HomeMy WebLinkAboutOrd2007-011Sponsored by: Oates
Failed Introduction: tiovenrber 26, 2007
Public Bearing: December ]0, 2007
Enactment: hailed 3-3
CI'T'Y OF SF.W;IRD, :1LASKA
URUIN:~NCE 2007-011
AN ORDIN.4NCF: UM' THE Cl"rY COUNCIL OF TIIE CITY OF
SEWARD, ALASKA, RF.VItiIM~ SEWARll crrv CODE SECTION
5.35.040 (EYCLUSIONS AND F.XN:MP'1'IUNS), EkEMPTING THAT
PORTION OF RESIDF.NTIAI. RENTS ABOVE $500, FROM SALES
T:1X, EFFECTIVE APRI1. 1, 200R
W'[IEREAS, Se++•ard City Code 5.3.035 provides authority for the imposition of sales tax and
rcyuires that sales faxes be collected and renrilted to the Kenai Peninsula Borough in accordance with
.4S 29.35.170 and Chapter 5.18 ul'the Kenai Peninsula Borough Code; and
WHEREAS, Suward City Cudc 5.35.045 specifies the amount of tax to he applied on the first
$5(10 of each separate sale, rent, or service transaction, with said amount being generally identified as
tlle'~Sflles 1flx Cap"; and
L WHN;REAS, the Seward City Cuuttcil is cunsidcrinh an iucn•asc to the sales lax cap by way of
Ordinance 211(17-10, which proposes ro increase the sales tax cap 1'rum $_500 to $1,000 clTcctivc April 1,
2008, and which will he introduced at the Sewflrd City Council meeting dated Vuvcnrbcr 2G, 2007, for
final passaee proposed on Decemher 10, 200R; and
V1'HEREAS. the Seward City Council desires to increa_e the tax cap from $S00 to $1,0(1(1, but
desires that an increase in the tax cap not adversely affect residential renters, and therefore desires ro
exclude from sales taxation, that portion of residential rents above $500, effective April I. 200R, where
"residential rents" is defined in Section I below.
VO}~' THEREFORE. TFIE CITY C'OLfiC'll. OF TBF. C'ITl OF SF.4~'ARD. AI.AtiK:+,,
IlERE61 ORDAINS that:
Section T. Seward City Code Section 5.35.040 (I ti) is herehy added, as follows:
Bold =new
(l6) [lousing rental payments above $500 per month for a dwelling unit, +r•here
d++rlliuK unit means a house, apartment, or room in a residential facility such as
cou~re~ate housiu£ or assisted lining.
CITI' OT SE~~'ARD.:1LASKA
ORDINANCE 2007-O1 l
Section 2. 't'his effective date of the change in the housing rcotal payments exemption is April
I , 20UR.
Section 3. 'Phis ordinance shall take effect 30 days following its enactment.
YASSF,I) ANI) 4PPROVED by the City Council of the City of Seward, Alaska, this lUth day
of Decemher, 2007.
I'HN; CITY ON' SE~~'ARll, ALASIi:1
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C~l~ C_ "r '.~~
Clark Corhridge,l4Tstyo
A1'hti: Ambcrg, A~aldatta, Smith
NOES: Dunham, Kellar, Corhridge
ABSENT: Bardarson
ABSTAIN: None
A'I"PEST:
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1ean~ewis, CMC
City~'lerk
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'•, OF P~ °~°°
Council Agenda Statement
Meeting Date: November 26, 2UU7
From: Phillip Oates, City Manager
Agenda Item: Exemplinx residential rents above $5U0
BACKGROUND & JUSTIFICATION:
The Seward City Council is considering att increase in the sales tax cap from $SUU to $1,000 to
account for the fact that tax cap was implemented in 1965 attd has not been modified since that time.
The $500 value of the tax cap in 1965 is equal to more than $1,900 when adjusted for inflation.
An increase in the tax cap will impact only those sales between $500 and $1,000, making those sales
subject to sales tax. However, it is the desire of the city council that the increase in sales tax cap not
allcct renters. Therefore, Ordinance 2007-U11 proposes to exempt that portion ofresidential rents
above $500, from sales tax. This Ordinance is intended to be implemented concurrently with
Urdinaztce 2007-010 (increase in the sales tax cap from 55UU to $1,000), to provide sufficient time
for the Kenai Peninsula Borough to modify forms and computer programs to accommodate the new
sales tax cap.
in 2006, the City of Seward received sales tax revenues amounting to approximately $73,000 from
tax on residential rents. This proposed Ordinattcc would have no adverse impact on renters, as it
would continue to exempt all residential rent over $SUU from sales taxation.
CONSISTENCY CIIECKLIST: Where applicable, this resolution/ordinance i consistent with
the Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City
Council Rules of Procedures.
Other:
FTSCAI. NO`T'E:
Neither the City nor the Kenai Peninsula Borough have the ability to estnnatc the exact impact of
exempting residential rents between $500 and $ I ,000 from taxation, since taxpayers do not currently
report the amount of the rent between $500 and SI,000. However, this exemption may result in
potcutial lost sales tax revenues estimated at less than $70,000.
~'%, 7 ~~
Approved by Finance Department: ~f,4l~z.zt,.~ ~L ;.clt~•,~~>
RECOMMENDATION:
Counci I approves Urdinance 2007-O1 1, exempting that portion of residential rents above $500 from
sales tax, effective April 1, 2008.
1.l