HOUSE BILL REPORT
2SSB 5368
As Reported by House Committee On:
Local Government
Title: An act relating to encouraging rural economic development.
Brief Description: Encouraging rural economic development.
Sponsors: Senate Committee on Ways & Means (originally sponsored by Senators Short, Fortunato and Wilson, L.).
Brief History:
Committee Activity:
Local Government: 3/16/21, 3/23/21 [DPA].
Brief Summary of Second Substitute Bill
(As Amended By Committee)
  • Allows code cities to annex unincorporated territory within an urban growth area.
  • Allows interlocal agreements for annexation to include use of a sales tax credit for annexed areas should such a credit be reinstated by the Legislature.
  • Allows the Growth Management Hearings Board (GMHB) to refer a finding of noncompliance to the Department of Commerce (Commerce).
  • Tasks Commerce with providing technical assistance to facilitate speedy resolution of the finding of noncompliance.
  • Requires Commerce to offer training to assist rural counties in understanding findings of noncompliance and applying prior decisions of the GMHB, and allows Commerce to award grants to a public agency with expertise and funded by local governments to provide the training.
HOUSE COMMITTEE ON LOCAL GOVERNMENT
Majority Report: Do pass as amended.Signed by 7 members:Representatives Pollet, Chair; Duerr, Vice Chair; Goehner, Ranking Minority Member; Griffey, Assistant Ranking Minority Member; Berg, Robertson and Senn.
Staff: Elizabeth Allison (786-7129).
Background:

Growth Management Act.
The Growth Management Act (GMA) is the state's comprehensive land use planning framework for cities and counties.  Counties planning under the GMA, and the cities within such counties, must adopt internally consistent comprehensive plans and designate critical areas, agricultural lands, forestlands, and mineral resource lands.  Jurisdictions must implement comprehensive plans through locally adopted development regulations that conform to the plan.  Counties must also adopt countywide planning policies in cooperation with adjacent cities to coordinate planning.
 
Urban Growth Areas.
Counties that fully plan under the GMA must designate urban growth areas (UGAs), within which urban growth must be encouraged and outside of which growth may occur only if it is not urban in nature.  Planning jurisdictions must include within their UGAs sufficient areas and densities to accommodate projected urban growth for the succeeding 20-year period.  In addition, cities must include sufficient areas to accommodate the broad range of needs and uses that will accompany the projected urban growth, including, as appropriate, medical, governmental, institutional, commercial, service, retail, and other nonresidential uses.
 
Growth Management Hearings Board.
The Growth Management Hearings Board (GMHB) hears petitions and resolves disputes concerning the GMA.  The GMHB is comprised of five members appointed by the Governor.  Petitions are heard by three-member regional panels that generally include two members from the region where the case arose, and one member from a different region.

 

The GMHB may hear and determine petitions alleging that a state agency or planning jurisdiction is not in compliance with the GMA.  The GMHB may issue a final order finding compliance or it may remand for plans and regulations to be brought into compliance.  If a plan or regulation is found to be not in compliance, the GMHB must remand it back to the affected state agency, county, or city.  The GMHB must allow a reasonable time, generally 180 days, within which the agency, county, or city must come into compliance.  After the time to come into compliance has passed, the GMHB must have a hearing to determine whether the agency, city, or county is in compliance.  A finding of compliance or noncompliance must be issued within 45 days of the hearing.  If the GMHB finds the agency, county, or city to not be in compliance, it must transmit such finding to the Governor, and may recommend sanctions be imposed.

Summary of Amended Bill:

Annexation.
A code city may collaborate with the county or counties where the code city is located to form an interlocal agreement regarding annexation of unincorporated territory within a UGA boundary.  An interlocal agreement for annexation may include use of a sales tax credit for annexed areas should such a credit be reinstated by the Legislature.
 
The agreement must address the following:

  • a balancing of annexations of commercial, industrial, and residential properties so any potential loss or gain is considered and distributed fairly as determined by tax revenue;
  • development, ownership, and maintenance of infrastructure; and
  • the potential for revenue-sharing agreements.

 
The interlocal agreement formation processes must include procedures for public participation including opportunity for written comments and public meetings.
 

The Association of Washington Cities and the Washington State Association of Counties must report to the Legislature by December 1, 2021, on how a sales tax credit may be utilized to encourage appropriate annexations and what limits should be associated with such a credit if reinstated.

 

Growth Management Hearings Board – Noncompliance.
The GMHB may, after finding a jurisdiction out of compliance with the GMA, refer the finding of noncompliance to the Department of Commerce (Commerce).  The purpose of the referral is for Commerce to provide technical assistance to facilitate speedy resolution of the finding of noncompliance and to provide training as necessary.

 

Commerce must offer training to assist counties that are largely rural in understanding findings of noncompliance from the GMHB and applying prior decisions of the GMHB to ongoing planning efforts to avoid findings of noncompliance.  Commerce may award grants to a public agency with appropriate expertise and funded by local governments to provide the training.

Amended Bill Compared to Second Substitute Bill:

The amendment removes the provision allowing jurisdictions planning under the GMA to apply for a determination of compliance from Commerce for certain actions under the GMA and the State Environmental Policy Act.  Commerce must offer training to assist rural counties in understanding findings of noncompliance and applying prior decisions to ongoing planning efforts to avoid findings of noncompliance.  Interlocal agreements for annexation may include use of a sales tax credit for annexed areas should such a credit be reinstated by the Legislature.  The Association of Washington Cities and the Washington State Association of Counties must report to the Legislature by December 1, 2021, on how a sales tax credit may be utilized to encourage appropriate annexations and what limits should be associated with such a credit if reinstated.

Appropriation: None.
Fiscal Note: Available.  New fiscal note requested on March 23, 2021.
Effective Date of Amended Bill: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:

(In support) The annexation provision addresses the disparities in resources between cities and counties.  Often counties provide the infrastructure for areas that are annexed and cities receive the revenue from such areas.  The method for annexation is through an interlocal agreement and allows a single interlocal agreement to address all annexations within a UGA.  This is a powerful option to encourage collaboration between cities and counties.  It differs from current methods because it is collaborative, allows cities to qualify for an annexation sales tax credit, and does not have a referendum provision.  The goal is to provide a straightforward and achievable annexation process.  One recommendation would be to expand the annexation provision beyond code cities.  Boundary review boards have very robust procedures for public involvement and notification and hearing processes.  There are a great number of objectives and factors that must be weighed in annexation processes which can be very complex.  Language in the bill addresses boundary review boards and public processes and such language should remain.

 

The safe harbor provisions create an opportunity for jurisdictions to safeguard against appeals and litigation because jurisdictions are thinking more completely about the planning process going forward.  The option to seek a determination of compliance is permissive, not mandatory.  Commerce is allowed to offer technical guidance to jurisdictions.  The GMHB is quasi-judicial and can only inform a jurisdiction it is not in compliance.  It cannot offer guidance on how jurisdictions can come into compliance, and as a result, jurisdictions have struggled to know what changes they can make to come into compliance.  The bill helps reduce liability and improve outcomes in planning, and allows for money to be saved.  There is concern about the greenhouse gas emissions reduction subelement as it is a technical issue and not part of anything else discussed in the bill, but cities and counties are adopting greenhouse and climate change options.

 

(Opposed) None.

 

(Other) One issue with enforcement is the handful of cases where jurisdictions have to go before the GMHB until they are in compliance.  The GMHB is a quasi-judicial board that can tell a jurisdiction what it did wrong, but it cannot say what would need to be fixed or provide feedback to a jurisdiction as to whether an action would result in a finding of compliance.  The bill provides a voluntary process that would allow some dialogue and is less legalistic and more collaborative.  It allows jurisdictions who are contemplating high-risk actions to have a formal path where they can get an independent certification of compliance before taking that action.  Commerce has engaged in an informal process like this in the past, and the bill creates a more formal process.  The procedures are modeled on the Shoreline Management Act because there is a clear process understood by people within that act.

Persons Testifying: (In support) Senator Short, prime sponsor; Bryce Yadon, Futurewise; Paul Jewell, Washington State Association of Counties; Mary Lynne Evans, Washington State Boundary Review Boards Association; Jan Himebaugh, Building Industry Association of Washington; Jeanette McKague, Washington REALTORS; and Carl Schroeder, Association of Washington Cities.
(Other) Dave Andersen, Washington Department of Commerce.
Persons Signed In To Testify But Not Testifying: None.