June 6, 2019 MEMORANDUM To: From: Subject: Finance and Neighborhoods Committee Yolanda Ho and Aly Pennucci, Council Central Staff Statement of Legislative Intent 1-5-B-1 (Sweetened Beverage Tax and Short-Term Rental Tax Funds) On June 11, 2019, the Finance and Neighborhoods Committee will discuss the response to Statement of Legislative Intent (SLI) 1-5-B-1 concerning the Sweetened Beverage Tax (SBT) and Short-Term Rental (STR) Tax Funds.1 This SLI requested that the City Budget Office (CBO) submit legislation, by March 28, 2019, that would create separate funds for SBT and STR revenues, and propose financial policies for use of those revenues. The SLI was in response to the Executive’s proposed spending plans for calendar years 2019 and 2020, which did not fully align with the Council’s policy intent. On March 28, 2019, CBO responded to SLI 1-5-B-1. Rather than submitting legislation establishing the new funds as requested, the response outlined the Executive’s justification for not establishing the funds at this time, committing to delivering a “comprehensive proposal for financial policies for the newly created funds with the 2020 budget legislation transmitted to the Council in September 2019.”2 This memo: (1) Outlines policy considerations for the Council about why waiting to establish the funds and financial policies for use of these tax revenues until the 2020 budget is transmitted may not be in the Council’s interest; (2) Provides background on the SBT, describes Councilmember O’Brien’s draft legislation that would establish the SBT fund, propose financial policies, and outline alternative options; and (3) Provides background on the STR Tax, describes Councilmember O’Brien’s draft legislation that would establish the STR Tax fund, proposes financial policies, and outlines alternative options. Policy Considerations The Mayor’s proposed 2019-20 Budget allocated SBT and STR Tax revenues in a manner that did not fully align with the Council’s intent and did so in a manner that made it difficult to amend the spending plans without reducing or eliminating funding for other Council/City 1 SLI 1-5-B-1 was sponsored by Councilmember O’Brien, with Councilmembers González, Herbold, Juarez, Mosqueda, and Sawant signing on as cosponsors. The SLI was adopted by an 8-0 vote. 2 Response to SLI 1-5-B-1. Page 1 of 7 priorities. The Council always has the option of amending the proposed budget and associated budget legislation; however, the primary purpose of SLI 1-5-B-1 was to provide adequate time outside of Council’s compressed Fall budget season to develop clear financial policies to inform the 2020 budget. If the Council chooses to concede to the Executive’s proposed timeline (i.e. wait until the 2020 proposed budget is transmitted to adopt legislation establishing the separate funds and associated financial policies), the Mayor’s proposed use for these revenues may be again proposed in a manner inconsistent with Council’s intent and be proposed in a manner that would be difficult to unravel. This may, as previously mentioned, require the Council to make cuts or propose new revenue sources. If instead the Council chooses to reject the Executive’s SLI response and act swiftly to adopt legislation establishing the funds and financial policies, the Council’s priorities will have a greater chance of being reflected in the Mayor’s proposed budget. If the Mayor proposes a budget that is still inconsistent, it will be in direct disagreement with the Council’s articulated policy direction (which is informed by community support) – but would be transparent if/should the Council choose to alter the proposed budget. Options: A. Take no action. Accept CBO’s response to SLI 1-5-B-1 and await the Executive’s budget proposal to establish separate funds and financial policies. B. Council takes no action on legislation now and instead outlines expectations (via resolution or letter) for financial policies that should be included in any legislation the Executive transmits with the proposed 2020 Budget for establishing separate SBT and STR Tax funds. C. Introduce legislation in early summer to establish separate funds for SBT and STR Tax revenues and adopt financial policies that align with Council’s intent for use of these funds (as described in the next sections of this memo). D. Introduce legislation in early summer to establish a fund and financial policies for one but not both taxes. Sweetened Beverage Tax Background On January 1, 2018, the City began collecting revenues from the SBT, which was established by Ordinance 125324 in 2017. The tax is generally $0.0175 per fluid ounce of beverage distributed, with exceptions for manufacturers having annual gross receipts (business income) of $5 million or less. Table 1 presents initial and revised revenue estimates, based on actual revenues received versus revised estimates, as well as the difference between the two revenue projections. Page 2 of 7 Table 1. Sweetened beverage tax revenue estimates, 2018 Initial estimate Revised (May 2019) Difference Revenue $14,816,000 $22,254,000 $7,438,000 The SBT ordinance established financial policies that directed the revenues to specific purposes. For the first five years that the tax is collected, the adopted policies directed 20 percent of net proceeds to fund the following one-time or limited-duration expenditures: 1. One-time costs necessary to enable the Department of Finance and Administrative Services (FAS) to administer the tax, such as computer systems; 2. Up to $5 million in total as a one-time contribution to an endowment for the Seattle Colleges’ 13th Year Promise Scholarship program; 3. Up to $1.5 million in total for job retraining and placement programs for workers adversely impacted by the tax; and 4. Funding to construct or enhance classroom facilities for use by the Seattle Preschool Program. In 2018, consistent with the adopted polices, 20 percent of SBT fund balance was allocated to the above expenditures. Given the higher than anticipated revenues received, this policy was amended by the Council as reflected in the adopted 2019-20 budget to reduce the amount of spending in this category to 10 percent for 2019 to 2022. This amount is expected to provide sufficient funding for the priorities while allowing for greater investment in the uses of SBT revenues described below. The remainder of the proceeds from the SBT are limited to use in support of and in order of priority, as follows: 1. Expanding access to healthy and affordable food, closing the food security gap, and promoting healthy food choices through programs such as: a. Community-based investments to expand food access, such as food banks and meal programs; b. Fresh Bucks and Fresh Bucks to Go; c. Implementation of the Seattle Food Action Plan; d. Public health and nutrition programs targeted to assist persons experiencing diabetes and obesity; e. Public awareness campaigns to highlight the impact of sugar-sweetened beverages on health outcomes and increase education about healthy food and beverages; and f. Capital investments to promote healthy choices, such as water bottle filling stations in schools and community centers. Page 3 of 7 2. Supporting evidence-based programs that improve the social, emotional, educational, and physical and mental health for children, especially those services that seek to reduce the disparities in outcomes for children and families based on race, gender, or other socioeconomic factors and to prepare children for a strong and fair start in kindergarten. 3. Administration of assessing and collecting the tax. 4. Ensuring resources for the Office of Sustainability and Environment (OSE) and the SBT Community Advisory Board (CAB). 5. The cost of evaluations by the Office of the City Auditor (AUD) of SBT-funded programs, including health outcomes, and the economic impacts of the tax. The legislation that established the SBT also established the CAB as an advisory board charged with making recommendations to the Mayor and Council regarding the SBT, including funding recommendations across the range of programs previously described. The CAB is required to publish an annual report summarizing tax collection efforts, programs funded to date, and any completed studies evaluating the tax or program funded by it, as well as making recommendations for the allocation of SBT revenues to programs. The first annual report will be completed by July 2019 and is planned to be released in the first quarter of future years. The proposed 2019-20 budget appropriated approximately $5.7 million of unanticipated excess SBT revenue to supplant General Fund (GF) monies for programs administered by the Department of Education and Early Learning, Human Services Department, and OSE, freeing up the GF for other purposes. Although the proposed spending aligned with SBT spending priorities, the Council’s intent was for new revenues to be invested in the expansion of existing programs or creation of new programs in accordance with statute, rather than to maintain the same level of spending for programs such as food banks, child care vouchers, and the parentchild home program. This action raised concern among stakeholders, particularly the CAB and the Council, resulting in the request by the Council to establish a separate fund and strengthen the financial policies to prevent further use of SBT revenues to supplant the GF. Draft Legislation to Establish the SBT Fund and Amend Financial Policies Under the direction of Councilmember O’Brien, Central Staff drafted legislation that would establish a fund for SBT proceeds and modify the financial policies beginning in 2019. The draft legislation for the SBT would: 1. Create an SBT fund to track revenues and expenditures by City departments; 2. Establish financial policies for use of SBT revenues to: a. Codify spending guidance for revenues included in Ordinance 125324 by adding a new section to Chapter 5 of the Seattle Municipal Code; and Page 4 of 7 b. Require that excess revenues be used solely for expanding existing programs or creating new programs that align with SBT spending guidance. Council may want to consider including more specific guidance, and possibly more flexibility, for allocating excess revenues. For instance, some portion could be appropriated according to CABidentified priorities, another for specific programs (e.g., food banks), and the remainder left to the discretion of the Executive. Short-Term Rental Tax Background In November 2017, the Council adopted Ordinance 125422, that imposed a per night tax on each short-term rental operator in Seattle at a rate of $8 per night for a private or shared room, and $14 per night for an entire unit. The STR Tax was created to generate at least $5 million per year in ongoing funding to support community-initiated projects under the City’s Equitable Development Initiative (EDI) program; support for affordable housing was secondary. Ordinance 125442 outlined the Council’s intent for use of STR Tax revenues, as follows: 1. The first $5 million of net proceeds, after monies spent for implementation and administration, shall be applied to investments in community-initiated equitable development projects; 2. The next $2 million of net proceeds shall be applied to investments in affordable housing; and 3. The remainder of net proceeds shall be used to support community-initiated equitable development projects, including the affordable housing component of those projects. In March 2018, the State Legislature adopted House Bill (HB) 2015, that extended the authority for the Convention and Trade Center Tax3 to include short-term rentals. The state bill requires that any tax revenue generated from short-term rentals within Seattle be directed to the City provided that the City repeals any local tax that existed at the time HB 2015 was approved. In June 2018, the Council adopted Ordinance 125594, repealing Ordinance 125422. HB 2015 specifies that STR Tax revenue generated in Seattle is to be used by the City to support community-initiated equitable development projects and affordable housing programs. The Council’s expectation was that the STR Tax revenue would be spent in a manner consistent with the intent outlined in Ordinance 125422. The adopted 2019-2020 budget assumed that the STR Tax will generate $10.5 million in 2019 and in 2020 and proposed spending the $10.5 million of total forecasted STR Tax revenues as summarized in Table 2. 3 Within King County, a lodging excise tax, often described as the Convention and Trade Center Tax, is imposed on lodging businesses that have 60 or more units. This tax is collected by the Public Facilities District that operates the Washington State Convention Center. Page 5 of 7 Table 2. Programming of Short-Term Rental Tax Revenues: 2019-2020 Budget (Amounts in $1,000s) 2019 Adopted $ % 2020 Endorsed $ % Expenditures Office of Planning & Community Development - Equitable Development Initiative (EDI) EDI - Administration and Project Management (6 FTE) EDI - Consultant Services EDI - Project Awards Human Services Department Permanent Supportive Housing Homelessness Prevention Seattle Rental Housing Assistance Pilot Finance General (Debt Service) (2018 Bond Issue) Finance General (Debt Service) (2019 Bond Issue) Total Expenditures (865) 8.2% (869) 8.3% (200) (3,935) 1.9% 37.5% (200) (3,931) 1.9% 37.4% (3,737) 35.6% (3,300) 31.4% (1,000) 9.5% - - (357) (406) (10,500) 3.4% 3.9% 100% (1,355) (844) (10,500) 12.9% 8.0% 100% The spending plan in the 2019-2020 budget supported several Council priorities, broadly speaking, related to affordable housing and equitable development; however, it was not consistent with the Council’s original intent for STR Tax revenues. As previously mentioned, this revenue source was primarily established to generate at least $5 million annually for EDI project grant; resources to pay the debt service on bonds issued for affordable housing projects and to support development of affordable housing generally were secondary. The Mayor's proposed budget swapped STR Tax proceeds for the GF to fund the Office of Planning and Community Development (OPCD) staffing. The proposal to support staff and consultant resources for the EDI program, rather than grants to the community, and to support existing supportive housing programs and the Seattle Rental Housing Assistance pilot, rather than investments in new affordable housing projects, did not align with the Council’s original intent. The Council was unable to find the ongoing resources to fully align the proposed spending plan with the original intent; however, through Green Sheet 29-2-B-3-2019, the Council ensured that in 2019 a full $5 million would be available for EDI grants by reallocating Community Development Block Grant funds. Draft Legislation to Establish a STR Tax Fund and Financial Policies Under the direction of Councilmember O’Brien, Central Staff drafted legislation that would establish a fund and financial policies for STR Tax proceeds that would go into effect in 2020. The draft legislation for the STR Tax would: 1. Create a STR Tax fund to track revenues remitted from the Washington State Convention Center Public Facilities District that is generated from short-term rental activity in Seattle, as well as track expenditures by City departments. Page 6 of 7 2. Establish financial policies to ensure that monies deposited into this fund are expended as intended by the Council. The draft legislation would require that STR Tax revenues are used as follows: a. The first $5 million of proceeds shall be directed to OPCD for grants made to organizations for investments in community-initiated equitable development projects; b. The next $2 million of proceeds shall be directed to the Office of Housing for investments in new affordable housing projects or directed to debt service payments on bonds issued for affordable housing projects; and c. The remaining proceeds shall be applied to grants made to organizations for investments in community-initiated equitable development projects, including the affordable housing component of those projects. Council may want to consider modifications to financial policies included in the draft legislation for STR Tax revenues. Although the original intent for the STR Tax was to first establish an ongoing source of revenue for EDI grants, the Council may want to consider modifying the proposed policies to dedicate the first $2.2 million to pay the debt service on bonds for affordable housing and then the next $5 million for EDI grants. This would address concerns that (1) revenues could come in under what was assumed for the 2019 budget; and (2) at the direction of the Council, $29 million in bonds for affordable housing that requires $2.2 million to cover the annual debt service have already been issued regardless of STR Tax revenues, and the City is already obligated to pay that debt service. In addition, the Council could allow more flexible use of STR Tax revenues in 2020 to reflect the proposed spending in the 2020 endorsed budget and then, beginning in 2021, limit the use of this resource only for EDI grants and investments in new affordable housing projects. Next Steps Upon direction from the Council, legislation could be introduced immediately and taken up in committee for action by the Council in early Summer. Alternatively, Council could await transmittal of the Mayor’s proposed 2020 budget. Attachments: 1. DRAFT Legislation to establish the SBT fund and financial policies 2. DRAFT Legislation to establish the STR Tax fund and financial policies cc: Kirstan Arestad, Central Staff Director Page 7 of 7 ATTACHMENT 1 - DRAFT Legislation to establish the SBT fund and financial policies Yolanda Ho LEG Sweetened Beverage Tax Fund ORD D1a 1 CITY OF SEATTLE 2 ORDINANCE __________________ 3 COUNCIL BILL __________________ 4 5 6 7 8 9 ..title AN ORDINANCE related to creating a fund for Sweetened Beverage Tax revenues; adding a new Section 5.53.055 to the Seattle Municipal Code; and providing additional guidelines for expending proceeds. ..body WHEREAS, on June 5, 2017, the City Council passed Ordinance 125324, imposing a tax on 10 engaging in the business of distributing sweetened beverages (“Sweetened Beverage 11 Tax”), with specific direction on how the proceeds generated from the Sweetened 12 Beverage Tax should be expended; and 13 WHEREAS, services funded by the proceeds of the Sweetened Beverage Tax are intended to 14 expand access to healthy and affordable food; close the food security gap; promote 15 healthy nutrition choices; reduce disparities in social, developmental, and education 16 readiness and learning for children; assist high school graduates to enter college; and 17 expand services for the birth-to-five population and their families; and 18 WHEREAS, on November 19, 2018, the City Council passed Ordinance 125718, amending 19 Section 3 of Ordinance 125324 concerning use of proceeds of the Sweetened Beverage 20 Tax, to account for higher revenue projections; NOW, THEREFORE, 21 BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS: 22 Section 1. A new Sweetened Beverage Tax Fund is created in the City Treasury effective 23 June 1, 2019, to which proceeds remitted to The City of Seattle (“City”) from revenues collected 24 from the Sweetened Beverage Tax must be deposited, and from which expenditures may be paid 25 for purposes described in Section 3 of Ordinance 125324, as amended. The purpose of creating Template last revised November 13, 2018 1 ATTACHMENT 1 - DRAFT Legislation to establish the SBT fund and financial policies Yolanda Ho LEG Sweetened Beverage Tax Fund ORD D1a 1 the Sweetened Beverage Tax Fund is to separately account for revenues received from the tax 2 and expended by City departments. 3 4 5 Section 2. Section 3 of Ordinance 125324, as amended by Ordinance 125718, is amended as follows: Section 3. A new Section 5.53.055 is added to the Seattle Municipal Code, to read 6 as follows: 7 5.53.055 Sweetened beverage tax—Allocation of proceeds 8 Services funded by the proceeds of the beverage tax are intended to expand access to 9 healthy and affordable food; ((,)) close the food security gap; ((,)) promote healthy 10 nutrition choices; ((,)) reduce disparities in social, developmental, and education 11 readiness and learning for children; ((,)) assist high school graduates enter college; ((,)) 12 and expand services for the birth-to-five population and their families. 13 A. For the first five years that the tax is collected, a portion of the net 14 proceeds shall be used to fund one-time expenditures to administer the tax, in support of 15 education, and for training programs. Eligible expenditures include, in order of priority: 16 1. One-time costs necessary to enable the administration of the tax; 17 2. Up to $5,000,000 in total as a contribution to an endowment for the 18 Seattle Colleges 13th Year Promise Scholarship program; 19 20 3. placement programs for workers adversely impacted by the tax; and 21 22 Up to $1,500,000 in total as funding for job retraining and 4. Funding for capital projects to construct or enhance classroom facilities for use by the Seattle Preschool Program. Template last revised November 13, 2018 2 ATTACHMENT 1 - DRAFT Legislation to establish the SBT fund and financial policies Yolanda Ho LEG Sweetened Beverage Tax Fund ORD D1a 1 The portion of the net proceeds that shall be used for the above eligible 2 expenditures shall be as follows: 20 percent in the first year; and ((10)) ten percent in 3 each of the second, third, fourth, and fifth years of collections. 4 5 6 7 Beginning in the sixth year of collections, all net proceeds from the tax collected shall be for programs defined in subsection 5.53.055.B. ((of this section.)) B. proceeds from the beverage tax shall be used to support, in order of priority: 8 9 10 Except as required by subsection 5.53.055.A, ((of this section,)) net 1. security gap, and promoting healthy food choices through programs including, but not limited to: 11 12 Expanding access to healthy and affordable food, closing the food a. Community-based investments to expand food access, such as food banks and meal programs; 13 b. Fresh Bucks and Fresh Bucks to Go; 14 c. Implementation of the Seattle Food Action Plan; 15 d. Public health and nutrition programs targeted to assist 16 persons experiencing diabetes and obesity; 17 e. Public awareness campaigns to highlight the impact of 18 sugar-sweetened beverages on health outcomes and increase education about healthy 19 food and beverages; and 20 f. 21 water bottle filling stations in schools and community centers. 22 23 Capital investments to promote healthy choices, such as 2. Evidence-based programs that improve the social, emotional, educational, physical, and mental health of children, especially those services that seek to Template last revised November 13, 2018 3 ATTACHMENT 1 - DRAFT Legislation to establish the SBT fund and financial policies Yolanda Ho LEG Sweetened Beverage Tax Fund ORD D1a 1 reduce the disparities in outcomes for children and families based on race, gender, or 2 other socioeconomic factors and to prepare children for a strong and fair start in 3 kindergarten. 4 3. Administration of assessing and collecting the tax. 5 4. Ensuring resources for the Office of Sustainability and the 6 Environment and the Sweetened Beverage Tax Community Advisory Board. 7 5. The cost of program evaluations conducted by the Office of the 8 City Auditor under subsection 5.B of ((this ordinance)) Ordinance 125324, including 9 costs borne by other City departments in facilitating such evaluations. 10 In the annual City budget or by separate ordinance, the City’s legislative authority 11 shall from year to year determine the services and funding allocations that will most 12 effectively achieve the goals and outcomes in accordance with chapter 35.32A RCW. 13 C. Beginning in 2019 and thereafter, revenues that exceed projections shall 14 be used to either expand existing programs or create new programs that are in accordance 15 with subsection 5.53.055.B, and may not be used to supplant appropriations from other 16 funding sources. 17 Section 3. The Director of Finance is authorized to create other accounts or subaccounts 18 as may be needed to implement the Sweetened Beverage Tax Fund’s purpose and intent as 19 established by this ordinance. Template last revised November 13, 2018 4 ATTACHMENT 1 - DRAFT Legislation to establish the SBT fund and financial policies Yolanda Ho LEG Sweetened Beverage Tax Fund ORD D1a 1 Section 4. This ordinance shall take effect and be in force 30 days after its approval by 2 the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it 3 shall take effect as provided by Seattle Municipal Code Section 1.04.020. 4 Passed by the City Council the ________ day of _________________________, 2019, 5 and signed by me in open session in authentication of its passage this _____ day of 6 _________________________, 2019. 7 ____________________________________ 8 President ____________ of the City Council 9 Approved by me this ________ day of _________________________, 2019. 10 ____________________________________ 11 Jenny A. Durkan, Mayor 12 Filed by me this ________ day of _________________________, 2019. 13 ____________________________________ 14 Monica Martinez Simmons, City Clerk 15 (Seal) Template last revised November 13, 2018 5 ATTACHMENT 2 – DRAFT Legislation to establish the STR Tax fund and financial policies Aly Pennucci LEG Short-Term Rental Tax Fund ORD D2a 1 CITY OF SEATTLE 2 ORDINANCE __________________ 3 COUNCIL BILL __________________ 4 5 6 7 8 ..title AN ORDINANCE related to funding for the Equitable Development Initiative and affordable housing; creating a fund for short-term rental tax revenue. ..body WHEREAS, on November 13, 2017, the City Council passed Ordinance 125442, authorizing a 9 tax on every person engaging within Seattle in the business of being a short-term rental 10 operator, with specific direction on how the proceeds generated from the short-term 11 rental tax should be expended; and 12 WHEREAS, on March 23, 2018, the Governor signed House Bill (HB) 2015, which became 13 Chapter 245, Laws of 2018, modifying the lodging excise tax under RCW 36.100.040 to 14 remove the exemption for premises with fewer than 60 lodging units and to impose the 15 tax on short-term rentals; and 16 WHEREAS, Chapter 245 requires that a public facilities district within a county with a 17 population of 1,500,000 or more must make quarterly payments to a city in which a 18 convention and trade center is located from tax revenue from short-term rentals collected 19 by a public facilities district only if: (1) the city had authorized on or before December 20 31, 2017, a tax on engaging in the business of being a short-term rental operator; and (2) 21 the city has repealed the ordinance authorizing a tax on engaging in the business of being 22 a short-term rental operator; and 23 WHEREAS, as a result of Chapter 245, the public facilities district that operates the Washington 24 State Convention Center will impose the lodging tax under RCW 36.100.040 on short- 25 term rentals in Seattle; and Template last revised November 21, 2017 1 ATTACHMENT 2 – DRAFT Legislation to establish the STR Tax fund and financial policies Aly Pennucci LEG Short-Term Rental Tax Fund ORD D2a 1 WHEREAS, in order to receive the tax revenue from short-term rentals as authorized by Chapter 2 245, on June 4, 2018, the City Council passed Ordinance 125594, thereby repealing 3 Ordinance 125442, repealing the City’s short-term rental tax that would have been 4 imposed under Chapter 5.54 of the Seattle Municipal Code beginning January 1, 2019; 5 and 6 WHEREAS, HB 2015 requires that the payments made to a city must be used to support 7 community-initiated equitable development and affordable housing programs, as 8 determined by the city in its sole discretion; NOW, THEREFORE, 9 10 BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS: Section 1. A new Short-Term Rental Tax Fund is created in the City Treasury effective 11 January 1, 2020, to which proceeds remitted to The City of Seattle (“City”) from the Washington 12 State Convention Center Public Facilities District (“District”), from revenues collected by the 13 District derived from short-term rental activity within the City, must be deposited, and from 14 which expenditures may be paid for the purposes described in Section 2 of this ordinance. The 15 purpose of creating the Short-Term Rental Tax Fund is to separately account for revenues 16 received from the District and expended by City departments. The Fund shall receive earnings on 17 its positive balances and pay interest on its negative balances. 18 Section 2. The new Short-Term Rental Tax Fund shall receive revenues from the 19 payments made to the City from the District from revenue collected from short-term rentals in 20 Seattle. In accordance with RCW 36.100.040, the services funded by the proceeds of the short- 21 term rental tax shall support investments in affordable housing programs and community- 22 initiated equitable development projects, including but not limited to projects described in 23 Resolution 31711. In 2020 and beyond, the proceeds shall be used as follows: Template last revised November 21, 2017 2 ATTACHMENT 2 – DRAFT Legislation to establish the STR Tax fund and financial policies Aly Pennucci LEG Short-Term Rental Tax Fund ORD D2a 1 A. The first $5,000,000 of proceeds shall be directed to the Office of Planning and 2 Community Development for grants made to organizations for investments in community- 3 initiated equitable development projects; 4 B. The next $2,200,000 of proceeds shall be directed to the Office of Housing for 5 investments in new affordable housing projects or directed to debt service payments on bonds 6 issued for affordable housing projects; and 7 C. The remaining proceeds shall be directed to the Office of Planning and Community 8 Development and the Office of Housing for grants made to organizations for investments in 9 community-initiated equitable development projects, including the affordable housing 10 component of those projects. 11 Section 3. The Director of Finance is authorized to create other accounts or subaccounts 12 as may be needed to implement the Fund’s purpose and intent as established by this ordinance. Template last revised November 21, 2017 3 ATTACHMENT 2 – DRAFT Legislation to establish the STR Tax fund and financial policies Aly Pennucci LEG Short-Term Rental Tax Fund ORD D2a 1 Section 4. This ordinance shall take effect and be in force 30 days after its approval by 2 the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it 3 shall take effect as provided by Seattle Municipal Code Section 1.04.020. 4 Passed by the City Council the ________ day of _________________________, 2019, 5 and signed by me in open session in authentication of its passage this _____ day of 6 _________________________, 2019. 7 ____________________________________ 8 President ____________ of the City Council 9 Approved by me this ________ day of _________________________, 2019. 10 ____________________________________ 11 Jenny A. Durkan, Mayor 12 Filed by me this ________ day of _________________________, 2019. 13 ____________________________________ 14 Monica Martinez Simmons, City Clerk 15 (Seal) Template last revised November 21, 2017 4