HOUSE BILL REPORT

SB 5685

BYSenators Sellar, Hansen, Newhouse and Barr

Authorizing bonds for new facility for apple advertising commission.

House Committe on Ways & Means

Majority Report:  Do pass.  (17)

      Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Basich, Braddock, Fuhrman, Grant, Holland, Locke, Madsen, McLean, Nealey, Niemi, Peery, Schoon, Silver, Valle and B. Williams.

House Staff:Susan Kavanaugh (786-7145)

AS PASSED HOUSE MARCH 17, 1987

BACKGROUND:

The Apple Advertising Commission was created in 1937 and is currently the largest commodity commission in the state with an annual budget of $7.2 million.  The budget is completely funded by assessments on all fresh apple sales.

To further promote sales and otherwise efficiently fulfill the purposes of the commission, a new building has been constructed for commission offices, for warehouse space, and for a display room.  The commission needs to establish a long term financing arrangement for the cost of acquiring the land and constructing and equipping the building.  The total cost of building the facility and administering the program to finance the facility is estimated to be approximately $1.3 million.  The commission has $500,000 available in commission funds to apply to the project and seeks an additional $800,000.

SUMMARY:

The State Finance Committee is authorized to issue general obligation bonds up to $800,000 to provide partial financing of a new building for the Washington Apple Advertising Commission and to pay administrative expenses incidental to the bonding procedures.  The bonds are to be issued and sold in accordance with the general bonding requirements set forth in statute.

Proceeds from the sale of bonds are to be deposited with the state treasurer in the state building construction account, and the proceeds shall be administered by the Apple Commission.  Debt service on the bonds is to be paid out of the general fund; however, the general fund is to be reimbursed by the Apple Commission.  Whenever the principal and interest on a bond are due, the commission must pay from its general fund to the state treasurer the amount due.

The bonds cannot be issued until:  (1) the commission certifies that the net proceeds of the bonds, together with the other available funds, will be sufficient for the requirements of the capital project; and (2) the estimated future income from assessments levied by the commission will maintain an adequate balance to enable the commission to pay the principal and interest on the bonds as they become due.

Appropriation:    $800,000.

Fiscal Note:      Attached.

Effective Date:The bill contains an emergency clause and takes effect immediately.

House Committee ‑ Testified For:    Senator George Sellar, Representative Alex McLean.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    With tax exempt status, Apple Advertising Commission can save about 2 percentage points on bond financing.  Savings can be used to promote Washington State apples.  Apple Commission will reimburse general fund for bond retirement payments.

House Committee - Testimony Against:      None Presented.