AN ORDINANCE relating to solid waste taxation; amending Titles 5 and 21 of the Seattle Municipal Code to add and modify definitions; deleting a duplicative tax exemption provision; amending provisions relating to the taxation of solid wastes; deleting the tonnage tax on the collection of solid waste effective January 1, 2010; increasing the transfer tax rate effective January 1, 2010; deleting an obsolete credit provision; and amending sections 5.30.020, 5.30.025, 5.30.035, 5.30.040, 5.30.050, 5.45.090, 5.45.100, 5.48.055, 21.36.016, and deleting section 5.48.072, respectively, of the Seattle Municipal Code.

WHEREAS, the Department of Executive Administration, Revenue and Consumer Affairs Division has determined it is in the best interest of the City to add definitions to SMC Chapter 5.30 relevant to the solid waste industry and to amend certain provisions contained within SMC Chapter 5.48; and

WHEREAS, the credit that prohibits a pyramiding of the utility tax for haulers of Construction, Demolition and Landclearing waste is obsolete; and

WHEREAS, the City established per-ton taxes on the collection and transfer of Solid Waste in the city so that both City and private generators of Solid Waste that had contributed tons to the Kent Highlands and Midway landfills would support the costs of closing and maintaining those landfills, as well as the costs of the Clean Cities programs, which combat litter, illegal dumping and graffiti;

WHEREAS, the City in 2009 will make its final payment for debt incurred for the Kent Highlands and Midway landfill closure work, prompting a re-evaluation of the role of the tonnage taxes in subsequent years; and

WHEREAS, the evaluation concluded that only the transfer tax was necessary to finance ongoing landfill operations, additional landfillrelated capital improvement programs and the Clean Cities programs, and that preservation of the transfer tax would maintain the incentive to recycle where possible; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Section 5.30.020 of the Seattle Municipal Code is hereby amended as follows:

5.30.020 Definitions, A-B.

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E. "Beneficial use" has the meaning given in SMC 21.36.010.

F. "Bona-fide charitable organization" means an organization that meets all of the requirements of RCW 9.46.0209, as now existing or hereafter amended, and is organized and operated primarily to provide charitable services as defined by WAC 230-02-160. This term is used in conjunction with the gambling tax provisions contained in SMC Chapter 5.52.

F.G. "Bona-fide nonprofit organization" means an organization that meets all of the requirements of RCW 9.46.0209. This term is used in conjunction with the gambling tax provisions contained in SMC Chapter 5.52.

G.H. "Business" includes all activities engaged in with the object of gain, benefit, or advantage to the taxpayer or to another person or class, directly or indirectly.

H.I. "Business and occupation tax" or "gross receipts tax" means a tax imposed on or measured by the value of products, the gross income of the business, or the gross proceeds of sales, as the case may be, and that is the legal liability of the business.

Section 2. Section 5.30.025 of the Seattle Municipal Code is hereby amended as follows:

5.30.025 Definitions, C--D.

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I. "Dangerous waste" has the same meaning as given in SMC 21.36.012.

I.J. "Deficiency" means the amount of tax imposed by law less any tax reported by the taxpayer on a tax return.

J.K. "Delivery" means the transfer of possession of tangible personal property between the seller and the buyer or the buyer's representative. Delivery to an employee of a buyer is considered delivery to the buyer. Transfer of possession of tangible personal property occurs when the buyer or the buyer's representative first takes physical control of the property or exercises dominion and control over the property. Dominion and control means the buyer has the ability to put the property to the buyer's own purposes. It means the buyer or the buyer's representative has made the final decision to accept or reject the property, and the seller has no further right to possession of the property and the buyer has no right to return the property to the seller, other than under a warranty contract. A buyer does not exercise dominion and control over tangible personal property merely by arranging for shipment of the property from the seller to itself. A buyer's representative is a person, other than an employee of the buyer, who is authorized in writing by the buyer to receive tangible personal property and take dominion and control by making the final decision to accept or reject the property. Neither a shipping company nor a seller can serve as a buyer's representative. It is immaterial where the contract of sale is negotiated or where the buyer obtains title to the property. Delivery terms and other provisions of the Uniform Commercial Code (Title 62A RCW) do not determine when or where delivery of tangible personal property occurs for purposes of Seattle's business license tax.

K.L. "Director" means the Director of Executive Administration of the City or any officer, agent or employee of the City designated to act on the Director's behalf.

L.M. "Distribution affiliate" means a partnership, limited liability company or other entity that sells merchandise to the customer-owners of the distribution cooperative and which is owned fifty (50) percent or more by the distribution cooperative.

M.N. "Distribution cooperative" means a person a) that itself sells, or owns fifty (50) percent or more of a distribution affiliate that sells, merchandise to its customer-owners for resale at retail, b) in which two-thirds of the aggregate outstanding voting ownership interest is owned by its customer-owners, c) that makes distributions to its customer-owners at least partly on the basis of patronage, and d) that qualifies for federal income tax purposes under the provisions of subchapter T of the Internal Revenue Code of 1986, as amended.

Section 3. Section 5.30.035 of the Seattle Municipal Code is hereby amended as follows:

5.30.035 Definitions, G-M.

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F. "Hazardous substances" has the same meaning as given in SMC 21.36.014.

F.G. "In this City," "within this City." "In this City" or "within this City" includes all federal areas lying within the corporate city limits of the City.

G.H. "Janitorial Services." The term "janitorial services" shall mean those cleaning and care taking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery. The term does not include painting, papering, repairing, furnace or septic tank cleaning, snow removal, sandblasting, or cleanup related to construction activities.

H.I. "Manufacturer," "to manufacture."

1. "Manufacturer" means every person who, either directly or by contracting with others for the necessary labor or mechanical services, manufactures for sale or for commercial or industrial use from the person's own materials or ingredients any products. When the owner of equipment or facilities furnishes, or sells to the customer prior to manufacture, materials or ingredients equal to less than twenty percent (20%) of the total value of all materials or ingredients that become a part of the finished product, the owner of the equipment or facilities will be deemed to be a processor for hire and not a manufacturer. A business not located in this City that is the owner of materials or ingredients processed for it in this City by a processor for hire shall be deemed to be engaged in business as a manufacturer in this City.

2. "To manufacture" means all activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials or ingredients so that as a result thereof a new, different or useful product of tangible personal property is produced for sale or commercial or industrial use, and shall include:

a The production of special-made articles or custom-made articles;

b. The production of dental appliances, devices, restorations, substitutes, or other dental laboratory products by a dental laboratory or dental technician;

c. Crushing and/or blending of rock, sand, stone, gravel, or ore, and

d. The producing of articles for sale, or for commercial or industrial use from raw materials or prepared materials by giving such materials, articles, and substances of trade or commerce new forms, qualities, properties or combinations including, but not limited to, such activities as making, fabricating, processing, refining, mixing, slaughtering, packing, aging, curing, mild curing, preserving, canning, and the preparing and freezing of fresh fruits and vegetables.

3. "To manufacture" shall not include the production of computer software if the computer software is delivered from the seller to the purchaser by means other than tangible storage media, including the delivery by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser.

I.J. "Motor Carrier" shall mean the carrier providing transportation for hire described in the definitions of "common carrier" and "contract carrier" as defined in RCW 81.80.010.

Section 4. Section 5.30.040 of the Seattle Municipal Code is hereby amended as follows:

5.30.040 Definitions, N--R.

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L. "Recyclable materials" means material: has the meaning given in SMC 21.36.016.

1. That is collected for recycling or reuse, such as papers, glass, plastics, used wood, sand, building debris, metals, yardwaste, used oil and tires; and

2. That if not collected for recycling would otherwise be destined for

disposal at a landfill or incineration.

M. "Recycled material" means material:

1. That is in fact recycled, re-used, or reprocessed after collection; and

2. If not recycled, re-used or reprocessed, would have been destined for disposal at a landfill or incineration.

N. "Recycling" or "recycle." "Recycling" or "recycle" has the meaning given in SMC Section 21.36.016.

O.N. "Reporting period," "Monthly," "Quarterly," "Annual." The "reporting period" means one of the following:

1. A one-month period beginning the first day of each calendar month ("monthly");

2. A three-month period beginning the first day of January, April, July or October of each year ("quarterly"); or

3. A twelve-month period beginning the first day of January of each year ("annual").

P.O. "Retail Service" shall include the sale of or charge made for personal, business, or professional services including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, received by persons engaging in the following business activities:

1. Amusement and recreation services including but not limited to golf, pool, billiards, skating, bowling, swimming, bungee jumping, ski lifts and tows, basketball, racquet ball, handball, squash, tennis, batting cages, day trips for sightseeing purposes, and others, when provided to consumers. "Amusement and recreation services" also include the provision of related facilities such as basketball courts, tennis courts, handball courts, swimming pools, and charges made for providing the opportunity to dance. The term "amusement and recreation services" does not include instructional lessons to learn a particular activity such as tennis lessons, swimming lessons, or archery lessons.

2. Abstract, title insurance, and escrow services;

3. Credit bureau services;

4. Automobile parking and storage garage services;

5. Landscape maintenance and horticultural services but excluding (a) horticultural services provided to farmers and (b) pruning, trimming, repairing, removing, and clearing of trees and brush near electric transmission or distribution lines or equipment, if performed by or at the direction of an electric utility;

6. Service charges associated with tickets to professional sporting events; and

7. The following personal services: Physical fitness services, tanning salon services, tattoo parlor services, steam bath services, turkish bath services, escort services, and dating services.

8. The term shall also include the renting or leasing of tangible personal property to consumers and the rental of equipment with an operator.

Q.P. "Retailing" means the activity of engaging in making sales at retail and is reported under the retailing classification.

R.Q. "Return" means any document a person is required by the City to file to satisfy or establish a tax or fee obligation that is administered or collected by the City and that has a statutorily defined due date.

S.R. "Royalties" mean compensation for the use of intangible property, such as copyrights, patents, licenses, franchises, trademarks, tradenames and similar items.

T.S. "Rubbish" has the meaning given in SMC Section 21.36.016.

Section 5. Section 5.30.050 of the Seattle Municipal Code is hereby amended as follows:

5.30.050 Definitions, S.

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G. "Solid waste collection service" means collecting solid waste from customers for transfer, processing, treatment, storage, or disposal. Solid waste collection service includes, but is not limited to the activities of transferring, processing, treating, storing, or disposing of the solid waste collected. Solid waste collection service includes "property clean up services," defined as businesses that contract directly with residences and businesses to clean up property and remove solid waste. It does not include the operation of public or private dumps, transfer stations and similar operations.

G.H. "Successor" means any person to whom a taxpayer quitting, selling out, exchanging or disposing of a business sells or otherwise conveys, directly or indirectly, in bulk and not in the ordinary course of the taxpayer's business, any part of the materials, supplies, merchandise, inventory, fixtures or equipment of the taxpayer. Any person obligated to fulfill the terms of a contract shall be deemed a successor to any contractor defaulting in the performance of any contract as to which such person is a surety or guarantor.

Section 6. Section 5.45.090 of the Seattle Municipal Code is hereby amended as follows:

5.45.090 Exemptions.

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CC. Public Utilities. This chapter shall not apply to any person in respect to a business activity with respect to which a utilities tax liability is specifically imposed pursuant to SMC Chapter 5.48.

Section 7. Subsection W of Section 5.45.100 of the Seattle Municipal Code is hereby amended as follows:

5.45.100 Deductions.

In computing the license fee or tax, the following may be deducted from the measure of tax:

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W. Receipts From the Sale of Tangible Personal Property or Retail Services Delivered Outside the City but Within Washington. Effective January 1, 2008, amounts included in the gross receipts reported on the tax return derived from the sale of tangible personal property or retail services delivered to the buyer or the buyer's representative outside the city but within the State of Washington may be deducted from the measure of tax under the retailing or wholesaling

classifications. Retail services include those services defined as a retail service pursuant to SMC 5.30.040 P O.

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Section 8. Section 5.48.055 of the Seattle Municipal Code is hereby amended as follows:

5.48.055 Solid Waste activities subject to tax Amount.

There is levied upon, and shall be collected from everyone including The City of Seattle, on account of the following business activities engaged in or carried on with respect to solid waste, an annual license fee or occupation tax in the amount to be determined by the application of the rates given below:

A. Transfer tax. Effective through December 31, 2006, There is imposed upon everyone engaged in or carrying on the business of operating a garbage solid waste transfer station or upon the business of transferring solid waste generated in or outside of Seattle from one (1) mode of transportation to another a fee or transfer tax equal to the solid waste tons handled for transportation or transported for landfill or incineration disposal purposes multiplied by the following rates. Effective through December 31, 2006, a rate of Six Dollars and Forty Five Cents ($6.45) per ton of the waste handled for transportation or transported for garbage disposal, landfill, or incineration purposes. Effective January 1, 2007 through December 31, 2009, upon everyone engaged in or carrying on the business of operating a garbage transfer station or upon the business of transferring solid waste generated in or outside of Seattle from one (1) mode of transportation to another a fee or tax equal to a rate of Seven Dollars and Fifty Cents ($7.50) per ton of the waste handled for transportation or transported for garbage disposal, landfill, or incineration purposes. Effective January 1, 2010 a rate of Eight Dollars and Fifty Cents ($8.50) per ton. To prevent pyramiding of the tax under this subsection when two (2) or more transfers occur in Seattle, the fee or tax is imposed only upon the last transferor and shall not apply to earlier transfers. Solid Wwaste is transferred from one (1) mode of transportation equipment to another, whenever it is moved from a motor vehicle (including, for example, landgrading or earthmoving equipment), barge, train or other carrier to another motor vehicle (including landgrading or earthmoving equipment), barge, train or other carrier, irrespective of whether or not temporary storage occurs in the process, provided that. Solid waste shall not be considered transferred if the solid waste was generated and it has been placed in a sealed shipping container outside of the city prior to being moved from one mode of transportation to another within the C city or the solid waste was put into a sealed shipping container at a transfer station and subjected to the transfer tax prior to being delivered to the railhead. Beginning January 1, 2009, the transfer tax shall also be imposed on the last transfer in the city of construction, demolition, and landclearing solid waste placed into an intermodal container at the construction, demolition, or landclearing site and transported for landfill or incineration disposal outside of the city. Solid waste transported for recycling, or reuse as recovered material (which solid waste shall contain no more than ten (10) percent non-recyclable material, by volume), yardwaste yard and food waste destined for composting, items to be scrapped for salvage, solid waste used for beneficial use as approved by Seattle Public Utilities, soils, dangerous waste and hazardous substances, and sand and gravel for construction of a public improvement shall not be included in the tonnage by which the fee or transfer tax is measured. The measure of the transfer tax is the actual tonnage of the last in-city transfer of solid waste materials destined for landfill, or incineration disposal unless excluded above, and it is the intent of this subsection that all solid waste generated within the City, unless excluded above, destined to a landfill or incineration disposal be subject to this transfer tax.

B. Upon everyone, including The City of Seattle, engaged in or carrying on the business of the solid waste collection services of garbage, rubbish, trash, CDL Waste, and other solid waste, a fee or tax measured by the total of components 1 and 2 below the following:

1. A tax measured by gross income from solid waste collection services in Seattle which includes any charges to customers for transferring, processing, treating, storage, or disposal:

a. Prior to April 1, 2005, ten (10) percent of the total gross income from solid waste collection services in Seattle, less income derived from the activities identified in subsection C of this section.

b. Effective April 1, 2005, Eeleven and one-half (11.5) percent of the total gross income from the solid waste collection services of solid waste in Seattle, less income derived from the activities identified in subsection C of this section;and.

2. A tax measured by solid waste tonnage collected:

a. Effective through December 31, 2006, Twelve Dollars and Forty Cents ($12.40) per ton of solid waste collected in Seattle, excluding the tonnage from recycling when such recycling contains no more than ten (10) percent non-recyclable material by volume, yardwaste yard and food waste destined for composting, items to be reused or scrapped for salvage, and/or sand and gravel for construction of a public improvement; or.

b. Effective January 1, 2007 through December 31, 2009, Thirteen Dollars and Sixty Five Cents ($13.65) per ton of solid waste collected in Seattle, excluding the tonnage from recycling when such recycling contains no more than ten (10) percent non-recyclable material by volume, yard and food waste destined for composting, items to be reused or scrapped for salvage, solid waste used for beneficial use as approved by Seattle Public Utilities, soils, and/or sand and gravel for construction of a public improvement.

c. After December 31, 2009 the collection tax measured by the tons of solid waste as imposed in this subsection SMC 5.48.055 B 2 is eliminated.

C. The gross income receipts factor identified in subsection B.1 of this section above shall exclude income derived from:

1. Collection and/or sale of recycled materials and/or recovered materials, including charges for the lease or rental of containers used in the collection of recycled/recovered materials;

2. Collection and/or sale after processing of yardwaste yard and food waste products, including charges for the lease or rental of containers used in the collection of yardwaste yard and food waste products;

3. Sale of containers used for collection of residential solid waste;

4. Collection and disposal of bulky items and white goods of solid waste used for beneficial use as approved by Seattle Public Utilities, and soils;

5. Grants and contracts from governmental agencies;

6. The City of Seattle for collecting or disposing of residential garbage and other solid waste;

7. The portion of the City's solid waste collection receipts expended for collection of recyclable materials and yardwaste yard and food waste; and

8. Transportation or deposit of sand and gravel for construction or a public improvement.

D. The tax imposed under subsection A of this section applies to transferring in the Ccity of all solid waste generated in or outside the Ccity and the tax imposed under subsection B of this section applies only to collecting solid waste collection services within the Ccity. The taxes imposed under subsections A and B of this section are cumulative as to solid waste collected and/or transferred in the Ccity, even though the same tonnage of solid waste may be involved at each successive stage in the disposal process, and the economic burden of the two (2) taxes may aggregate.

E. Gross Iincome derived from activities excluded from the taxes imposed in subsections A and B and those activities contained in subsection gross receipts factor as described in subsections B and C of this section above shall be taxed under SMC Chapter 5.45.

Section 9. Section 5.48.072 of the Seattle Municipal Code is hereby deleted in its entirety.

Section 10. Section 21.36.016 of the Seattle Municipal Code is hereby amended as follows:

21.36.016 Definitions R--Z.

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12. "Solid waste" means all putrescible and nonputrescible solid, and semisolid and liquid wastes, including but not limited to garbage, rubbish, yardwaste, ashes, industrial wastes, infectious wastes, swill, construction, demolition and landclearing wastes, abandoned vehicles or parts thereof, and recyclable materials. This includes all liquid, solid and semisolid materials which are not the primary products of public, private, industrial, commercial, mining and agricultural operations. Solid waste includes, but is not limited to sludge from wastewater treatment plants, seepage from septic tanks, wood waste, dangerous waste, hazardous substances, and problem wastes.

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Section 11. 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 _______________, 2008, and signed by me in open session in authentication of its passage this _____ day of _______________, 2008.

_________________________________

President __________of the City Council

Approved by me this ____ day of _____________________, 2008.

_________________________________

Gregory J. Nickels, Mayor

Filed by me this ____ day of __________________________, 2008.

____________________________________

City Clerk

(Seal)

Mel McDonald/GMH

DEA 2008 Utility Tax Amendments Ordinance

August 25, 2008

Version #14a

Form Last Revised on December 31, 2007 1