[| FOSTER PEPPER a Memorandum To: Carolyn Robertson, Government Relations Manager ity of Auburn rom: Hugh D. Speer & Alice Ostdiek Date: ciober 21, 2008 Suibject: ‘Tax on Businesses Utilizing Freight Doors Attached isthe first draft of an ordinance imposing an excise tax on businesses that tlie more than two freight doors (also known as “warehouse roll-up doors”). After circulating this among the cities interested inthis type of tax, please get back to us with your comments, and ‘we will prepare a revised version of the ordinance. Please note that there ae various blanks and bracketed phrases that shouldbe considered before finalizing the draft ordinance. ‘This taxis characterized usa “license excise” as authorized by RCW 35A,82.020. These license “fes” or “excises” have traditionally have been treated as a category of excise taxes. (Gee the atached pages from the Municipal Research and Services Center’s Revenue Guide for Washingion Cities and Tovns.) The excise would be imposed on a category of businesses that regularly and tively utilize freight services over strets and roads within the City. It would be ‘measured by the numberof freight doors, which is defined as doors ofa specified minimum dimension, with a loading dock, that ean be accessed by motor vehicle via city streets. The excise would not take into account the first two freight doors. Freight doors accessible only by ‘ail would not be used in the caleulation of the tax. Proceeds would be used solely for freight mobility purposes, ie, for constructing, reconstructing, operating and maintaining major streets and roads regularly used by trucks. ‘is important to ste that, a drafled, this Hense excise would nov be a tax on freight ‘doors. A tax of fee on the doors themselves might be misconsirued asa tx on property. City property taxes are strictly ited by both the State constitution and various statutes. For ‘example, in Covell v. Seaite, 127 Wn.2d 874, 905 P-2d 324 (1995), the Washington State Supreme Court held that a “street utility fee imposed by Seattle was actually a hidden property ‘tex, partly because it was imposed on residences regardless of whether they were occupied. ‘This draft ordinance makes it clear that tis isan excise tax on a narrow class of businesses, ‘measured by the number of active freight doors above two. Ifa door isnot being usd, that door is nt taken into account in caleulation of the fee. The ordinance also provides a mechanism for m2 4400 1% 9647 IO: mOAN TERK SEATTLE, WASHINGTON sensi WWWFOSTER.COMMemorandum October 21, 2008 Page 2 ‘ensuring tat the fee is not measured by doors thet are notin active use duting the year—it is measured solely by active doors above two doors, ‘This ordinance has been drafted using Auburn as the example, ad it would have to be adjusted tit into other city’s codes. Please let us know what questions and comments you have on tis draft. Hugh ean be reached at (206) 447-8965, Alice ean be reached at (206) 447-4668, Attachments ce: Shelley Coleman, Finance Director, City of Auburn ‘Dan Heid, City Atlomey, City of Auburn