If the city of Seattle’s message to residents was “you can leave if you don’t like our income tax,” King County Superior Court perhaps had a message of its own for the city: If you don’t like the ban on local income taxes, get state law changed.

In a 27-page ruling, King County Superior Court John Ruhl struck down Seattle’s income tax for violating a 1984 state law that explicitly prohibits it. However, the city and the progressive think-tank Economic Opportunity Institute (EOI) have vowed to challenge the ruling in the Court of Appeals in the hopes the political Hail Mary pass from the stands will reach its intended receiver: an ostensibly friendly State Supreme Court.

During the Nov. 17 court hearing, the city claimed they had a right to tax under a section of the State Constitution that provides “for all corporate purposes, all municipal corporations may be vested with authority to assess and collect taxes.” However, that line of reasoning runs afoul of the State Supreme Court’s decision in Watson v. City of Seattle and King County v. City of Algona; in the latter ruling, the court opinion states “We have consistently held that municipalities must have express authority, either constitutional or legislative, to levy taxes.”

“Unless the City can identify a statute that specifically authorizes it to impose the type of tax described in the Ordinance, the Ordinance cannot withstand the Plaintiffs’ challenge,” Ruhl wrote.

Ruhl also struck down the city’s argument that the income tax was really an excise tax – a defense that has repeatedly failed to stand up to legal scrutiny. “To the extent that the Ordinance purports to impose a tax on the “privilege” of receiving pay for labor, such a “privilege” is not a valid basis for an excise tax.”

Another claim made by EOI was that the 1984 state law violated the state’s single-subject rule requirement, which says “No bill shall embrace more than one subject, and that shall be expressed in the title.” However, Ruhl said this applies to the bill title rather than the chapter title created by the Code Reviser, “because the title of the bill is what the legislators saw and relied upon when they voted on the bill.”

While Ruhl declined to address whether the city’s high-earner income tax violated the State Constitution’s uniformity requirement on property taxes, his invalidation of the city ordinance on statutory grounds means a steep uphill battle for Seattle and EOI in their attempt to overturn the state’s prohibition on a progressive income tax; the appeal will only consider whether Ruhl erred in his ruling concerning the 1984 state law on local income taxes.

Among those involved in the lawsuit was Opportunity For ALL, founded by Seattle venture capitalist Matt McIlwain. In a statement, he called the ruling “a big win, but only another step along the way. We are happy to note that Seattle residents will, at least for the moment, not need to move to Bellevue to avoid this illegal tax, as the City’s lawyer suggested they could do at last Friday’s hearing.”

Despite the setback, EOI Executive Director John Burbank sees reason for long-term optimism. In a Nov. 24 blog post, he wrote that the summary judgment “was not unexpected. This case involves a challenge to an 80-year-old interpretation of the state constitution, and lower courts generally do not overturn state Supreme Court precedent. But this case will go to the Washington State Supreme Court. That’s where we will win.”

He also took the plaintiffs to task for using “a sneaky section of Washington law that prohibits cities from taxing net income” to achieve their legal victory.

“Our constitution and our laws are living documents,” he wrote further. “They change with the needs of our people, and the wisdom we gain over the years.”

However, McIlwain wrote that the appeal “means more taxpayer money will be wasted in the hopes of changing 85 years of court rulings against their arguments.”

It’s also an effort to undermine the constitutional amendment process and the will of the voters who have rejected an income tax since 1934, says Freedom Foundation’s Chief Litigation Counsel David Dewhirst. The state-based think tank represented one of the plaintiffs in the lawsuit.

In a statement, Dewhirst wrote that “if you want to change the existing tax laws, you can ask your legislator to introduce a bill, or you can sponsor a ballot initiative. And if you want to amend the Constitution, there’s a process for that, too. Their problem is, they’ve tried that and it never works because the voters have consistently rejected income taxes of all kinds. So they’re trying a shortcut by asking the courts to legislate from the bench.”

He added: “There’s no way to predict what the Supreme Court will decide, but there are numerous court precedents the justices would have to disregard in order to rule in the city’s favor.”

The post King County court smacks down Seattle income tax appeared first on Lens.

As Washington continues to grow, rural counties throughout the state are struggling to attract new businesses and jobs for their residents. Some state and local lawmakers much of the difficulty is due to restrictions and complications caused by Growth Management Act (GMA) policies either artificially reducing available land or prolonging the permit process. It was the central topic of a Nov. 15 joint work session by the Senate Local Government and Agriculture, Water, Trade and Economic Development committees.

Growth Management Services Eastern Regional Manager Dave Andersen told panel members that “rural areas are struggling economically in Washington. Our metro areas are doing very well. The rural areas in Washington are getting spillover from the metro areas but there’s still a big gap.”

Although government officials cite various regulatory tools available for land outside urban growth areas (UGA), critics claim that more options are needed if counties outside of central Puget Sound are to prosper.

“We definitely need new tools in the toolbox,” Stevens County Commissioner Wes McCart told legislators. “Simply to get some development here would be a boon, yet we’re kept out of that. economic development needs to keep up with the time.”

The frustration was shared by many of the panel members, too. Sen. Jan Angel (R-26) told Anderson that “I have lost companies going to other states…when I’ve had places right outside the urban growth area with plenty of services and acreage. But it was the timeframe in getting this done.”

“We’ve got to work to get a system…in place to where you can expedite this somehow and not lose these companies to other states,” she added.

Anderson said that a rural industrial land bank can help speed up the process for major industrial development. The bank consists of two or less “master planned locations for major industrial activity outside urban growth areas.”

However, Angel said many companies want to own their buildings and the property they’re on, which makes this option impossible.

Also, the timeline itself can deter many companies on publicly-owned land, says Sen. Dean Takko (D-19). “You mention all these things that you can have land ready for development, but you know the reality that I’m seeing especially in my district is we’ve got land that is on port property, zoned industrial, has been industrial…we’ve got land that should be ready to go, but the reality of siting one of these things is it still takes year and years and years because of our convoluted system that we have for permitting things.”

“I have trouble telling industries…they want to come up and locate in my district or in the state of Washington. I’m going, “Do you realize what you’re going to go through? Are you ready to spend four, five, six years on permitting, even if you’re’ in a port district that has land zoned industrial?”

Under GMA, most counties are required to set up UGAs that separate rural and urban areas. Additional restrictions are imposed outside the UGA to preserve “the rural character.”

Another option for local planners is known as a limited area of more intense rural development (LAMIRD). They come in a variety of forms, including small scale industrial and commercial activities in existing pockets of development, small-scale tourist uses and small-scale commercial. Another example of a LAMRID is Suncadia Resort near Cle Elum.

These LAMRIDs don’t require additional urban government services to function and complement the local economy, Anderson said.

However, McCart called LAMRIDs in his county “the Truman show,” in reference to a 1996 movie in which the protagonist is unknowingly part of a reality TV show continuously film on a massive set.

“You literally set a community in a little area up with a 1993 circle around it, and you’ve created a little time capsule,” he said. “It’s got to be predominantly built, so you’re allowed a little bit of infill.”

As a result, these LAMRIDs have seen “24 years of no significant growth and no way to ever move that boundary because you’re still bound by the 1993 built environment,” he added.

“LAMRIDs are not a tool for economic development,” he said. “Rural counties with limited GMAs need ability to grow…but LAMRIds are not allowed to grow. If you have a handful of urban growth areas and that’s all you’re allowed to have in our county, you have a hard time providing jobs without a lot of commute.”

McCart was among the testifiers during this year’s session in favor of a bill that would have loosened GMA restrictions on counties suffering from economic stagnation. The bill was passed by both houses and signed into law, albeit with a partial veto by Governor Jay Inslee. Some concerns cited by opponents was fear of “runaway development,” which McCart said at the Nov. 15 meeting is unfounded.

“There are provisions in the law…to prevent that,” he said. “We have moratoriums, we have interim zoning.”

The connection between GMA policy and job loss in rural counties was also emphasized this session when a House bill passed this year would have allowed local governments to site businesses where they can have freight mobility access, but it was veto outright by Inslee. Rep. Liz Pike (R-18) argued that the lack of access cost Clark County 7,500 jobs.

The post More GMA fine-tuning needed for rural counties, say lawmakers appeared first on Lens.

Spokane voters have rejected a ballot proposition that would have placed fees on the shipment of certain fossil fuels through city limits. Business stakeholders say they are relieved that voters recognized the initiative would have been illegal to enforce, while also diverting taxpayer dollars from important city services.

“Ultimately, I would say the voters realized this was just a massive distraction, would be costly to the city and was not something they were interested in adopting to use Spokane as a test case,” said Michael Cathcart, Executive Director of Better Spokane, a Spokane-based civic engagement organization which advocates for greater business consideration in public policy decisions.

During the November 7 general election, Spokane voters rejected the measure by just over 6,500 votes, with 57.5% of voters voting against the proposition.

“Obviously, we were really happy,” said Cathcart. “I think the messaging came across really well so voters understood the unintended consequences of the measure should it pass.”

In August, Cathcart co-led the public awareness campaign of the Committee to Protect Spokane’s Economy. The goal was to warn voters of the possible ramifications of approving the proposition.

Proposition 2 would have required rail car owners to pay $261 – per car – for shipping uncovered coal and crude oil cars through Spokane city limits unless they were pressurized to 8 pounds per square inch (psi) or lower.

However, the North Dakota Industrial Commission (NDIC) requires oil originating from the Bakken crude fields to be pressurized to 13.7 psi before ever leaving the site. The requirement is considered to be “stable dead crude oil,” while allowing 1 psi margins of error. Also, Governor Jay Inslee signed a 2015 measure into law which requires a pressure reading of 14.69 psi or lower for crude oil traveling through Washington.

In August, a NDIC staff member told Lens the requirement is set to prevent explosions, and there is no evidence to suggest a lower psi would make the oil any safer.

Cathcart said candidates running for city elected positions wanted to focus on other priorities as a city, such as on roads or crime, which seemed to resonate with voters. He added that the proposition would create side issues for Spokane.

“If this were to pass and actually be enforced it wouldn’t change anything,” he added. “What it would have done was to push these materials on other forms of transportation that would likely move through the community.”

Railroad officials who ship through the city also expressed relief at the news.

“We are very pleased to see the voters say that this is not a safety issue and that this is illegal. It really speaks to the importance of rail in the state of Washington,” said Courtney Wallace, Regional Director for Public Affairs with Burlington Northern Santa Fe (BNSF) Railway. “Rail is the safest way to move commodities, and we will continue to move them…including coal and oil.”

Wallace said the initiative would have been a waste of taxpayer dollars that would be better spent on hiring additional police officers, fixing roads or adding infrastructure. She added that the coupling of coal and oil in the proposition highlighted the true intention of the campaign.

“It was a false narrative to say coal and crude were wrapped around safety,” said Wallace. “Coal is not hazardous. There are other materials moved on various transportation methods that are considered hazardous. BNSF would not be in business if we didn’t run a safe railroad.”

Wallace added that the railways are regulated by the federal government so trade can flow freely through the U.S., and that it is especially important for trade to move freely into Washington, as 40 percent of jobs here are tied to trade.

Spokane City Councilmember Breean Beggs was one of the measure’s backers. He told Lens the campaign contributions were one of the main reasons for the proposition’s rejection.

The Committee to Protect Spokane’s Economy raised $354,000, with the largest donations coming from BNSF, Lighthouse Resources Inc. and Cloud Peak Energy. Safer Spokane, the proposition’s backer, raised a little over $7,000.

“It wasn’t really unexpected given they spent that much money,” said Beggs of the campaign undertaken to educate citizens about the ramifications of enacting the measure. “I was of course hoping it would pass because it was a safer policy for a safer city.”

Cathcart said the city makes it easy to qualify an initiative for the ballot, and he wouldn’t be surprised if a similar measure appeared next year. “I could certainly see them trying this again. The legality of the measure isn’t going to change, but maybe how they campaign might.”

Wallace agreed. “There will likely be other pushes on this, because I think it’s a broader conversation beyond rail safety. I think the conversation is more on climate change and fossil fuel use. Trains and rail are a convenient way to get that message out…I do think you will see other pushes on similar initiatives.”

Beggs said proponents of the proposition had reached out to state lawmakers to try and get a bill moved through the legislature that would accomplish the same goal. He added the backers were meeting this week to discuss future strategies, however, nothing is set in stone.

The post Voters reject Spokane rail prop; stakeholders relieved appeared first on Lens.

Washington benefits from one of the more stable revenue streams in the nation, and the best among the West Coast states. That’s according to a new study by the Tax Policy Center that examined all 50 state budgets and revenue over an 11-year period.

As part of the study, the think tank made recommendations for state budgeting that would ensure revenue security, including measures that state lawmakers may want to consider before tinkering this upcoming session with the state’s balanced budget requirement (BBR) or dipping into the budget stabilization fund (BSD), a.k.a. the “rainy-day fund.”

Between 2005-2016, Washington and nine other states’ revenue streams had a 4.4-5.5 standard deviation in percent change. That’s less than Oregon, which had a 5.5-6.5 standard deviation change, and half of California’s 8.5+ standard deviation.

Both those states have income taxes and a capital gains income tax, which Washington Research Council (WRC) Research Director and Senior Economist Dr. Kriss Sjoblom says provokes greater revenue volatility. “Most of them (capital gains) apply to the top slice of the taxpayers, and they’re taxed at a higher rate than everyone. The progressivity accentuates the volatility of an income tax. It’s very hard to forecast capital gains, because you have to forecast the stock market, and you know how poorly people are at forecasting the stock market.”

But in Washington’s case, the volatility has generally favored higher-than-expected revenue. Between the 2015-2016 fiscal years alone, it increased by 8.8 percent – or $18.7 to $20.3 billion. Last week, the Economic and Revenue Forecast Council (ERFC) announced it now anticipates $304 million more in revenue for the state’s primary operating budget account during the 2017-19 budget cycle, and another $186 million for the 2019-21 biennium.

Meanwhile, 33 other states are struggling to make up for less-than-anticipated revenue, according to a recent fiscal survey by the National Association of State Budget Officers.

Washington is among the few states that does not impose an income tax. Instead, it relies primarily on a sales tax that is among the highest in the nation, which in the 2016 fiscal year generated half of the revenue the state took in.

While some argue this is a “regressive” system in need of change, tax policy experts have highlighted the sales tax’s reliability that prevents massive budget deficits. Unlike other types of taxes, it generates revenue from a large swath of state residents for engaging in many day-to-day transactions, both big and small.

That stability is critical not only for accurate ERFC predictions, but also for state lawmakers whose purse strings are tightened or loosened based on those estimates as part of the Balanced Budget Requirement (BBR). That fiscal stipulation was first implemented during the 2013-15 biennium, by restricting budgeted state spending to four-year revenue forecasts.

The state’s budgeting practices have helped Washington maintain high credit ratings. According to the latest reports, Fitch gave Washington a rating of AA+ with a stable outlook, Moody’s rated Washington an Aa1 with a stable outlook and Standard & Poor rated the state an AA+ with a stable outlook.

As reported by the Office of State Treasurer Duane Davidson, Moody’s rating praised the “state’s sound management practices such as its quarterly consensus revenue forecasting process, multi-year revenue and expenditure projections, timely budget adoption, and demonstrated willingness to address budget shortfalls. The rating also reflects an economy that is growing and expected to outperform the nation over the long term.”

A balanced state budget is also among the top tax and fiscal priorities for the Association of Washington Business, which includes nearly 8,000 members representing 700,000 employees.

Despite this, some lawmakers say the continued surplus revenue causes the BBR to artificially restrict state spending. With a power transition in the Senate, its future role could be up in the air.

Sjoblom says the BBR helps prevent the state from spending based on assumed growth that doesn’t materialize. “In a world in which your annual revenues move up and down, but where you knew 100 years into the future what revenues are going to be year by year, you might very well choose to borrow and lend to stabilize your spending and then deal with surpluses and deficits that can meted out over in the long run.”

“But the trouble is, you don’t actually know what’s going to happen in the revenue,” he added. “You can’t count on revenue going up so you’re able to pay back loans.”

The Tax Policy Center’s take on it strikes a nuanced middle ground by noting “research suggests that BBRs have a beneficial disciplinary effect on state budget balances. States with strict BBRs respond more quickly to deficit shocks. However, some research also suggests that BBRs make it more difficult for states to respond to revenue shortfalls during a recession without exacerbating the business cycle and volatility.”

Yet, this perceived flaw is made up for with the rainy-day fund, according to the study, though it adds: “they have their limitations and may not be able to prevent deep program cuts during multiyear recessions, but they can be designed to smooth the relationship between cyclical revenue streams and more constant spending needs.”

Ultimately, it recommends that states seeking greater budget stability use both tools in tandem. “States should consider their institutions as tools that work together to promote long-term sustainability, not as singular institutions that function in isolation.” Though their revenue streams are more volatile, both Oregon and California have BBRs and rainy-day funds.

Injury to either one can make it harder for the other to fulfill its function. Under state law, the rainy-day fund can be authorized by a majority vote on emergency spending; non-emergency appropriations require a supermajority. For the 2017-19 operating budget, $925 million was taken from the rainy-day fund to cover pension-related spending. The current balance is $1.6 billion, and only $100 million will be added by 2021.

For comparison’s sake, that’s less than four percent of the operating budget’s total spending.

“When you get to the really big downturns, the budget reserves just postpone the pain,” Sjoblom said. “We blew through the budget reserve in the Great Recession.”

The relatively low reserve was noted by Rep. Terry Nealey (R-16), a ranking member of the House Finance Committee and member of the House Appropriations Committee. In a statement, he wrote: “I’m concerned our state’s rainy-day fund is only $1.7 billion compared with the state operating budget of more than $44 billion. If there’s a dip in the state’s economy, as we’ve seen in the past, it won’t take much to quickly evaporate that savings.”

“It’s my hope legislators don’t view this as additional money they can book for spending in the coming 2018 session in January,” he added. “Let’s not allow this increase to burn a hole in budget writers’ pockets. Instead, let’s do the wise thing and sock it away for any unanticipated expenditures or future downturns in the economy.”

The post Study findings may discourage legislators’ budget tinkering appeared first on Lens.

The Washington State Energy Facility Site Evaluation Council (EFSEC) voted unanimously this week to send Governor Jay Inslee a recommendation to deny the proposed Vancouver Energy terminal project. Labor and business stakeholders say they are worried what message this may send to potential businesses looking to move and build in Washington.

According to Vancouver Energy, the construction of the terminal would provide $22 million in state and local taxes, and full operation would bring in $2 billion to local and regional economies.

The project’s construction would also create an estimated 320 full-time or equivalent jobs. During operation, it would provide 616 on-site and off-site jobs, and an additional 1,000 direct, indirect and induced jobs annually.

On November 28, EFSEC held a public hearing in Olympia concerning its recommendation to the governor.

EFSEC Chair Roselyn Marcus told attendees the council’s decision would balance the “needs of the facility at this particular site versus public interest” and must decide if the company’s “proposed benefits outweigh the negative impacts on broad, public interest.”

Vancouver Energy’s original application was filed in 2013. Marcus said the process was probably “the longest in the council’s history, with issues of great significance that have never been faced by this council before.”

She added the draft EIS process included over 250,000 comments reviewed by the council and a 25-day adjudicatory meeting which comprised of 91 witnesses testifying and 818 exhibits. The data resulted in 5,000 pages of transcripts.

Earlier this month, EFSEC released its Final Environmental Impact Statement (FEIS) on the project, which included 1,200 pages of research, comments and recommendations about the proposed project.

According to the FEIS, unavoidable effects of the terminal’s operation include increased rail traffic and rail-related noise to the nearby community.

Greg Shafer, Development Engineering Manager for Clark County told attendees the council decided Vancouver Energy has not met its requirement under state law “to establish that the port of Vancouver is an acceptable location to site the proposed Vancouver Energy distribution terminal.”

Jaime Rossman said, “Based on the evidence and the adjudicative record and the final environmental impact statement as well as the voluminous testimony we’ve heard. I am inclined to agree with this direction.” He is Rules Coordinator for the Washington Department of Commerce.

“The final EIS clearly outlines a number of impacts and risks that I think speak for themselves in describing some of the dangers of the potential facility and I look forward to seeing the final write up and looking through that…I believe this is the right course of action,” continued Rossman.

In response, the company released an online statement saying, “We are extremely disappointed, especially after a review of more than four years in a process that state law says should take one year.”

According to Vancouver Energy, the council set an “impossible standard” for energy projects based upon rare risks. Also, the company said the FEIS found any negative effects could be mitigated.

“This decision sends a clear anti-development message that will have a chilling effect on business in the state of Washington,” stated the company.

The project site is located within the Port of Vancouver. Port staff said they will continue to look at possible concerns as the process continues.

“We heard the vote and we heard the conversation that occurred among the council,” Abbi Russell, Communications Director for the Port of Vancouver, told Lens. “We respect that process and everybody who has put in so much work in the process so far.”

“Knowing that we have a process still ahead of us and work to do, we will continue to review the FEIS and talk with Vancouver Energy,” added Russel. “We want to make sure no matter what that if the project is built at the port, we want to make sure it is operated safely and in an environmentally sensitive manner.”

Labor and business leaders have come out vocally against the council’s decision. “This decision sets a bad precedent for future energy projects in this state, and for the jobs and economic development that would come with it,” warned Larry Brown, Legislative and Political Director for Aerospace Machinists 751, in a recent Keep Washington Competitive release. “We’re basically telling the world we are anti-development, anti-construction and anti-jobs

For John Stuhlmiller, the vote is harmful to business wishing to build trade-related projects in the state. “We can’t continue down this path and expect to be the most trade-dependent state in the nation if we are not willing to invest in new infrastructure projects. If you look at the recent pattern of regulatory rulings, they have all had far-reaching regulatory implications that will increasingly stifle development.”

EFSEC decided it will transmit the final report of recommendation to the governor during its December 19 council meeting. The governor will then have 60 days to make a final decision.

The post Energy council recommends governor deny Vancouver Energy project appeared first on Lens.

The plaintiffs challenging the city of Seattle’s income tax have succeeded so far, with a November 22 ruling in King County Superior Court overturning the ordinance. To prevent further appeals that aim to get the issue in front of the State Supreme Court, they now want sanctions imposed on the city and the progressive think tank that helped draft the proposal  and intervened in the case.

Whether the plaintiffs find success in that pursuit may depend on obtaining the contents of a 2015 report provided by the city attorney on the tax’s legality. Throughout the entire legal fight over the income tax, one voice has remained conspicuously absent – that of City Attorney Peter Holmes. Why he’s chosen to play Switzerland is something the plaintiffs challenging the city ordinance want to know, including whether it says something about what the City Council knew when it approved the measure earlier this year.

Meanwhile, newly-elected Seattle Mayor Jenny Durkan plans to push forward with the appeal. When asked in a Facebook live interview with the Seattle Times what she thought of the court ruling, she said: “I think that Judge Ruhl made the decision he made, but we won’t know the final decision on this case until the Supreme Court rules.” She added that the ruling “should be appealed. I think that a Superior Court judge is never really in a position to decide what the law for the whole state should be.”

But the case may never get to the Supreme Court if plaintiff Michael Kunath has his way. In his motion requesting sanctions, attorney Matthew Davis alleges the city engaged in “frivolous conduct,” in part because of the many rationales used by the city’s lawyers during the tax’s November 17 legal hearing.

“By arguing that the Court should ‘do justice’ instead of following the law, the City asked the Court to disregard the law,” the motion states.

The motion also takes aim at the Economic Opportunity Institute (EOI), which was paid $50,000 by the city for consulting work on the tax. After the lawsuit was filed against the city, EOI successfully requested to intervene, claiming it was necessary to protect similar activist work they conduct in other Washington cities.

Their legal argument against the tax centered on the Code Reviser’s title for a 1984 law prohibiting local governments from imposing an income tax, which they claimed violated the state’s single-subject clause for titles. However, Judge John Ruhl concluded that the rule applies to bill titles when it is voted on in session, not the Code Reviser’s title.

Davis says EOI’s misinterpretation of that rule was deliberate.  “EOI built its entire case on the false argument about the {bill) title…even after it knew that it was wrong. That kind of conduct is the very definition of frivolous litigation.”

“The Court should send a signal that even the noblest of causes cannot justify frivolous arguments in litigation,” the motion states further. “The Court should declare EOI’s arguments and the City’s “net income” arguments frivolous and award appropriate terms.”

The question of what the City Council knew, and when it first found out, revolves around a series of events between 2014-15 when the council passed what is called a “statement of legislative intent” for City Attorney Peter Holmes to investigate the legality surrounding a “millionaire excise tax.” That report was provided to the city in April 2015, but according to Davis, “the city has refused to produce it in response to public records requests.”

“Although the contents of the opinion are unknown, efforts to enact an income tax ceased after it was issued,” he wrote.

The council took up the issue again this year, but this time to substantiate the tax’s constitutionality relied on an opinion letter provided to EOI by an activist law firm that had previously represented the think tank during a similar income tax lawsuit in Olympia.

“EOI and its counsel have been advocating for income taxes for a long time,” Davis wrote. “They are dubious sources for an objective opinion.”

Among Davis’ exhibits in his motion is a Seattle Weekly article from September, in which former councilmember Nick Licata is quoted as saying: “whatever we got from the law department, I doubt whether it would be pro income tax…”

Giving credence to that is the fact that Holmes did not sign Seattle’s motion for a summary judgment in the case. Instead, the city hired outside counsel via Pacifica Law Group, LLP.

It’s impossible to know for sure whether Holmes was legally prohibited from defending the tax without viewing the report, Davis wrote. “The City could easily answer that question by providing the memorandum to the Court for in-camera review.” A camera review allows a judge to examine publicly withheld information to determine if the information should be made available.

The motion will be considered by Ruhl on December 6.

The post Seattle, think tank income tax arguments are “frivolous,” says plaintiff appeared first on Lens.

Traveling events and sporting games are important to Seattle businesses as they lay the groundwork for additional spending in the local area. Some of the best opportunities for employers include large conventions and sporting events which generate additional revenue and allow businesses to thrive and prosper.

In 2016, Seattle and King County hosted 38.9 million visitors, a 2.2 percent increase from 2015, according to the VisitSeattle’s 2017-2018 annual report.

The same year, conventions brought in $397 million, the city and county hosted 20 million overnight guests and visitor expenditures hit $7 billion. Those guests generated $718 million in tax revenue and eased annual household tax burdens by $876 annually.

David Blandford, Senior Vice President of Public Affairs for VisitSeattle, told Lens the city sets itself up well for associations and corporate businesses to book events at venues such as the Convention Center. He estimates Seattle books close to 50 conventions each year.

“Once we get them there, they are going to spend money on meals, transportation and provisions at the event,” he told Lens.

Convention delegates who stay at a downtown hotel for at least one night will statistically spend 2.4 days outside of the convention in some other part of the city or state, Blandford added.

“We know they will come here, spend money downtown,” he said. “They usually take some time to go on tours, take the ferry to Bainbridge Island, visit a brewery. They come to the core event and spent time elsewhere as well.”

He added that those staying in downtown hotels are the “biggest fish” out of event goers.

“With consumer trade shows, people drive in and you’re talking about local residents coming too. They may get a meal or something when they are driving home…it is not quite as big as a convention of dentists or lawyers that are flying in from all parts of the country or sometimes different parts of the world.”

He added that Seattle tends to attract international employees who tend to say for five nights, which adds up in terms of meals, bar bills, transportation and tours.

“The impacts with those types of groups are significantly more impactful than say a one- or two-night show when they park and eat.”

Sporting events are also powerful revenue generators for the local economy. Michael Lopata told Lens large traveling events or sports games are huge for the annual success of his business. He is General Manager of Quality Athletics, a sports bar located near Century Link Field.

“We know the way the schedule works and the way the events are,” he said. “Even at Safeco Field we know that those are going to be our huge money-making days for the restaurant as far as revenue goes.”

The eight Seahawks home games equate to about 10 percent of the restaurant’s yearly sales, he added.

“When there is a big concert or event going on we know that those are going to drive sales for us in a big way with locals and tourists alike.”

The restaurant is also close to King Street train station which means that people have to walk by the business when heading to the events.

The restaurant changes its strategy depending on local events to prevent any delays for the influx of guests. During a game, the business could host between 1,000 to 1,2000 people. By comparison, the business might serve 100 on a non-event day.

“What we do is streamline our process. We have a “Game Day” food menu which separates out food in the kitchen so it’s much more effective to put out food for 1,200 people.”

The restaurant makes similar changes to its drink menu. “We know Sounders fans are a big beer drinking crowd. Seahawks fans are more a liquor crowd due to the earlier games. We cater to people coming to the event because we have three years of experience to know what they are looking for.”

Lopata said his business brings in $2.5 million annually. Seahawks games bring in upwards of $30,000 in revenue. Comparatively, a Sunday in the football offseason might earn the business 10 percent of a Seahawks day. Also, Sounders games bring in $20,000, and the business can make between $12,000 and $15,000 when the Mariners are playing.”

Lopata told Lens that he and his staff look at the restaurant as a year-round operation, and the additional revenue is factored in accordingly.

“We are not able to give the staff a raise just because we had a busy Seahawks day,” he said. “When we write our budgets, we look at the number of people we’d like to hire and the projected revenue for the year. We know what we are going to do on those days.”

The restaurant closes half of its facility when there aren’t any events to accommodate around 100 people. On game days, the business opens both patios and a second bar to host up to 400 fans.

“We want people to come back to us, and we want to be the pre-game spot… If the San Francisco 49ers play, we want those fans to remember the food and experience and come back.”

The post Event spending boosts Seattle economic activity appeared first on Lens.

Air freight is a popular form of transport for Washington producers exporting their products overseas to the Asia market. The state’s primary gateway for exports is Sea-Tac International Airport; in 2016, it handled 366,000 tons of cargo, making it the 19^th busiest airport in the nation. Almost 90 percent of its international cargo comes from Washington.

Although the Port of Seattle wants to double the airport’s tonnage by 2036, the Washington State Department of Transportation estimates the airport will reach full capacity two years before that. A new study by the state plans over the next year to identify alternative airports in Washington where some of the new freight could possibly be shifted, while also finding ways to reduce congestion within the complex system products currently travel while en route to market.

Compared to trucking, shipping and rail, air cargo handles a tiny portion of goods; just one percent of total global tonnage. However, airplanes can travel to areas otherwise inaccessible or deliver perishable products such as cherries much faster than other modes of travel.

Joe Bryan is the project manager WSP, the company producing the report. At the Joint Transportation Committee’s November 15 work session, he told panel members that air freight serves “as the failsafe to the entire supply chain system. They’re the ones that when things don’t work perfectly, you can still get goods to market on time one way or another.”

This makes it a highly lucrative industry of around $100 billion annually. In Washington, Sea-Tac’s air freight yields an estimated $22.7 billion in annual economic value to the state.

It’s also a growing industry, with the market size doubling every decade. In 2014, the Port of Seattle had an 11.8 percent increase in cargo tonnage alone. The port hopes to increase that by five percent annually, and has already invested $23 million in facility upgrades to handle the new activity.

But Sea-Tac’s airport capacity is just one of several issues that may concern Washington producers. The process for moving items via air cargo is complicated; often it requires 20 separate documents and more than seven companies. According to a presentation by Bryan during the November 15 work session, “the process is getting more complicated, not less, due to additional requirements for security and safety.”

The combination of businesses, airports and local governments means “the performance is a joint product of the public and the private sector. It’s not just what the private operators do,” Bryan added. “It’s also what the public system enables them to do. And the combination is what makes the difference in the market…”

While “congestion” and “capacity” are often used interchangeably in describing the cause for delayed flights, traffic on the roads can also cause problems.

Rep. Mark Hargrove (R-47), who works for Boeing as an instructor pilot, told colleagues at the work session that road conditions can have a large impact on freight capacity. “Let’s say a truck carrying Microsoft products is delayed a little bit getting to Boeing Field or Sea-Tac, and then that flight is going then to Louisville. It’s not so much that truck being delayed; it’s going to delay the stuff getting to Louisville…each minute that it’s late cost thousands of dollars because if it’s getting to Louisville late, then it gets redistributed to all the other places. There are penalties to be paid and that kind of stuff.”

Rep. Gael Tarleton (D-36) said: “The connectivity between land, air and sea networks is extremely important, particularly to Washington state. We have so many transportation projects all over the state. Some of the corridors…might be in better condition to handle a significant shift in the air cargo demand compared to some of the major airports which are being surrounded by substantial transportation projects.”

However, delays don’t just add to the cost of shipping. It makes it harder for Washington airports to compete for cargo freight with other major airports such as Los Angeles. It’s an option some Washington growers have taken in the past when congestion proves too great.

“What we really want to accomplish is we want the entire state system to be more competitive and better able to exploit the opportunities available in the marketplace,” Bryan said. “I think we will end up being able to say…that it isn’t so much that Washington airports are competing with one another; it’s that Washington is competing with other locations.”

A meeting is scheduled Friday, December 8 with stakeholders that include representatives from the Washington Tree Fruit Association, FedEx, Boeing Field and the Washington Trucking Association.

The $500,000 study was authorized by the state legislature during this year’s session as part of the transportation budget. The report is due by December 14, 2018.

The post Preparing Washington for air cargo’s big takeoff appeared first on Lens.

Millennium Bulk Terminals (MBT) filed a lawsuit this week against the Washington State Department of Ecology for withholding records used as the basis for critical findings within the proposed terminal project’s Final Environmental Impact Statement (FEIS). The company also is appealing a November 14 decision by Ecology to deny the project’s shoreline permits, arguing that the Hearing Examiner’s decision considered concerns outside of the permit’s proper scope.

“If a company paid millions to a consultant for a project, that consultant would provide the background information supporting their work to the client within weeks,” said MBT Vice President Wendy Hutchinson in a recent statement. “Yet Ecology and their consultant have not been able to provide that information to us for over half a year. Why can’t Ecology provide this information directly, or ask its consultant to provide the information?”

Hutchinson said she also found fault with Ecology altering the FEIS to ignore recommendations and findings from the Department’s hired experts.

“The lack of timely response to very specific requests for data is troubling,” said MBT Attorney Jon Sitkin. “The process to receive documents from Ecology has been very slow. Seven months after our request, Ecology has only released limited information.  This is too long for information that should be readily available, given the FEIS was completed in April.”

MBT’s permitting process began over 5 years and 9 months ago. In April, Ecology and Cowlitz County released its FEIS which found the terminal’s coal dust deposits would not exceed air quality standards and trains passing through the area would contribute to increased rail traffic.

In July, the company received its first permit required for final project approval: the critical areas permit. Since then, the project’s water quality and shoreline permits have both been denied. MBT appealed the water quality permit denial at the end of October.

On December 4, the company also appealed Ecology’s decision to deny the shoreline permits. MBT claimed the Hearings Examiner’s decision was “erroneous” and considered negative effects generated outside of the immediate scope of the permits.

In its lawsuit against the Department, MBT claims Ecology violated the Public Records Act and refused to provide records the Department used as the basis for its findings in the FEIS.

One successful records request revealed the Department disregarded expert opinion and went ahead to compare train car emissions to Cowlitz County emissions when referencing areas of concern within the project’s FEIS.

“This is not an apples to apples comparison,” stated an Ecology expert’s statement that was referenced in the lawsuit. The advisor recommended leaving out the comparison entirely as it was misrepresentative.

An August 10, 2016 e-mail reveals that Ecology’s consultant, ICF International, Inc., recommended Ecology not include its Green House Gas (GHG) model in its FEIS when recommending mitigation.  “…ICF does believe the analysis prepared for the SEPA EIS is not adequate to develop a very specific GHG mitigation measures…” stated the email.

Yet Ecology disregarded that advice and used the model anyway, recommending that Millennium should mitigate for GHG.

“This time Ecology chose to leave the erroneous comparison in the FEIS,” Sitkin said. “There have been no documents produced by Ecology that demonstrate why they disregarded the expertise of their consultant.”
“Ecology has yet to produce modeling data to back up their GHG calculations,” Sitkin continued. “It is data that is typically provided as backup or reference data for an EIS, but it was not included in the 14,000-plus pages for the Millennium project’s FEIS that took more than five years to finish. Why?”

At the local level, Longview City Councilmember Mike Wallin said he recognizes the benefit of the project for Cowlitz County, and condemns the Department for its seemingly one-track mind when it comes to fossil fuel projects.

“Millennium wins the award for persistence,” Wallin told Lens. “They are so committed to doing this project for our community; it’s pretty impressive. Unfortunately, the goal post keeps moving. It’s a terrible precedent for any group, agency or entity trying to start a new industry in Washington.”

Millennium offers “the hope of a vibrant economic future,” Wallin said, as the project would provide skilled, family-wage jobs that will enable the community to prosper.

The project’s construction is anticipated to created 2,650 direct, indirect and induced jobs and $435 million in economic activity. Once operational, it would provide 135 jobs annually and $2.2 million in state tax revenues.

“The perception is…Ecology has predetermined the outcome on these permits and other projects. We will probably never see another mill or manufacturer permitted on the riverfront in Southwest Washington and that is alarming,” Wallin continued.

He added that both Ecology and Governor Jay Inslee have their minds made up and will keep changing the rules to stop the project or anything else related to diesel, a position the councilmember called “alarming for everyone.”

Dave Bennett, Communications Manager of Ecology’s Southwest Regional Office, told Lens the Department would address specific allegations within the lawsuit in court, adding that they believe Cowlitz County and Ecology have carried out the permitting process in a fair and impartial manner.

The post Millennium Bulk Terminals sues Ecology for withheld records appeared first on Lens.

A Washington State Supreme Court ruling issued Thursday may have just added yet another hurdle for any possible appeal by the city of Seattle for its income tax. The 7-2 decision struck down a 2015 local property tax exemption by the city of Spokane for senior citizens and disabled veterans, citing a lack of expressed statutory authority to implement such an ordinance and the violation of the State Constitution’s uniformity clause on property taxes.

However, it’s not the final nail in the coffin that it could have been, says Matthew Davis, who is the attorney for Michael Kunath, one of the plaintiffs challenging Seattle’s income tax. Davis has previously filed a motion for sanctions against the city and a progressive think tank that helped write the ordinance and later intervened in the lawsuit. A decision on that is expected next week.

It remains to be seen how this latest ruling will shape newly-elected Seattle Mayor Jenny Durkan’s decision to move forward with an appeal. In a Facebook live interview with the Seattle Times, she said the income tax should be defended, even though she called its success a “long shot.” Requests for comment from her office was not returned.

Spokane’s legal defense was similar to that made by Seattle during the November legal hearings in King County Superior Court over its high-earner income tax, in which attorneys representing the city cited a section of the State Constitution that provides “for all corporate purposes, all municipal corporations may be vested with authority to assess and collect taxes.”

Judge John Ruhl’s decision invalidated Seattle’s ordinance based on a 1984 state law expressly prohibiting it, though he added that “unless the City can identify a statute that specifically authorizes it to impose the type of tax described in the Ordinance, the Ordinance cannot withstand the Plaintiffs’ challenge.”

This legal opinion was reflected in the State Supreme Court’s December 7 decision. “Municipal corporations have no inherent right to levy taxes. However, article VII permits the legislature to delegate tax powers to municipal corporations. Therefore, a local jurisdiction’s taxing authority is derived from legislative grant specified by the Washington Constitution.

“The delegation of powers of taxation under RCW 35A.11.020 is specific and limited by the statute’s express language,” the ruling states further. “The statute provides that code cities have powers of taxation within constitutional limits. It does not, nor could it, expand or vary the constitution’s uniformity requirements.”

As articulated in the State Supreme Court case King County v. City of Algona, cities must have both the authority and power to levy a tax. That means it must be constitutional taxing authority that was first delegated to the legislature, and then explicitly delegated to the city itself.

Yet, Davis says it’s hard to say how a ruling on tax exemption authority will play out should Seattle’s tax ordinance get in front of the high court. “I think the court is still compressing the two-part test into a one-part test.” He points to a recent court decision in which the justices ruled 8-1 in favor of Seattle’s tax on ammunition. The plaintiff had made two arguments; it was a regulation disguised as a tax to circumvent a state ban on gun regulations, and that the city lacked the taxing authority.

Although Seattle is designated as a different type of city than Spokane – Seattle is rated a first-class city under RCW 35.01.010 – it too is limited in its taxing authority. Even if the state’s ban on local income taxes were overturned, as the Economic Opportunity Institute (EOI) attempted to do during the November hearing, the city would still have to prove that the state had delegated such authority from the legislature. Even then, the state legislature would theoretically only have the constitutional authority to delegated authority for a flat-rate income tax.

“They have to win every single one of these arguments, or they lose,” Davis said. “I think the ultimate insanity of the city argument is that…when considering the validity of an ordinance, the courts would never look at anything but the constitution.”

Since the 1930s, the State Supreme Court has unanimously ruled that income is property and thus subject to the State Constitution’s uniformity requirement for property taxes. On top of that, Washington voters have repeatedly rejected a constitutional amendment that would alter that understanding, the most recent of which was the vote on Initiative 1098 in 2010.

Seattle’s lawsuit is part of a larger effort to remove the ban on a progressive income tax through judicial fiat. However, beneath the legal justifications for the tax is the fervent hopes that a friendly Supreme Court will side with them. A 2008 EOI paper states that “highly respected legal scholars believe that if an income tax measure passed today without a constitutional amendment and was challenged in court, there is a good chance that the Supreme Court would reverse its earlier ruling and allow the tax to stand. An alternative – and more politically feasible – route would be to pass an income tax legislatively, either by initiative or by a majority vote in the legislature and ratifying vote of the people. Such legislation would almost certainly be challenged in court, providing the State Supreme Court with the opportunity to review and possibly reverse the ruling from 75 years ago.”

Since the city ordinance was passed in July, significant voices have remained silent. Those include Seattle City Attorney Peter Holmes, who had previously written a legal brief to the city on the tax’s constitutionality. That brief has been exempt from public disclosure, and the city has retained outside counsel for defending its tax proposal.

Attorney General Bob Ferguson also has remained neutral, so far declining to intervene in defense of the 1984 state law.

However, another relatively quiet voice since July has been the income tax’s loudest champion, Councilmember Kshama Sawant. Her last press release concerning the tax was released in July shortly after the measure was passed, and her Twitter account showed no response to the Nov. 22 King County Superior Court ruling. Her public Facebook page shows no posts on the decision following the decision, and no response by her to a commenter leaving a link to a story about the ruling. Requests for comment from Sawant was not returned.

The post Washington high court adds doubt to Seattle income tax appeal appeared first on Lens.

The city of Seattle is moving forward with its “long shot” appeal to the King County Superior Court ruling on its income tax ordinance. They’re seeking a review of it by the State Supreme Court, which recently struck down a tax exemption passed by the city of Spokane for lacking statutory authority. It’s the same argument Judge John Ruhl used in his Nov. 22 decision against Seattle and the progressive think tank Economy Opportunity Institute (EOI).

The Dec. 8 motion for appeal was filed just after the State Supreme Court issued a ruling against Spokane that adds further doubt to any possibility the justices will side with Seattle. Many observers noted that it might have provided Mayor Jenny Durkan with the political cover to drop any appeal. In a Facebook live interview with the Seattle Times, she called the appeal a “long shot”, but said they should file one, anyway.

Continuing further with the lawsuit is a waste of everyone’s time and money, says the Opportunity for ALL coalition, which is funding the legal challenge. On Twitter, they wrote “The city should cease wasting hundreds of thousands of taxpayer dollars on a tax that is clearly unconstitutional.” In another Twitter post, the organization wrote: “We will continue to make our case that there is a better way – one that preserves and protects our city’s and state’s incredible economic ecosystems and creates opportunity for all.”

Also challenging the city ordinance is the Freedom Foundation, a conservative think tank.

Parties to a lawsuit can appeal for direct review by the high court for various reasons. The city is expected to argue that theirs is a case “involving a fundamental and urgent issue of broad public import which requires prompt and ultimate determination.”

However, the case may not be heard by the high court at all due to the nuance of Ruhl’s decision. In Washington state, the legality of city tax ordinances is scrutinized via a two-tier process because municipalities have no de facto authority to pass a tax; they must be authorized to do so by the state legislature. That taxing authority delegated from the legislature must also not violate the State Constitution. In its ruling against Spokane, the Supreme Court concluded that while the legislature can pass property tax exemptions, cities lack that express authority.

Many progressive income tax advocates have hoped the legal challenge would enable the Supreme Court the opportunity to overturn an 80-year legal precedent treating income as property under the constitution’s uniformity clause regarding property taxes.

Yet, that question was not addressed by Ruhl, who invalidated it solely based on a 1984 state law explicitly prohibiting local income tax. This means that Seattle’s appeal can only address that argument, and the only part of the income tax debate that will be considered by the Appeals Court and, if they side against the city, ultimately the State Supreme Court if they choose to let the lower court’s decision stand.

Also, Ruhl could still approve sanctions against Seattle and EOI filed by plaintiff Michael Kunath for making “frivolous arguments” in court. Kunath is requesting the court review a 2015 legal brief provided to the City Council by City Attorney Peter Holmes, who has remained uninvolved in the legal challenge.

Aside from the tax’s legality, critics have also taken aim at its negative impact on renters and homeowners. It’s what prompted the Rental Housing Association of Washington and plaintiff Dorothy Sale to challenge the city ordinance.

In particular, the tax would harm middle class elderly residents who purchased their homes decades ago at far lower prices but would be subject to the tax when they go to sell and use that money for retirement, Opportunity For ALL argues:

“Dorothy Sale bought her home in Ravenna in 1967 for $18,500, and has lived there and paid property taxes for the last 50 years. Now 98, Dorothy retired from her job at the University of Washington in 1983. Living on a state pension and limited social security, she currently qualifies for reduced property taxes as a low-income property owner. Dorothy may need to rely on the money she earns from the sale of her home if she requires assisted living or nursing care in the future. She opposes taxing the real estate gains of Seattle residents of modest means who have lived in their homes for decades.”

The city now has 30 days from Dec. 8 to deliver to the appellate court clerk a list of pleadings for the court to consider. Within two weeks, the city must provide an argument for why its case should receive direct review from the State Supreme Court. Opportunity for ALL will be given for them to file a brief and allow the plaintiffs to file responses. A court date will then be set for an oral argument.

However, a final decision won’t be coming anytime soon, with the earliest possible date sometime in July 2018.

The post Seattle makes “long shot” appeal on income tax appeared first on Lens.

Washington businesses often struggle to navigate numerous licensing and regulatory requirements while operating in the state, and industry and business leaders are saying these challenges are major deterrents for employers to move into the state and make a living.

Among their concerns, stakeholders also cite the lack of predictable timelines for economic development projects and a non-centralized agency for business licensing. 

Lee Newgent, Executive Secretary of the Washington State Building and Construction Trades Council, told Lens that the main issue with Washington’s regulatory system is that there isn’t a set time limit for a decision regarding project applications.

“We support Canada’s system where there should be a decision from the application date within an 18-month window,” he added. “It should be something definite, instead of open-ended like the way it is.”

The Millennium Bulk Terminals project in Longview began its permitting process five years and nine months ago and is still trying to acquire necessary permits. The Vancouver Energy terminal has also endured delay. That project has spent more than four years under review, and the Washington State Energy Facility Site Evaluation Council (EFSEC) is recommending the governor deny the project.

The problem is that private investors may not want to wait four or five years in an application process with no set deadline, added Newgent.

“We are going to start losing out in that investment, which is not something the state of Washington or federal agencies have the money to do. It will have to come from private investment companies, but only if they are going to have a return on investment or a defined window so they know if their application is moving forward or not.”

Another problem is the perceived bias when considering projects and their permits.

“If water impact is being looked at, it should just consider water and not other issues,” he added. “We are strongly confident that the people that are applying for export projects can remedy any issues brought up in Environment Impact Statements (EIS).”

Newgent said the problem is political pressure placed on state departments – entities that should remain neutral.

“Whether you are Democratic or Republican, these communities need new investment,” he added. “We support the idea of (companies) creating long-term building trades and family-wage jobs…an actual tax base, tax return and infrastructure investment.”

For the retail sector, businesses have two main regulatory challenges, according to Renée Sunde, President and CEO of the Washington Retail Association (WRA).

The first is the Business and Occupation (B&O) tax, which is a gross receipts tax levied on all businesses. In Washington, the state lacks a centralized jurisdiction run by the state or another institution because taxing jurisdictions prefer to operate separately, Sunde said.

“A 10-employee business has to fill out all paperwork for all the different jurisdictions and it is a pain,” she said. “Take a small furniture business in Olympia that delivers couches and desks to Yelm, Tumwater and Lacey. For every city they do work in, they have B&O taxes and have to manage them individually because it’s not centralized in one location.”

She added that the state of Washington should centralize its efforts so the Department of Revenue collects the B&O tax, but she believes that cities don’t want to lose local control to the state because they might be charged for services.

Along with that tax burden is the countless number of business licenses – and the fact that each city requires a separate license, added Sunde.

Jeff Garfield, President of Seattle-based Bedrooms & More, told Lens he experienced this problem firsthand in dealing with the state destination-based sales tax. The tax is collected on retailers delivering products outside of their taxing district in the place where the product is transported.

“Because we are a business where we deliver all over the state, it is a fairly onerous job to get that reporting done correctly,” Garfield told Lens.

The real problem, he added, is the unintended consequence of the tax’s implementation.

“These smaller cities decided that when they are receiving this revenue from a Seattle store, they said the (company) must be doing business in my city or town, therefore I will require business license or B&O tax from that company.”

Garfield said the business started receiving letters from smaller communities and taxing districts demanding they get annual business licenses at around $100 each.

“Just our little store in the Wallingford district in Seattle delivers to over 100 different taxing districts. If we have to pay a business license tax to every single district for driving something in and dropping it off at someone’s home, it would be kind of ridiculous.”

Garfield added there should be a threshold to define the “work” a business is doing in a particular taxing district before needing a business license. This would help differentiate a business making a delivery for two minutes, versus a company that comes in and remodels a kitchen or requires more labor.

Last session, State Rep. Kristine Lytton (D-40) sponsored HB 2959, which would simplify business licenses and encourage cities to centralize them. The bill was signed into law last June.

“It’s a step in the right direction and sets up the process for cities to join and have the state organize it, but doesn’t force anyone to do it, which is what really needs to happen,” said Sunde.

A centralized system for both the B&O tax and business licenses would be beneficial for both small and large businesses, she added.

“Even moreso, the burden is on the little business where the owner and his wife may sit at the kitchen table at night…it’s time they could be doing normal family things or making their business better.”

The post Licensing, permitting top regulatory burdens for Washington businesses appeared first on Lens.

The Seattle City Council unanimously approved new regulations at a Monday meeting on short-term and vacation rentals that industry members warn will backfire as the city looks to address a lack of affordable housing. Instead of opening more residential space to long-term renters, platform owners say it will lead to fewer units on the market and job loss both within the industry as well as in businesses that depend on vacationers and tourists.

“It very much is going to have job impacts,” Seattle Oasis Co-owner Darik Eaton told Lens.

Although less than one percent of the city’s housing is used as short-term rentals, the City Council’s new regulations aims to discourage much of that use through companies like Airbnb, VRBO and HomeAway in an effort to drive more units into the long-term housing market.

“We are not the cause of the affordable housing crisis,” Seattle City Suite Co-owner Emma Woods told the council. She is also the vice chair of the Seattle Short-Term Rental Alliance (SSTRA).

The ordinance imposes new requirements on short-term rentals, including:

• A special license for all renters or platform operators such as Airbnb;
• Limits new renters to offering their primary home and one additional unit; and
• Current renters are limited to two units.

The new regulations won’t affect those people who rent out parts of their houses to help cover their mortgage or rent, a fact highlighted by Councilmember Teresa Mosqueda. “The legislation before us I think allows people to maintain that mom and pop approach…I think that this is a priority to make sure that individuals can stay and be financially stable in our city” while “looking to constantly bring more homes onto the market.”

Also, some neighborhoods are allowed to be exempt from the rental unit limits. That includes downtown, along with First Hill and Capitol Hill buildings built after 2012.

However, the council agreed not to include Belltown, a move that vacation rental owners warned would cripple their businesses. Seattle Oasis Vacation co-owner Sally Lauren Nichols told the council that 40 percent of her company’s revenue comes from short-term rentals in that neighborhood alone.

“Remember that we are people of this community too,” she said. “If you pass further geographic restrictions…it will most likely put us out of business, and there will be no money to go toward funding affordable housing.”

Other vacation rental industry members voiced opposition, including Eaton. He said the “designed effect will be the complete opposite of what I believe the council is trying to do” by pushing their business activity into a more concentrated part of the city “because those are going to be the only places that can have legal short-term rentals.”

Also considered at the Monday meeting was an additional $2 nightly tax on top of a tax previously approved of $14 for homes and $8 for rooms. However, the council rejected the tax following protests from industry members. “With the current slated bill, we are now set to be taxed at the highest of any short-term company in the United States,” Nichols said.

Eaton agreed. “It will pass further onto the travelers, not the platforms.”

Another short-term rental operator who testified argued that the tax disproportionally impacts certain renters. “Most people are like me; we have one unit and there’s no difference between an $80 and a $200 a night, which is an unfair tax or fee. I think it should be…a percentage of what your revenue is.”

Also opposing the nightly tax was TechNet, a national, bipartisan network. In a statement, Executive Director for Washington and the Northwest Joanie Deustch wrote that although they support new regulations as a “fair compromise, this tax is a poison pill that would upend the compromise.  It unfairly targets the short-term rental industry made up of over 4,500 Seattle residents who serve as hosts to visitors in our city.”

“Additionally, this type of tax would stifle innovation and growth for future internet-based marketplaces, which thousands of Seattle residents depend upon to pay their bills,” she wrote further.

Under their ordinance passed last month, short-term rentals are defined as 30 consecutive days or less. Industry members had previously warned that many owners used their rental property during some parts of the year. If not allowed to rent them out short-term, many will simply not rent them out at all.

Eaton told Lens that although the ordinance is “still heavy-handed…it’s a hell of a lot better than what it started out as, in that people can actually own an investment property in the city of Seattle, whereas the original legislation didn’t allow for that at all.”

Still, with the anticipated loss of 40 percent of its business, Eaton said they’re looking at all the options. “We do have a year to figure this out. We have time to put our thinking caps on to honestly stay in business. Tough decisions are being made.”

A big unintended consequence for the city will be the lost jobs, economic activity and revenue that will result from this action, he added. The ordinance will take hundreds of units off the market, which means fewer workers in the industry, as well as vacationers and tourists spending money in Seattle.

The new regulations will take effect in January 2019.

The post Seattle’s vacation rental industry hit with new rules appeared first on Lens.

A high-speed rail line between Vancouver, B.C. through Seattle to Portland, Oregon could potentially provide 1.7-2.1 million annual trips and pay for its own maintenance and costs by 2035. It’s a scenario outlined in a feasibility study just released by the Washington State Department of Transportation and shared with the Joint Transportation Committee at a December 14 work session.

However, further analysis is needed to hash out those details before exploring funding sources, something proposed in Governor Jay Inslee’s supplemental transportation budget. It’s likely that if the state plans to attract private investors, it will have to make a compelling case to appropriate the estimated $24-$42 billion needed to build it.

One of the arguments the state might make is the potential market demand. According to the study, one rail design with four major stations (Vancouver, Seattle, Tacoma and Portland) could tap into 13-17 percent of travelers in those corridors and provide 2.8-3.2 million annual trips.

“It’s a big idea to be sure, but many would say it’s an idea whose time has come,” Charles Knutson told the committee. He is Inslee’s senior policy advisor for transportation and economic development.

So far, private stakeholders have proven willing to put money on the table. The feasibility study received $300,000 from the state legislature during this year’s session, while Microsoft and the Washington Building Trades contributed $50,000 and $10,000 respectively. While light rail has proven controversial in the Puget Sound region, the idea of a high-speed rail line has gained support from a diverse group of entities that include Washington Roundtable, the Association of Washington Business, the Business Council of British Columbia and the Portland Business Alliance.

With worsening traffic conditions and rising housing prices, some see a rail line as a way to better connect the region while enabling commuters to live farther away from major employment centers in more affordable communities.

“If you can just imagine being able to go from downtown Seattle to downtown Vancouver in less than an hour, and now imagine that throughout the Pacific Northwest,” Knutson said. “They (the business community) see the economic development potential…throughout the Cascadia region. The feasibility study is bearing this out. It’s good to keep in mind that the private sector is at the table and they might be able to pitch in.”

“This really is about investing in ourselves and in the broader Cascadia region,” he added. “In these tough, troubled times we need more openness, more connectivity, more trade, not less.”

This isn’t the first time Washington has toyed with the notion of high-speed rail; a 1992 state study found the concept sound.

However, great advances in transportation technology mean a rail line could move passengers even faster, says Scott Richman. He is the senior transportation project with CH2M, which published the new report. “When they were talking about ultra-high-speed rail, they weren’t talking about the speeds we have now.”

The study looked at several rail tech options, with varying speeds (200-270 miles per hour) and passenger capacities (824 to 1,500). It found the most financially viable schedule would have 12 daily round trips. The study also considered connecting corridors through Stampede Pass to link up with Ellensburg, Moses Lake and Spokane.

However, the building and operating costs largely depend on which rail technology is chosen. At 270 MPH, Maglev offers the fastest trip, but it also has the highest construction costs compared to high-speed rail. However, Maglev could potentially cover its operating costs by 2035, 20 years faster than high-speed rail.

The actual price tag will also depend on how much tunneling is involved; the study made a high-end assumption. Eliminating half of it would trim approximately a quarter of the total bill, and further changes could bring other costs down.

But that won’t be known until a business case is done, says Ron Pate, director of WSDOT’s Rail, Freight and Port Division. He told the committee that they also will need to take into consideration the logistics of building across a state border to the south and international border to the north, adding that it is “really important to set up a framework with governance structure in place.”

The business case will also help them determine the best way to pay for the rail line. A private company called Texas Central is working on a 240-mile bullet train line from Houston to Dallas.

Inslee’s proposed 2018 transportation budget released Thursday includes $3.6 million for the business case.

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Governor Jay Inslee’s proposed 2018 supplemental budget released Thursday brought forth mixed tidings of discomfort and joy. His operating budget would add $1 billion in spending to the 2017-19 biennium, raid nearly as much from the budget stabilization account to pay for teacher salary increases as part of the McCleary decision and add a new state carbon tax or fee.

However, equally worthy of note was what Inslee left out: the dismantling of the property tax swap approved earlier this year to pay for new basic education spending, along with a capital gains income tax included in his proposed 2017-19 operating budget.

“I was absolutely shocked that it (capital gains income tax) was not in the budget, but I will take it,” Washington Policy Center’s Government Reform Director Jason Mercier said. “I couldn’t tell you (why it wasn’t included).”

The tax was one Inslee had previously touted as a replacement for the property tax swap, and became a key discussion in the 45^th legislative district race between Senator-elect Manka Dhingra and Republican candidate Jinyoung Englund. Its absence suggests there may not be a major push for it in the legislature, where both chambers are now controlled by Democrats.

When asked about it at a December 14 press conference, Inslee said: “We have found a way to do this in a different way that I believe responds to, as I’ve indicated, both to the needs of the education of our children and their long-term health. So, this is what I’m proposing.”

Mercier noted that “it’s not what he said; it’s what he didn’t say, and how long he didn’t want to address it.”

Within the context of the debate over a progressive income tax in Washington, the capital gains income tax poses a much more serious threat to the state’s constitutional ban. Although progressive income tax advocates have looked to the city of Seattle’s ordinance to offer an opportunity for the State Supreme Court to overturn 80 years of legal jurisprudence on the matter, government reform experts such as Mercier have pointed out that the ordinance has many more barriers to overcome before the constitutional question can be addressed, including a 1984 state law explicitly prohibiting local income taxes.

However, the same cannot be said for a capital gains income tax, which like Seattle’s law would have also provoked a lawsuit.

Inslee’s budget also adheres to the four-year balanced budget requirement, whereas last year his spending list “assumed” that rule would be suspended.

It’s a stance that Senate fiscal hawks are urging Inslee to maintain throughout the session. “While it’s promising that the governor finally proposed a budget that balances over four years, I call on him to publicly commit to veto any budget that doesn’t,” Senate Republican Leader Mark Schoesler (R-9) said in a statement.

Sen. John Braun (R-20) in a statement voiced a similar sentiment. “I’m glad he is finally adhering to the four-year balanced budget law in crafting his budget, and I appreciate that he is embracing the bipartisan work on the K-12 education funding structure enacted last session. I ask that the governor veto any budget that isn’t balanced over four years.”

Braun made a measured critique of Inslee’s carbon tax proposal. “We will see whether there are enough votes in the Legislature to pass these proposals.”

Schoesler wrote: “I also worry how the governor’s as-yet-unveiled ‘carbon pricing plan’ would affect family jobs in Washington. If he can’t explain the difference between a carbon tax and a carbon pricing plan, then it’s a tax. It IS an energy tax.”

Inslee’s supplemental budget highlights includes:

• A $950 million transfer from the rainy-day fund to pay for the state’s new education salaries for the 2018-19 school year;
• $42 million to cover higher-than-expected wildfire fighting costs from this year’s season;
• $162 million for shortfalls in the state’s Medicaid program; and
• $106 million for increased operating costs at the state’s psychiatric hospitals, as well as maintaining federal funding levels at Western State Hospital.

The $950 million transfer would leave $1.4 billion in the rainy day fund by 2019. At the press conference, Inslee said “We want to make sure we start on time, and our budget this year will fully comply with the McCleary decision on time this year.”

A supermajority vote is needed in the legislature to approve the use of those dollars for anything besides emergency spending. However, the legislature this session approved a raid on the fund to pay for state public pension liabilities.

Even if Inslee gets the votes needed, it’s a move State Treasurer Duane Davidson says could harm the state’s high credit rating. In a statement, he wrote that “with a robustly growing economy we should be adding to our reserves now – not pulling from them.”

“I firmly believe that the reserves need to be used prudently,” he added. “The Legislature should look for alternative ways to fund McCleary – other than using our reserves to pay for operating expenses.”

Davidson points to the state’s recent credit agency rating reports that were influenced by the reserves, as well as the state’s balanced budget requirement. That same month, his office held the biggest bond refunding series sale in state history, with nearly $138 million in debt service costs saved as the result of a $814 million bond sale.

A May 2017 study by Pew Trusts found that “while rainy day funds are one of several factors that inform ratings decisions, they are especially important because of the increasing volatility in state revenue.”

“Credit rating agency analysts pay attention to how states structure their reserves, whether policymakers are disciplined about controlling deposits and withdrawals, and how officials integrate rainy day fund policy with spending and revenue decisions,” the study concluded.

Further details on Inslee’s carbon tax will be released in January when the legislature convenes for session.

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Washington business owners are reporting that it is difficult to stay informed when receiving workplace safety inspection penalties given out by the Department of Labor and Industry (L&I)’s Division of Occupational Safety and Health (DOSH). In response, L&I staff are making tweaks to better explain an employers’ options for requesting additional information or appealing a citation.

Specifically, members of the business community have expressed dissatisfaction with how the department notifies employers regarding the DOSH penalty process.

Jan Gee, President and CEO of the Washington Food Industry Association (WFIA), told Lens her members were unsure of how to file for additional information that would provide detailed reasoning and calculations made for DOSH penalties.

“There wasn’t a single person in our four meetings around the state that even knew what it meant to make a public records request or that the department had (more specific) documents they didn’t provide with the penalty,” Gee said. “Nobody knew. They haven’t had any experience with it because they didn’t know they could do it.”

Elaine Fischer, Spokesperson for L&I’s Public Affairs office, told Lens that during a typical inspection, department staff will visit a workplace to interview the employer and workers during its inspection to investigate serious injuries. Investigators will also take pictures and measurements as needed.

Once the inspection is complete and a supervisor has reviewed the report, the department will schedule a “closing conference” with the employer to go over the findings. L&I staff will explain what the violations were and allow the employer to present additional information they want to be taken into consideration.

“During that closing conference, they also explain how the penalties will be calculated, what they are based on and how to appeal if they disagree with the findings, as well as how to get a copy of the inspection file from our public records office,” said Fischer.

Once L&I processes the report, the employer will receive a citation in the mail with a cover letter explaining their appeal rights and a checklist showing what the business owner needs to do or how to pay the fine. The business owner then has 15 business days to appeal as needed.

Paul Guppy, Vice President of Research for the Washington Policy Center (WPC), says more transparency would certainly help businesses trying to navigate the DOSH penalty process.

“Clarification is important because the agency controls all the information…the agency should build in more time for the business owner to really find out what is going on, including how to access public records.”

“Workplace safety is important and so is enforcement,” added Guppy. “I think most employers want to comply… L&I and employers are working to the same goal, but the problem arises when there’s a disagreement about what the facts are, and the business owner should have as equal access to the facts as L&I does.”

In early December, Gee met with L&I Director Joel Sacks to request a clearer process for employers.

“What we are saying to the department is that you are not providing enough information, and employers are getting these notices of penalties and they have two weeks to file an appeal…it doesn’t make it clear at all to the employer, and it doesn’t make it simple.”

Businesses get a notice of the total penalty, but it doesn’t include the formula that L&I staff used when calculating the DOSH penalty, Gee said.

The department should send out the work sheet that details the calculations for the penalty, she added, and tell businesses they have additional documents and photographs on file so that employers can request the additional information.

“We want employers to know there is an enforcement file on them which gives them important information to determine if they want to appeal and if there is a likeliness to get their penalty excused or reduced,” she said.

DOSH penalty fines are substantial for businesses, Gee added. An employer could receive between a $5,000 and $10,000 penalty per inspection.

“It’s not a small issue,” she said. “With those increased penalties comes an increased responsibility by the department for disclosure.”

Since meeting with Gee, the department has planned several changes to better inform employers, which include:

• Updating the citation checklist to include how to request inspection documents from Public Records;
• Updating the citation cover letter to include Public Records Information and remove bureaucratic jargon; and,
• Improving the Public Records website by adding an option to request inspection summaries or inspection files.

Currently, the cover letter rework has already been implemented.

Fischer added that the department is also working to improve turnaround time on inspection reports. Often, an employer may want that report instead of the more time-intensive and expansive inspection file.

“We definitely saw that there was room for improvement in how we are communicating what to do,” said Fischer. “We want to make it easier for employers to understand all they need to prepare their appeal and we’ll elaborate more of that on the public records website.”

The department is hoping to complete its revamp by the end of the year.

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A Thurston County Superior Court judge ruling on Friday invalidated the state Department of Ecology’s Clean Air Rule due to a lack of statutory authority. For the time being, Ecology says it is weighing its options. It also remains to be seen whether the ruling will have any effect on anticipated carbon tax proposals made in the state legislature this upcoming session.

The Clean Air Rule would have required businesses that emitted more than 100,000 metrics tons of carbon dioxide (CO2) and CO2 equivalents annually to reduce their emissions by an average of 1.7 percent annually. Among those effected would have been fuel and natural gas suppliers,  pulp and paper plants, metal manufacturers and waste facilities.

However, following oral arguments by the Association of Washington Business (AWB), which filed the lawsuit last fall, and Ecology, Judge James Dixon’s bench ruling concluded that Ecology could not regulate suppliers because their authority does not extend to those who sell products, only to those who directly emit carbon.

In a statement, AWB President Kris Johnson said: “We did not believe this rule was the right way to accomplish the goal of reducing emissions. It was unnecessary and, if the rule was allowed to stand, would have made it more expensive to heat homes, drive to work and grow a business in the state of Washington because it would have put Washington manufacturers at a competitive disadvantage to national and international companies.

“We can and will do more to reduce our state’s carbon emissions in a way that keeps businesses in Washington’s clean economy instead of driving them to other states and nations with less stringent standards,” he added.

Ecology Spokesperson Camille St. Onge told Lens that “we’re waiting to get the written order and evaluate it. We’re considering all of our options with our counsel,” which could include an appeal and/or legislative action. Inslee has already announced plans for a carbon pricing plan or tax as part of his 2018 supplemental budget, and lawmakers such as Sen. Guy Palumbo (D-1) plan to introduce their own carbon tax proposal this session.

Palumbo is the newly-appointed vice chair of the Senate Energy, Environment, & Technology committee, and earlier this year session proposed a carbon tax via SB 5930. Although it failed to garner a public hearing in Ways & Means, the election of Sen. Manka Dhingra (D-45) last month handed Democrats control over both chambers. A similar bill was introduced this year by Rep. Joe Fitzgibbon, but failed to get out of the House Committee on Environment.

Palumbo told Lens that “I think everybody you talk to, no matter Left or Right, it seems everybody agrees that a thoughtful, bipartisan legislative solution to the issue of climate change…is the preferred path.”

Unlike the Clean Air Rule, which would have been invalidated under SB 5930, Palumbo says his proposal for a flat-tax on carbon would involve little agency rulemaking. “Business is still looking for that preemption of regulatory certainty.”

The bill would also seek to lower carbon emissions by investing new state revenue from the tax into various carbon-reduction projects, such as restoring forest health and reducing storm water pollution. “If we’re going to do something on carbon, there’s got to be accountability on the expenditure of tax dollars,” he said.

The Clean Air Rule has proved controversial from its inception following an executive order by Governor Jay Inslee. Its practicality and benefits have also been called into question.

Though Ecology cited the Washington Clean Air Act, its authority to pass the rule was challenged early on by both employers and state lawmakers. Proponents of the rule pointed to emission goals set in 2008 by the legislature as justifying the executive order. However, a legal opinion by State Attorney Bob Ferguson stated that these reduction goals are not legally enforceable.

Ecology and members of the business community also clashed over its economic implications. The agency’s preliminary cost-benefit analysis estimated Washington employers would lose $1.3 billion to $2.8 billion over 20 years. However, in its formal comments to Ecology, AWB estimated that the rule would result in the loss of “over 34,000 jobs, and $7.3 billion in sales by year 2035.” Nearly half of those costs would be borne by small businesses.

Washington Policy Center’s Environmental Director Todd Meyers told Lens that, legality issues aside, the rule became convoluted in an effort to avoid “leakage” of jobs, and emissions, to other regions.

“If you’re trying to cut carbon without driving manufacturing out of the state, you end up creating all sorts of loopholes,” Meyers said. “Their approach was ‘The answer to too much government is more government.’ At the end of the day, there are only so many ways you can cut carbon emissions, and it’s going to raise the cost of energy.

“The challenge is how do you thread that needle, and government is really bad at threading that needle,” he added.

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Seattle city leaders have approved a memorandum of understanding (MOU) with Los Angeles-based Oak View Group (OVG) to renovate KeyArena with the hope of attracting both National Hockey League (NHL) and National Basketball Association (NBA) teams. City councilmembers and other stakeholders agree that the agreement is critical for revitalizing one of the city’s main entertainment venues to attract visitors and additional spending.

“It’s a gem and it is aging,” said Deborah Daoust, Director of Communications for Seattle Center. “It needs upgrades and it really needs what OVG will give to turn it into a state-of-the-art sports and concert arena.”

Seattle Center, the city department that manages and oversees KeyArena, also serves as the landlord for nearby attractions including the Seattle Repertory Theatre, Seattle’s Children Theatre and the Museum of Pop Culture. Under the new agreement, OVG would become the tenant of KeyArena and invest $600 million in private funds to redevelop the facility.

The business has agreed to contribute a number of local benefits including:

• $250,000 to develop a neighborhood mobility action plan with a transportation consultant;
• $3.5 million for expert consultants and legal counsel during the MOU negotiation process;
• $40 million on transportation improvements over the 39-year lease;
• An estimated $2.6 million per year on guaranteed baseline rent and tax payments; and,
• Prevailing wages for current qualified KeyArena employees.

This fall, OVG announced it would have the building ready by October 2020 if it obtains all environmental approvals by October 2018.

OVG CEO Tim Leiweke told USA Today the MOU “sends a very strong message now to the NBA and to the NHL that everyone worried about…’Will you ever possibly get this deal done within the politics of Seattle and the Seattle process as everyone likes to call it?'”

“Guess what? Game, set and match. We clearly send a message to everyone that this will get done, this will get built and we are ready now to go get one and hopefully soon, two teams,” he added.

On December 4, the Seattle City Council voted 7-1 to authorize Mayor Jenny Durkan to execute a MOU with OVG.

“We are experiencing a unique moment in our City’s history and with it comes an opportunity to preserve one of our (city’s) most iconic public assets for the benefit of the public good,” said Councilmember Teresa Mosqueda in an online statement. “This project recreates a world-class, multi-purpose sports and entertainment facility (including women’s sports!) which will become a cherished part of Seattle’s legacy.”

Council President Bruce Harrell agreed. “The City negotiated one of the strongest arena agreements you will find in the country, protecting our taxpayers and the City,” he said.

He continued: “I am confident this will be a partnership of success with OVG in building a state-of-the-art arena, generating economic vitality, and the ultimate goal of getting an NHL team and bringing back the Sonics.”

On December 6, Mayor Durkan signed the MOU between the city and OVG. After the signing, Durkan tweeted, “Today’s investment is the best path forward to bring back our Sonics, recruit a NHL team, make Seattle a world class music city and drive investment in the future of Seattle Center.”

Daoust told Lens the revamp will nearly double the size of the arena with increased capacity and more interior space for hockey and basketball games. “Hockey has never been successful in the building because of sight line issues right now, but those will be taken care of,” she said.

One day after the signing of the MOU, NHL Commissioner Gary Bettman allowed Seattle to file an application for an NHL expansion team.

Seattle would become the league’s 32nd NHL team, with a price tag of $650 million.

“It will be a boon for all the restaurants here because there will be many more events,” said Daoust. “That’s more people dining out, more people shopping in the retail spaces around here and more parking on the surface lots.”

Daoust added OVG will more than compensate Seattle Center its average revenue while using the space, as laid out in the MOI. “From the city’s general fund standpoint, that’s always a benefit.”

The lease term is 39 years with the addition of two eight-year renewal options.

Also, OVG is required to invest a minimum of $168 million of capital improvements into the building during the life of the lease. Daoust said that this way, the arena will be in state-of-the-art condition when the city reclaims the arena.

“From start to finish, it’s truly a privately financed redevelopment of the arena,” said Daoust.  “In the mind of the city, it’s really an agreement that will set a new standard for arena redevelopment in this country.”

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The fate of dynamic tolling of 17-miles of high occupancy (HOV) lanes on Interstate 405 between Bellevue and Lynnwood could have long-term implications for Eastside traffic congestion reduction and management policy. The Washington State Department of Transportation (WSDOT) envisions tolled lanes running the entire 40-mile corridor down to State Route 167 in Renton.

But discontinuing the I-405 tolls could thwart that vision. Two years after its inception, the I-405 tolling is failing to meet one of the two requirements necessary to remain in operation under state law. The long and short of it is that while more vehicles are moving through the corridor than before and the HOV lanes have faster, more reliable times than they did prior to tolling, it’s still not meeting the mark set by the legislature.

Yet, a recent study of the corridor for the Joint Transportation Committee suggests that lawmakers may resort to higher maximum toll rates and other alterations in order to improve those metrics, rather than shut the system down. The results of the report were shared to panel members at a December 14 work session, where the discussion may set the tone for possible legislative action come January.

The corridor performance analysis study was authored by the University of Minnesota’s Department of Civil, Environmental, and Geo-Engineering and included a list of recommendations on how to improve the performance metrics that are failing to meet standards under state law.

Incidentally, the study’s scope did not include whether the system should be abolished and the corridor restored  to previous use of HOV lanes. In a recent memo, Washington Attorney General Bob Ferguson said the system only needs to meet one of the two state goals; reiterating the state law itself, the University of Minnesota study states that “if measures…above are not met within two years of ETL (express toll lanes) facility operation, statute directs the ETL project on I-405 be terminated as soon as practicable.”

The first objective is for I-405 toll payments to cover its operating expenses. On that, the system has met its goal many times over. Since opening in September 2015, the tolls have generated $45 million in revenue for WSDOT. Of that, less than half ($19 million) was needed to pay for operation costs.

However, the lanes – constructed using gas tax dollars – are still failing to maintain a 45 mile per hour (mph) average speed 90 percent of the time, the second objective mandated by state law. During the latest six-month period (January to July) the northbound lanes had an average speed above 45 mph 85 percent of the time, 78 percent for the southbound lanes.

Also, the general-purpose lanes experienced “no significant change” in trip times as the result of tolling.

However, during that time the corridor in both directions experienced an 11-percent increase in vehicle volume, albeit an additional HOV lane opened for tolling added an additional 10 percent road capacity. WSDOT also invested $11 million into a 1.8-mile northbound shoulder lane.

One of the ways the study’s authors recommend fixing the HOV travel times is by raising the maximum toll rate above its current $10 limit, which is reached 15 percent of the time. That limit was created by the Washington State Transportation Commission shortly before tolling began.

Other recommendations in the study include:

• Extending the peak period times from 5-9 a.m. by one hour to 10 a.m.;
• Charging separate segment toll rates based on the traffic conditions; and
• Making it easier for vehicles to transition in and out of the tolled lanes.

Matt Schmit is a project manager for the University of Minnesota’s Humphrey School of Public Policy. He told lawmakers at the December 14 work session that “during that 17-mile stretch of the corridor, conditions can change drastically. The price that a car locked in at that one time may not be reflective of conditions downstream or upstream so to speak.”

“When traffic builds on the I-405 corridor, it quickly builds,” he added. “You really don’t want to hit the maximum toll rate; it’s a tool that’s only useful if you’re not hitting that maximum toll rate.”

Dr. Alireza Khani of the University of Minnesota added that: “we don’t want to surprise drivers so when they see a rate, they enter and at the end they pay something differently; they would be able to lock in a price. We don’t want to change the price for the vehicles that are already in the lanes. Drivers would be able to lock in a price and pay that one.”

House Transportation Committee Chair Judy Clibborn (D-42) seemed open to the idea of higher tolls, telling colleagues “I would like to just put in everybody’s mind that…we’re not really tolling for the money. We’re tolling for the management. We’re talking about raising tolls, but we’re really trying to manage throughput. I just want to make sure everybody understood that.”

However, panel member such Sen. Dean Takko (D-19) voiced concerns that varying toll rates would negatively affect traffic. “If I understand what you’re saying, you’d get into one segment and it says $3. You get into the next segment, it says $8. Doesn’t that create a problem if it’s that congested that the prices are getting high enough that you want to peel off?”

Schmit replied that “this is the challenge that you have. The peak of the peak periods, where the traffic is at its worst.”

Takko’s apprehension is shared by Mariya Frost, director of the WPC Coles Center for Transportation. In a blog post, she wrote that variable tolls for each segment “would be like ordering a steak at a restaurant for $30, and about 1/3 into your meal, being told it’s now $100. People would have maybe a minute to do math and make split financial decisions while driving.” That could mean bottlenecks where two segments meet, she adds.

Frost also criticizes the recommendation to extend the peak period time to 10 a.m., rather than transitioning it to start an hour later at 6 a.m. The study itself concluded that “the actual peak travel time starts after 6AM and extends beyond 9AM.”

“They have one hour to toll and one more hour of free flow speeds that could pad their metrics,” she said. “It’s horribly dishonest.”

However, a variety of factors may discourage legislators from letting the toll system go defunct. In addition to improving HOV lane travel times despite an influx of new drivers in all lanes, the Everett Herald reports that restriping the lanes and removing the tolling equipment could cost $13 million. Also, Sound Transit CEO Peter Rogoff at an October meeting said the agency may alter planned investments in that corridor, such as bus rapid transit, if the tolling is eliminated.

The post Higher tolls could improve I-405 travel times, WSDOT study says appeared first on Lens.

As Amazon looks for candidates for its second headquarters (HQ2), Seattle leadership would like a clean slate in its relationship with the company. One policy researcher warns the city missed its chance and let a prime opportunity for more jobs and an economic surge slip away.

In September, Amazon announced it would invest $5 billion into creating HQ2 which would employ 50,000 workers and be comparable in size to Seattle’s headquarters.

Washington Policy Center (WPC) President Daniel Mead Smith told Lens it is already too late for Seattle to entice Amazon to locate its second headquarters downtown.

“Amazon made it clear it wasn’t interested in Seattle, but was looking for different locations, different workforces and a different type of business climate,” he said.

Other Washington cities have submitted applications including Bellevue, Renton and Tacoma.

However, Smith said there is a “zero percent chance” Amazon will choose a location for HQ2 within Washington state.

“The company is looking for a city or region with a different high-tech skillset and a different type of business climate, and an area with some tax incentives.”

He continued: “They decided Washington state is not going to be where they want to be because of how friendly we are to business and how unpredictable Seattle is. All the city council talks about is additional taxes and regulations for businesses in Seattle, and they never look at ways to reduce taxes or reduce regulations.”

A recent example of the city’s disposition materialized when the city council proposed a head count tax on high earning businesses. The move would charge an estimated 2,200 businesses 5.2 cents per hour per employee, totaling $100 annually per worker.

The city is making a mistake when it comes across as anti-business, Smith contends.

“I think not having them here will have a negative impact because there is a lot of need for additional jobs in the Seattle area.”

Seattle Metropolitan Chamber of Commerce President and CEO Maud Daudon said in an online statement that the city was “fortunate” to host companies like Amazon, and Seattle should do whatever it takes to keep world-class businesses in the region.

She called Amazon’s announcement not to consider Seattle to be a “wake-up call” for the region.

“It is my sincere hope that…(we) put aside our differences and unite around efforts to remain competitive to employers like Amazon. This means intentionally improving our overall business climate, and changing attitudes about the amazing employers and access to jobs we are fortunate to have.”

In the fall, members of the Seattle city council, state lawmakers, port leadership and academic representatives sent a letter to Amazon asking the company to revisit its mutually beneficial relationship with the city.

“We understand there are many reasons for your decision to potentially site HQ2 in a different city. To the extent that this decision was based on Amazon feeling unwelcome in Seattle, or not being include in some of our regional decisions, we would like to hit the refresh button,” read the letter.

Seattle stakeholders continued saying the company may have received mixed messages from the community and elected officials, but that they hope Amazon will stay to grow together within Seattle as well as cities across Washington.

The letter’s signers suggested creating a task force consisting of large and small businesses, and representatives from schools, labor and local government. The team would focus on improving concerns within transportation, freight mobility, safety, public health investments and educational opportunities.

At the end of November, Amazon’s Vice President of Public Policy Brian Huseman responded by thanking Seattle stakeholders for reaching out to rekindle the relationship.

“With over 40,000 employees, we recognize our unique position as the city’s largest private employer,” he wrote.

“We estimate our investment in Seattle from 2010 through 2016 resulted in an additional $38 billion to the city’s economy and, with your leadership, public resources derived from this activity have supported important city priorities like homelessness programs, transit services, and public health and safety initiatives.”

Huseman added it would be open to working more closely with the city moving forward.

“We propose a roundtable discussion in January at our offices to discuss the challenges and opportunities ahead for the city and how we can best work together on them. If you are amenable, we will work with you to schedule a convenient time for the meeting,” he added.

Even so, Smith said Amazon taking jobs elsewhere could hurt the local economy and create a stigma for business looking to move to Seattle.

“They will look at what Amazon announced and think maybe Seattle isn’t somewhere we should be moving to.”

Yet, Smith said he is hopeful with Mayor Durkan taking office.

“She will look at some pro-business policies, and so I think that is a good opportunity for the Seattle area because there has been a lot of anti-business sentiment from the city council. I hope she’ll make it a priority to talk to business rather than to wait until it’s too late.”

The post Analyst: Amazon searching for better business climate appeared first on Lens.