HOUSE BILL REPORT
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.
As Reported by House Committee On:
Title: An act relating to water-sewer districts.
Brief Description: Concerning water-sewer districts.
Sponsors: Representatives Gregerson, Griffey, Ryu, Pike and Springer.
Local Government: 1/17/17, 1/26/17 [DP].
HOUSE COMMITTEE ON LOCAL GOVERNMENT
Majority Report: Do pass. Signed by 7 members: Representatives Appleton, Chair; McBride, Vice Chair; Taylor, Ranking Minority Member; Griffey, Assistant Ranking Minority Member; Gregerson, Peterson and Pike.
Staff: Yvonne Walker (786-7841).
Water-Sewer Districts – General Information.
Water-sewer districts (districts) may purchase, construct, maintain, and supply waterworks to furnish water to inhabitants within and outside of a district. Districts may also develop and operate systems of sewers and drainage, and are authorized to create facilities, systems, and programs for the collection, interception, treatment, disposal, and control of pollution from wastewater. Districts may also fix rates and charges for services, enter into contracts, levy taxes, and issue bonds and instruments evidencing indebtedness. Water-sewer districts are governed by boards of elected commissioners (boards).
Sales of Real Property.
A board may sell real property of the district at a public or private sale if it: (1) determines that the property is not and will not be needed for district purposes; and (2) provides notice of the sale in accordance with specific requirements, including the estimated value of the property or, if an appraisal has been made, the property's appraised value.
Private sales of real property are authorized for property with an estimated value of $5,000 or less. In conducting sales, the board may, as it deems appropriate, determine the estimated value based upon the advice of real estate brokers and appraisers. If the estimated value of the property to be sold exceeds $5,000, the value must be established by a written broker price opinion from three licensed and disinterested real estate brokers, or by a professionally designated real estate appraiser. A signed broker price opinion or appraisal must be filed with the secretary of the board and made available for public inspection.
With limited exceptions, real property of the district may not be sold for less than 90 percent of its value. However, if after 120 days of offering the property for sale it cannot be sold at 90 percent or more of its estimated or appraised value, the board may adopt a resolution stating that the district has been unable to sell the property. The district may then, subject to public notice requirements and right of refusal authorizations, sell the property at the highest price it can obtain at public auction. The applicable notice must, among other requirements, describe the property, state the time and place at which it will be offered for sale, and state the terms of sale.
Treasurer Duties – Warrants.
The county treasurer is the treasurer of a district. However, with the approval of the county treasurer, the board of any district with more than 2,500 water customers or sewer customers may designate another person to act as the district treasurer. The district treasurer must have experience in financial or fiscal matters.
All taxes and revenue collected by the district, except those funds received for specified obligations, must be maintained in a maintenance or general fund created and maintained by the district treasurer. Disbursements from the general fund are authorized only by warrants of the county auditor issued with the authority of the board or upon a resolution of the board. The district treasurer must also maintain special funds as prescribed by the district, and disbursements may occur by warrants of the county auditor.
Contract and Competitive Bidding.
All work ordered by a district, which has an estimated cost in excess of $50,000, must be let by contract and competitive bidding. Notice calling for bid proposals must be published in a newspaper of general circulation in the district. Competitive bidding requirements may be waived if an applicable exemption applies to the work. Contracts let by competitive bidding must be awarded to the lowest responsible bidder. Alternatively, a district may let contracts using the small works roster process.
Pollution Control Facilities – Municipal Powers.
Municipalities, defined as any city, town, county, or port district in the state, are authorized under pollution control statutes to acquire, lease, or sell facilities (i.e., any land, building, structure, machinery, system, fixture, or equipment) used to abate, control, or prevent pollution that is located within the municipality. Municipalities are also authorized to issue revenue bonds to defray the cost of acquiring or improving a facility or facilities, and to secure the payment of the bonds.
Summary of Bill:
Sales of Real Property.
Provisions governing the sale of real property by districts are modified. The board must base their determination of the estimated value of real property to be sold by the district on a written appraisal report by a state-licensed or state-certified real estate appraiser, or a written broker's price opinion. The appraisal report or broker's price report must have been prepared less than six months before the date of sale. Provisions that apply to notice of the district's intention to sell real property are modified to specify that notices must refer to the appraisal report or the broker's price opinion, as applicable.
If a purchaser for real property cannot be found within 120 days of publication of the initial notice of intent to sell, the board may adopt a resolution stating that the district has been unable to sell the real property at 90 percent or more of the estimated value. The district may then, subject to public notice requirements and right of refusal authorizations, sell the property at the highest price it can obtain at public auction. The notice of intent to sell at public auction, in addition to current requirements, must now state the minimum opening bid.
Treasurer Duties – Warrants.
The board of a district with revenues of $5 million or more in each of the preceding three years that were audited by the State Auditor in accordance with state law is authorized to adopt a policy to issue its own warrants for the payment of claims or other obligations of the district.
Similarly, the board of a district with revenues greater than $250,000 and less than $5 million in each of the preceding three years that were audited by the State Auditor in accordance with state law is authorized to adopt a policy to issue its own warrants for the payment of claims or other district obligations. Adoption of the policy is authorized, however, only if both the country treasurer and the district agree to adopt the policy.
For both categories of districts, the board may authorize the issuing of one general certificate that permits the county treasurer to pay all warrants specified in the general certificate. The district may then issue the warrants specified in the general certificate.
Asset Management Services.
Water-sewer districts are expressly authorized to contract for asset management service of their water storage assets (i.e., water storage structures and associated distribution systems, such as water tanks, towers, wells, meters, or water filters). Water-sewer districts may negotiate a fair and reasonable water storage asset management service contract with firms that submit the best proposals. Services provided under the contract may include financing, designing, improving, operating, maintaining, repairing, testing, inspecting, cleaning, administering, or managing the water storage asset.
If a water-sewer district chooses to contract for asset management services, the water-sewer district must publish advance notice of its requirements to procure asset management services. The district may:
negotiate with the firm that submits the best proposal based on criteria established by the district;
terminate negotiations if unable to negotiate a satisfactory contract; and
select another firm to continue negotiations with until a contract is reached, or terminate the selection process.
If a district chooses to negotiate a contract under these procurement procedures, no other statutory procurement requirements apply.
Pollution Control Facilities – Powers.
Water-sewer districts are added to the definition of a "municipality" under pollution control statutes, and are thereby authorized: to acquire, lease, or sell facilities located within a district that are used to abate, control, or prevent pollution; and to issue and secure payment of revenue bonds to defray the cost of acquiring or improving such facilities.
Fiscal Note: Requested on January 26, 2017.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:
(In support) This bill is identical to House Bill (HB) 2358 and HB 6147, which passed out of the Local Government Committee last year and allows the water-sewer districts to be more efficient. The first section of this bill relates to surplus property liquidation and it is drafted to make the statute more workable, as the existing statute left many open questions. The second section relates to warrants. Under current law water sewer districts can be their own treasurer. Treasurers would like the same threshold for the issuance of warrants as fire districts. The third section of the bill, relating to water-sewer maintenance contracts, allows for long-term contracts for storage facilities such as water tanks. The fourth section relates to pollution control facilities in which water-sewer districts already run these types of facilities. When waste water enters a treatment plant, a dewatering device separates the solids from the liquids. The purchase of a dewatering device can save a district over $80,000 per year and lower water rates when one takes into consideration the initial purchase cost of the device, short term costs, maintenance costs, and hauling costs. Lastly, the Belfair Water District did have problems but it is now under new management.
(Opposed) This bill increases the power and autonomy of water districts. The Belfair Water District had a policy of not accepting certified mail and a policy of locking its fire hydrants. These small districts are not always well managed. The warrants issued by counties now are better and more accountable than if they were to do their own warrants. It is a mistake to allow water districts to be in the pollution control business as it is a very technical and specialized process. The increase of the power and autonomy of water districts is not in the interest of the citizens of Washington.
Persons Testifying: (In support) Representative Gregerson, prime sponsor; Joe Daniels, Washington Association of Water and Sewer Districts; and Ron Hall, Southwest Suburban Sewer District.
(Opposed) Arthur West.
Persons Signed In To Testify But Not Testifying: None.