HOUSE BILL REPORT

HB 980

BYRepresentative Rayburn

Revising provisions on irrigation districts.

House Committe on Agriculture & Rural Development

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (14)

     Signed by Representatives Rayburn, Chair; Kremen, Vice Chair; Baugher, Bristow, Brooks, Chandler, Doty, Grant, Holm, Jacobsen, McLean, Moyer, Nealey and Rasmussen.

House Staff:Tim Burke (786-7103)

AS REPORTED BY COMMITTEE ON AGRICULTURE & RURAL DEVELOPMENT

MARCH 3, 1987

BACKGROUND:

In a 1984 decision, the Washington Supreme Court decided a case dealing in part with the constitutional "due process" requirements which apply to the foreclosure on delinquent assessments owed to an irrigation district.  Among other things, the court held that "due process" requires that (1) in addition to each legal owner, the district must provide notice of foreclosure to each person with a recorded interest, such as a mortgage, in the property; (2) the description of the property included in the notice must identify and describe the property with reasonable certainty; (3) the notice must advise each owner and person with a recorded interest of their right to appear and contest the foreclosure and must specify the termination date of any redemption right; and (4) the owner and and any person with a recorded interest have a right to a hearing to contest the foreclosure action.

The members of an irrigation district's board of directors and the district's secretary are required to obtain a $1,000 surety bond for the faithful performance of their duties. The irrigation district laws contain numerous provisions establishing accounting rules and fiscal controls.

SUMMARY:

SUBSTITUTE BILL:  The procedure for foreclosing on delinquent assessments owed to an irrigation district is changed in order to conform to the Washington Supreme Court's 1984 decision.  In addition to each legal owner, notice of foreclosure must be given to each person with a recorded interest (such as a mortgage) in the property; (2) the description of the property included in the notice must identify and describe the property with reasonable certainty; (3) the notice must advise each owner and person with a recorded interest of their right to appear and contest the foreclosure and must specify the termination date of any redemption right; and (4) the owner and any person with a recorded interest have a right to a hearing to contest the foreclosure action.

The notice will be given twice:  The first notice will be given to only owners of record, while the second and later notice will be given to (a) those owners of record who have not paid in response to the first notice and (b) all persons with recorded interests on property for which the assessment remains unpaid.

The members of an irrigation district's board of directors and the district's secretary are required to obtain a $10,000 surety bond for the faithful performance of their duties.  In addition, the secretary and any person authorized by the board to "handle" deposited funds are required to obtain a bond in the amount of the greater of $10,000 or the average monthly balance, during the preceding calendar year, in the district's expense fund.  Various accounting rules and fiscal controls on the depositing and disbursing of district funds are established.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Unlike the original bill, the substitute requires that notice of foreclosure be provided to persons with recorded interests and that the redemption period be specified in the notice.  Also, unlike the substitute, the original bill did not contain any language dealing with surety bonds or establishing fiscal controls over the depositing and disbursing of irrigation district funds.

Fiscal Note:    Not Requested.

House Committee ‑ Testified For:     Jim Trull, Washington Water Resources Association.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     (1) In a 1984 decision, the state's Supreme Court found the foreclosure procedures for delinquent assessments provided by statute to be constitutionally defective; this bill addresses the concerns of the court. (2) If districts had to conduct a title search up front, before issuing the first notice of delinquent assessments, the persons owing assessments would automatically owe $230 to $240 more than the assessment just to pay for the title search.  The number of assessments for which title searches will be necessary should be significantly reduced by the two tiered notice provided by the bill.

House Committee - Testimony Against: None Presented.