HomeMy WebLinkAboutResolution No. 2019-30tltc city~(,
KENAI, ALASKA
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Sponsored by: Administration
CITY OF KENAI
RESOLUTION NO. 2019 • 30
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI , SUPPORTING SECTION 5 OF
KENAI PEN INSULA BOROUGH ORDINANCE 2019-09, PROVIDING THAT A BALLOT
PROPOSITION ON AMENDING THE BOROUGH 'S SALES TAX CODE SHALL BE PLACED
BEFORE BOROUGH VOTERS ATTHE REGULAR ELECTION ON OCTOBER 1, 2019 .
WHEREAS , due to the continuing decline in state assistance to municipalities and other losses
of revenue, the Kenai Peninsula Borough is pursuing a borough-wide tax on temporary lodging
rentals similar to bed taxes levied by other Cities and Boroughs in Alaska; and
WHEREAS, the City of Kenai attracts a significant number of visitors to the Kenai Peninsula each
year, and although visitors contribute to the economy, the City does not currently receive any
direct revenue from visitors to offset demands on public services other than the City's share of
general sales tax; and ,
WHEREAS, the City at one time had a Hotel/Motel Room Tax of five percent (5%), which was
transmitted from the operator and/or owner renting rooms to the City; however, effective June 15 ,
1996, the Hotel/Motel Room Tax was suspended until such time as Council directs otherwise ;
and ,
WHEREAS, under the Borough Ordinance, a temporary lodging ta x would be established and
apply to "temporary lodging," to be defined in the ordinance; and ,
WHEREAS , a temporary lodging tax should be inclusive of recreational vehicles sites and
campsites that compete with hotels , lodges , motels , and bed and breakfasts , to level the playing
field in the hospitality industry; and ,
WHEREAS, the City of Kenai does not currently have a bed tax and , if adopted and approved by
voters , Borough Ordinance 2019-09 would allow the City to participate in a Borough -wide bed ta x
levied by cities within the Borough in which the borough-wide bed tax would be collected by the
Borough and fifty percent (50%) remitted to the City; and,
WHEREAS , the revenue generated from the Borough portion of the bed ta x would be used for
educational purposes and make other Borough revenues available to offset visitor costs , the City
would be able to designate where to direct its portion of the bed ta x; and ,
WHEREAS , this Resolution of support does not obligate the City to enact a bed ta x but if a majority
of Borough qualified voters approved Borough Ordinance 2019-09 on the October 1, 2019 Kenai
Peninsula Borough ballot then the City must enact its own bed tax in order to participate in the
City's share in the Borough-wide rate remitted to the City of Kenai.
NOW , THEREFORE, BE IT RESOL VED BY THE COUNC IL OF THE CITY OF KENAI , ALASKA :
Resolution No . 2019-30
Page 2 of 2
Section 1: That the Kenai City Council supports Section 5 of Kenai Peninsula Borough
Ordinance 2019-09, providing that a ballot proposition on amending the Borough's Sales Tax
Code shall be placed before borough voters at the regular election on October 1, 2019.
Section 2: That the Kenai City Council requests the Kenai Peninsula Borough Assembly
include in the definition that the temporary lodging tax apply to recreational vehicles and camp
sites in the same way as other forms of lodging .
Section 3: That the Kenai City Council recommends that the Kenai Peninsula Borough
convene a joint work session of municipalities to discuss the ordinance on amending the Borough
Sales Ta x Code to levy a ta x on temporary lodging before adopt ion of the ordinance on temporary
lodging .
Section 4: That a copy of this resolution be transmitted to Mayor Charlie Pierce , Kenai
Peninsula Borough Assembly Members, and City Managers, Mayors , and City Councils of the
other cities in the Borough .
Section 5: That this resolution take effect immediately upon passage.
ADOPTED BY THE COUNCIL OF THE CITY OF KENAI , ALASKA, this 151h day of May, 2019 .
~RIAN GABRIEL SR., MAYOR
ATTEST:
MEMORANDUM
TO: Mayor Brian Gabriel and Kenai City Council
FROM: Paul Ostrander, City Manager
DATE: May 6, 2019
SUBJECT: Resolution 2019-30 – Supporting Kenai Peninsula Borough Ordinance
2019-09 to Establish a Temporary Lodging Tax
____________________________________________________________________________
Kenai Peninsula Borough Ordinance 2019-09 would establish a Temporary Lodging Tax, exempt
temporary lodging rentals from the General Sales Tax, and allow cities to exempt up to one half
of the Borough’s Temporary Lodging Tax, subject to Borough voter approval. Borough
Ordinances 2017-17 and 2017-29 as well as 2018-24, which would have asked voters to approve
a 6% and 12% bed tax, respectively, failed in 2017 and 2018. City of Kenai Resolution 2017-53
supported Borough Ordinance 2017-17.
In 1991, the City enacted a Hotel/Motel bed tax of 5%, which was administered by the City and
transmitted by the operator and/or owner renting rooms. The tax was put in place to promote
economic development and tourism within the City but was suspended in 1996 until such time as
the Council directed otherwise. At the time, an area-wide bed tax was not in place, putting City of
Kenai businesses at a competitive disadvantage when local lodging was in low demand. The
suspension of the bed tax was due to the possibility of adverse impacts on Kenai hotel/motel
operators that asserted the tax made them uncompetitive with similar businesses outside of the
City of Kenai that did not have a bed tax. City of Kenai businesses have expressed that RV and
tent sites should be subject to any Temporary Lodging Tax to provide equity and assure
competitiveness with motels, hotels and bed and breakfasts. Council may want to consider
recommending the Assembly amend Borough Ordinance 2019-09 to include the taxation of RV
and tent sites.
If adopted and approved by voters, Borough Ordinance 2019-09 would allow the City to participate
in a Borough-wide 6% bed tax levied by cities within the Borough in which the borough-wide rate
of 12% would be collected by the Borough and 6% remitted to the City. The City’s participation in
a bed tax would include approximately 28 businesses operating as motels, hotels, or bed and
breakfasts within the City of Kenai and would not include motor homes or tents.
Page 2 of 2
Resolution 2019-30
Bed taxes are a common source of local government revenues. Other Alaska cities and boroughs
have a bed tax with rates that range from 4% to 12%. Opposition to a bed tax by the hotel and
travel industry is often lessened if some of the bed tax revenue is directed towards tourism
promotion efforts. If a bed tax was enacted, the Council could appropriate a portion of the
revenues specifically towards tourism marketing.
The City of Kenai attracts a significant number of visitors to the Kenai Peninsula each year, and
although visitors contribute to the economy, the City does not currently receive any direct revenue
from visitors to offset demands on public services other than the City’s share of general sales tax.
The estimated annual distribution of tax revenue of a 6% bed tax for a full fiscal year is
approximately $150,000 to the City of Kenai.
Support of Resolution 2019-30 does not obligate the City to enact a bed tax or determine the
distribution of revenue but supports placing an area-wide bed tax on the October 1, 2019 Kenai
Peninsula ballot.
Your consideration is appreciated.
Kenai Peninsula Borough, Alaska New Text Underlined; [DELETED TEXT BRACKETED] Ordinance 2019-09
Page 1 of 4
Introduced by: Bagley
Date: 05/07/19
Hearing: 06/05/19
Action:
Vote:
KENAI PENINSULA BOROUGH
ORDINANCE 2019-09
AN ORDINANCE AMENDING THE BOROUGH’S SALES TAX CODE TO LEVY A 12
PERCENT TAX ON TEMPORARY LODGING, EXEMPT TEMPORARY LODGING
RENTALS FROM THE GENERAL SALES TAX, AND ALLOW CITIES THAT LEVY
A SIMILAR SALES TAX ON TEMPORARY LODGING TO EXEMPT UP TO ONE-
HALF OF THE BOROUGH’S TEMPORARY LODGING TAX, SUBJECT TO VOTER
APPROVAL
WHEREAS, the Kenai Peninsula Borough (“borough”) needs to raise revenue to protect the
general fund, which has been declining due to substantial losses in tax revenues
due to past increases in tax exemptions, the continuing and projected large decline
in state assistance to municipalities, other proposed cuts in municipal funding, and
the increasing reliance on borough funding for education; and
WHEREAS, the borough is currently facing a potentially severe budget deficit for FY 2020;
and
WHEREAS, currently 49 Alaska municipalities including cities and boroughs have a bed tax,
with bed tax rates that are based on a percentage of price ranging from 4 percent
to 12 percent; and
WHEREAS, the Kenai Peninsula Borough and the Aleutians East Borough are the only second-
class boroughs in the state without an additional sales tax on temporary lodging;
and
WHEREAS, several hundred thousand visitors travel to the Kenai Peninsula each year and
contribute in a large way to the area’s economy but also create a large demand on
public services in the borough; and
WHEREAS, impacted borough services include solid waste, roads, recreational and senior
citizen services, 911 and emergency services, hospital services and disaster
services; and
WHEREAS, while the revenue to the borough generated from this additional sales tax on
temporary lodging would be used solely for educational purposes, it would also
make other borough revenues available to offset these visitor costs and help
maintain the fund balance; and
Ordinance 2019-09 New Text Underlined; [DELETED TEXT BRACKETED] Kenai Peninsula Borough, Alaska
Page 2 of 4
WHEREAS, “temporary lodging” is currently defined in the borough sales tax code as “a
service to provide any lodging of less than one month”; and
WHEREAS, to clarify that this tax does not apply to the rental of spaces for motor homes, tents,
and other similar temporary shelters not provided by the seller, and what is
considered temporary lodging, the definition of “temporary lodging” is amended;
and
WHEREAS, a temporary lodging tax of 12 percent is estimated to generate approximately
$1,100,000 in additional revenues in FY2020 and $4,400,000 in FY2021 and
FY2022; and
WHEREAS, to enable the cities to levy a similar tax and allow the tax to apply evenly
throughout the borough, the ordinance exempts from the borough’s 12 percent
temporary lodging tax an amount equal to a similar city tax of up to one-half of
the borough’s temporary lodging tax; and
WHEREAS, as this includes an increase in the sales tax rate voter approval is required; and
WHEREAS, this also specifically authorizes cities to levy a temporary lodging tax to ensure the
general law cities may legally do so under AS 29.45.700(a) after the borough
exempts temporary lodging from its general sales tax provisions in this ordinance;
NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KENAI
PENINSULA BOROUGH:
SECTION 1. KPB 5.18.100 is amended as follows:
5.18.100. General—Levied—Amount.
A. There is levied by the borough a consumer's sales tax of up to 3 percent
maximum rate on all retail sales, on all rents, and on all services made or
rendered within the borough, measured by the gross sales price of the
seller.
B. In addition to the tax levied in paragraph A of this section, there is levied
in the borough a sales tax on the rental of temporary lodging of up to 12
percent of the rental price of all such rentals within the borough, except as
specifically exempted herein.
C. In addition to the sales taxes levied by the borough, any municipality
within the borough may levy a consumer's sales tax and a temporary
lodging tax that may be included in their general sales tax, taxed separately,
or both, as provided by Alaska Statute which shall be reported, collected,
and enforced according to the terms of this chapter.
Kenai Peninsula Borough, Alaska New Text Underlined; [DELETED TEXT BRACKETED] Ordinance 2019-09
Page 3 of 4
SECTION 2. That KPB 5.18.200(A) is amended by amending paragraph 22, as follows:
5.18.200. Exemptions/waivers—Exemptions.
A. The following classes of retail sales, services and rentals are exempt:
…
22. The rental of temporary lodging shall be exempt from the
borough general sales tax levied pursuant to KPB 5.18.100(A).
SECTION 3. That KPB 5.18.215 is hereby enacted, as follows:
5.18.215. Exemptions/waivers—Temporary lodging within cities in the
borough.
Rentals of temporary lodging within any city in the borough are exempt from the
borough’s temporary lodging room tax in an amount equal to a similar temporary
lodging tax that is either levied separately from or included in the city’s general
sales tax, or both, with a maximum total exemption of one-half of the borough’s
temporary lodging tax.
SECTION 4. That KPB 5.18.900, Definitions, is hereby amended by amending the definition of
temporary lodging as follows:
5.18.900. Definitions.
When not clearly otherwise indicated by the context, the following words and
phrases, as used in this chapter, have the following meanings:
. . .
“Temporary lodging” [IS DEFINED AS] means a service to provide any structure
or portion of a structure, permanent or temporary, fixed or mobile, in which a
person, for money or other consideration, may obtain lodging, dwelling, or
sleeping accommodations for less than one month. This term includes hotels,
apartment hotels, motels, tourist homes, houses or courts, lodging houses, inns,
rooming houses, hostels, trailers, bed and breakfasts, dormitories except as
excluded below, and any other facility, structure, or room of whatever name where
space for lodging, dwelling, or sleeping may be secured for consideration. “Room”
excludes any self-contained and powered motor home or tent not provided by the
seller, tent or tent space, hospital, medical clinic, sanitarium, or nursing home; or
any student dormitory operated by a non-profit or public educational entity.
SECTION 5. That a ballot proposition shall be placed before borough voters at the regular
election on October 1, 2019 to read as follows:
Ordinance 2019-09 New Text Underlined; [DELETED TEXT BRACKETED] Kenai Peninsula Borough, Alaska
Page 4 of 4
Shall Ordinance 2019-09 be approved? Ordinance 2019-09 establishes a borough
sales tax of up to 12 percent on temporary lodging, exempts temporary lodging
from the borough general sales tax, and exempts the amount of any city temporary
lodging tax up to one-half of the borough’s temporary lodging tax. “Temporary
lodging” includes a service to provide lodging as described in the ordinance of less
than one month for money or other consideration”.
Yes _____ A “yes” vote means you approve of a borough temporary lodging
tax of up to 12 percent instead of the general sales tax on temporary lodging, with
an exemption for any similar tax on temporary lodging tax levied by a city on the
lodging. This exemption in cities cannot exceed one-half of the borough’s
temporary lodging tax.
No _____ A “no” vote means you oppose a borough temporary lodging tax of
up to 12 percent instead of the existing general sales tax on temporary lodging,
with an exemption for any similar tax on temporary lodging tax levied by a city
on the lodging. This exemption in cities cannot exceed one-half of the borough’s
temporary lodging tax.
SECTION 6. That Sections 5 and 6 of this ordinance shall become effective immediately upon
enactment of this ordinance. Sections 1, 2, 3 and 4 of this ordinance shall become
effective April 1, 2020, only if the proposition contained in Section 5 is approved
by a majority of voters voting on the question in the regular election of October 1,
2019.
ENACTED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH ON THE *
DAY OF *, 2019.
____________________________________
Wayne H. Ogle, Assembly President
ATTEST:
__________________________________
Johni Blankenship, MMC, Borough Clerk
Yes:
No:
Absent: