I'd like to call to order the city council study session of December 3rd, 2024.

Clerk, will you please call the roll?

Councilmember Bushnell.

Present.

Councilmember Daniels.

Absent Councilmember Diaz.

Here.

Deputy Mayor Hines.

Here.

Councilmember Ramba.

Here.

Councilmember Sidalga?

Here.

Councilmember Scott.

Councilmember Walker.

Here.

Mayor Woodards.

Absent.

Deputy Mayor and Council Members, the study session material was sent to you at 1102.

All right.

Thank you.

And with that, we'll move on to our first agenda item, which is the Tacoma Venues and Events Excise Tax Update.

And I'd like to call on Tacoma Venues and Events Director Adam Cook to begin the presentation.

Thank you very much, Deputy Mayor Hines, City Manager Paulie, Council Members.

For the record, my name is Adam Cook, and I serve as the director for Tacoma Venues and Events.

And I appreciate the opportunity to come before you today to discuss a proposed ordinance regarding the addition of a vendor refreshment serving tax in Tacoma.

And I will move forward.

The proposed ordinance would amend Chapter 6A of the tax and license code to add a section dedicated to implementing a vendor refreshment service tax at Tacoma Venues and Events operated facilities.

This tax would have the potential to simultaneously support our city's budget goals as well as the community and cultural event organizations throughout Tacoma.

As we go through today's presentation, we'll briefly touch on how and why we developed this proposal, our desired goals, and other opportunities we explored to accomplish those.

We'll get into the meat of the proposal itself and what it entails, and we'll discuss the potential impacts to consumers, the community, and the city's overall budget.

As we emerged from the pandemic and fully implemented a new competitive grant process for our community events, Tacoma Venues and Events and the Office of Management and Budget continued to work closely together to identify opportunities to enhance support for our community events program while also minimizing its impact on the general fund.

As we began the process of crafting the 2025-26 budget, the general fund's obligations included one full-time staff position supporting permitting in the full community events ecosystem, the city's annual recognition celebrations, the Martin Luther King Jr.

and City of Destiny Award events, our Fourth of July fireworks presented in partnership with Metro Parks Tacoma, and our community event grant funding and skill shop training presentations.

The existing baseline budget was $733,000 for the biennium.

However, to actually activate these services at their current 2024 levels, we anticipated that the true cost would be closer to 900,000 for the coming biennium.

We are able to reduce some of this obligation by transferring the personnel and operating costs to other TVE enterprise funds, but the community support funding is still significant.

At the same time, we recognize that the current activation levels for our community event support fall well below the need.

Funding requests have increased 82% since 2022, both in the number of requests and the amount requested.

Through the tremendous work of the City Events and Recognition Committee, we have increased the number of funded events correspondingly, but due to the budget constraints, the total available funding has not increased to meet this need.

This has resulted in a decrease of 62% for the average award to each funded organization from $6,000 down to just over $2,300 in 2024.

Simply put, the need in our community far outpaces our capacity.

Through our work with the Office of Management and Budget, we identified three main goals for any potential funding program.

First, focus on providing better access for our community, both to city services and resources and to the cultural activities throughout the region.

While at the same time strengthening the trust in city government by providing more consistent funding sources and opportunities and minimizing the overall impact on the general fund.

We reviewed multiple options for additional revenue generation.

Unfortunately, a per ticket service fee would not generate enough revenue and could push our rates above the market comparisons for us.

Admissions taxes, retail sales taxes, and alcohol taxes are all capped or prohibited through state statute, so those were not an option for us.

This left us with a potential excise tax on services provided through TV managed facilities that we'll discuss today.

As we began to craft the excise tax, we started by limiting to city-owned and TVE managed indoor venues.

This would encompass the Tacoma Dome, the Greater Tacoma Convention Center, and the Tacoma City Theaters.

We specifically targeted the indoor venues, recognizing that at Cheney Stadium as a family-friendly atmosphere, very specifically focused on affordable entertainment and events.

An excise tax would not be an option there.

We then address the tax directly to the sellers of food and beverage.

Placing the tax on the sale of all goods, such as concert merchandise would create a price barrier that would make it challenging for the dome to recruit events to our region.

We added limitations for the tax to be imposed when the vendor makes more than $15,000 daily or $1 million annually.

This exemption effectively eliminates the Tacoma City theaters where the consumer is much more price sensitive and the vendors have a very narrow margin that could not absorb the tax.

This leaves the tax primarily focused on the primary food and beverage supplier for the Tacoma Dome and the Greater Tacoma Convention Center, which is our partner ERIMARC.

Pending council approval, we would start collection of this tax in January of 2025 with distribution starting in January of 2026.

We're basing our distribution on the pay forward model to ensure that we are not committing more resources that are than are available in any given year.