the rate of 0.200 hundredths of one percent (0.002) effective
January t,2O2O.
4. 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 0.046 hundredths of one percent
(0.00046) through December 3t,2O2L, and multiplied by the rate of 0.100
hundredths of one percent (0.001) effective January L, 2022.
5. Upon every person engaging within the city in the business of
(a) printing, (b) both printing and publishing newspapers, magazines,
periodicals, books, music, and other printed items, (c) publishing
newspapers, magazines and periodicals, (d) extracting for hire, and (e)
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
0.046 hundredths of one percent (0.00046) through December 3L, 2O2I,
and multiplied by the rate of 0.100 hundredths of one percent (0.001)
effective January t, 2022.
6. 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 0.152 hundredths of one percent (0.00152) through
December 3L, 2O2t, and multiplied by the rate of 0.200 hundredths of one
percent (0.002) effective January L,2O2Z.
7. 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
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4
activities shall be equal to the gross income of the business multiplied by
the rate of 0.152 hundredths of one percent (0.00152) through December
3L, 202L, and multiplied by the rate of 0.200 hundredths of one percent
(0.002) effective January L, 2022. 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.
B. Square footage fax. Upon every person who leases, owns, occupies,
or otherwise maintains an office, warehouse, outdoor warehouse, or other
place of business within the city for purposes of engaging in business
activities in the city, the tax shall be measured by the number of square feet
of business warehouse business-floor space, outdoor warehouse space, or
other business floor space for each office, warehouse, outdoor warehouse,
or other place of business leased, owned, occupied, or otherwise maintained
within the city during the reporting period, calculated to the nearest square
foot.
1. Subject to the reductions established in subsection (8)(!)(6) of
this section, the amount of the tax due shall be equal to the sum of the
number of square feet of business warehouse floor space and outdoor
warehouse space for each business warehouse or outdoor warehouse leased,
owned, occupied, or otherwise maintained within the city multiplied by the
rate for each calendar year listed below, and the number of square feet of
other business floor space for each office or other place of business leased,
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5
owned, occupied, or otherwise maintained within the city multiplied by the
rate for each calendar year listed below.
Effective
Date
Business Warehouse Floor
Space/Outdoor Warehous
Other Business Floor
Space
1t1t2019 0.06 quarterly rate
0.24 annual rate
0.02 quarterly rate
0.08 annual rate
1t1t2020 0.09 quarterly rate
0.36 annual rate
0.02 quarterly rate
0.08 annual rate
1tlt2025 0.12 quarterly rate
0.48 annual rate
0.02 quarterly rate
0.08 annual rate
1t1t2028 0.15 quarterly rate
0.60 annual rate
0.03 quarterly rate
0.12 annual rate
2. For purposes of this section, business warehouse means a
building or structure, or any part thereof, in which goods, wares,
merchandise, or commodities are received or stored, whether or not for
compensation, in furtherance of engaging in business.
?Ear nrrrn^cac nf fhic canl-ian rtttfrlrrnr vtzrahnttca mainc rn arat
that is outdoors and is primarily used for the transloading of goods. wares.
merchandise, or commodities on property for purposes of switching modes
Ar rrahialac aF -n nrr6\rth^6 Far +1r nrirtrarrr nr rrn^ca nf rarhnlacrlina
distributing, or re-organizing goods, wares, merchandise, or commodities en
route to final destinations of sale or other transaction. Transloading
generally involves the transfer of goods from one mode of transportation to
another en route to an ultimate destination and. for purposes of the square
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Re: Outdoor Warehousing
6
footage tax, includes areas used for crossdocking, waylaying, temporary
embarkment, and other similar activities.
34. For purposes of this section, other business floor space means
the floor space of an office or place of business, other than a business
warehouse or outdoor warehouse.
45. For purposes of this section, the square footage of a business
warehouse and other business floor space shall be computed by measur.ing
to the inside finish of permanent outer building walls and shall include space
used by columns and projections necessary to the building. Square footage
shall not include stairs, elevator shafts, flues, pipe shafts, vertical ducts,
heating or ventilation shafts, janitor closets, and electrical or utility closets.
6. For purposes of this section, the square footage of an outdoor
warehouse shall only include those areas used for the receipt or storage of
goods, wares, merchandise, or commodities that are beino received and
temporarily stored for transloading, whether or not for compensation. in
fr rrtharrnna nf annrnina in hr rcinacc Qrrl^h .ara.ac rrrrill frrnin=llrr innlrrda fhnco
areas where goods. wares, merchandise, and commodities. in transit to their
ultimate destination, are parked, packaged, or stored after transloading.
waylaying, or crossdocking. Square footage shall not include areas used only
for employee- customer, or visitor parking. dock high loadino areas used
primarily for a business warehouse, buildings, areas used only for direct
crlac nr ranfrlc fa nnncr rm6Fc l-cranarl =ra2c ctnrrvrrrrrfar f=rilifioc
maneuvering areas and drive aisles. areas used only for garbage or recycling
pickup, rights-of-way, or other areas clearly not used for the temporary
storage of goods, wares, merchandise, and commodities in transit. Outdoor
areas used for storage of agricultural products or for ancillary storage of
materials utilized in, or products resulting from, onsite manufacturing
operations are not considered outdoor warehouses.
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7
52. Persons with more than one office, business warehouse,
outdoor warehouse, or other place of business within the city must include
all business warehouse floor space, outdoor warehouse space, and other
business floor space for all locations within the city. When a person rents
space to another person, the person occupying the rental space is
responsible for the square footage business tax on that rental space only if
the renter has exclusive right of possession in the space as against the
landlord. Space rented for the storage of goods in a warehouse or outdoor
warehouse where no walls or other barriers separate the goods, and where
the exclusive right of possession in the space is not held by the person to
whom the space is rented, shall be included in the business warehouse
fuiftess-floor space of the person that operates the business warehouse
ffi€ss, and not by the person renting the warehouse space.
69. If the square footage tax imposed in this subsection (B) is less
than or equal to the gross receipts tax imposed in subsection (A) of this
section, no square footage tax will be due; if the square footage tax imposed
in this subsection (B) exceeds the gross receipts tax imposed in subsection
(A) of this section, the taxpayer shall also remit the excess over the gross
receipts tax payable under subsection (A) of this section.
C. Gross receipts and square footage threshold.
1. Gross receipts threshold. The gross receipts tax imposed in
subsection (A) of this section shall not apply to any person engaging in any
one or more business activities which are otherwise taxable pursuant to this
section, whose value of products, including byproducts, gross proceeds of
sales, and gross income of the business, as the case may be, from all
activities conducted within the city during any calendar year does not exceed
the threshold amount of $250,000.
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Re: Outdoor Warehousing
B
2. Square footage threshold. The square footage tax imposed in
subsection (B) of this section shall not apply to any person unless that
person's total fleerarea of business space within the city exceeds one of the
following thresholds:
a. 4,000 Feur-theusand-taxable square feet of business
warehouse space; of
b. 261.360 taxable square feet (six acres) of outdoor
warehouse space; or
be. 12.000 ffitaxable square feet of other
business floor space.
If the square footage tax applies, it applies to all business space leased,
owned, occupied, or otherwise maintained by the taxpayer during the
applicable reporting period.
D. Gross receipts maximum - Retailing activities. Effective January 1,
2022, the gross receipts tax imposed in subsection (A) of this section shall
not apply to retailing activities exceeding $20,000,000 in any calendar year
which are otherwise taxable pursuant to this section.
E. Rules. The director may promulgate rules and regulations regarding
the manner, means, and method of calculating any tax imposed under this
section.
SECTION 2, - Severability. If any one or more section, subsection,
or sentence of this ordinance is held to be unconstitutional or invalid, such
decision shall not affect the validity of the remaining portion of this ordinance
and the same shall remain in full force and effect.
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Re: Outdoor Warehousing
9
SECTION 3. - Corrections by City Clerk or Code Reviser. Upon
approval of the City Attorney, the City Clerk and the code reviser are
authorized to make necessary corrections to this ordinance, including the
correction of clerical errors; ordinance, section, or subsection numbering; or
references to other local, state, or federal laws, codes, rules, or regulations.
SECTION 4, - Effective Date. This ordinance shall take effect and be
in force five days from and after its publication as provided by RCW
35A.11.090 and RCW 35A.12.130; however, the square footage tax on
outdoor warehousing operations implemented in this ordinance will not take
effect and the City will not impose this tax until January L,2O2L.
DANA RALPH, MAYOR
September 15. 2020
Date Approved
A
&September 15. 2020
Date AdoptedKIMBERLEYOTO, CITY RK
September 18, 2020
Date Published
APP AS TO
UR *P RICK,TTORNEY
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10
Classified Proof
238398 - City of Kent, City Clerk - LEGAL ADS
220 Fourth Ave S
Kent, WA, 98032
908262
3030 - Legal Notices
18D020
856-5728
KOMOTO
4368
ffios/1st2o2o
Reporter
ffi;*Fj;e47o - Jennifer rribbett ffiffi(360) s02-8212
fF$ffiffii,S9: ffijtribbett@courierherald.com,-1,+Is.ffi-gefr.1ri ffi$
l0:48:55 am
$92.87
$0.00
$0.00
$92.87
$0.00
Proofed by Jennifer Tribbett, 09/091202010:51:40 am Page: I
Classified Proof
CITYOF KENT
NOTICE OF
OROINANCE
PASSED BY THEctwcouNctl
The following is the sum-
mary of an ordinance
passed by the Kent City
Council on Sept€mb€r
15,2020.
ORDINANCE NO.4368.
AN ORDINANCE of the
City Council of the Cityof Kent, Washington,arnending seclion
3.28.050 of the Kent City
Code to extend the
square footage compo-
n6nt of the City of Kent
business and oocupation
tax to include outdoor
warehousing activities.
This ordinance shall take
effeot and be in force
fivc dcyr from rnd aftcr
its publication as provid-
ed by RCW 354.11.090
and RCW 35A.12.130;
however, the square
footage tax on outdoor
warehousing operations
implemented in this ordi-
nance will not teke effect
and the City will not im-
pose this tax until Janu-
ary 1,2021.
A copy of the complete
text of any ordinance will
be mailed upon request
of the City Clerk.
Kimberley A, Komoto,
City Clerk
Kkomoto@KentWA.gov
253€56-5725
#904262
9t18t20
Proofed by Jennifer Tribbett, 091091202010:51:40 am Page:2