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Home My WebLink About1994-013 License and taxes 3 ORDINANCE NO. 9413 AN ORDINANCE relating to license fees or taxes upon persons in the business of furnishing cable television service; amending section 5.50.065 to the City of Yakima Municipal Code; and providing for related matters. WHEREAS, the City of Yakima ( "City ") is authorized to impose a license fee or tax, in addition to franchise fees, upon persons engaged in the business of furnishing cable television; WHEREAS, the City deems it necessary and advisable to adopt measures providing increased revenue from such a license fee or ID tax upon persons engaged in the business of furnishing cable television service in order to provide for a portion of the cost of funding a police station and legal center for the City, and to provide for other needs of the City, with the expectation that upon full payment of such police station and legal center costs, including full retirement of any indebtedness incurred for such purposes, the City will then take action to reduce the additional revenue derived pursuant to this Ordinance; provided that such license fee or tax is not unduly discriminatory against cable operators or cable subscribers in light of the rates of license fee or tax imposed upon persons engaged in the utility businesses of water, sewer and refuse collection; WHEREAS, the City has previously enacted Ordinance No. 93- 107, codifed as section 5.50.065 of the Municipal Code, imposing a license fee or tax upon persons engaged in the business of e 1 4 11 0 furnishing cable television service; WHEREAS, the City desires to amend the license fee or tax set forth in section 5.50.065 of the Municipal Code to clarify that such license fee or tax applies to all providers of cable television services in the City; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1. Section 5.50.065 of the Municipal Code is hereby amended to read as follows: "A. Commencing February 15, 1994, there is levied upon and shall be collected from every person engaging in the business of providing cable television service an annual license fee or tax equal to five percent of the total gross income derived from such business in the City of Yakima. B. For purposes of this provision, "cable television aghl service" shall be defined to mean: 1. a system providing service pursuant to a franchise issued by the City under the Cable Communications Policy Act of 1984 (Public Law No. 98 -549, 47 U.S.C. 521 (Supp.)) as it may be amended or superseded; and 2. any system that competes directly with such franchised system by employing antennae, microwave, wires, wave - guides, coaxial cables, or other conductors, equipment, or facilities designed, construed, or used for the purpose of (i) collecting and amplifying local and distant broadcast television signals and distributing and transmitting them; (ii) transmitting original cablecast programming not received through television broadcast signals; or (iii) transmitting television pictures, film and video -tape programs not received through broadcast television signals, whether or not encoded or processed to permit reception by only selected receivers; provided, however, that "cable television service" shall not include entities that are subject to charges as "Commercial TV Stations" under 47 U.S.C. S 158. C. A system "competes directly" within the meaning of 2 1111 paragraph B of this section if it provides one or more functionally equivalent services at competitive rates, terms and conditions." Section 2. This ordinance shall be effective thirty (30) days after its passage, approval and publication as provided by law and the City Charter. 22x1 PASSED BY THE CITY COUNCIL, signed and approved this day of march , 1994. CITY OF YAKIMA, WASHINGTON BY (; VaAi Mayor ATTEST • K, c City Clerk Publication Date a-254A Effective Date 4-244 J' \ET125739- 00015 \yakord3 doc • 3 BUSINESS OF THE CITY COUNCIL 0 YAKIMA, WASHINGTON AGENDA STATEMENT I Gi Item No I For Meeting Of 3/22/94 ITEM TITLE An Ordinance amending Section 5.50.065 of the City of Yakima Municipal Code pertaining to taxes on the provision of cable television serviced SUBMITTED BY John R. Hanson, Director of Finance & Bud Ray Paolella, City Attorney !�' CONTACT PERSON/TELEPHONE John Hanson / 575 -6070 SUMMARY EXPLANATION Background Last November, at the time the financing package to pay for a portion of the Police Legal Center debt service was approved, the City Council asked staff to return legislation which would provide tax equity between the City's Cable TV Franchise Operator (TCI) and other firms providing similar service within Yakima 1� At the February 22, 1994 City Council meeting, Council deferred action on a proposed Ordinance which would broaden the City's Cable Television Tax to include any system that would compete directly with the City's franchise system The reason to defer action was threefold 1 The preamble to the proposed ordinance did not include the same provisions as the ordinance imposing a tax on the franchise cable firm regarding the Council's intent to take action to reduce the tax after repayment of the bonds Continued Resolution _ Ordinance X Contract _ Other (Specify) Funding Source APPROVED FOR SUBMITTAL. �`l.. City Manager STAFF RECOMMENDATION Pass ordinance 'BOARD /COMMISSION RECOMMENDATION COUNCIL ACTION Legal /BD JH/Cable TV 2 The proposed ordinance appeared to be crafted too broadly and might include more than franchise competitors 4 10 3 There had not been adequate notice given to potentially affected parties to allow for their comment on the proposed ordinance The attached ordinance includes modifications to address issues 1) and 2) above The proposed ordinance further defines and limits potential systems to be covered by the tax as those being in direct competition with the franchised system, and further defines direct competition as a system providing "one or more functionally equivalent services of competitive rates, terms and conditions " Income derived from the tax will be pledged to the bond redemption fund The income from the source is initially expected to be insignificant, however, all proceeds would be applied to debt service and will, over time, shorten the debt service repayment period Finally, staff provided those businesses identified by the franchise as "potential direct competitors" a copy of the proposed ordinance and invited their comment (See attached letter) Le JH1Cable N MAR -18 -1994 16 03 FROM THE SHIERS FIRM TO 15095766335 P 01 SHIERS � ' CHREY HAUGE s , ATTORNEYS AT LAW COX & CAULKINS ry '' ` ; :'::. 600 KTTSAP STREET, SUITE 202, PORT ORCHARD, WA 98366 (206) 876 -4455 FAX (206) 876 -0169 FACSIMILE cOV$R SHEET Date: MARCH 18. 1994 To: JOHN R. HANSON From: TRACY E. DiGIOVANNI FAX: (5g9) 576 -6335 Re: 5Z TV TAX ORDINANCE Our File No: 23275 -14 _ Total number of pages Also mailed? YES (including this sheet): 3 COMMENTS: • If you have any questions, please call TRACY at (206) 876 -4455. ********** ********************* * * * * * * * ** * ** * * * * ***** * * * *** * ** **tetra** ****e*** NOTICE: The information contained in this message is intended only for the Addressee or Addressee's authorized agent. The message may contain information that is privileged, confidential, or otherwise exempt from disclosure. If the ed reader of this message is not the intended recipient recipient's or authori agent, then you are notified that any dissemination, distribution this message is prohibited. If you have received this message in error, please notify the sender by telephone at d return at etateoriginal nd any y copies of the message by mail to the sender ** e**** t****i t* t* t**************** t*** * * * *t * * * * * * * * * * * * * * ** * * * * * * * * ** FRANK SHIERS RUSSELL D. HAUGE SUSAN L. CAULKINS GLENN E. TANNER T Cri1PS JEFFREY COX TRACY E. DiGIOVANNI KIM D HUNT MAR -18 -1994 16 04 FROM THE SHIERS FIRM TO 15095766335 P 02 SHIERS ns Ln. ® CHREY 'Lr�rT ' • HAUGE 4 COX & �` ATTORNEYS AT LAW CAULKINS 600 KITSAP STREET, SUITE 202, PORT ORCHARD, WA 98366 (206) 876 -4455 FAX (206) 876 -0169 March 18, 1994 VIA OVERNIGHT MAIL & FAX Mr John R. Hanson, Director Department of Finance and Budget City of Yakima 129 North Second Street Yakima, WA 98901 (509) 576 -6335 Mr. Ray Paolella, City Attorney City of Yakima 129 North Second Street ® Yakima, wa 98901 (509) 575 -6160 Re: Proposed City of Yakima Cable Television Tax Ordinance Our File No 23275 -14 Dear Mr. Hanson and Mr Paolella This office represents Northwest Cable Network This office has reviewed the proposed ordinance relating to a 5% tax on the businesses furnishing cable television services (draft dated March 2, 1994) which is scheduled to go before the City Council on March 22, 1994 at 2:00 p.m. We have several concerns regarding the proposed ordinance Our research has not revealed any authority for the City of Yakima to impose an annual license fee or tax equal to 5% of the total gross income of Northwest Cable Network derived from such business in the City of Yakima. The next concern is the applicability of the tax. From our reading of the proposed ordinance, it appears that the tax would apply to 41r 5% of the total gross income derived from those customers of Northwest Cable Network who reside within the city limits of Yakima. The other concern is the date of the ordinance In Section 1, subparagraph "A ", the proposed ordinance states that commencing February 15, 1994, the license fee or tax will be levied. However, MAR -18 -1994 16 05 FROM THE SHIERS FIRM TO 15095766335 P 03 Mr. John R. Hanson Mr. Ray Poalella #23275 -14 March 18, 1994 Page Two at Section 2 of proposed ordinance, it states that the ordinance will be effective thirty (30) days after its passage, approval and publication. Assuming the proposed ordinance is passed by the City Council, Northwest Cable Network requests that the tax not be 410 effective for at least six (6) months to allow judicial review. Below we summarize the concerns which must be analyzed and addressed by the attorneys for the City of Yakima and the City Council before acting on the proposed ordinance: 1. Whether the City of Yakima has the authority to impose the subject tax? 2. To what extent is the tax applied (i.e., define "total gross income derived from such business in the City of Yakima ".)? 3. Amending the effective date to allow Northwest Cable Network time to seek judicial review. We request that both the City Council and its attorneys review our concerns and contact us with your comments, before the proposed ordinance is put before the City Council I look forward to hearing from you. Sincerely, 411 dv)1 0'14 TRACY E. DiGIOVANNI hmf cc: Pat Carey Gene Twiner .„ . • On March 11, 1994 this letter was sent to Herman McDowell, General Manager Pat Carey Orchard Park Northwest Cable Network 620 No 34th Avenue PO Box 9128 Yakima, WA 98908 Yakima, WA 98909 March 11, 1994 Dear Business Enclosed please find a copy of a proposed City of Yakima TV tax ordinance which may apply to delivery of television services by your business This past November, the Yakima City Council imposed such a tax on the City's franchise cable operator T C I Cablevision The purpose of the tax was to provide an "income" source to partially support the repayment of 0 debt on the City's new Police Station /Legal Center project At that time the City Council asked the City staff to return legislation which would provide equity between T C I and those businesses providing direct competitive services within the City limits of Yakima The Council also requested staff to identify and notify those businesses which may be impacted by the proposed ordinance The issue is set to go before City Council at the regular Council meeting on March 22, 1994 at 2 00 p.m in the City Council Chambers at City Hall, 129 N 2nd Street If you would like to discuss the proposed ordinance further, I can be contacted at 575 -6070 Sincerely, John R Hanson, Director Department of Finance & Budget TD -15 31-1 Ltr f /HDB Daily