BILL REQ. #:  Z-0528.4 

Read first time 02/09/11.   Referred to Committee on Capital Budget.

     AN ACT Relating to state assistance for financing local government infrastructure; amending RCW 43.155.010, 43.155.020, 43.155.030, 43.155.055, 43.155.060, 43.155.065, 43.155.068, 43.155.070, 43.155.075, 43.155.090, 43.155.100, 43.160.030, 43.160.035, 43.160.060, 36.135.010, 36.135.020, 36.135.030, 36.135.040, 82.18.040, 82.16.020, and 82.16.020; reenacting and amending RCW 43.155.050; adding a new section to chapter 36.135 RCW; creating a new section; providing an effective date; and providing an expiration date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 43.155.010 and 1996 c 168 s 1 are each amended to read as follows:
     (1) The legislature finds that ((there exists in the state of Washington over four billion dollars)) a 1998 local government infrastructure study documented that local governments in the state of Washington had a total funding need of over eight billion dollars worth of critical projects for the planning, acquisition, construction, repair, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, and storm and sanitary sewage systems. ((The December, 1983 Washington state public works report prepared by the planning and community affairs agency documented that local governments expect to be capable of financing over two billion dollars worth of the costs of those critical projects but will not be able to fund nearly half of the documented needs.))
     (2) The legislature further finds that Washington's local governments have unmet financial needs for solid waste disposal, including recycling, and encourages the board to make an equitable geographic distribution of the funds.
     (3) The legislature further finds that local governments face financial challenges as they try to make needed infrastructure improvements, and that depositing certain utility and solid waste tax revenue into county-level local infrastructure assistance accounts will expand financing to be secured with those taxes.
     (4) Therefore, the legislature intends to provide financing assistance to local governments to help them respond to the demands for infrastructure improvement, repair, and expansion related to health, safety, and the environment by creating an "infrastructure bank." The infrastructure bank will provide local government with credit support through contingent loan agreements between the state and local governments that will lower the borrowing cost for local governments that have the ability to borrow but do not have access to the highest credit ratings. In addition, a grant and loan program will benefit small or distressed local governments by reducing burdens on taxpayers' and ratepayers' while improving the health and safety of the residents and the environment.
     (5) It is the policy of the state of Washington to encourage self-reliance by local governments in meeting their ((public works)) infrastructure needs and to assist in the financing of critical ((public works)) infrastructure projects by making loans, ((financing guarantees)) grants, credit support, and technical assistance available to local governments for these projects.

Sec. 2   RCW 43.155.020 and 2009 c 565 s 33 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.
     (1) "Board" means the ((public works)) infrastructure financing board created in RCW 43.155.030.
     (2) "Capital facility plan" means a capital facility plan required by the growth management act under chapter 36.70A RCW or, for local governments not fully planning under the growth management act, a plan required by the ((public works)) infrastructure financing board.
     (3) "Contingent loan agreement" means an agreement between the state and a local government in which the state provides an absolute and unconditional commitment to make a loan to a local government from the infrastructure financing account in order to enhance the credit of local government borrowing.
     (4) "Department" means the department of commerce.
     (((4) "Financing guarantees" means the pledge of money in the public works assistance account, or money to be received by the public works assistance account, to the repayment of all or a portion of the principal of or interest on obligations issued by local governments to finance public works projects.))
     (5) "Infrastructure project" means a project of a local government for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, storm and sanitary sewage systems, solid waste facilities, including recycling facilities, and flood control levees. A planning project may include the compilation of biological, hydrological, or other data on a county, drainage basin, or region necessary to develop a base of information for a capital facility plan.
     (6) "Local governments" means cities, towns, counties, special purpose districts, and any other municipal corporations or quasi-municipal corporations in the state excluding school districts and port districts.
     (((6) "Public works project" means a project of a local government for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, or storm and sanitary sewage systems and solid waste facilities, including recycling facilities. A planning project may include the compilation of biological, hydrological, or other data on a county, drainage basin, or region necessary to develop a base of information for a capital facility plan.))
     (7) "Solid waste or recycling project" means remedial actions necessary to bring abandoned or closed landfills into compliance with regulatory requirements and the repair, restoration, and replacement of existing solid waste transfer, recycling facilities, and landfill projects limited to the opening of landfill cells that are in existing and permitted landfills.
     (8) "Technical assistance" means training and other services provided to local governments to: (a) Help such local governments plan, apply, and qualify for loans, grants, and ((financing guarantees)) contingent loan agreements from the board, and (b) help local governments improve their ability to plan for, finance, acquire, construct, repair, replace, rehabilitate, and maintain public facilities.

Sec. 3   RCW 43.155.030 and 1999 c 153 s 58 are each amended to read as follows:
     (1) The ((public works)) infrastructure financing board is hereby created.
     (2) The board shall be composed of thirteen members appointed by the governor for terms of four years, except that five members initially shall be appointed for terms of two years. The board shall include: (a) ((Three)) One member from the house of representatives to be appointed by the speaker of the house; (b) one member from the senate to be appointed by the president of the senate; (c) two members, ((two)) one of whom shall be an elected official((s)) and one shall be a public works manager, appointed from a list of at least six persons nominated by the association of Washington cities or its successor; (((b) three)) (d) two members, ((two)) one of whom shall be an elected official((s)) and one shall be a public works manager, appointed from a list of at least six persons nominated by the Washington state association of counties or its successor; (((c) three)) (e) two members appointed from a list of at least six persons nominated jointly by the Washington public utility districts association and a state association of water-sewer districts, or their successors; (f) the chair of the community economic revitalization board, pursuant to RCW 43.160.030; (g) one community economic revitalization board member chosen by the community economic revitalization board members; and (((d) four)) (h) three members appointed from the general public. In appointing the ((four)) general public members, the governor shall endeavor to balance the geographical composition of the board and to include members with special expertise in relevant fields such as public finance, architecture and civil engineering, and public works or infrastructure construction. The governor shall appoint one of the general public members of the board as chair. The term of the chair shall coincide with the term of the governor.
     (3) Staff support to the board shall be provided by the department.
     (4) Members of the board shall receive no compensation but shall be reimbursed for travel expenses under RCW 43.03.050 and 43.03.060.
     (5) If a vacancy on the board occurs by death, resignation, or otherwise, the governor shall fill the vacant position for the unexpired term. Each vacancy in a position appointed from lists provided by the associations under subsection (2) of this section shall be filled from a list of at least three persons nominated by the relevant association or associations. Any members of the board, appointive or otherwise, may be removed by the governor for cause in accordance with RCW 43.06.070 and 43.06.080.

Sec. 4   RCW 43.155.050 and 2010 1st sp.s. c 37 s 932 are each reenacted and amended to read as follows:
     (1) The ((public works assistance)) infrastructure financing account is hereby established in the state treasury. Money may be placed in the ((public works assistance)) infrastructure financing account from the proceeds of bonds when authorized by the legislature or from any other lawful source. Moneys from the account may be expended only after appropriation.
     (2) Money in the ((public works assistance)) infrastructure financing account shall be used ((to make loans and to give financial guarantees to local governments for public works projects.)) for the following types of assistance:
     (a) Loans and grants for preconstruction and emergency activities, capital facility planning, and infrastructure projects. The loans and grants must be based on costs to taxpayers and ratepayers in relation to median household income; and
     (b) Payments required under contingent loan agreements for infrastructure projects.
     (3) Moneys in the account may also be appropriated to provide for state match requirements under federal law for projects and activities conducted and financed by the board under the drinking water assistance account and for state match requirements under federal law for the water pollution control revolving fund program administered by the department of ecology.
     (4) Not more than fifteen percent of the biennial capital budget appropriation to the ((public works)) infrastructure financing board from this account may be expended or obligated for preconstruction loans, emergency loans, or loans for capital facility planning under this chapter; of this amount, not more than ten percent of the biennial capital budget appropriation may be expended for emergency loans and not more than one percent of the biennial capital budget appropriation may be expended for capital facility planning loans. For the 2007-2009 biennium, moneys in the account may be used for grants for projects identified in section 138, chapter 488, Laws of 2005 and section 1033, chapter 520, Laws of 2007. During the 2009-2011 fiscal biennium, sums in the public works assistance account may be used for the water pollution control revolving fund program match in section 3013, chapter 36, Laws of 2010 1st sp. sess. During the 2009-2011 fiscal biennium, the legislature may transfer from the job development fund to the general fund such amounts as reflect the excess fund balance of the fund.
     (5) Moneys in the account may be appropriated to provide financial assistance through the water system acquisition and rehabilitation program created in chapter 70.119A RCW.

Sec. 5   RCW 43.155.055 and 2003 c 330 s 1 are each amended to read as follows:
     (1) A subaccount is created in the ((public works assistance)) infrastructure financing account to receive money to fund the following projects: (a) Water storage projects; and (b) water systems facilities.
     (2) The projects listed in subsection (1) of this section must comply with the competitive bid requirements of RCW 43.155.060.
     (3) The subaccount created in subsection (1) of this section shall receive amounts appropriated to it for purposes of distributing these moneys as grants for water storage projects and water systems facilities projects as provided in the appropriation and this section. This subaccount shall be administered by the board and shall be separate from the other programs managed by the board under this chapter.
     (4) The subaccount created in this section shall be known as the water storage projects and water systems facilities subaccount of the ((public works assistance)) infrastructure financing account.

Sec. 6   RCW 43.155.060 and 1988 c 93 s 2 are each amended to read as follows:
     (1)(a) In order to aid the financing of ((public works)) infrastructure projects, the board may:
     (((1))) (i) Make low-interest or interest-free loans and make grants to local governments from the ((public works assistance)) infrastructure financing account or other funds and accounts for the purpose of assisting local governments in financing ((public works)) infrastructure projects. The board may require such terms and conditions and may charge such rates of interest on its loans as it deems necessary or convenient to carry out the purposes of this chapter. Money received from local governments in repayment of loans made under this section shall be paid into the ((public works assistance)) infrastructure financing account for uses consistent with this chapter.
     (ii) Make loans to local governments to assist those local governments to pay all or a portion of the principal of or interest on obligations issued to finance infrastructure projects pursuant to contingent loan agreements; and
     (iii) Coordinate with the Washington state treasurer, who, on behalf of the state of Washington, may prescribe the terms of and enter into a contingent loan agreement between the state and a local government if the state treasurer determines that such a contingent loan agreement is financially prudent and is consistent with the provisions of this chapter. Contingent loan agreements may be entered into by the state treasurer only with local governments whose limited tax general obligations or senior revenue obligations, as applicable to the obligations concerned, are rated not higher than A1 or A+ by at least one of the nationally recognized rating agencies. The state's obligation to make any loan to a local government pursuant to the terms of a contingent loan agreement shall be subject to appropriation from the infrastructure financing account. The office of the state treasurer may charge a fee to local governments to recover the costs of creating the contingent loan agreements.
     (b) In order to provide for the state of Washington's obligations under the terms of contingent loan agreements, the legislature shall make provision, from time to time in appropriations acts, for such amounts as may be required to make timely payments from the infrastructure financing account.
     (2) ((Pledge money in the public works assistance account, or money to be received by the public works assistance account, to the repayment of all or a portion of the principal of or interest on obligations issued by local governments to finance public works projects. The board shall not pledge any amount greater than the sum of money in the public works assistance account plus money to be received from the payment of the debt service on loans made from that account, nor shall the board)) Neither the board nor the state treasurer may pledge the faith and credit or the taxing power of the state or any agency or subdivision thereof to the repayment of obligations issued by any local government.
     (3) In order to aid the financing of infrastructure projects, the board may:
     (a) Create such subaccounts in the ((public works assistance)) infrastructure financing account as the board deems necessary to carry out the purposes of this chapter((.
     (4))); and
     (b) Provide a method for the allocation of loans ((and financing guarantees)), grants, and contingent loan agreements and the provision of technical assistance under this chapter.
     (4) The board shall consult with the community economic revitalization board established under chapter 43.160 RCW to explore opportunities for coordination and consistency.
     (5) All local ((public works)) infrastructure projects aided in whole or in part under the provisions of this chapter shall be put out for competitive bids, except for emergency ((public works)) infrastructure projects under RCW 43.155.065 for which the recipient jurisdiction shall comply with this requirement to the extent feasible and practicable. The competitive bids called for shall be administered in the same manner as all other ((public works)) infrastructure projects put out for competitive bidding by the local governmental entity aided under this chapter.

Sec. 7   RCW 43.155.065 and 2001 c 131 s 3 are each amended to read as follows:
     The board may make low-interest or interest-free loans and grants to local governments for emergency ((public works)) infrastructure projects. Emergency ((public works)) infrastructure projects shall include the construction, repair, reconstruction, replacement, rehabilitation, or improvement of a public water system that is in violation of health and safety standards and is being operated by a local government on a temporary basis. The loans and grants may be used to help fund all or part of an emergency ((public works)) infrastructure project less any reimbursement from any of the following sources: (1) Federal disaster or emergency funds, including funds from the federal emergency management agency; (2) state disaster or emergency funds; (3) insurance settlements; or (4) litigation.

Sec. 8   RCW 43.155.068 and 2001 c 131 s 4 are each amended to read as follows:
     (1) The board may make low-interest or interest-free loans and grants to local governments for preconstruction activities on ((public works)) infrastructure projects ((before the legislature approves the construction phase of the project)). Preconstruction activities include design, engineering, bid-document preparation, environmental studies, right-of-way acquisition, and other preliminary phases of ((public works)) infrastructure projects as determined by the board.
     (2) The purpose of the loans and grants authorized in this section is to accelerate the completion of ((public works)) infrastructure projects by allowing preconstruction activities to be performed before ((the approval of the construction phase of the project by the legislature)) full financing is obtained.
     (((2))) (3) Projects receiving loans and grants for preconstruction activities under this section must be evaluated using the priority process and factors in RCW 43.155.070(((2))) (4). The receipt of a loan or grant for preconstruction activities does not ensure the receipt of a construction loan or grant for the project under this chapter. ((Construction loans for projects receiving a loan for preconstruction activities under this section are subject to legislative approval under RCW 43.155.070 (4) and (5).)) The board shall adopt a single application process for local governments seeking both a loan and grant for preconstruction activities under this section and a construction loan and grant for the project.

Sec. 9   RCW 43.155.070 and 2009 c 518 s 16 are each amended to read as follows:
     (1) To qualify for ((loans or pledges)) a loan, grant, or contingent loan agreement under this chapter the board must determine that a local government meets all of the following conditions:
     (a) The city or county must be imposing a tax under chapter 82.46 RCW at a rate of at least one-quarter of one percent;
     (b) The local government must have developed a capital facility plan; ((and))
     (c) The local government must be using all local revenue sources which are reasonably available for funding ((public works)) infrastructure, taking into consideration local employment and economic factors;
     (d) The local government must have an equitable sewer user charge system for residential, commercial, and industrial users that the governing body of the local government determines will provide for the maintenance and operation of that system and for the timely payment of all financial obligations of the planned sewer utility;
     (e) The connection fees for new connections to a sewer system must reflect a fair share cost of infrastructure from which new connections will benefit;
     (f) The local government must have a capital wastewater facilities reserve fund dedicated to paying for wastewater infrastructure and equipment replacement; and
     (g) A sewer use ordinance must restrict certain connections and wastes to protect a local government's investment and enhance the wastewater treatment's process stability and effluent quality. The ordinance must, at a minimum:
     (i) Require new sewers and connections to be properly designed and constructed;
     (ii) Require a provision with a timeline and proximity in which existing and future residences must connect to the sewer system;
     (iii) Prohibit inflow sources into the sewer system; and
     (iv) Prohibit introduction of toxic or hazardous wastes into the sewer system in an amount or concentration that endangers the public's safety or the physical integrity of the system which may cause violations of the national pollutant discharge elimination system permit or state waste discharge permit.
     (2) Except where necessary to address a public health need or substantial environmental degradation, a county, city, or town planning under RCW 36.70A.040 must have adopted a comprehensive plan, including a capital facilities plan element, and development regulations as required by RCW 36.70A.040. This subsection does not require any county, city, or town planning under RCW 36.70A.040 to adopt a comprehensive plan or development regulations before requesting or receiving a loan or ((loan guarantee)) grant or from entering into a contingent loan agreement under this chapter if such request is made before the expiration of the time periods specified in RCW 36.70A.040. A county, city, or town planning under RCW 36.70A.040 which has not adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040 is not prohibited from receiving a loan or ((loan guarantee)) grant or from entering into a contingent loan agreement under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before submitting a request for a loan ((or loan guarantee)), grant, or contingent loan agreement.
     (3) In considering awarding loans ((for public facilities to)) or grants, or entering into contingent loan agreements with a special district((s)) requesting funding for a proposed facility located in a county, city, or town planning under RCW 36.70A.040, the board shall consider whether the county, city, or town planning under RCW 36.70A.040 in whose planning jurisdiction the proposed facility is located has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.
     (4) The board shall develop a priority process for ((public works)) infrastructure projects as provided in this section. The intent of the priority process is to maximize the value of ((public works)) infrastructure projects accomplished with assistance under this chapter. The board shall attempt to assure a geographical balance in assigning priorities to projects. The board shall consider at least the following factors in assigning a priority to a project:
     (a) Whether the local government receiving assistance has experienced severe fiscal distress resulting from natural disaster or emergency ((public works)) infrastructure needs;
     (b) ((Except as otherwise conditioned by RCW 43.155.110, whether the entity receiving assistance is a Puget Sound partner, as defined in RCW 90.71.010;
     (c))) If the project is located in the Puget Sound region, whether the project is referenced in the action agenda developed by the Puget Sound partnership ((under RCW 90.71.310)) and any project designed to address the effects of storm water or wastewater on Puget Sound may receive assistance under this section only if the project is not in conflict with the action agenda developed by the Puget Sound partnership under RCW 90.71.310;
     (((d))) (c) Whether the project is critical in nature and would affect the health and safety of a great number of citizens;
     (((e))) (d) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007;
     (((f))) (e) The cost of the project compared to the size of the local government and amount of loan money available;
     (((g))) (f) The number of communities served by or funding the project;
     (((h))) (g) Whether the project is located in an area of high unemployment, compared to the average state unemployment;
     (((i))) (h) Whether the project is the acquisition, expansion, improvement, or renovation by a local government of a public water system that is in violation of health and safety standards, including the cost of extending existing service to such a system;
     (((j))) (i) Except as otherwise conditioned by RCW 43.155.120, and effective one calendar year following the development of model evergreen community management plans and ordinances under RCW 35.105.050, whether the entity receiving assistance has been recognized, and what gradation of recognition was received, in the evergreen community recognition program created in RCW 35.105.030;
     (((k))) (j) The relative benefit of the project to the community, considering the present level of economic activity in the community and the existing local capacity to increase local economic activity in communities that have low economic growth;
     (k) Whether the project is energy efficient, is leadership in energy and environmental design certified, or is a green building defined under an established program; and
     (l) Other criteria that the board considers advisable.
     (5) Existing debt or financial obligations of local governments shall not be refinanced under this chapter. Each local government applicant shall provide documentation of attempts to secure additional local or other sources of funding for each ((public works)) infrastructure project for which financial assistance is sought under this chapter.
     (6) Before November 1st of each even-numbered year, the board shall develop and submit to the appropriate fiscal committees of the senate and house of representatives a description of the loans, grants, and contingent loan agreements, including those made under RCW 43.155.065((,)) and 43.155.068((, and subsection (9) of this section)) during the preceding fiscal year ((and a prioritized list of projects which are recommended for funding by the legislature)), including one copy to the staff of each of the committees. The list shall include, but not be limited to, a description of each project and recommended financing, the terms and conditions of the loan ((or financial guarantee)), grant, or contingent loan agreement, the local government jurisdiction and unemployment rate, demonstration of the jurisdiction's critical need for the project and documentation of local funds being used to finance the ((public works)) infrastructure project. The list shall also include measures of fiscal capacity for each jurisdiction ((recommended for)) that received financial assistance, compared to authorized limits and state averages, including local government sales taxes; real estate excise taxes; property taxes; and charges for or taxes on sewerage, water, garbage, and other utilities.
     (7) ((The board shall not sign contracts or otherwise financially obligate funds from the public works assistance account before the legislature has appropriated funds for a specific list of public works projects. The legislature may remove projects from the list recommended by the board. The legislature shall not change the order of the priorities recommended for funding by the board.
     (8) Subsection (7) of this section does not apply to loans made under RCW 43.155.065, 43.155.068, and subsection (9) of this section.
     (9) Loans made for the purpose of capital facilities plans shall be exempted from subsection (7) of this section.
     (10))) To qualify for ((loans or pledges)) a loan, grant, or contingent loan agreement for solid waste or recycling facilities under this chapter, a city or county must demonstrate that the solid waste or recycling facility is consistent with and necessary to implement the comprehensive solid waste management plan adopted by the city or county under chapter 70.95 RCW.
     (((11) After January 1, 2010, any project designed to address the effects of storm water or wastewater on Puget Sound may be funded under this section only if the project is not in conflict with the action agenda developed by the Puget Sound partnership under RCW 90.71.310.))

Sec. 10   RCW 43.155.075 and 2001 c 227 s 10 are each amended to read as follows:
     In providing loans or grants for ((public works)) infrastructure projects, the board shall require recipients to incorporate the environmental benefits of the project into their applications, and the board shall utilize the statement of environmental benefits in its prioritization and selection process. The board shall also develop appropriate outcome-focused performance measures to be used both for management and performance assessment of the loan or grant program. To the extent possible, the department should coordinate its performance measure system with other natural resource-related agencies as defined in RCW 43.41.270. The board shall consult with affected interest groups in implementing this section.

Sec. 11   RCW 43.155.090 and 1987 c 19 s 6 are each amended to read as follows:
     Loans from the ((public works assistance)) infrastructure financing account under this chapter shall be made by loan agreement under chapter 39.69 RCW.

Sec. 12   RCW 43.155.100 and 2002 c 329 s 11 are each amended to read as follows:
     The water conservation account is created in the custody of the state treasurer. All receipts from federal funding dedicated to water conservation under 16 U.S.C. Sec. 3831 shall be deposited in the account. In addition, the legislature may appropriate money to the account. The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures. Expenditures from the account shall be used for the development and support of water conservation as defined by 16 U.S.C. Sec. 3831. Only the ((public works)) infrastructure financing board or its designee may make expenditures from the account.

Sec. 13   RCW 43.160.030 and 2008 c 327 s 3 are each amended to read as follows:
     (1) The community economic revitalization board is hereby created to exercise the powers granted under this chapter.
     (2) The board shall consist of one member from ((each of the two major caucuses of)) the house of representatives to be appointed by the speaker of the house and one member from ((each of the two major caucuses of)) the senate to be appointed by the president of the senate. The board shall also consist of the following members appointed by the governor: A recognized private or public sector economist; one port district official; one county official; one city official; one representative of a federally recognized Indian tribe; one representative of the public; one representative of small businesses each from: (a) The area west of Puget Sound, (b) the area east of Puget Sound and west of the Cascade range, (c) the area east of the Cascade range and west of the Columbia river, and (d) the area east of the Columbia river; one executive from large businesses each from the area west of the Cascades and the area east of the Cascades. The appointive members shall initially be appointed to terms as follows: Three members for one-year terms, three members for two-year terms, and three members for three-year terms which shall include the chair. Thereafter each succeeding term shall be for three years. The chair of the board shall be selected by the governor. The members of the board shall elect one of their members to serve as vice chair. The director of ((community, trade, and economic development)) commerce, the director of revenue, the commissioner of employment security, and the secretary of transportation shall serve as nonvoting advisory members of the board.
     (3) Management services, including fiscal and contract services, shall be provided by the department to assist the board in implementing this chapter.
     (4) Members of the board shall be reimbursed for travel expenses as provided in RCW 43.03.050 and 43.03.060.
     (5) If a vacancy occurs by death, resignation, or otherwise of appointive members of the board, the governor shall fill the same for the unexpired term. Members of the board may be removed for malfeasance or misfeasance in office, upon specific written charges by the governor, under chapter 34.05 RCW.
     (6) A member appointed by the governor may not be absent from more than fifty percent of the regularly scheduled meetings in any one calendar year. Any member who exceeds this absence limitation is deemed to have withdrawn from the office and may be replaced by the governor.
     (7) A majority of members currently appointed constitutes a quorum.

Sec. 14   RCW 43.160.035 and 2003 c 151 s 2 are each amended to read as follows:
     ((Each)) (1) The member of the house of representatives who is appointed to the community economic revitalization board under RCW 43.160.030 may designate another member from the house of representatives to take his or her place on the board for meetings at which the member will be absent((, as long as the designated member belongs to the same caucus. The designee shall have all powers to vote and participate in board deliberations as have the other board members)). ((Each)) The member of the senate who is appointed to the community economic revitalization board under RCW 43.160.030 may designate another member from the senate to take his or her place on the board for meetings at which the member will be absent((, as long as the designated member belongs to the same caucus. The designee shall have all powers to vote and participate in board deliberations as have the other board members)). Each agency head of an executive agency who is appointed to serve as a nonvoting advisory member of the community economic revitalization board under RCW 43.160.030 may designate an agency employee to take his or her place on the board for meetings at which the agency head will be absent.
     ((The)) (2) Designees ((will)) under this section have all powers to participate in board deliberations as have the other board members but shall not have voting powers.

Sec. 15   RCW 43.160.060 and 2008 c 327 s 5 are each amended to read as follows:
     (1) The board is authorized to make direct loans to political subdivisions of the state and to federally recognized Indian tribes for the purposes of assisting the political subdivisions and federally recognized Indian tribes in financing the cost of public facilities, including development of land and improvements for public facilities, project-specific environmental, capital facilities, land use, permitting, feasibility, and marketing studies and plans; project design, site planning, and analysis; project debt and revenue impact analysis; as well as the construction, rehabilitation, alteration, expansion, or improvement of the facilities. A grant may also be authorized for purposes designated in this chapter, but only when, and to the extent that, a loan is not reasonably possible, given the limited resources of the political subdivision or the federally recognized Indian tribe and the finding by the board that financial circumstances require grant assistance to enable the project to move forward. However, no more than twenty-five percent of all financial assistance approved by the board in any biennium may consist of grants to political subdivisions and federally recognized Indian tribes.
     (2) Application for funds shall be made in the form and manner as the board may prescribe. In making grants or loans the board shall conform to the following requirements:
     (((1))) (a) The board shall not provide financial assistance:
     (((a))) (i) For a project the primary purpose of which is to facilitate or promote a retail shopping development or expansion.
     (((b))) (ii) For any project that evidence exists would result in a development or expansion that would displace existing jobs in any other community in the state.
     (((c))) (iii) For a project the primary purpose of which is to facilitate or promote gambling.
     (((d))) (iv) For a project located outside the jurisdiction of the applicant political subdivision or federally recognized Indian tribe.
     (((2))) (b) The board shall only provide financial assistance:
     (((a))) (i) For a project demonstrating convincing evidence that a specific private development or expansion is ready to occur and will occur only if the public facility improvement is made that:
     (((i))) (A) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted; and
     (((ii))) (B) Will improve the opportunities for the successful maintenance, establishment, or expansion of industrial or commercial plants or will otherwise assist in the creation or retention of long-term economic opportunities;
     (((b))) (ii) For a project that cannot meet the requirement of (((a))) (b)(i) of this subsection but is a project that:
     (((i))) (A) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted;
     (((ii))) (B) Is part of a local economic development plan consistent with applicable state planning requirements;
     (((iii))) (C) Can demonstrate project feasibility using standard economic principles; and
     (((iv))) (D) Is located in a rural community as defined by the board, or a rural county;
     (((c))) (iii) For site-specific plans, studies, and analyses that address environmental impacts, capital facilities, land use, permitting, feasibility, marketing, project engineering, design, site planning, and project debt and revenue impacts, as grants not to exceed fifty thousand dollars.
     (((3))) (c) The board shall consult with the infrastructure financing board established under chapter 43.155 RCW to explore opportunities for coordination and consistency.
     (d) The board shall develop guidelines for local participation and allowable match and activities.
     (((4))) (e) An application must demonstrate local match and local participation, in accordance with guidelines developed by the board.
     (((5))) (f) An application must be approved by the political subdivision and supported by the local associate development organization or local workforce development council or approved by the governing body of the federally recognized Indian tribe.
     (((6))) (g) The board may allow de minimis general system improvements to be funded if they are critically linked to the viability of the project.
     (((7))) (h) An application must demonstrate convincing evidence that the median hourly wage of the private sector jobs created after the project is completed will exceed the countywide median hourly wage.
     (((8))) (i) The board shall prioritize each proposed project according to:
     (((a))) (i) The relative benefits provided to the community by the jobs the project would create, not just the total number of jobs it would create after the project is completed, but also giving consideration to the unemployment rate in the area in which the jobs would be located;
     (((b))) (ii) The rate of return of the state's investment, including, but not limited to, the leveraging of private sector investment, anticipated job creation and retention, and expected increases in state and local tax revenues associated with the project;
     (((c))) (iii) Whether the proposed project offers a health insurance plan for employees that includes an option for dependents of employees;
     (((d))) (iv) Whether the public facility investment will increase existing capacity necessary to accommodate projected population and employment growth in a manner that supports infill and redevelopment of existing urban or industrial areas that are served by adequate public facilities. Projects should maximize the use of existing infrastructure and provide for adequate funding of necessary transportation improvements; and
     (((e))) (v) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007.
     (((9))) (j) A responsible official of the political subdivision or the federally recognized Indian tribe shall be present during board deliberations and provide information that the board requests.
     Before any financial assistance application is approved, the political subdivision or the federally recognized Indian tribe seeking the assistance must demonstrate to the community economic revitalization board that no other timely source of funding is available to it at costs reasonably similar to financing available from the community economic revitalization board.

Sec. 16   RCW 36.135.010 and 2009 c 45 s 1 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Capital facilities plan" means a capital facilities plan required under chapter 36.70A RCW.
     (2) "Local government" means cities, towns, counties, special purpose districts, and any other municipal corporations or quasi-municipal corporations in the state, excluding school districts and port districts.
     (3) "((Public works project)) Infrastructure" means a project of a local government for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, or storm and sanitary sewage systems, flood control levees, and solid waste facilities, including recycling facilities.

Sec. 17   RCW 36.135.020 and 2009 c 45 s 2 are each amended to read as follows:
     (1) County legislative authorities may establish local ((public works)) infrastructure assistance funds and local infrastructure boards for the purpose of funding ((public works)) infrastructure projects located wholly or partially within the county. Counties may form multicounty local infrastructure funds for the purpose of funding infrastructure projects located in more than one county and are authorized to contract with the infrastructure financing board, pursuant to chapter 39.34 RCW, to administer the fund. Moneys may be deposited in local ((public works)) infrastructure assistance funds from existing revenue sources of the county and from the local infrastructure account created in section 23 of this act.
     (2) The county legislative authorities must appoint members of the local infrastructure boards, which must be composed of a county official, two officials from the different cities or towns within the county, and one official from a utility district that operates within the county.
     (3) Moneys deposited in local ((public works)) infrastructure assistance funds, and interest earned on balances from the funds, may only be used:
     (a) To make loans to the county and to other local governments for funding ((public works)) infrastructure projects as provided in this chapter; ((and))
     (b) To make grants to the county and to other local governments.
     (i) When a project owner has entered into a contingent loan agreement with the state with respect to financing an infrastructure project, if the project owner is obligated to repay a loan from the state that has been made pursuant to a contingent loan agreement, then the first use of any grant award payments thereafter must be used to repay the state before being applied to any other purpose; or
     (ii) When a project owner has entered into a contingent loan agreement with the state with respect to financing an infrastructure project, and if the project owner is not obligated to repay a loan from the state that has been made pursuant to a contingent loan agreement, the first use of any grant award payments thereafter must be used to repay the infrastructure loan before being applied to any other purpose; and
     (c) For costs incurred in the administration of funds.
     (((3))) (4) No more than fifty percent of the moneys loaned or granted from a fund in a calendar year may be loaned or granted to the county providing local ((public works)) infrastructure assistance funds. At least twenty-five percent of the moneys anticipated to be loaned or granted from a fund in a calendar year must be made available for funding ((public works)) infrastructure projects in cities or towns.
     (((4))) (5) No more than one percent of the average annual balance of a county's fund, including interest earned on balances from the fund, may be used annually for administrative costs.

Sec. 18   RCW 36.135.030 and 2009 c 45 s 3 are each amended to read as follows:
     (1) ((Counties, in consultation with cities and towns within the county,)) Local infrastructure boards may make loans and grants to local governments from funds established under RCW 36.135.020 for the purpose of assisting local governments in funding ((public works)) infrastructure projects. ((Counties)) Local infrastructure boards may require terms and conditions and may charge rates of interest on its loans as they deem necessary or convenient to carry out the purposes of this chapter. ((Counties)) Local infrastructure boards may not pledge any amount greater than the sum of money in their local ((public works)) infrastructure assistance fund plus money to be received from the payment of the debt service on loans made from that fund. Money received from local governments in repayment of loans made under this chapter must be paid into the fund of the lending county for uses consistent with this chapter.
     (2) Prior to receiving moneys from a fund established under RCW 36.135.020, a local government applying for financial assistance under this chapter must demonstrate to the lending ((county)) local infrastructure board:
     (a) Utilization of all local revenue sources that are reasonably available for funding ((public works)) infrastructure projects;
     (b) Compliance with applicable requirements of chapter 36.70A RCW; and
     (c) Consistency between the proposed project and applicable capital facilities plans.
     (3) ((Counties)) Local infrastructure boards may not make loans or grants under this chapter prior to completing the initial collaboration and prioritization requirements of RCW 36.135.040(1).

Sec. 19   RCW 36.135.040 and 2009 c 45 s 4 are each amended to read as follows:
     (1) ((County legislative authorities)) Local infrastructure boards utilizing or providing money under this chapter must develop a prioritization process for funding ((public works)) infrastructure projects that gives priority to projects necessary to address public health needs, substantial environmental degradation, or increases existing capacity necessary to accommodate projected population and employment growth. This prioritization process must be:
     (a) Completed collaboratively with public works directors of local governments within the county;
     (b) Documented in the form of written findings produced by the county; and
     (c) Revised periodically according to a schedule developed by the county and the public works directors.
     (2) In addition to the requirements under subsection (1) of this section, ((legislative authorities)) local infrastructure boards providing funding to other local governments under this chapter must consider, through a competitive application process, the following factors in assigning a priority to and funding a project:
     (a) Whether the local government applying for assistance has experienced severe fiscal distress resulting from natural disaster or emergency ((public works)) infrastructure needs;
     (b) Whether the project is critical in nature and would affect the health and safety of a great number of citizens;
     (c) The cost of the project compared to the size of the local government and amount of loan money available;
     (d) The number of communities served by or funding the project;
     (e) Whether the project is the acquisition, expansion, improvement, or renovation by a local government of a public water system that is in violation of health and safety standards;
     (f) The number of additional housing units estimated to be achieved by funding the project;
     (g) The additional jobs estimated to be achieved by funding the project; ((and))
     (h) Whether the project is subject to a contingent loan agreement with the state; and
     (i) Other criteria the ((county legislative authority)) local infrastructure board deems appropriate.

Sec. 20   RCW 82.18.040 and 2000 c 103 s 11 are each amended to read as follows:
     (1) Taxes collected under this chapter ((shall)) must be held in trust until paid to the state. Taxes received by the state ((shall)) must be deposited in the ((public works)) local infrastructure assistance account created in ((RCW 43.155.050)) section 23 of this act. Any person collecting the tax who appropriates or converts the tax collected ((shall be)) is guilty of a gross misdemeanor if the money required to be collected is not available for payment on the date payment is due. If a taxpayer fails to pay the tax imposed by this chapter to the person charged with collection of the tax and the person charged with collection fails to pay the tax to the department, the department may, in its discretion, proceed directly against the taxpayer for collection of the tax.
     (2) The tax ((shall be)) is due from the taxpayer within twenty-five days from the date the taxpayer is billed by the person collecting the tax.
     (3) The tax ((shall be)) is due from the person collecting the tax at the end of the tax period in which the tax is received from the taxpayer. If the taxpayer remits only a portion of the total amount billed for taxes, consideration, and related charges, the amount remitted ((shall)) must be applied first to payment of the solid waste collection tax and this tax ((shall have)) has priority over all other claims to the amount remitted.

Sec. 21   RCW 82.16.020 and 2009 c 469 s 702 are each amended to read as follows:
     (1) There is levied and ((there shall be)) collected from every person a tax for the act or privilege of engaging within this state in any one or more of the businesses herein mentioned. The tax ((shall be)) is equal to the gross income of the business, multiplied by the rate set out after the business, as follows:
     (a) Express, sewerage collection, and telegraph businesses: Three and six-tenths percent;
     (b) Light and power business: Three and sixty-two one-hundredths percent;
     (c) Gas distribution business: Three and six-tenths percent;
     (d) Urban transportation business: Six-tenths of one percent;
     (e) Vessels under sixty-five feet in length, except tugboats, operating upon the waters within the state: Six-tenths of one percent;
     (f) Motor transportation, railroad, railroad car, and tugboat businesses, and all public service businesses other than ones mentioned above: One and eight-tenths of one percent;
     (g) Water distribution business: Four and seven-tenths percent;
     (h) Log transportation business: One and twenty-eight one-hundredths percent.
     (2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.
     (3) Twenty percent of the moneys collected under subsection (1) of this section on water distribution businesses and sixty percent of the moneys collected under subsection (1) of this section on sewerage collection businesses ((shall)) must be deposited in the ((public works)) local infrastructure assistance account created in ((RCW 43.155.050)) section 23 of this act.

Sec. 22   RCW 82.16.020 and 1996 c 150 s 2 are each amended to read as follows:
     (1) There is levied and ((there shall be)) collected from every person a tax for the act or privilege of engaging within this state in any one or more of the businesses herein mentioned. The tax ((shall be)) is equal to the gross income of the business, multiplied by the rate set out after the business, as follows:
     (a) Express, sewerage collection, and telegraph businesses: Three and six-tenths percent;
     (b) Light and power business: Three and sixty-two one-hundredths percent;
     (c) Gas distribution business: Three and six-tenths percent;
     (d) Urban transportation business: Six-tenths of one percent;
     (e) Vessels under sixty-five feet in length, except tugboats, operating upon the waters within the state: Six-tenths of one percent;
     (f) Motor transportation, railroad, railroad car, and tugboat businesses, and all public service businesses other than ones mentioned above: One and eight-tenths of one percent;
     (g) Water distribution business: Four and seven-tenths percent.
     (2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.
     (3) Twenty percent of the moneys collected under subsection (1) of this section on water distribution businesses and sixty percent of the moneys collected under subsection (1) of this section on sewerage collection businesses ((shall)) must be deposited in the ((public works)) local infrastructure assistance account created in ((RCW 43.155.050)) section 23 of this act.

NEW SECTION.  Sec. 23   A new section is added to chapter 36.135 RCW to read as follows:
     The local infrastructure assistance account is created in the state treasury. All receipts from taxes allocated to the account under RCW 82.16.020(3) and 82.18.040 must be deposited in the account. Money placed in the account may be spent only after appropriation. At least twice a year, the state treasurer must distribute money in the account to all counties on the basis of population. Counties must place any funds received under this section into a local infrastructure fund and must use the money in accordance with this chapter.

NEW SECTION.  Sec. 24   This act applies to tax collections received by the state on or after August 1, 2011.

NEW SECTION.  Sec. 25   Section 21 of this act expires June 30, 2013.

NEW SECTION.  Sec. 26   Section 22 of this act takes effect June 30, 2013.