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HomeMy WebLinkAbout4503 Ordinance Checklist PRIOR TO COl1NCIL 6v9EETING -Obtain unassigned original PDF Ordinance from Law (Council Agenda folder), ensuring any exhibits arevattached. K© Assign Ordinance Number from tracking spreadsheet. # cJ jv/�ddd Ordinance Number, Date Passed, Date Published & Summary to tracking spreadsheet. / pdate Ordinance PDF by adding Ordinance Number, Date Passed & Date Published I Print on Ordinance paper (Print in black text) M® AY, PRIOR TO COUNCIL MEETING ci/Send Summary of Ordinance to Kent Reporter Jennifer Tribbett iennifer tribbett@soundpublishing.com kinacountylegalsC�reporternewspapers.com for publication, using the Template for Ordinance. Request publication on the Friday following the Council meeting AT HE C®l1NCIL MEETING Obtain Signatures from Mayor and City Attorney AFTP4Z COUNCIL MEETING Sign (City Clerk) and Emboss with City Seal ❑ Recording Require : ❑ No - ❑ Yes No - Rez a Ordinances Should NOT be recorded *QUASI-JUDICIAL QUESTIONNAIRE* ` - Co dernnati®n Ordinances Should be recorded. N❑ s - ght-of-Way Dedication Should be recorded. ❑ es - treet Vacation Should be recorded. ❑ Recor Or nance, using PDF version. ❑ Obtain recorded version (PDF) from KC Recorder's Office website and import to Laserfiche. Label as ' XX - Recorded Version". Scan PDF copy into P:\City Clerk's Office\Records Management\Ordinances and Resolutions - Including Franchise Ordinances\ORDINANCES. ❑ Wednesday following Council Meeting, receive Word version from Law, save Word version to Ordinance folder P:\City Clerk's Office\Records Management\Ordinances and Resolutions - Including Franchise Ord inances\ORDINANCES. Upload signed & stamped PDF and WORD versions of Ordinance to Code Publishing User Portal https://user.codepublishing.com/users/sign_in. ❑ Print Ordinance and add to binder in the vault "Ordinances Passed Since Last Supplement". ❑ Obtain Affidavit of Publication from Kent Reporter and append to PDF in P:\City Clerk's Office\Records Management\Ordinances and Resolutions - Including Franchise Ord inances\ORDINANCES. Onlv include affidavits of publication and copy of printed notice remove the "Classified Proof" page)! ❑ RE-Upload Original signed PDF (or recor ded version if applicable) and the Affidavit of Publication to Code Publishing User Portal https://user.codepublishing.com/users/sign_in, ❑ Drag and drop PDF of Ordinance WITH Affidavit of Publication into Laserfiche. ❑ Create an Ordinance packet for hardcopy and file with Ordinances in Vault. P:\City clerk's Office\Records Management\Ordinances and Resolutions-Including Franchise Ordinances ORDINANCE NO. 4503 AN ORDINANCE of the City Council of the City of Kent, Washington, relating to Business and Occupation Tax, which amends section 3.28.050 of the Kent City Code, entitled "Imposition of the tax", to increase the gross receipts tax levied upon manufacturers effective January 1, 2025, and removes the gross receipts maximum cap on retailing once a retailer has attained $100,000,000 or more in retailing gross receipts during any given calendar year. RECITALS A. Currently, the City's business and occupation tax provides a maximum cap of $20 Million per calendar year against which the gross receipts tax may be levied against retailers. This maximum cap applies equally to small local retailers as it does to large nationwide chain retailers, regardless of the overall gross receipts they may earn from doing business within the City of Kent. Through this ordinance, and effective January 1, 2025, an upper threshold of $100 Million will be added. With this new upper threshold in place, a business with taxable retailing gross receipts in the amount of $100 Million or more per calendar year will pay retailing gross receipts tax on the entire amount of their taxable retailing gross receipts. B. Beginning January 1, 2026, and on the first day of each calendar year thereafter, both the $20 Million retailing maximum cap and 1 Amend KCC 3.28.050 - Re: Rate Increase the $100 Million upper threshold will be adjusted by the Consumer Price Index (CPI), specifically the CPI Seattle-Tacoma-Bellevue, measured from June 1st through June 1st of the previous calendar year, if the CPI reflects an upward adjustment from the previous annual June to June period. C. This ordinance also increases the manufacturing gross receipts tax rate from 0.001 to 0.00125, effective January 1, 2025. D. This ordinance amends Section 3.28.050 of the Kent City Code to implement these changes. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT, WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS: ORDINANCE SECTION 1. - Amendment - KCC 3.28.050. Section 3.28.050 of the Kent City Code, entitled "Imposition of the tax", is hereby amended as follows: Sec. 3.28.050. Imposition of the tax. Except as provided in subsections (C) and D 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 gross receipts tax and square footage tax are separate business and occupation taxes imposed by this chapter. The amount for the gross receipts tax shall be determined by application of rates against the gross proceeds of sale, gross income of business, or value of products, including byproducts as described in subsection (A) of this section. The amount for the square footage tax shall be determined by application of rates against the square footage of the business space within the city as described in subsection (B) of this section. 2 Amend KCC 3.28.050 - Re: Rate Increase The amount of tax due to the city shall be the larger of the amounts calculated under each tax, as measured for each tax reporting period. 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 0.00152 through December 31, 2021, and multiplied by the rate of 0.002 effective January 1, 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 0.00046 through December 31, 2021, and multiplied by the rate of 0.001 effective January 1, 2022 through December 31 2024 and multiplied by the rate of 0.00125 effective January 1, 2025. 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 0.00152 through December 31, 2019, and multiplied by the rate of 0.002 effective January 1, 2020. 3 Amend KCC 3.28.050 - Re: Rate Increase 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 0.00046 through December 31, 2021, and multiplied by the rate of 0.001 effective January 1, 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 0.00046 through December 31, 2021, and multiplied by the rate of 0.001 effective January 1, 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 0.00152 through December 31, 2021, and multiplied by the rate of 0.002 effective January 1, 2022. 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 activities shall be equal to the gross income of the business multiplied by the rate of 0.00152 through December 31, 2021, and multiplied by the rate of 0.002 effective January 1, 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 4 Amend KCC 3.28.050 - Re: Rate Increase rendering any type of service which does not constitute a sale at retail, a sale at wholesale, or a retail service. B. Square footage tax. 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 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. 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, owned, occupied, or otherwise maintained within the city multiplied by the rate for each calendar year listed below. Business Warehouse Floor Space/ Other Business Effective Date Outdoor Floor Space Warehouse Space 1/1/2019 0.06 quarterly 0.02 quarterly rate rate 0.08 annual rate 0.24 annual rate 5 Amend KCC 3.28.050 - Re: Rate Increase Business Warehouse Floor Space/ Other Business Effective Date Outdoor Floor Space Warehouse Space 1/1/2020 0.09 quarterly 0.02 quarterly rate rate 0.08 annual rate 0.36 annual rate 1/1/2025 0.12 quarterly 0.02 quarterly rate rate 0.08 annual rate 0.48 annual rate 1/1/2028 0.15 quarterly 0.03 quarterly rate rate 0.12 annual rate 0.60 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. The storage units of self-storage businesses are not business warehouses. 3. For purposes of this section, outdoor warehouse means an area that is outdoors and is primarily used for the transloading of goods, wares, merchandise, or commodities on property for purposes of switching modes or vehicles of conveyance for the primary purpose of wholesaling, distributing, or reorganizing goods, wares, merchandise, or commodities en route to final destinations of sale or other transaction. Transloading 6 Amend KCC 3.28.050 - Re: Rate Increase 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 footage tax, includes areas used for crossdocking, waylaying, temporary embarkment, and other similar activities. 4. 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. 5. For purposes of this section, the square footage of a business warehouse and other business floor space shall be computed by measuring 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 being received and temporarily stored for transloading, whether or not for compensation, in furtherance of engaging in business. Such areas will typically include those 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 loading areas used primarily for a business warehouse, buildings, areas used only for direct sales or rentals to consumers, landscaped areas, stormwater facilities, 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. 7 Amend KCC 3.28.050 - Re: Rate Increase 7. 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. Except in the case of self-storage units, 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 space is used by the renter for purposes of engaging in business activities and the renter has exclusive right of possession in the space as against the landlord. Space rented as self-storage units shall be included in the other business floor space of the person that operates the self-storage business. 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 floor space of the person that operates the business warehouse, and not by the person renting the warehouse space. 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. 2. Square footage threshold. The square footage tax on business warehouse floor space and other business floor space imposed in subsection (B) of this section shall not apply to any person unless that person's total area of business warehouse space and other business floor space within the city exceeds one of the following thresholds: 8 Amend KCC 3.28.050 - Re: Rate Increase a. Four thousand taxable square feet of business warehouse space; or b. Twelve thousand taxable square feet of other business floor space. If the square footage tax applies to business warehouse floor space or other business floor space, it applies to all business warehouse space and other business floor space leased, owned, occupied, or otherwise maintained by the taxpayer during the applicable reporting period. The square footage tax on outdoor warehouse space imposed in subsection (B) of this section shall not apply to any person unless that person's total area of outdoor warehouse space within the city exceeds 261,360 taxable square feet (six acres) of outdoor warehouse space. If the square footage tax applies to outdoor warehouse space, it applies to all outdoor warehouse space leased, owned, occupied, or otherwise maintained by the taxpayer during the applicable reporting period. D. Gross receipts maximum - Retailing-aet4vit4es. Effe ,tive ,anua_y 1, The gross receipts tax imposed on retailing in subsection (A) of this section shall not apply to $20,900,900 on any ealendar year whieh are etheFwise taxable pursuant te this seetien the following: 1 For calendar years 2022 through 2024, retailing exceeding $20 000 000 in any calendar year which is otherwise taxable pursuant to this section. 2 For calendar year 2025 retailing that exceeds $20,000,000, but is less than $100 000 000 in any calendar year which is otherwise taxable pursuant to this section However, for retailing that equals or exceeds $100,000 000 in a calendar year, the gross receipts tax provided for in subsection (A) of this section shall apply to all gross receipts. 9 Amend KCC 3.28.050 - Re: Rate Increase 3 Beginning with the calendar year 2026, and each calendar year thereafter, the dollar amounts provided for in subsection (D)(2) of this section will be adjusted upward annually by the percentage change in the Consumer Price Index for Urban Wade Earners and Clerical Workers (CPI- W) as published by the Bureau of Labor Statistics for the Seattle-Tacoma- Bellevue area, measured from the previous annual June to June period. The adjusted dollar amounts will be rounded to the nearest $1,000. E. Rules. The director may adopt 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. 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 thirty days from the time of final passage, as provided by law. November 19, 2024 DANA RALPH, Date Approved 10 Amend KCC 3.28.050 - Re: Rate Increase ATTEST: November 19, 2024 KIMBERLEY , OMOTO, CITY CLERK Date Adopted November 22, 2024 Date Published APPR D AS TO FORM: TA WHITE, CITY ATTORNEY 11 Amend KCC 3.28.050 - Re: Rate Increase Legal Invoice Date: 11/22/2024 Sound Publishing, Inc. Kent Reporter Unit Attn: A/R PO Box 930 Everett WA 98206-0930 Bill To: Customer Account#: 50431432 City of Kent, City Clerk- LEGAL ADS Legal Description: KEN1005358 220 Fourth Ave S Kent WA 98032 Legal Description: City Ordinances Dese. ORDS 4500-4503 Legal#: KEN1005358 Ad Cost: $ 198.75 Published:Kent Reporter Ordered By: KIM KOMOTO Issues Ordered: I Start Date: 11/22/2024 End Date: 11/22/2024 Due: $ 198.75 Please return this with payment. Questions?Call 1-800-485-4920 City of Kent, City Clerk- LEGAL ADS Account#: 5043 1432 220 Fourth Ave S invoice#: KEN1005358 Kent WA 98032 Due:$ 198.75 Kent Reporter Affidavit of Publicatiog3 State of Washington} i County of King } ss Amanda Kahlke being first duly swom, upon oath deposes and says: that he/she is the legal representative of the Kent Reporter a weekly newspaper. The said newspaper is a legal newspaper by order of the superior court in the county in which it is published and is now and has been for more than six months prior to the date of the first publication of the Notice i hereinafter referred to, published in the English language continually as a weekly newspaper in King County, Washington and is and always has been printed in whole or part in the Kent l Reporter and is of general circulation in said County, and is a legal newspaper, in accordance with the Chapter 99 of the Laws of 1921, as amended by Chapter 213, Laws of 1941, and approved as a legal newspaper by order of the Superior Court of King County, State of Washington, by order dated June 16, 1941, and that the annexed is a true copy of KEN1005358 ORDS 4500-4503 as it was published in the regular and entire issue of said paper and not as a supplement form thereof for a period of 1 issue(s), such publication commencing on 11/22/2024 and ending on 11/22/2024 and that said newspaper was regularly distributed to its subscribers during all of said period. The amount of the fee for such publication is $198.75. a&:�- Subscribed and sworn before me on this tr day off 'vdGL' g99i4tltJll/i/rJ T nia. y MtjT CD— t, Publicz in and for the State of r : °G • zz 4 Washington. e 9�r cily or K-1,Ul,Ck,k-LH(iA L A US 15043 W33 KIM KOMO-R) 1nIWOO 'rtttrttttttk%t%