S-771                 _______________________________________________

 

                                                   SENATE BILL NO. 3208

                        _______________________________________________

 

State of Washington                              49th Legislature                              1985 Regular Session

 

By Senators Warnke, Newhouse, Moore, Wojahn, Halsan and Vognild

 

 

Read first time 1/21/85 and referred to Committee on Commerce and Labor.

 

 


AN ACT Relating to private activity bonds; adding a new chapter to Title 39 RCW; and creating a new section.

 

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 state private activity bond ceiling allocation committee created by section 5 of this act.

          (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 now or hereafter amended.

          (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 section 103(c) of 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 section 103(n) of the code or any successor provision of 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 section 103(n) of the code.

          (16) "Student loan bonds" means bonds issued by an issuer that are student loan bonds as defined in section 103(n) of the code.

 

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

          (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, if a notification form for government activity bonds in excess of the then-remaining balance of the allocation of the state ceiling for such bonds is filed with the department, the excess automatically shall receive an allocation of the state ceiling from the then-remaining balance of the state ceiling allocation for industrial development bonds.

          (4) No issuer is eligible to receive an allocation for the financing of an individual project of more than fifteen percent of any bond use category's initial allocation of the state ceiling after June 1 of any year unless on or before June 1 that issuer files with the director a written notice of its intent to take more than fifteen percent of a bond use category's initial state ceiling for such project and, if such bonds are not issued by October 1 of that year, files on or before October 1 a written confirmation notice with the director of its continued intention to issue such bonds that year.

          (5) Except as provided by subsection (4) of this section, the portion of the state ceiling allocated to a bond use category shall be allocated automatically to issuers of bonds in that category in the order of the date and time the issuers file properly completed and signed notification forms with the department and, except in the case of carryforward projects provided for in section 6(3) of this act, to the extent there is available state ceiling, in the amount of the bonds purchased and sold pursuant to the provisions of the bond purchase agreement described in the issuers' notification form.

 

          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 in the bond use category applicable to the bonds and, in the case of government activity bonds sold after June 1 of the year the notification form is filed, the state ceiling available in the industrial development bonds bond use category, the director shall mail a written deficiency notice to the issuer within five business days after the filing of the issuer's notification form for such bonds and in that notice advise the issuer of the amount by which the principal amount of the bonds described in the notification form exceeds the available state ceiling; the issuer shall be entitled to an allocation of the remaining available state ceiling in the applicable bond use category upon its filing with the department within fifteen calendar days after the date of the director's deficiency notice of a written notice of the amount of the available state ceiling, if any, it will consume.  State ceiling allocation notification forms filed in any year for which a full or partial deficiency notice was given by the director shall be retained on a waiting list.  When any state ceiling becomes available that year or on January 1 of the following year for the bond use category for which the notification form was filed, the director shall notify by mail the issuers on the waiting list, and these issuers who, within five business days of receipt of such notice, certify to the director their intention to issue bonds up to the amount stated in the original notification form, automatically shall receive an allocation of the available state ceiling in the order those forms were filed.  All automatic allocations of the state ceiling under this subsection shall expire on the ninety-first day after mailing of the director's allocation confirmation or the notice of allocation, unless the bonds described in the issuer's state ceiling allocation notification form are delivered in accordance with their filed bond purchase agreement within ninety days after the director's allocation confirmation or notice of allocation was mailed.  Each issuer shall file a confirmation of delivery notice with the department within ten days after delivery of the bonds.

 

          NEW SECTION.  Sec. 5.     (1) There is created a state private activity bond ceiling allocation committee composed of the following members:  (a) The director; (b) the director of the department of community development; (c) the port district official, the county official, and the city official serving on the community economic revitalization board; (d) the chair of the community economic revitalization board; (e) one of the small business representatives serving on the community economic revitalization board, chosen by the small business representatives on the board; (f) a member representing special purpose districts other than port districts, who shall be appointed to the allocation committee by the governor for a term of three years; and (g) a member representing student loan bond issuers in the state, who shall be appointed to the allocation committee by the governor for a term of three years.

          (2) The presiding officer of the community economic revitalization board shall serve as presiding officer of the allocation committee.

          (3) Staff support for the allocation committee shall be provided by the department.

          (4) All members of the allocation committee other than the director and the director of the department of community development shall be compensated in accordance with RCW 43.03.240 and shall be reimbursed for travel expenses as provided in RCW 43.03.050 and 43.03.060.

          (5) The allocation committee may delegate to a subcommittee, established by rule, any of the allocation committee's powers under section 6 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 notices filed under section 3(4) 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 government activity bonds or student loan bonds have been and are reasonably likely to be consumed that year.  The allocation committee then may, in its discretion, reallocate to the industrial development bonds bond use category up to eighty percent of the remaining government activity bond state ceiling allocation or up to eighty percent of the remaining student loan bond state ceiling allocation that have not been and do not appear reasonably likely to be consumed that year.  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 industrial development bonds bond use category up to one hundred percent of the remaining unallocated portion of the government activity bond state ceiling, or up to one hundred percent of the remaining unallocated portion of the student loan bond state ceiling, if all the allocations of the state ceiling have not been taken for government activity bonds or student loan bonds, respectively, described in notices filed under section 3(4) of this act.

          (2) The allocation committee may in its discretion grant a guaranteed 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.  Guaranteed allocations shall be deemed to have been received automatically by issuers on January 1 of the year for which they are granted in each year, and in the order they were granted.  Such guaranteed 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 "carryforward 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 and the allocation committee each may adopt such rules as are necessary to carry out the purposes of 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.

 

          NEW SECTION.  Sec. 9.     The method for making new allocations of the state ceiling provided in sections 3, 4, and 6 of this act shall expire on December 31, 1988, unless extended by law for an additional fixed period of time, except that any guaranteed allocations granted under section 6(2) of this act and any allocations carried forward under section 6(3) of this act shall remain in full force and effect after that 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 act.

 

          NEW SECTION.  Sec. 11.    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. 12.    Sections 1 through 9 of this act shall constitute a new chapter in Title 39 RCW.