6044-S AAS 3/14/95

6044-S AAS 3/14/95

SSB 6044 - S AMD 235 (S2674.2)

By Senators Owen, Quigley, Long, Prince, Finkbeiner, Wood, Schow, Roach and Kohl

ADOPTED AS AMENDED 3/14/95

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 47.46.010 and 1993 c 370 s 1 are each amended to read as follows:

The legislature finds and declares:

It is essential for the economic, social, and environmental well-being of the state and the maintenance of a high quality of life that the people of the state have an efficient transportation system.

The ability of the state to provide an efficient transportation system will be enhanced by a public-private sector program providing for private entities to undertake all or a portion of the study, planning, design, development, financing, acquisition, installation, construction or improvement, operation, and maintenance of transportation systems and facility projects.

A public-private initiatives program will provide benefits to both the public and private sectors. Public-private initiatives provide a sound economic investment opportunity for the private sector. Such initiatives will provide the state with increased access to property development and project opportunities, financial and development expertise, and will supplement state transportation revenues, allowing the state to use its limited resources for other needed projects.

The public-private initiatives program, to the fullest extent possible, should encourage and promote business and employment opportunities for Washington state citizens.

The public-private initiatives program should be implemented in cooperation and consultation with affected local jurisdictions.

The secretary of transportation should be permitted and encouraged to test the feasibility of building privately funded transportation systems and facilities or segments thereof through the use of innovative agreements with the private sector. The secretary of transportation should be vested with the authority to solicit, evaluate, negotiate, and administer public-private agreements with the private sector relating to the planning, construction, upgrading, or reconstruction of transportation systems and facilities.

Agreements negotiated under a public-private initiatives program will not bestow on private entities an immediate right to construct and operate the proposed transportation facilities. Rather, agreements will grant to private entities the opportunity to design the proposed facilities, demonstrate public support for proposed facilities, and complete the planning processes required in order to obtain a future decision by the department of transportation and other state and local lead agencies on whether the facilities should be permitted and built.

The legislature finds that in the case of Highway 522, selected under this chapter, public support has not been demonstrated and therefore the secretary shall not proceed. Among the demonstrations of nonsupport for inclusion of Highway 522 are:

(1) Over sixteen thousand citizens have signed petitions in opposition to the toll project;

(2) The majority of city councilmembers in Monroe, Duvall, and Index have made public statements opposing the toll project, and that the Woodinville chamber of commerce has officially opposed the toll project;

(3) No city council or chamber of commerce in the area has favored the toll project;

(4) Of the five hundred individuals who attended the public information hearings on the toll proposal, four hundred fifty-eight signed a petition requesting that the proposal be rejected;

(5) Businesses in Monroe, Woodinville, Duvall, Snohomish, Sultan, Startup, Gold Bar, Index, Skykomish, and Stevens Pass are extremely dependent on Highway 522 for commerce, that due to the rural nature of these areas no alternative for commerce exists, and that a toll on Highway 522 would severely inhibit their ability to stay in business; and

(6) In an informal poll of residents who currently use Highway 522 to shop, eighty-one and one-half percent of the respondents claimed they would be unlikely to continue shopping at these stores if a toll were imposed.

Agreements negotiated under the public-private initiative's program should establish the conditions under which the private developer may secure the approval necessary to develop and operate the proposed transportation facilities; create a framework to attract the private capital necessary to finance their development; and ensure that the transportation facilities will be designed, constructed, and operated in accordance with applicable local, regional, state, and federal laws and the applicable standards and policies of the department of transportation.

The department of transportation should be encouraged to take advantage of new opportunities provided by federal legislation under section 1012 of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). That section establishes a new program authorizing federal participation in construction or improvement or improvement of publicly or privately owned toll roads, bridges, and tunnels, and allows states to leverage available federal funds as a means for attracting private sector capital.

Sec. 2. RCW 47.46.030 and 1993 c 370 s 3 are each amended to read as follows:

(1) The secretary or a designee shall solicit proposals from, and negotiate and enter into agreements with, private entities to undertake as appropriate, together with the department and other public entities, all or a portion of the study, planning, design, construction, operation, and maintenance of transportation systems and facilities, using in whole or in part private sources of financing.

The public-private initiative program may develop up to six demonstration projects. Each proposal shall be weighed on its own merits, and each of the six agreements shall be negotiated individually, and as a stand-alone project. The commission shall approve each of the selected projects.

((~~Proposals and demonstration projects may be selected by the public and private sectors at their discretion.~~))

(2) A state transportation system or facility selected as a demonstration project under this chapter, that is designated by the commission as a prioritized improvement project under the comprehensive six-year investment program set forth in RCW 47.05.051, shall not be reprioritized as a result of its selection as a demonstration project. As state funds become available, the funds must be used toward the capital costs of the demonstration project, or in the case of a project developed in phases, for the phase or segment. If no state funding is required to finance the demonstration project, state funds that become available for such project under RCW 47.05.051 instead must be used (a) to reduce the rate of tolls or user fees imposed on the demonstration project, or (b) for improvements on alternative state or local nontoll routes that provide a reasonable, free, and convenient access alternative to the demonstration project.

(3) Projects selected prior to and after September 1, 1994, must comply with the requirements of subsections (4) through (9) of this section.

(4) No projects selected or agreements entered into under this chapter take effect until the department conducts a comprehensive analysis of traffic patterns and economic impact to determine and define the geographical boundary of the area of the project that is most affected by the imposition of tolls or user fees authorized under this chapter. The area so defined is referred to in this section as the affected project area. In defining the affected project area, the department in consultation with the legislative transportation committee shall, at a minimum, undertake: (a) A comparison of the estimated percentage of residents of communities in the vicinity of and impacted by the project who could be subject to tolls or user fees and the estimated percentage of other users and transient traffic that could be subject to tolls or user fees; (b) anticipated traffic diversion patterns; and (c) potential economic impact resulting from proposed toll rates or user fee rates imposed on residents of and commercial traffic and commercial entities in communities in the vicinity of and impacted by the project. The department shall provide the legislative transportation committee with progress reports on the status of the definition of the affected project.

(5) After a determination and definition by the department of the affected project area, the department shall conduct a minimum thirty-day public comment period. Within fifteen days following the public comment period, the legislative transportation committee may conduct a hearing on the defined affected project area. The department may make adjustments to the definition of the geographical boundary of the affected project area, based on comments received from the public and a hearing by the legislative transportation committee. Within thirty days after the public comment period, the department shall establish the boundaries of the affected project area in units no smaller than a precinct as defined by RCW 29.01.120.

(6) The department shall establish a process that provides for public involvement in decision making with respect to the affected project area. In carrying out the public involvement process the department shall proactively seek public participation through a process appropriate to the characteristics of the affected project area that assesses overall public support among users and residents of the affected project area. Such public involvement process shall provide opportunities for users and residents of the affected project area to comment upon key issues regarding the project including, but not limited to: (a) Alternative sizes and scopes; (b) design; (c) environmental assessment; (d) right of way and access plans; (e) traffic impacts; (f) tolling or user fee strategies and tolling or user fee ranges; (g) project cost; (h) construction impacts; (i) facility operation; and (j) any other salient characteristics.

(7) The results of the public involvement process shall be made available for public review and comment.

The department shall provide the legislative transportation committee with progress reports on the status of the public involvement process. The results of such public involvement process, including public comment, shall be forwarded to the legislative transportation committee for its review. Within forty-five calendar days of submission of such information, the legislative transportation committee shall conduct a public hearing regarding the results of the public involvement process. Taking into account the information submitted, the legislative transportation committee shall adopt a resolution making a recommendation to the secretary of the department of transportation regarding the appropriateness of the definition of the affected project area and the project description and characteristics.

(8) In response to the recommendation of the legislative transportation committee, the secretary, within two weeks after receipt of legislative transportation committee recommendation, shall transmit a copy of the map depicting the affected project area and the project description and characteristics to the county auditor of the county in which any portion of the affected project area is located.

(9) Upon receipt of the map and the project description and characteristics, the county auditor shall, within sixty days, verify the precincts that are located within the affected project area. The county auditor shall prepare the text identifying and describing the affected project area and the project and shall set a special election date for the submission of a ballot proposition authorizing the imposition of tolls or user fees within the affected project area. The text of the project must appear in a voter's pamphlet for the affected project area. The department shall pay for the costs of publication and distribution. The special election date must be the next date for a special election provided under RCW 29.13.020 that is at least sixty days but, if authorized under RCW 29.13.020, no more than ninety days after receipt of the final map and project description and characteristics by the auditor. The department shall pay the costs of an election held under this section. A simple majority of those voting within the affected project area to authorize tolls or user fees within the project area is required for approval. If the vote is affirmative, the department is authorized to solicit proposals for replacement projects. If the vote is affirmative for a project selected prior to September 1, 1994, the department may enter into an agreement authorized under RCW 47.46.040 with a private entity.

(10) All projects designed, constructed, and operated under this authority must comply with all applicable rules and statutes in existence at the time the agreement is executed, including but not limited to the following provisions: Chapter 39.12 RCW, this title, RCW 41.06.380, chapter 47.64 RCW, RCW 49.60.180, and 49 C.F.R. Part 21.

(11) The secretary or a designee shall consult with legal, financial, and other experts within and outside state government in the negotiation and development of the agreements.

Sec. 3. RCW 47.46.040 and 1993 c 370 s 4 are each amended to read as follows:

Agreements shall provide for private ownership of the projects during the construction period. After completion and final acceptance of each project or discrete segment thereof, the agreement shall provide for state ownership of the transportation systems and facilities and lease to the private entity unless the state elects to provide for ownership of the facility by the private entity during the term of the agreement.

The state shall lease each of the demonstration projects, or applicable project segments, to the private entities for operating purposes for up to fifty years.

The department may exercise any power possessed by it to facilitate the development, construction, financing, operation, and maintenance of transportation projects under this chapter. Agreements for maintenance services entered into under this section shall provide for full reimbursement for services rendered by the department or other state agencies. Agreements for police services for projects developed under ((~~the~~)) agreements may be entered into with ((~~any qualified law enforcement agency, and shall provide for full reimbursement for services rendered by that agency~~)) the Washington state patrol. The agreement for police services shall provide that the state patrol will be reimbursed for costs on a comparable basis with the costs incurred on other state highway facilities. The department may provide services for which it is reimbursed, including but not limited to preliminary planning, environmental certification, and preliminary design of the demonstration projects.

The plans and specifications for each project constructed under this section shall comply with the department's standards for state projects. A facility constructed by and leased to a private entity is deemed to be a part of the state highway system for purposes of identification, maintenance, and enforcement of traffic laws and for the purposes of applicable sections of this title. Upon reversion of the facility to the state, the project must meet all applicable state standards. Agreements shall address responsibility for reconstruction or renovations that are required in order for a facility to meet all applicable state standards upon reversion of the facility to the state.

For the purpose of facilitating these projects and to assist the private entity in the financing, development, construction, and operation of the transportation systems and facilities, the agreements may include provisions for the department to exercise its authority, including the lease of facilities, rights of way, and airspace, exercise of the power of eminent domain, granting of development rights and opportunities, granting of necessary easements and rights of access, issuance of permits and other authorizations, protection from competition, remedies in the event of default of either of the parties, granting of contractual and real property rights, liability during construction and the term of the lease, authority to negotiate acquisition of rights of way in excess of appraised value, and any other provision deemed necessary by the secretary.

The agreements entered into under this section may include provisions authorizing the state to grant necessary easements and lease to a private entity existing rights of way or rights of way subsequently acquired with public or private financing. The agreements may also include provisions to lease to the entity airspace above or below the right of way associated or to be associated with the private entity's transportation facility. In consideration for the reversion rights in these privately constructed facilities, the department may negotiate a charge for the lease of airspace rights during the term of the agreement for a period not to exceed fifty years. If, after the expiration of this period, the department continues to lease these airspace rights to the private entity, it shall do so only at fair market value. The agreement may also provide the private entity the right of first refusal to undertake projects utilizing airspace owned by the state in the vicinity of the public-private project.

Agreements under this section may include any contractual provision that is necessary to protect the project revenues required to repay the costs incurred to study, plan, design, finance, acquire, build, install, operate, enforce laws, and maintain toll highways, bridges, and tunnels and which will not unreasonably inhibit or prohibit the development of additional public transportation systems and facilities. Agreements under this section must secure and maintain liability insurance coverage in amounts appropriate to protect the project's viability and may address state indemnification of the private entity for design and construction liability where the state has approved relevant design and construction plans.

Nothing in this chapter limits the right of the secretary and his or her agents to render such advice and to make such recommendations as they deem to be in the best interests of the state and the public.

Sec. 4. RCW 47.46.050 and 1993 c 370 s 5 are each amended to read as follows:

(1) The department may enter into agreements using federal, state, and local financing in connection with the projects, including without limitation, grants, loans, and other measures authorized by section 1012 of ISTEA, and to do such things as necessary and desirable to maximize the funding and financing, including the formation of a revolving loan fund to implement this section.

(2) Agreements entered into under this section shall authorize the private entity to lease the facilities within a designated area or areas from the state and to impose user fees or tolls within the designated area to allow a reasonable rate of return on investment, as established through a negotiated agreement between the state and the private entity. The negotiated agreement shall determine a maximum rate of return on investment, based on project characteristics. If the negotiated rate of return on investment is not affected, the private entity may establish and modify toll rates and user fees.

(3) Agreements may establish "incentive" rates of return beyond the negotiated maximum rate of return on investment. The incentive rates of return shall be designed to provide financial benefits to the affected public jurisdictions and the private entity, given the attainment of various safety, performance, or transportation demand management goals. The incentive rates of return shall be negotiated in the agreement.

(4) Agreements shall require that over the term of the ownership or lease the user fees or toll revenues be applied only to payment of the private entity's capital outlay costs for the project, including interest expense, the costs associated with construction, operations, toll collection, maintenance and administration of the ((~~facility~~)) project, reimbursement to the state for all costs associated with an election as required under RCW 47.46.030, the costs of project review and oversight, technical and law enforcement services, establishment of a fund to assure the adequacy of maintenance expenditures, and a reasonable return on investment to the private entity. ((~~The use of any excess toll revenues or user fees may be negotiated between the parties.~~

After expiration of the lease of a facility to a private entity, the secretary may continue to charge user fees or tolls for the use of the facility, with these revenues to be used for operations and maintenance of the facility, or to be paid to the local transportation planning agency, or any combination of such uses.)) A negotiated agreement shall not extend the term of the ownership or lease beyond the period of time required for payment of the private entity's capital outlay costs for the project under subsection (4) of this section.

NEW SECTION. Sec. 5. A new section is added to chapter 47.05 RCW to read as follows:

RCW 47.46.030(2) applies to this chapter."

SSB 6044 - S AMD 235 (s2674.2)

By Senators Owen, Quigley, Long, Prince, Finkbeiner, Wood, Schow, Roach and Kohl

ADOPTED AS AMENDED 3/14/95

On page 1, line 1 of the title, after "facilities;" strike the remainder of the title and insert "amending RCW 47.46.010, 47.46.030, 47.46.040, and 47.46.050; and adding a new section to chapter 47.05 RCW."