[atlas:bill]

AN ACT Relating to regulation of public-private partnership agreements; amending RCW 47.46.040; adding a new section to chapter 34.12 RCW; and adding new sections to chapter 47.46 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 34.12 RCW to read as follows:

When requested by the state auditor, the chief administrative law judge shall assign a special administrative law judge to conduct an adjudicative proceeding under section 5 of this act.

NEW SECTION. Sec. 2. A new section is added to chapter 47.46 RCW to read as follows:

The department and a private entity that is party to an agreement under this chapter are subject to a periodic fiscal audit, after agreements entered into under this chapter have been finalized, and annually after that. The audit must be conducted by an accounting firm selected by the state auditor and a panel of state legislators that includes the chairpersons and ranking minority members from each of the following committees: The house of representatives and senate transportation committees, the house of representatives appropriations committee, and the senate ways and means committee. A final report of the audit must be presented to the appropriate legislative standing committees at their next regularly scheduled meetings.

NEW SECTION. Sec. 3. A new section is added to chapter 47.46 RCW to read as follows:

The state auditor shall review and comment on the necessity and appropriateness of any toll increases proposed by the private entity and the department. If revenues from tolls are greater than initially forecast, the department shall establish procedures for public review of receipts generated every three years after completion of the project. The department shall also establish procedures to either lower the tolls or retire the bonds issued for the project earlier than originally provided.

Sec. 4. RCW 47.46.040 and 1995 2nd sp.s. c 19 s 3 are each amended to read as follows:

(1) 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.

(2) 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.

(3) 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.

(4) 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, involving state highway routes, developed under agreements shall be entered into with 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 for comparable service on other state highway routes. 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.

(5) 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.

(6) 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.

(7) 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.

(8) 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.

(9) ((~~Agreements shall include a process that provides for public involvement in decision making with respect to the development of the projects.~~

(10)(a) In carrying out the public involvement process required in subsection (9) of this section, the private entity shall proactively seek public participation through a process appropriate to the characteristics of the project that assesses and demonstrates public support among: Users of the project, residents of communities in the vicinity of the project, and residents of communities impacted by the project.

(b) The private entity shall conduct a comprehensive public involvement process that provides, periodically throughout the development and implementation of the project, users and residents of communities in the affected project area an opportunity to comment upon key issues regarding the project including, but not limited to: (i) Alternative sizes and scopes; (ii) design; (iii) environmental assessment; (iv) right of way and access plans; (v) traffic impacts; (vi) tolling or user fee strategies and tolling or user fee ranges; (vii) project cost; (viii) construction impacts; (ix) facility operation; and (x) any other salient characteristics.

(c) If the affected project area has not been defined, the private entity shall define the affected project area by conducting, at a minimum: (i) A comparison of the estimated percentage of residents of communities in the vicinity of the project and in other communities 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; (ii) an analysis of the anticipated traffic diversion patterns; (iii) an analysis of the potential economic impact resulting from proposed toll rates or user fee rates imposed on residents, commercial traffic, and commercial entities in communities in the vicinity of and impacted by the project; (iv) an analysis of the economic impact of tolls or user fees on the price of goods and services generally; and (v) an analysis of the relationship of the project to state transportation needs and benefits.

~~The agreement may require an advisory vote by users of and residents in the affected project area.~~

(d) In seeking public participation, the private entity shall establish a local involvement committee or committees comprised of residents of the affected project area, individuals who represent cities and counties in the affected project area, organizations formed to support or oppose the project, if such organizations exist, and users of the project. The private entity shall, at a minimum, establish a committee as required under the specifications of RCW 47.46.030(5)(b) (ii) and (iii) and appointments to such committee shall be made no later than thirty days after the project area is defined.

(e) Local involvement committees shall act in an advisory capacity to the department and the private entity on all issues related to the development and implementation of the public involvement process established under this section.

(f) The department and the private entity shall provide the legislative transportation committee and local involvement committees with progress reports on the status of the public involvement process including the results of an advisory vote, if any occurs.

~~(11)~~)) Before final execution of negotiated agreements, the agreements must be adopted as rules in compliance with the procedures of chapter 34.05 RCW. Provisions of the agreement that are subject to rule-making procedures include the following: (a) Alternative sizes and scopes of the project; (b) design; (c) tolling or user-fee strategies and tolling or user-fee amounts; (d) project costs and projected overruns, including anticipated toll increases; and (e) facility operation.

(10) 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.

NEW SECTION. Sec. 5. A new section is added to chapter 47.46 RCW to read as follows:

As used in this section, the term "tolls" includes both tolls and user fees.

If agreements entered into under this chapter contain provisions allowing adjustments in tolls, those adjustments are subject to the following procedures:

(1) A party seeking adjustments in the tolls shall submit a petition to the office of the state auditor stating the amount of the proposed toll adjustment, the specific provisions of the agreement that permit the proposed adjustment, and the rationale and supporting evidence for the proposed adjustment.

(2) A party submitting a petition for an adjustment in tolls shall provide reasonable public notice to all persons residing or doing business within the geographic area most likely to be affected by the toll adjustment. The notice must set forth, in plain and understandable language, the essential elements of the petition for toll adjustment.

(3) A person may challenge the proposed toll adjustment by submitting a letter to the state auditor demanding an adjudicative proceeding. The demand letter must be received by the state auditor not more than twenty days after publication of the toll adjustment petition.

(4) If the state auditor does not receive a demand for an adjudicative proceeding within twenty days of the publication of the toll adjustment petition, then the auditor shall grant the petition for a toll adjustment.

(5) If a demand for an adjudicative proceeding is received by the state auditor within the allotted time period, the state auditor shall request the chief administrative law judge to appoint a special administrative law judge to conduct findings of fact and conclusions of law on the petition for the proposed toll adjustment.

(6) In any adjudication conducted under this section, the office of the attorney general's public counsel division shall represent the interests of the toll payers in the most affected geographic area.

NEW SECTION. Sec. 6. A new section is added to chapter 47.46 RCW to read as follows:

In an adjudicative proceeding under section 5 of this act, the special administrative law judge's investigation must determine whether: (1) The proposed toll adjustment is allowable under the terms of the agreement; and (2) whether the underlying rationale, or data for the toll adjustment, support the amount of the requested toll adjustment.

At the conclusion of the hearing, the special administrative law judge shall make findings of fact and conclusions of law, including a determination on the appropriate amount of toll adjustment, if any.

NEW SECTION. Sec. 7. A new section is added to chapter 47.46 RCW to read as follows:

In no event may the state auditor entertain a petition for a toll adjustment more than once in any three-year period, except for emergencies. For purposes of this section, an emergency is when the actual revenues from a toll operation are insufficient to meet the obligations for debt retirement on the construction bonds for the project.