HOUSE BILL REPORT

HB 641

BYRepresentatives Haugen and Beck

Revising provisions on local improvement districts.

House Committe on Local Government

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (11)

     Signed by Representatives Haugen, Chair; Beck, Bumgarner, Ferguson, Hine, Madsen, Nealey, Nelson, Nutley, Rayburn and L. Smith.

House Staff:Steve Lundin (786-7127)

AS REPORTED BY COMMITTEE ON LOCAL GOVERNMENT FEBRUARY 24, 1987

BACKGROUND:

Local improvement districts (LID's) are mechanisms used by government to finance all or part of the costs of public improvements where those public improvements specifically benefit, or increase the value of, real property located in the vicinity of the improvement.

Special assessments are imposed on real property within the LID to finance those portions of the costs that will be financed by the LID.

The process to provide a public improvement using a LID involves the following general steps: (1) creating the LID; (2) constructing the improvement, using interim financing; and (3) providing final financing for the project by: (a) establishing the assessment roll; (b) allowing property owners to prepay their special assessments; and (c) issuing LID bonds to obtain money for the unpaid special assessments, with those property owners who did not prepay their special assessments being liable for installment payments that are used to redeem the LID bonds.  LID bonds are not general indebtedness.

Legislation was enacted in 1985 that allowed local governments to establish a reserve fund to secure a specific LID bond issue, that is in addition to a guaranty fund used to secure any LID bond issues of the local government.

SUMMARY:

SUBSTITUTE BILL:  If a reserve fund is created for a local improvement district (LID) bond issue, the local government must credit any unused money in the reserve fund to reduce the nondelinquent payment of assessments or nondelinquent payments of installments, after administrative expenses have been made.  Any balance in a reserve fund that remains after payment of the administrative expenses and this crediting shall be placed into the guaranty fund of the local government.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The original bill permitted certain things if a reserve fund were created, while the substitute requires certain things to be done if a reserve fund were created.

Fiscal Note:    Not Requested

House Committee ‑ Testified For:     Celia Strong, City of Everett; Marilyn Showalter, Roberts & Shefelman; Mark Triplett, Homebuilders Association; and Stan Finkelstein, Association of Washington Cities.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     This accomplishes the purposes of the legislation two years ago that allowed reserve funds to be created and clarifies that the credit shall occur.

House Committee - Testimony Against: The substitute is not strong enough.  Any left over money is required to be put into the guaranty fund, instead of being credited to property owners.