AN ACT Relating to agricultural financing; amending RCW 39.84.020 and 42.17.2401; adding a new section to chapter 82.04 RCW; adding a new section to chapter 84.36 RCW; adding a new chapter to Title 39 RCW; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature finds that Congress has made available a program which, if enacted by individual states, allows the issuance of tax exempt industrial development bonds for the purpose of making loans to eligible persons who engage in certain agricultural activities as provided in the federal internal revenue code.

The legislature has found and determined and does hereby declare that in this state the following conditions exist: (a) An inadequate supply of funds at interest rates sufficiently low to enable persons to engage in agriculture in this state or to expand agricultural operations for present levels; (b) that such inability to pursue agricultural operations lessens the supply of agricultural commodities available to fulfill the needs of the citizens of this state, nation, and the increasing world demand for food; (c) that such inability to continue operations decreases available employment in the agricultural sector of the state and contributes to continued unemployment and its attendant problems; (d) that such conditions prevent the acquisition of an adequate capital stock of farm equipment and machinery, therefore impairing the productivity of agricultural land; (e) that such conditions are conducive to consolidation of acreage of agricultural land resulting in fewer individuals living and farming on the traditional family farm; (f) that these conditions contribute to a continued loss in population, and movement of persons from rural to urban areas which results in increased costs to communities for creation of new public facilities and services; (g) that there have been recurrent shortages of funds from private market sources at reasonable rates of interest; (h) that these shortages have made the sale and purchase of agricultural land to family farmers a virtual impossibility in many parts of the state; (i) that the ordinary operations of private enterprise have not in the past corrected these conditions; and (j) that a stable supply of adequate funds for agricultural financing is required to encourage family farmers in an orderly and sustained manner and to reduce the problems described in this section.

Based upon the above findings it is therefore declared that conditions exist in the state that require the creation of a body politic and corporate to issue notes and bonds in order to make or acquire loans for the acquisition and development of agricultural facilities.

It is declared to be the public policy of the state and a recognized governmental function to assist the agricultural producers of this state and by doing so contribute to the general economic welfare. A strong agricultural economy is a most important public concern. The agricultural sector in Washington both directly and indirectly is the largest employer in the state and its products compose the largest share of this state's exports. A strong agricultural sector is vital to our financial institutions, ports, transportation industry, and a wide range of other agricultural servicers.

It is the purpose of this chapter to establish a state agricultural finance commission to act as a financial conduit which, without using public funds, can issue nonrecourse revenue bonds and participate in federal, state, and local agricultural financing programs and thereby make additional funds available at favorable rates to help the agricultural producers of this state. This chapter is enacted to accomplish these and related purposes and shall be liberally construed to carry out its purpose and objectives. The agricultural finance commission shall be the exclusive issuer of nonrecourse revenue bonds for agricultural facilities comprising industrial development projects.

Sec. 2. Section 2, chapter 300, Laws of 1981 as amended by section 1, chapter 51, Laws of 1983 1st ex. sess. and RCW 39.84.020 are each amended to read as follows:

As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Board of directors" means the board of directors of a public corporation.

(2) "Construction" or "construct" means construction and acquisition, whether by devise, purchase, gift, lease, or otherwise.

(3) "Facilities" means land, rights in land, buildings, structures, docks, wharves, machinery, transmission equipment, landscaping, utilities, approaches, roadways and parking, handling and storage areas, and similar ancillary facilities.

(4) "Financing document" means a lease, sublease, installment sale agreement, conditional sale agreement, loan agreement, mortgage, deed of trust guaranty agreement, or other agreement for the purpose of providing funds to pay or secure debt service on revenue bonds.

(5) "Improvement" means reconstruction, remodeling, rehabilitation, extension, and enlargement; and "to improve" means to reconstruct, to remodel, to rehabilitate, to extend, and to enlarge.

(6) "Industrial development facilities" means manufacturing, processing, research, production, assembly, warehousing, transportation, pollution control, solid waste disposal, energy facilities, ((~~and~~)) industrial parks, and agricultural facilities as defined in section 3 of this 1985 act.

(7) "Industrial park" means acquisition and development of land as the site for an industrial park. For the purposes of this chapter, "development of land" includes the provision of water, sewage, drainage, or similar facilities, or of transportation, energy, or communication facilities, which are incidental to the use of the site as an industrial park, but does not include the provision of structures or buildings.

(8) "Municipality" means a city, town, county, or port district of this state.

(9) "Ordinance" means any appropriate method of taking official action or adopting a legislative decision by any municipality, whether known as a resolution, ordinance, or otherwise.

(10) "Project costs" means costs of (a) acquisition, construction, and improvement of any facilities included in an industrial development facility; (b) architectural, engineering, consulting, accounting, and legal costs related directly to the development, financing, and construction of an industrial development facility, including costs of studies assessing the feasibility of an industrial development facility; (c) finance costs, including discounts, if any, the costs of issuing revenue bonds, and costs incurred in carrying out any trust agreement; (d) interest during construction and during the six months after estimated completion of construction, and capitalized debt service or repair and replacement or other appropriate reserves; (e) the refunding of any outstanding obligations incurred for any of the costs outlined in this subsection; and (f) other costs incidental to any of the costs listed in this section.

(11) "Revenue bond" means a nonrecourse revenue bond, nonrecourse revenue note, or other nonrecourse revenue obligation issued for the purpose of financing an industrial development facility on an interim or permanent basis.

(12) "User" means one or more persons acting as lessee, purchaser, mortgagor, or borrower under a financing document and may include a party who transfers the right of use and occupancy to another party by lease, sublease, or otherwise.

NEW SECTION. Sec. 3. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Affiliate" means, with respect to any lender, any person, firm, or corporation controlled by, or under common control with, that lender, and any person, firm, or corporation controlling that lender.

(2) "Agricultural facility" means land, any building or other improvement thereon or thereto, and any equipment and other personal properties deemed necessary or suitable for use, whether or not now in existence, in farming, ranching, the production of agricultural commodities (including, without limitation, the products of aquaculture, Christmas trees, and ornamental horticulture), soil and water conservation projects, or the treating, processing or storing of such agricultural commodities when such activities are customarily engaged in by farmers as a part of farming, and that are approved for financing by the agricultural finance commission.

(3) "Agricultural producer" means an eligible person, family, partnership, or domestic corporation that owns, mortgages, or leases agricultural facilities.

(4) "Code" means the federal internal revenue code of 1954, as now or hereafter amended, and the regulations and rulings promulgated thereunder.

(5) "Commission" means the Washington agricultural finance commission.

(6) "Bonds" means bonds, notes, certificates, short-term obligations, or any other evidences of indebtedness of the commission.

(7) "Eligible person" means a person, family, partnership, or corporation eligible for agricultural facility financing in accordance with standards adopted by the commission.

(8) "Lender" means any bank, savings and loan association, savings bank, credit union, development credit corporation, insurance company, investment company, trust company, building and loan association, mortgage banker, mortgage company, municipal corporation, government agency, or any other financial institution approved by the board and maintaining an office in the state.

NEW SECTION. Sec. 4. (1) There is hereby established a public body corporate and politic with perpetual corporate succession, to be known as the Washington state agricultural finance commission. The commission is an instrumentality of the state exercising essential government functions and, for purposes of the code, acts as a constituted authority on behalf of the state when it issues bonds pursuant to this chapter. The commission is a "public corporation" within the meaning of Article 32, section 1 of the state Constitution, and a "public body" within the meaning of RCW 39.53.010. The agricultural finance commission shall be the exclusive issuer of nonrecourse revenue bonds for agricultural facilities comprising industrial development projects.

(2) The commission shall consist of six members appointed by the governor subject to confirmation by the senate. The members shall include three members who are active in farming, and three members with expertise in agricultural financing. The director of agriculture shall serve as an ex officio voting member of the commission and shall assist in the initial staffing and organization of the commission.

(3) Upon initial establishment of the commission, the governor shall determine which members will serve two-year terms, four-year terms, or six-year terms. After the initial terms, all terms shall be six years. If a vacancy occurs on the commission before the expiration of a term, the governor shall within thirty days appoint a replacement to complete the remainder of the unexpired term.

(4) The members of the commission shall serve without compensation but may be reimbursed solely from the funds of the commission for expenses incurred in the discharge of their duties under this chapter, subject to the provisions of RCW 43.03.050 and 43.03.060. A majority of the commission constitutes a quorum.

(5) The commission shall be ethnically diverse and composed of members of both sexes.

(6) The commission may adopt an official seal. The commission shall establish rules concerning its exercise of the powers under this chapter. The rules shall be adopted in conformance with chapter 34.04 RCW.

(7) The commission shall elect from its members a chairperson and employ necessary staff including an executive director, a treasurer, and a secretary. The executive director shall be exempt from the civil service provisions of chapter 41.06 RCW. The commission shall file with the office of financial management a certified annual report within one hundred twenty days after the close of its fiscal year. The commission shall also file with the state treasurer, the secretary of the senate, the clerk of the house of representatives, and the legislative budget committee, by January 1 of each year, a written report covering its activities for the previous fiscal year. When so filed, such report shall be a public record and open for public inspection. The report shall include a complete list of (a) all applications for mortgage loans and other financial assistance presented to the commission during such fiscal year, (b) all persons who have received any form of financial assistance from the commission during the fiscal year, (c) the nature and amount of all such financial assistance, and (d) projected activities of the commission for the next fiscal year, including a projection of the total amount of mortgage loans and other financial assistance anticipated and the amount of revenue bonds or other evidences of indebtedness that will be necessary to provide the projected level of assistance during the next fiscal year.

(8) Initial operating staff and expenses of the commission shall be provided by the state treasurer from appropriations lawfully made by the legislature: PROVIDED, That no funds appropriated by the legislature may be used to pay or secure any bonds issued by the commission. As soon as may be practicable, the commission shall provide for its expenses and payment of employees from its operations by such charges and fees or from the proceeds of bonds as it may decide and at such time, if practicable, shall reimburse the state treasurer for prior costs and payments. The commission may contract with the department of agriculture for staff support.

NEW SECTION. Sec. 5. In addition to the powers and duties specified in this chapter, the commission has the following powers, together with all powers incidental thereto or necessary to the discharge thereof:

(1) To adopt and repeal rules consistent with this chapter for the regulation and conduct of its affairs and business;

(2) To establish standards for eligibility for agricultural facility financing consistent with the United States internal revenue code;

(3) To enter into contracts in the name of the commission and not in the name of the state of Washington. The obligations of the commission under the contracts shall be obligations only of the commission and are not, in any way obligations of the state of Washington;

(4) To issue bonds in accordance with this chapter;

(5) To make loans to or deposits with lenders for the purpose of making loans;

(6) To loan its funds to one or more persons to be used by such persons to pay the costs of acquiring, constructing, reconstructing, or improving agricultural facilities, or soil or water conservation projects, such loans to be on such terms and conditions, for such period of time, and secured or evidenced by such mortgages, deeds of trust, notes, debentures, bonds, or other secured or unsecured evidences of indebtedness of such persons as the commission determines;

(7) To purchase or to make commitments to purchase from lenders notes, debentures, bonds, or other evidences of indebtedness secured by mortgages, deeds of trust, or security devices, or unsecured, as the commission determines, or portions thereof or participations therein, which notes, bonds, or other evidences of indebtedness have been or will be executed by the obligors thereon to obtain funds with which to acquire by purchase, construction, or otherwise, or to reconstruct or improve agricultural facilities: PROVIDED, That nothing contained herein empowers the commission to purchase from lenders notes, bonds, or other evidences of indebtedness or participations therein that represent obligations incurred by the obligor more than six months before the date of such purchase by the commission;

(8) To contract with lenders or others for the origination of or the servicing of the loans made by the commission or represented by the notes, bonds, or other evidences of indebtedness that it has purchased;

(9) To foreclose any mortgages, deeds of trust, notes, debentures, bonds, and other security interests held by it, either by action or by exercise of a power of sale, and to sell the equity of redemption in said security interests in accordance with the terms of said instruments and applicable state law, and to take all such other actions as necessary to enforce any obligation held by it;

(10) To purchase the equity of redemption in any such mortgage, deed of trust, note, debenture, bond, or other security;

(11) To receive and accept from any source, aid or contributions of money, property, labor, or other items of value for furtherance of any of its purposes, subject to any conditions not inconsistent herewith or with the laws of this state pertaining to such contributions, including but not limited to, gifts, guarantees, or grants from any department, agency, or instrumentality of the United States;

(12) To establish and collect such fees and charges in connection with its loans, advances, insurance, commitments, servicing, and other activities as it may determine;

(13) To sell any notes, bonds, or other evidences of indebtedness or other obligation held by the commission;

(14) To procure from the farmers home administration of the United States department of agriculture or elsewhere such insurance, letters of credit, and guarantees as the commission finds advisable, including but not limited to, insurance or guarantees against any loss in connection with any notes or obligations held by it, and any of its property or assets, and for payment of any bonds or other obligations issued by the commission in such amounts and from such public or private entities as it finds advisable, and to pay premiums or other charges for any such insurance or guarantees;

(15) To borrow money and to sell and issue its bonds for any corporate function, use, or purpose authorized herein;

(16) To mortgage, pledge, assign, or grant security interests in any or all of its notes, bonds, or other evidences of indebtedness or other instruments, contract rights, or other property;

(17) To execute and deliver, in accordance with this section and section 6 of this act, mortgages and deeds of trust and trust indentures, or either;

(18) To appoint, employ, contract with, and provide for the compensation of such officers, employees, and agents, including but not limited to, engineers, attorneys, management consultants, fiscal advisers, and experts, as the business of the commission may require: PROVIDED, That no commission member or members of his or her firm, business, partnership, or corporation shall be employed or compensated by the commission;

(19) To invest any funds of the commission that it determines are not presently needed for any of its corporate purposes in such obligations as it determines;

(20) To enter into a management agreement or agreements with a person for the management by that person for the commission of any of its properties upon such terms and conditions as may be mutually agreeable;

(21) To sell, exchange, donate, and convey any or all of its properties whenever the commission finds any such action will further the purposes for which the commission was established;

(22) To make, enter into, and execute such contracts, agreements, leases, and other instruments with any person, including but not limited to any federal, state, or local governmental agency, and to take such other actions as necessary or convenient to accomplish any purpose for which the commission was organized or to exercise any power expressly granted hereunder, including such actions as the commission considers appropriate in order to have the interest payments on its bonds and other obligations treated as tax exempt under the internal revenue code;

(23) To establish such special funds, and controls on disbursement to and from such funds, as it finds convenient for the purposes of this chapter;

(24) To sue or be sued in its own name;

(25) To delegate any of its powers and duties if consistent with the purposes of this chapter;

(26) To take assignments of leases and rentals; and

(27) To exercise any other power reasonably required to implement the purposes of this chapter.

NEW SECTION. Sec. 6. (1) Bonds issued under this chapter shall be issued in the name of the commission. The bonds shall not be obligations of the state of Washington and shall be obligations only of the commission payable from the special fund or funds created by the commission for their payment. Such funds shall not be or constitute public moneys or funds of the state of Washington but at all times shall be kept segregated and set apart from other funds.

(2) The principal of and interest on any bonds issued by the commission shall be secured by a pledge of the revenues and other receipts out of which the same may be payable and may be secured by a trust indenture evidencing such pledge or by a foreclosable mortgage and deed of trust conveying as security for such bonds all or any part of the property of the commission from which the revenues so pledged may be derived. The resolution under which the bonds are authorized to be issued or any such trust indenture or mortgage may contain any agreements and provisions respecting the maintenance and insurance of the property covered by such trust indenture or mortgage, the use of the revenues subject to such trust indenture or mortgage, the creation and maintenance of special funds from such revenues, the rights, duties, and remedies of the parties to any such instrument and the parties for the benefit of whom such instrument is made, and the rights and remedies available in the event of default as the committee deems advisable and that are not in conflict with this chapter.

(3) Bonds issued by the commission shall be executed and delivered by the commission at any time and from time to time, shall be in such form and denominations and of such tenor and maturities, shall contain such provisions permitting or restricting redemption of such bonds before their maturities, shall contain such provisions not inconsistent with this chapter, and shall bear such rate or rates of interest, payable and evidenced in such manner, as may be provided by resolution of the commission. Bonds of the commission may be sold at public or private sale, at such price or prices, and at such time as determined by the commission to be advantageous.

The commission may pay all expenses, premiums, and commissions in connection with any financing done by it.

(4) All obligations created and all bonds issued by the commission shall be solely and exclusively an obligation of the commission and shall not be payable from or secured by tax funds or governmental revenue or by all or part of the faith and credit of the state or any unit of local government. Any bonds issued by the commission shall be limited or special obligations of the commission payable solely out of the revenues and other receipts of the commission specified in the proceedings authorizing those bonds.

(5) The commission may not pass a resolution authorizing the issuance of any notes or bonds in excess of two hundred fifty thousand dollars for any one real estate transaction. Resolutions of the commission authorizing the issuance of any notes or bonds or any issue thereof under this chapter may provide for:

(a) Pledging all or any part of the fees and charges made or received by the commission, and all or any part of the moneys received in payment of any loans, notes, bonds, or other evidences of indebtedness, and other moneys received or to be received by the commission to secure the payment of the notes or bonds or of any issue thereof, and subject to such agreements with bondholders or noteholders as may then exist;

(b) Pledging all or any part of the revenue of the commission, including payments or income from any loans, notes, bonds, or other evidences of indebtedness owned or held by the commission to secure the payment of the notes or bonds issued under this chapter or of any issue of such notes or bonds, subject to such agreements with noteholders or bondholders as may then exist;

(c) Pledging of any loan, grant, or contribution from the federal, state, or local government, if authorized by the terms of such loan, grant, or contribution;

(d) The use and disposition of the gross income from mortgage loans owned by the commission and payment of the principal of mortgage loans owned by the commission;

(e) The setting aside of reserves or sinking funds and the regulation and disposition thereof;

(f) Limitations on the purpose to which the proceeds of sale of notes or bonds may be applied and pledging such proceeds to secure the payment of the notes or bonds or of any issue thereof;

(g) Limitations on the issuance of additional notes or bonds, the terms upon which additional notes or bonds may be issued and secured, and the refunding of outstanding or other notes or bonds;

(h) The procedure, if any, by which the terms of any contract with noteholders or bondholders may be amended or abrogated, the amount of notes or bonds the holders of which must consent thereto, and the manner in which such consent may be given;

(i) Vesting in a trustee or trustees such property, rights, powers, and duties in trust as the commission may determine, which may include any or all of the rights, powers, and duties of the trustee appointed by the bondholders under this chapter and limiting or abrogating the right of the bondholders to appoint a trustee or limiting the rights, powers, and duties of such trustee;

(j) Any other matter, of like or different character, which in any way affects the security or protection of the notes or bonds issued by the commission.

(6) Any bonds issued by the commission may from time to time be refunded by the issuance, or by sale or exchange of refunding bonds payable from the same or different sources for the purpose of paying all or any part of the principal of the bonds to be refunded, any redemption premium required to be paid as a condition to the redemption before maturity of any such bonds that are to be so redeemed in connection with such refunding, any accrued and unpaid interest on the bonds to be refunded, any interest to accrue on each bond to be refunded to the date on which it is to be paid, whether at maturity or by redemption before maturity, and the expense incurred in connection with such refunding. Unless duly called for redemption under provisions contained therein, the holders of any such bonds then outstanding and proposed to be refunded shall not be compelled without their consent to surrender their outstanding bonds for such refunding. Any refunding bonds may be sold by the commission at public or private sale at such price or prices as may be exchanged for the bonds or other obligations to be refunded. Any refunding bonds issued by the commission shall be issued and may be secured in accordance with this chapter.

(7) Bonds issued under this chapter shall contain a recital on their face to the effect that payment of the principal of, interest on, and prepayment premium, if any, on the bonds, shall be a valid claim only as against the special fund or funds relating thereto, that neither the faith and credit, nor the taxing power of the state or any municipal corporation, subdivision, or agency of the state, other than the commission as set forth in this chapter, is pledged to the payment of the principal of, interest on, and prepayment premium, if any, on the bonds.

NEW SECTION. Sec. 7. No member of the commission or any authorized person executing the notes or bonds may be liable personally on the notes or bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

NEW SECTION. Sec. 8. The commission, subject to the terms of any agreements with noteholders or bondholders as may then exist, shall have power to purchase notes or bonds of the commission.

NEW SECTION. Sec. 9. The notes and bonds of the commission are securities in which all public officers and bodies of this state and all municipalities and municipal subdivisions, all insurance companies and associations, and other persons carrying on an insurance business, all banks, banking associations, trust companies, savings banks and savings associations, saving and loan associations, investment companies, all administrators, guardians, executors, trustees and other fiduciaries, and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or other obligations of the state, may properly and legally invest funds, including capital, in their control or belonging to them.

NEW SECTION. Sec. 10. The property of the commission and its income and operation shall be exempt from taxation.

NEW SECTION. Sec. 11. (1) The commission shall adopt written policies to provide for the selection of bond counsel. The policies shall provide for the creation and maintenance of a roster of attorneys whom the commission believes possess the requisite special expertise and professional standing to provide bond counsel opinions that would be accepted by the underwriters, bondholders, and other members of the financial community, and that would further the public interest in obtaining the lowest possible interest rates on the bonds issued by the commission. Any attorney may apply to have his or her name placed on the roster, but the name may not be placed on the roster unless the attorney demonstrates to the commission's satisfaction that the attorney would issue the kind of opinions required by this section.

(2) Before selecting an attorney or attorneys to provide bond counsel services, the commission shall provide all attorneys on the roster with a notice of its intentions to select bond counsel and shall invite each of them to submit to the commission his or her fee schedule for providing bond counsel services. The commission shall have wide discretion in selecting the attorney or attorneys it considers to be most appropriate to provide the services, but in the exercise of this discretion the commission shall consider all submitted fee schedules and the public interest in achieving both savings in bond counsel fees and issuance of bonds on terms most favorable to the commission. At least once every two calendar years, the commission shall elect anew an attorney or attorneys to serve as bond counsel. However, the commission may retain an attorney for longer than two years when necessary to complete work on a particular bond issue. An attorney previously retained may be selected again but only after the commission has provided other attorneys on the roster with an opportunity to be selected and has made the fee schedule review required under this subsection. In addition to or as an alternative to retaining counsel for a period of time, the commission may appoint an attorney to serve as counsel with respect to only a particular bond issue.

NEW SECTION. Sec. 12. (1) The commission shall adopt written policies to provide for the selection of underwriters. The policies shall provide for the creation of a roster of underwriters whom the commission believes possess the requisite special expertise and professional standing to provide bond marketing services that would be accepted by bondholders and other members of the financial community, and that would further the public interest in marketing the commission's bonds at the lowest possible costs. Any underwriter may apply to have its name placed on the roster, but its name may not be placed on the roster unless it demonstrates to the commission's satisfaction that it meets the requirements of this section.

(2) Before selecting an underwriter, the commission shall provide all underwriters on the roster with a notice of its intentions to select underwriters and shall invite each of them to submit to the commission his or her fee schedule for providing services. The commission shall have wide discretion in selecting the underwriter it considers to be most appropriate to provide the services, but in the exercise of this discretion the commission shall consider all submitted fee schedules and the public interest in achieving both savings in underwriting fees and issuance of bonds on terms most favorable to the commission. At least once every two calendar years, the commission shall elect anew an underwriter. However, the commission may retain an underwriter for longer than two years when necessary to complete work on a particular bond issue. An underwriter previously retained may be selected again but only after the commission has provided other underwriters on the roster with an opportunity to be selected and has made the fee schedule review required under this subsection. In addition to or as an alternative to retaining counsel for a period of time, the commission may appoint an underwriter to serve with respect to only a particular bond issue.

NEW SECTION. Sec. 13. Proceeds received by the commission from the sale of all bonds issued under this chapter shall be deposited forthwith by the commission in any trust company, savings bank, savings and loan association, or bank having the powers of a trust company within or without the state, in a special fund or funds established for the particular purpose for which the bonds were issued and sold, which money shall not be funds of the state of Washington. Such fund or funds shall at all times be segregated and set apart from all other funds and held in trust for the purpose for which such bonds were issued as determined by the commission. Money other than bond sale proceeds received by the commission for these same purposes, such as private contributions or grants from the federal government, may be deposited in such fund or funds.

NEW SECTION. Sec. 14. If any part of this chapter is found to be in conflict with federal requirements which are a prescribed condition to the allocation of federal funds to the state, the conflicting part of this chapter is hereby declared to be inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and such finding or determination shall not affect the operation of the remainder of this chapter in its application to the agencies concerned. The rules under this chapter shall meet federal requirements which are a necessary condition to the receipt of federal funds by the state.

NEW SECTION. Sec. 15. This chapter, being necessary for the welfare of the state and its inhabitants, shall be liberally construed to effect the purposes thereof.

NEW SECTION. Sec. 16. The commission shall have no power of eminent domain or power to levy any taxes of any kind.

NEW SECTION. Sec. 17. A new section is added to chapter 82.04 RCW to read as follows:

This chapter does not apply to income received by the state agricultural finance commission under chapter 39.-- RCW (sections 1 and 3 through 16 of this act).

NEW SECTION. Sec. 18. A new section is added to chapter 84.36 RCW to read as follows:

The real and personal property of the state agricultural finance commission established by chapter 39.-- RCW (sections 1 and 3 through 16 of this act) are exempt from taxation.

Sec. 19. Section 2, chapter 34, Laws of 1984 and RCW 42.17.2401 are each amended to read as follows:

For the purposes of RCW 42.17.240, the term "executive state officer" includes:

(1) The chief administrative law judge, the director of financial management, the director of personnel, the director of ((~~the planning and community affairs agency~~)) community development, the director of the state system of community colleges, the executive director of the data processing authority, the executive secretary of the forest ((~~practice[s]~~)) practices appeals board, the director of the gambling commission, the director of the higher education personnel board, the secretary of transportation, the executive secretary of the horse racing commission, the executive secretary of the human rights commission, the administrator of the interagency committee for outdoor recreation, the director of parks and recreation, the executive secretary of the board of prison terms and paroles, the administrator of the public disclosure commission, the director of retirement systems, the secretary of the utilities and transportation commission, the executive secretary of the board of tax appeals, the secretary of the state finance committee, the president of each of the regional and state universities and the president of The Evergreen State College, each district and each campus president of each state community college;

(2) Each professional staff member of the office of the governor;

(3) Each professional staff member of the legislature; and

(4) Each member of the state board for community college education, data processing authority, forest practices board, forest practices appeals board, gambling commission, game commission, higher education personnel board, transportation commission, horse racing commission, human rights commission, board of industrial insurance appeals, liquor control board, interagency committee for outdoor recreation, parks and recreation commission, personnel board, personnel appeals board, board of prison terms and paroles, public disclosure commission, public employees' retirement system board, public pension commission, University of Washington board of regents, Washington State University board of regents, board of tax appeals, teachers' retirement system board of trustees, Central Washington University board of trustees, Eastern Washington University board of trustees, The Evergreen State College board of trustees, Western Washington University board of trustees, board of trustees of each community college, state housing finance commission, agricultural finance commission, and the utilities and transportation commission.

NEW SECTION. Sec. 20. Sections 1 and 3 through 16 of this act shall constitute a new chapter in Title 39 RCW.

NEW SECTION. Sec. 21. 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. 22. 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.