AN ACT
Relating to the receipt and expenditure of federal and private funds by local
governments; amending RCW 35.21.735; creating new sections; and declaring an
emergency.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. The
purpose of this act is to assist community and economic development by
clarifying the authority of all cities, towns, counties, and public
corporations to engage in federally guaranteed "conduit financings"
and to specify procedures that may be used for such conduit financings.
Generally, in such a conduit financing a municipality borrows funds from the
federal government or from private sources with the help of federal guarantees,
without pledging the credit or tax revenues of the municipality, and then lends
the proceeds for private projects that both fulfill public purposes, such as
community and economic development, and provide the revenues to retire the
municipal borrowings. Such conduit financings include issuance by
municipalities of federally guaranteed notes under section 108 of the housing
and community development act of 1974, as amended, to finance projects eligible
under federal community development block grant regulations.
Sec.
2. RCW
35.21.735 and 1985 c 332 s 3 are each amended to read as follows:
(1)
The legislature hereby declares that carrying out the purposes of federal
grants or programs is both a public purpose and an appropriate function for ((such))
a city, town, county, or public corporation. The provisions of RCW
35.21.730 through 35.21.755 and RCW 35.21.660 and 35.21.670 and the enabling
authority herein conferred to implement these provisions shall be construed to
accomplish the purposes of RCW 35.21.730 through 35.21.755.
(2)
All cities, towns ((and)), counties, and public corporations
shall have the power and authority to enter into agreements with the United
States or any agency or department thereof, or any agency of the state
government or its political subdivisions, and pursuant to such agreements may
receive and expend, or cause to be received and expended by a custodian or
trustee, federal or private funds for any lawful public purpose. Pursuant
to any such agreement, a city, town, county, or public corporation may issue
bonds, notes, or other evidences of indebtedness that are guaranteed or
otherwise secured by funds or other instruments provided by or through the
federal government or by the federal government or an agency or instrumentality
thereof under section 108 of the housing and community development act of 1974
(42 U.S.C. Sec. 5308), as amended, or its successor, and may agree to repay and
reimburse for any liability thereon any guarantor of any such bonds, notes, or
other evidences of indebtedness issued by such jurisdiction or public
corporation, or issued by any other public entity. For purposes of this
subsection federal housing mortgage insurance shall not constitute a federal
guarantee or security.
(3)
A city, town, county, or public corporation may pledge, as security for any
such bonds, notes, or other evidences of indebtedness or for its obligations to
repay or reimburse any guarantor thereof, its right, title, and interest in and
to any or all of the following: (a) Any federal grants or payments received or
that may be received in the future; (b) any of the following that may be
obtained directly or indirectly from the use of any federal or private funds
received as authorized in this section: (i) Property and interests therein,
and (ii) revenues; (c) any payments received or owing from any person resulting
from the lending of any federal or private funds received as authorized in this
section; (d) any proceeds under (a), (b), or (c) of this subsection and any
securities or investments in which (a), (b), or (c) of this subsection or
proceeds thereof may be invested; (e) any interest or other earnings on (a),
(b), (c), or (d) of this subsection.
(4)
A city, town, county, or public corporation may establish one or more special
funds relating to any or all of the sources listed in subsection (3)(a) through
(e) of this section and pay or cause to be paid from such fund the principal,
interest, premium if any, and other amounts payable on any bonds, notes, or
other evidences of indebtedness authorized under this section, and pay or cause
to be paid any amounts owing on any obligations for repayment or reimbursement
of guarantors of any such bonds, notes, or other evidences of indebtedness. A
city, town, county, or public corporation may contract with a financial
institution either to act as trustee or custodian to receive, administer, and
expend any federal or private funds, or to collect, administer, and make
payments from any special fund as authorized under this section, or both, and
to perform other duties and functions in connection with the transactions
authorized under this section. If the bonds, notes, or other evidences of
indebtedness and related agreements comply with subsection (6) of this section,
then any such funds held by any such trustee or custodian, or by a public
corporation, shall not constitute public moneys or funds of any city, town, or
county and at all times shall be kept segregated and set apart from other
funds.
(5)
For purposes of this section, "lawful public purpose" includes,
without limitation, any use of funds, including loans thereof to public or
private parties, authorized by the agreements with the United States or any
department or agency thereof under which federal or private funds are obtained,
or authorized under the federal laws and regulations pertinent to such
agreements.
(6)
If any such federal or private funds are loaned or granted to any private party
or used to guarantee any obligations of any private party, then any bonds,
notes, other evidences of indebtedness issued or entered into for the purpose
of receiving or causing the receipt of such federal or private funds, and any
agreements to repay or reimburse guarantors, shall not be obligations of any
city, town, or county and shall be payable only from a special fund as
authorized in this section or from any of the security pledged pursuant to the
authority of this section, or both. Any bonds, notes, or other evidences of
indebtedness to which this subsection applies shall contain a recital to the
effect that they are not obligations of the city, town, or county or the state
of Washington and that neither the faith and credit nor the taxing power of the
state or any municipal corporation or subdivision of the state or any agency of
any of the foregoing, is pledged to the payment of principal, interest, or
premium, if any, thereon. Any bonds, notes, other evidences of indebtedness,
or other obligations to which this subsection applies shall not be included in
any computation for purposes of limitations on indebtedness. To the extent
expressly agreed in writing by a city, town, county, or public corporation,
this subsection shall not apply to bonds, notes, or other evidences of
indebtedness issued for, or obligations incurred for, the necessary support of
the poor and infirm by that city, town, county, or public corporation.
(7)
Any bonds, notes, or other evidences of indebtedness issued by, or
reimbursement obligations incurred by, a city, town, county, or public
corporation consistent with the provisions of this section but prior to the
effective date of this section, and any loans or pledges made by a city, town,
or county in connection therewith substantially consistent with the provisions
of this section but prior to the effective date of this section, are deemed
authorized and shall not be held void, voidable, or invalid due to any lack of
authority under the laws of this state.
NEW
SECTION. Sec. 3. If any
provision of this act or its application to any person or circumstance is held
invalid, the remainder of the act or the application of the provision to other
persons or circumstances is not affected.
NEW
SECTION. Sec. 4. The
authority granted by this act is additional and supplemental to any other
authority of any city, town, county, or public corporation. Nothing in this
act may be construed to imply that any of the power or authority granted hereby
was not available to any city, town, county, or public corporation under prior
law. Any previous actions consistent with the provisions of this act are
ratified and confirmed.
NEW SECTION. Sec. 5. This act
is necessary for the immediate preservation of the public peace, health, or
safety, or support of the state government and its existing public
institutions, and shall take effect immediately.
