AN ACT Relating to private activity bonds; adding a new chapter to Title 39 RCW; adding a new section to chapter 43.160 RCW; providing an expiration date; and declaring an emergency.

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

NEW SECTION. Sec. 1. The federal deficit reduction act of 1984 imposes an annual ceiling on the aggregate amount of federally tax-exempt private activity bonds, including student loan bonds, industrial development bonds, and certain government activity bonds, that may be issued during any calendar year by or on behalf of states and their political subdivisions. The deficit reduction act of 1984 provides a formula for allocating the annual ceiling among various issuers of private activity bonds within a state, but permits each state to enact a different allocation method that is appropriate to that state's needs. The purpose of this chapter is to provide a flexible and efficient method of allocating the state ceiling in Washington in a manner that recognizes the paramount need of the state and its political subdivisions to finance public improvements which are owned by those public entities and also promotes industrial and economic development, encourages private investment, and assists students seeking financial aid.

NEW SECTION. Sec. 2. The definitions in this section apply throughout this chapter unless the context clearly requires to the contrary.

(1) "Allocation committee" means the community economic revitalization board created under chapter 43.160 RCW.

(2) "Bonds" means bonds, notes, or other obligations of an issuer.

(3) "Bond purchase agreement" means an executed agreement for the purchase of bonds.

(4) "Bond use category" means any of the following categories of bonds: Government activity bonds, industrial development bonds, or student loan bonds.

(5) "Code" means the federal internal revenue code of 1954 as it exists, with amendments, on the effective date of this act. It also means the code as amended after the effective date of this act, but only if the amendments are approved by the director as provided in section 11 of this act.

(6) "Community economic revitalization board" means the board of that name created under chapter 43.160 RCW.

(7) "Department" means the department of commerce and economic development or its successor with respect to the powers and duties granted by this chapter.

(8) "Director" means the director of the department.

(9) "Government activity bonds" means bonds that are treated as private activity bonds under the code and that are neither student loan bonds nor revenue bonds issued under Article XXXII of the state Constitution.

(10) "Industrial development bonds" means revenue bonds issued under Article XXXII of the state Constitution.

(11) "Issuer" means the state, any agency or instrumentality of the state, any political subdivision, or any other entity authorized to issue private activity bonds in the state.

(12) "Political subdivision" means any county, city, town, public utility district, port district, school district, water district, sewer district, irrigation district, reclamation district, drainage district, diking district, diking and drainage district, or other special purpose district, municipal corporation, or quasi-municipal corporation of the state or any agency, public corporation, instrumentality, or separate entity formed by one or more of the foregoing, but does not include a public corporation formed under chapter 39.84 RCW.

(13) "Private activity bonds" means bonds that are private activity bonds as defined in the code.

(14) "State" means the state of Washington.

(15) "State ceiling" means for any calendar year the aggregate amount of private activity bonds that may be issued in the state under the code.

(16) "Student loan bonds" means bonds issued by an issuer that are student loan bonds as defined in the code.

NEW SECTION. Sec. 3. (1) The state ceiling shall be allocated among issuers of bonds in the manner provided by this chapter to fulfill the dual purposes of providing certainty and predictability.

(2) The state ceiling automatically shall be allocated each year initially as follows: Forty-five percent to government activity bonds; forty-five percent to industrial development bonds; and ten percent to student loan bonds. The allocation is subject to revision by the allocation committee as provided in section 6 of this act.

(3) After June 1 of any year, no issuer may receive an allocation for the financing of an individual project if the allocation would use more than fifteen percent of the initial state ceiling for the category. However, this rule does not apply if prior to June 1 the issuer has filed with the director a written notice of its intent to take more than fifteen percent. If an issuer intends to use an allocation of more than fifteen percent and if the bonds are not issued by October 1, then the allocation shall not be granted unless, on or before October 1, the issuer has filed with the director a written confirmation of its continued intention to issue the bonds.

(4) Subject to the provisions of this chapter, the state ceiling allocated to a bond use category shall be allocated to issuers of bonds in that category in the order of the date and time in which the issuers have filed properly completed and signed notification forms with the department.

NEW SECTION. Sec. 4. (1) The notification form filed by an issuer shall identify: (a) The amount of the state ceiling allocation that is sought; (b) the bond use category from which the allocation is to be made; (c) a certification by the issuer that a bond purchase agreement has been executed with respect to the bonds for which an allocation is sought; and (d) such other information or evidence of the issuer's intention to issue bonds as the director prescribes.

(2) If the principal amount of the bonds for which an allocation of the state ceiling is sought does not exceed the amount of the state ceiling available in the bond use category applicable to the bonds, the director shall mail a written allocation confirmation notice to the issuer within five business days after the filing of the issuer's notification form for the bonds.

(3) If the principal amount of the bonds for which an allocation of the state ceiling is sought exceeds the amount of the state ceiling available under this chapter for the bonds, then the director shall mail a written deficiency notice to the issuer. This notice shall be mailed within five business days after the filing of the issuer's notification form for the bonds and shall advise the issuer of the amount by which the bonds exceed the available state ceiling. The issuer shall be entitled to an allocation of any remaining available ceiling in the applicable category by its filing with the department, within fifteen days after the date the director's deficiency notice is mailed, a written notice of the amount of the available ceiling it will use.

(4) State ceiling allocation notification forms, for which the director has given deficiency notice, shall be retained on a waiting list for the remainder of the year during which the forms were filed. If state ceiling becomes available that year or on January 1 of the following year, the following rules apply: (a) The director shall notify by mail the issuers on the waiting list; and (b) those issuers who, within five business days of receipt of such notice, certify to the director their intention to issue bonds up to the amounts stated in their original notification forms, shall receive allocations of the available state ceiling in the order the original forms were filed.

(5) Except as provided to the contrary under this chapter, all allocations to issuers shall expire on the ninety-first day after mailing of the director's confirmation or notice of the allocation, unless the bonds to which the allocations pertain have been purchased and delivered to the purchaser. Within ten days after the issuer delivers bonds to the purchaser, the issuer shall file a confirmation of delivery notice with the department.

NEW SECTION. Sec. 5. A new section is added to chapter 43.160 RCW to read as follows:

In addition to its other powers and duties under this chapter, the community economic revitalization board shall serve as the allocation committee for purposes of chapter 39.--!sc ,1RCW (sections 1 through 4 and 6 through 11 of this act). The board may delegate to a committee composed of several board members any of the powers specified for the allocation committee under chapter 39.-- RCW (sections 1 through 4 and 6 through 11 of this act).

NEW SECTION. Sec. 6. (1) After June 1 of any year, the director shall convene meetings of the allocation committee when notification forms have been filed for industrial development bonds equal in aggregate principal amount to eighty percent of the available industrial development bonds' state ceiling allocation. At such meetings, the allocation committee shall consider the confirmation notices filed under section 3(3) of this act and any other information the allocation committee deems relevant, and shall determine how much, if any, of the allocation of the state ceiling for student loan bonds has been and is reasonably likely to be consumed that year. The allocation committee may, in its discretion, reallocate to the categories for government activity bonds and for industrial development bonds up to eighty percent of the remaining available ceiling allocation in the category for student loan bonds. However, it may only reduce the remaining available allocation for the student loan category by the amount that it believes is not reasonably likely to be used that year for student loan bonds. The allocation committee shall make such reallocations no more than once in any thirty-day period. In December of any year, the allocation committee may reallocate to the categories for government activity bonds and for industrial development bonds up to one hundred percent of the remaining available ceiling allocation in the category for student loan bonds.

(2) The allocation committee may in its discretion grant an advanced allocation of the state ceiling in any future year of a portion of the state ceiling for a bond use category, upon such conditions as the allocation committee may determine. Advanced allocations shall be deemed to have been received by issuers on January 1 of the year for which they are granted in each year, and in the order they were granted. Such advanced allocations shall be considered received before any new allocations are made in a given year.

(3) If a filed state ceiling notification form includes a certification that a bond ordinance has been adopted authorizing a principal amount of bonds greater than the principal amount of bonds to be purchased pursuant to the bond purchase agreement described in the same filed notification form, and if the project to be financed is described specifically in the bond ordinance and qualifies under the code as a "carry forward project," then an allocation of the state ceiling in an amount equal to the excess of the principal amount of the bonds authorized by the bond ordinance over the principal amount of the bonds purchased pursuant to the bond purchase agreement automatically shall be made and carried forward for the period of time permitted by the code. The allocation committee may in its discretion replace the amount of state ceiling allocation to be carried forward under this subsection by granting a guaranteed allocation of a portion of the state ceiling in the applicable bond use category for the following year, and such guaranteed allocation may in turn be carried forward or replaced by additional guaranteed allocations for the period of time permitted by the code.

NEW SECTION. Sec. 7. The director shall adopt rules and regulations necessary to carry out the purposes of this chapter. The director shall adopt such rules and regulations as may be requested by the allocation committee and which pertain solely to its powers and duties. The director shall prescribe all forms mentioned in this chapter.

NEW SECTION. Sec. 8. The department shall report annually to the legislature and the governor on the allocations of the state ceiling made during the previous year. The report shall be submitted each January prior to the convening of the regular session of the legislature.

NEW SECTION. Sec. 9. This chapter and section 5 of this act shall expire on December 31, 1988, unless extended by law. However, this expiration shall not affect any advanced or "carried forward" allocations. These allocations shall remain in full force and effect after the expiration date.

NEW SECTION. Sec. 10. Any state ceiling allocations taken during 1984 or 1985 in conformance with the code and an applicable executive order of the governor are ratified and confirmed and shall remain in full force and effect notwithstanding any other provision of this chapter.

NEW SECTION. Sec. 11. In order to permit the full use of the authorized state ceiling under the federal law, the director may adopt rules approving any amendments made to the code after the effective date of this act.

NEW SECTION. Sec. 12. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 13. Sections 1 through 4 and 6 through 11 of this act shall constitute a new chapter in Title 39 RCW.

NEW SECTION. Sec. 14. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.