ORDINANCE _________________

AN ORDINANCE relating to the admission tax; providing for an exemption from the admission tax for the Fremont Fair and organized youth athletic competitions; eliminating the admission tax on secondary market sales of admission tickets; providing for college, universities and nonprofit organizations to request non-taxable donations or contributions in lieu of an admission charge for certain events; revising, for technical purposes only, the language of the exemption of those portions of membership dues and initiation fees paid solely to join or to continue membership in an organization or club; repealing Sections 5.40.027 and 5.40.040 and amending Sections 5.40.010, 5.40.020, 5.40.025 and 5.40.060 of the Seattle Municipal Code.

WHEREAS, the City recognizes that the Fremont Fair is an important community event and exempting it from admission tax requirements will contribute to its future success; and

WHEREAS, the City desires to encourage youth athletic competitions and make them more economically self sufficient; and

WHEREAS, it is not practical for the City of Seattle to collect admission tax that might be due on the secondary market sales of admission tickets, and it is not in the public interest to continue to attempt to do so; and

WHEREAS, the City recognizes the need for colleges, universities and non-profit organizations to request donations or contributions as an alternative to mandatory admission charges or fees; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Section 5.40.010 of the Seattle Municipal Code is hereby amended as follows:

5.40.010 Definitions.

For the purposes of this chapter, the words and terms contained in SMC Chapter 5.30 shall apply throughout this chapter unless expressly provided otherwise herein. The following additional definitions shall apply throughout this chapter:

A. "Admission charge" means the price required or paid for entering a premise or location and includes but is not limited in meaning to:

1. A charge made for season tickets or subscriptions;

2. A cover charge or a charge made for use of seats or tables, reserved or otherwise, and similar accommodations;

3. A charge made for food or refreshments in any place where any free entertainment, recreation or amusement is provided;

4. A charge made for rental or use of equipment or facilities for purposes of recreation or amusement and, where the rental of the equipment or facilities is necessary to the enjoyment of the privilege for which a general admission is charged, the combined charge shall be considered as the admission charge;

5. A charge made for entrance admission to any theater, dance hall, amphitheater, private club, auditorium, observation tower, stadium, athletic pavilion or field, baseball or athletic park, circus, side show, swimming pool, outdoor amusement park or any similar place; and includes equipment to which persons are admitted for purposes of recreation such as merry-go-rounds, ferris wheels, dodgems, roller coasters, go-carts and other rides whether such rides are restricted to tracks or not;

6. A charge made for automobile parking where the amount of the charge is determined according to the number of passengers in an automobile.;

7. A charge made for entrance to any building, enclosure or area in which there is a swimming pool, skating rink, golf driving range, miniature golf course, short nine, or other golf course, or to gain entrance to such pool, rink or course itself, or for the use of the facilities thereof, or any rental paid by the person paying for such entry for the use of equipment and facilities supplied him and appropriate to the enjoyment of the privilege for which the admission is charged, or the aggregate thereof.

B. "Cabaret" means a room where musical entertainment is permitted in connection with a restaurant business.

C. "College" or "university" means any accredited public or private college, junior college or university, or the recognized student body association thereof insofar as the admission charges received by the college, university, or student body association are budgeted, and applied solely for exhibition, performance, study and/or teaching of the performing arts, visual arts, history or science. It specifically excludes any athletic department or division or activities of the college or university or of the recognized student body association thereof.

D. "Department" means the Department of Executive Administration of The City of Seattle, or its functional successor.

E. "Director" means the Director of Executive Administration of The City of Seattle, or his or her functional successor, and shall include the Director's authorized representatives.

F. "Market Price" means the price at which a seller is ready and willing to sell and a buyer is ready and willing to buy. Market price is a price that is acceptable to both buyer and seller and which might be different from the listed price.

DG. "Nonprofit organization" means an organization in which no part of the income can be distributed to its members, director or officers and that holds a current tax exempt status as provided under Sec. 501(c)(3), (4) or (6) of the Internal Revenue Code of 1986, as amended, or is specifically exempted from the requirement to apply for tax exempt status under Sec. 501(c)(3).

E. "Department" means the Department of Executive Administration of The City of Seattle, or its functional successor.

F. "Director" means the Director of Executive Administration of The City of Seattle, or his or her functional successor, and shall include the Director's authorized representatives.

Section 2. Section 5.40.020 of the Seattle Municipal Code is hereby amended as follows:

5.40.020 Tax levied.

***

J. It is unlawful for any person to request a donation or contribution that effectively represents an admission charge at any event unless the event is held by an exempt organization pursuant to SMC 5.40.025. Donations or contributions requested by such organizations that would otherwise be subject to the admission tax pursuant to SMC 5.40.025 A10c (over 3100 seating capacity or attendance) or SMC 5.40.025 B (athletic or recreational activity) are not subject to the tax; provided, that people are admitted or allowed to remain in attendance without payment of such donation or contribution and the signage, invitation, advertisement, notice or other literature related to the event contains a statement, conspicuously posted, that such donation or contribution is not required for the privilege of entering, attending, or remaining in attendance at the event.

K. The amount subject to admission tax shall exclude dues, and initiation fees paid by a member for the privilege of joining or belonging to an organization. For purposes of this subsection, "dues" are those amounts periodically paid by members solely for the entitlement of those persons to continued membership in the organization or club, and "initiation fees" are amounts paid solely to admit a person as a member to an organization or club and represent the value of membership in the organization or club. However, where dues or initiation fees cover costs for services received by the members and no separate charge (including but not limited to green fees, entertainment costs such as cover charges, facility or equipment rentals, or charges for food and beverages) is imposed for such services, admission taxes will be assessed on the portion of dues or initiation fees that represent the value of those services. In determining the value subject to tax, comparable charges will be used.

Section 3. Section 5.40.025 of the Seattle Municipal Code is hereby amended as follows:

5.40.025 Tax exemptions--Minimum charge--Specific exemptions-Colleges--Universities--Nonprofit organizations.

A. The admission tax as imposed in SMC Section 5.40.020 shall not apply to anyone paying an admission charge:

1. In the amount of One Dollar and Fifty Cents ($1.50) or less; or

2. To any activity of any elementary or secondary school as contemplated by RCW 35.21.280; or

3. To any activity of any Parent-Teacher-Student Association (PTSA), Parent-Teacher Association (PTA), or similar organization, provided that the proceeds of the activity are used to benefit an elementary or secondary school; or

4. To the annual Bumbershoot Festival held on Labor Day and the preceding Thursday, Friday, Saturday and Sunday; or

5. To the Woodland Park Zoo; or

6. To the Folklife Festival held on Memorial Day and the preceding Thursday, Friday, Saturday and Sunday.; or

7. To the Fremont Fair held annually by the Fremont Public Association; or

8. To an organized athletic event such as tournaments, leagues, and other competitions intended for youth less than 19 years of age, sponsored and held by non-profit organizations; or

9. To actively participate in bowling or to rent bowling shoes or equipment; or

10. To an event sponsored by a college or university or nonprofit organization, when all of the following three (3) criteria are met:

a. A college or university or nonprofit organization, as both are defined in Section 5.40.010 and registered under Section 5.40.080, that meets one (1) or more of the following criteria:

i. Publicly sponsors and through its members, representatives, or

personnel promotes, publicizes and distributes most of the tickets for admission; or

ii. Publicly sponsors and presents the event at a facility it owns or leases as lessee for a term of not less than one (1) month; or

iii. Publicly sponsors and:

(a). Performs a major portion of the performance, or

(b). Supplies a major portion of the materials on exhibition, or

(c). When the event is part of a season or series of performances or exhibitions, performs the major portion of the performances or exhibitions in the season or series; and

b. The college, university or nonprofit organization receives the use and benefit of admission charges collected; and

c. In the case of a performance, the seating capacity of the location where the event occurs is three thousand one hundred (3,100) people or less, or, in the case of an exhibition, no more than three thousand one hundred (3,100) people are permitted on the premises at any one (1) time.

B. Except as provided in subsections A2, A8, and A9 above, t The exemption to the admission tax as provided in subsection A(7) A10 of this section shall not apply to:

1. The admission of spectators to an athletic event, including, but not limited to, football games, basketball games, or baseball games; or

2. The admission for recreational activities, including, but not limited to, golf, skating, or swimming; picnicking or

3. An event in which a college, university or nonprofit organization lends its name to an endorsement for an ineligible person for the purpose of invoking the tax exemption.

Section 4. Section 5.40.027 of the Seattle Municipal Code is hereby repealed and its substantive provision incorporated into SMC 5.40.025 A9.

Section 5. Section 5.40.040 of the Seattle Municipal Code is hereby repealed and its substantive provisions are incorporated into SMC 5.40.010 A7 (See Section 1) and SMC 5.40.020 K (See Section 2).

Section 6. Section 5.40.060 of the Seattle Municipal Code is hereby amended as follows:

5.40.060 Ticket numbering and information information and unlawful acts.

A. Ticket information.

1A. Whenever a charge is made for admission to any place, a serially numbered or reserve seat ticket shall be furnished to the person paying such charge unless written approval has been obtained from the Director to use: (1) a turnstile or other counting device which will accurately count the number of paid admissions, or (2) any method established by administrative rule that determines the number of paid admissions for the purposes of this chapter. The established price, service charge, sales tax, City admission tax and total price at which every such admission ticket or card is sold shall be separately, conspicuously and indelibly printed or written on the face or back of that part of the ticket which is to be collected by the management of the place to which admission is gained.

2B. It shall be unlawful for a promoter, sponsor, venue, or anyone contractually

related to a promoter, sponsor or venue, to sell an admission ticket or card on which the name of the person conducting the event and the price is not so printed, stamped or written, or to sell or offer to sell an admission ticket or card at a price in excess of the price printed, stamped or written thereon. Ticket sales that occur through a subsequent sale(s) of the ticket(s) by the initial purchaser who purchased the ticket(s) from the promoter, sponsor or venue, or any subsequent sale of such ticket(s), may be made at market price. No admission tax will be assessed by the City on the price of an admission ticket in a secondary market transaction, conducted by the initial purchaser or a subsequent purchaser thereof. However, vendors, and other persons regularly engaged in the business of reselling tickets or admissions into events must obtain a business license to do so pursuant to SMC 5.55.030.

For transactions between the promoter, sponsor, or venue and the original purchaser or customer, Tthe admission tax due shall be based on the total sum of the established price plus any service charge printed on the ticket. When a charge is made for admission, a sign must be posted in a conspicuous place on the entrance or ticket office which breaks down the admission charge as follows:

Established Price

Service Charge (if any)

Sales Tax

City Admission Tax

Total Price

It is unlawful to charge a service charge on admission tickets unless the purchaser is fully informed of the purpose of such charge by published or posted notice in advance of the ticket sale.

3C. The Director or his/her designee, who has been commissioned as a Special Police Officer, or the Seattle Police Chief or his/her designee, is authorized to confiscate, seize or otherwise remove from sale, or offered sale, any ticket in violation of or offered for sale or sold in violation of this subsection.

B. It is unlawful for any person to request a donation or contribution that represents an admission charge or fee for the privilege of entering, attending, or remaining in attendance at any theater, dance, amusement or other place of public performance where persons are not admitted or allowed to remain in attendance without payment of such donation or contribution. Signage, advertising, invitations, notices and other literature relating to the event may only state the words "donation accepted" or "donation appreciated." The amount of a "donation" shall not be stated on an invitation, signage, advertising, or other literature. Any donation amount suggested or requested used in conjunction with the event will be treated as an admission charge subject to tax under this chapter.

Section 7. This ordinance shall take effect and be in force thirty (30) days from and after its approval by the Mayor, but if not approved and returned by the Mayor within ten (10) days after presentation, it shall take effect as provided by Municipal Code Section 1.04.020.

Passed by the City Council the ____ day of _________, 2005, and signed by me in open session in authentication of its passage this _____ day of __________, 2005.

_________________________________

President __________of the City Council

Approved by me this ____ day of _________, 2005.

_________________________________

Gregory J. Nickels, Mayor

Filed by me this ____ day of _________, 2005.

____________________________________

City Clerk

(Seal)

Mel McDonald

Admission Tax Exemption Ordinance

February 22, 2005

version #14