[atlas:bill]

AN ACT Relating to equitable adjustment of bonded indebtedness for fire protection district mergers and annexations; adding a new section to chapter 52.06 RCW; adding a new section to chapter 35.02 RCW; adding a new section to chapter 35.13 RCW; adding a new section to chapter 35A.14 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The purpose of section 2 of this act is to ensure that a taxpayer is not required to pay property taxes to more than one taxing district for fire protection bond levies, when part of a fire protection district is merged with another district, or annexed to or incorporated into a city or town. Section 2 of this act is intended to provide equitable adjustment of bonded indebtedness between taxing districts in these circumstances while protecting the security of bondholders.

NEW SECTION. Sec. 2. A new section is added to chapter 52.06 RCW to read as follows:

(1) When a part of a fire protection district is transferred and merged with an adjacent fire protection district, or annexed to or incorporated into a city or town, the bonded indebtedness outstanding against the merging district shall be adjusted equitably between the merging district and the merger district as provided in this section.

(2) For the purposes of this section, the merging district is the district from which the property is removed and the merger district is the district, city, or town in which the property is merged, annexed, or incorporated.

(3) The county legislative authority of each county containing the merging and merger districts shall establish the terms of adjustment of the bonded indebtedness and shall provide and specify:

(a) When bonded indebtedness is transferred from one district to another district:

(i) That such bonded indebtedness is assumed by the district to which it is transferred;

(ii) That thereafter such bonded indebtedness shall be the obligation of the district to which it is transferred;

(iii) That, if the terms of adjustment so provide, any bonded indebtedness thereafter incurred by the merger district through the sale of bonds authorized before the date its boundaries were altered shall be the obligation of such district including the territory added thereto; and

(iv) That taxes shall be levied thereafter against the taxable property located within such district as it is constituted after its boundaries were altered, the taxes to be levied at the times and in the amounts required to pay the principal of and the interest on the bonded indebtedness assumed or incurred, as the same become due and payable.

(b) In computing the debt limitation of any district from which or to which bonded indebtedness has been transferred, the amount of transferred bonded indebtedness at any time outstanding:

(i) Shall be an offset against and deducted from the total bonded indebtedness, if any, of the district from which the bonded indebtedness was transferred; and

(ii) Shall be deemed to be bonded indebtedness solely of the district that assumed the indebtedness.

(c) When adjustments of bonded indebtedness do not provide for transfer of bonded indebtedness from one district to another district:

(i) That the existing bonded indebtedness of each district, the boundaries of which are altered and any bonded indebtedness incurred by each such district through the sale of bonds authorized before the date its boundaries were altered is the obligation of the district in its reduced or enlarged form, as the case may be; and

(ii) That taxes shall be levied thereafter against the taxable property located within each such district in its reduced or enlarged form, as the case may be, at the times and in the amounts required to pay the principal of and interest on such bonded indebtedness as the same become due and payable.

NEW SECTION. Sec. 3. A new section is added to chapter 35.02 RCW to read as follows:

When a part of a fire protection district is incorporated into a city or town, the bonded indebtedness outstanding against the district shall be adjusted equitably between the district and city or town as provided in section 2 of this act. When bonded indebtedness is transferred under section 2 of this act to the incorporating city or town, the transferred bonded indebtedness becomes the obligation of the annexing city or town.

NEW SECTION. Sec. 4. A new section is added to chapter 35.13 RCW to read as follows:

When a part of a fire protection district is annexed to a city or town, the bonded indebtedness outstanding against the district shall be adjusted equitably between the district and city or town as provided in section 2 of this act. When bonded indebtedness is transferred under section 2 of this act to the annexing city or town, the transferred bonded indebtedness becomes the obligation of the annexing city or town.

NEW SECTION. Sec. 5. A new section is added to chapter 35A.14 RCW to read as follows:

When a part of a fire protection district is annexed to a code city or town, the bonded indebtedness outstanding against the district shall be adjusted equitably between the district and code city as provided in section 2 of this act. When bonded indebtedness is transferred under section 2 of this act to the annexing code city, the transferred bonded indebtedness becomes the obligation of the annexing code city.