[atlas:bill]

AN ACT Relating to clean water investment; amending RCW 82.08.020; and adding a new chapter to Title 90 RCW.

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

NEW SECTION. Sec. 1. DECLARATION OF POLICY. It is the solemn obligation of each generation to provide beneficial stewardship of Washington state's natural resources. Meeting this obligation requires restoration of the environment, and improved protection of the health and safety of our citizens. The purpose of this chapter is to provide funding for (1) facilities that control, collect, treat, reuse, or dispose of wastewater and storm water; (2) facilities that treat, conserve, or distribute drinking water; (3) improvements to or replacement of existing irrigation facilities that will conserve water or improve water quality; (4) acquiring valuable or potentially valuable riparian habitat; and (5) acquiring valid, current water rights in order to restore streamflows. Only those facilities and acquisitions that are in compliance with applicable land use and growth management act comprehensive plans, urban growth areas, critical area ordinances, development regulations, and other applicable requirements are eligible for funding under this chapter.

NEW SECTION. Sec. 2. DEFINITIONS. Unless the context requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Administering agencies" means the agencies identified by the legislature as responsible for administering the funds made available under this chapter.

(2) "Current, valid water right" means a water right, whether a permit, certificate, or claim, under which water is currently being used, or has been used in the preceding five years, in a manner consistent with the terms of the water right, and which has not been relinquished or abandoned.

(3) "Drinking water treatment, conservation, and distribution facilities" means domestic or municipal water supply, treatment, conservation, or distribution systems including but not limited to equipment, utilities, structures, real property, and interests in and improvements on real property necessary for or incidental to the acquisition, construction, installation, or use of any such water supply treatment, conservation, or distribution system.

(4) "Public body" means the state of Washington or any agency, political subdivision, special purpose district, or municipal or quasi-municipal corporation thereof; an agency of the federal government; and those Indian tribes now or hereafter recognized as such by the federal government.

(5) "Small communities" means an incorporated town or city or unincorporated area with a population of five thousand or fewer or a special purpose district or other municipal or quasi-municipal corporation providing services to five thousand customers or fewer on the effective date of this act.

(6) "Wastewater and storm water collection, treatment, and reuse facilities" means any facilities or systems used for the control, collection, storage, treatment, reuse, recycling, or disposal of wastewater, including but not limited to sanitary sewage, residential, industrial, commercial, and agricultural wastewater; or municipal storm water. Such facilities may include all equipment, utilities, structures, real property, and interests in and improvements on real property necessary for or incidental to such purpose.

NEW SECTION. Sec. 3. GENERAL OBLIGATION BONDS‑-AUTHORIZED‑-ISSUANCE, SALE, TERMS‑-APPROPRIATION REQUIRED. For the purpose of providing funds to public bodies for:

(1) The planning, acquisition, construction, and improvement of wastewater and/or storm water control, collection, treatment, disposal, or reuse facilities;

(2) The planning, acquisition, construction, and improvement of drinking water treatment, conservation, and distribution facilities;

(3) The planning, acquisition, construction, improvement, or replacement of existing irrigation facilities that will conserve water or improve water quality;

(4) Identifying, acquiring, improving, and maintaining riparian areas that currently have or will have value as fish and/or wildlife habitat; and

(5) Identifying, acquiring, leasing, and maintaining valid, current water rights and converting such water rights into instream flow rights,

the state finance committee shall issue general obligation bonds of the state of Washington in the sum of one billion dollars to finance the facilities, acquisitions, and other expenditures authorized by this chapter and all costs incidental thereto. These bonds are special indebtedness under Article VIII, section 3 of the state Constitution and shall be paid and discharged within twenty-five years after the date of issuance. No bonds authorized by this chapter may be offered for sale without prior legislative appropriation of the net proceeds of the bonds to be sold.

NEW SECTION. Sec. 4. DEPOSIT OF PROCEEDS INTO CLEAN WATER INVESTMENT ACCOUNT, 2001‑-APPROPRIATION. The proceeds from the sale of bonds authorized by this chapter shall be deposited into the clean water investment account, 2001, which is hereby created in the state treasury. These funds shall be appropriated by the legislature as follows:

(1) Thirty percent of the funding shall be used for the purposes specified in section 3(1) of this act;

(2) Thirty percent of the funding shall be used for the purposes specified in section 3(2) of this act;

(3) Fifteen percent of the funding shall be used for the purposes specified in section 3(3) of this act;

(4) Ten percent of the funding shall be used for the purposes specified in section 3(4) of this act; and

(5) Fifteen percent of the funding shall be used for the purposes specified in section 3(5) of this act.

Five years after the effective date of this act, the legislature may review the distribution of funds set forth under subsections (1) through (5) of this section, and may reallocate the percentage distribution within the five eligible categories of expenditures based on demonstrated need and environmental benefit.

NEW SECTION. Sec. 5. ADMINISTRATION OF PROCEEDS. (1) General. The proceeds from the sale of the bonds deposited in the clean water investment account, 2001 shall be administered by the administering agencies, which shall be designated by the legislature when it initially appropriates funds made available under this chapter. The administering agencies may use or permit the use of any funds so deposited to accomplish the authorized purposes by direct expenditures and by grants to public bodies. Funds made available under this chapter may be used as matching funds when federal, local, or other funds are made available on a matching basis for facilities, acquisitions, or other expenditures eligible for funding under this chapter.

(2) Promulgation of Rules‑-Funding Criteria‑-Small Communities. (a) The administering agencies shall, within six months of the initial appropriation of funds made available under this chapter, adopt rules governing the expenditure of funds made available under this chapter.

(b) These rules shall include grant eligibility criteria, which shall include, but not be limited to, the following: (i) Environmental performance as described in subsection (5) of this section; (ii) the project sponsor's ability to provide its own funding for the project; and (iii) the availability of funding from other sources.

(c) Fifty percent of the funding provided for the purposes specified in section 3 (1) and (2) of this act shall be awarded to small communities or to public bodies providing services to small communities. Up to ninety percent of the eligible costs of any project undertaken by a small community shall be grant eligible.

(3) Costs of Administration. Not more than four percent of the proceeds of the bond issue may be used to pay the cost of administration of the grants, acquisitions, and other expenditures authorized by this chapter, including the administering agency's costs incurred providing technical, financial, and engineering assistance.

(4) Biennial Performance Accounting. Every two years the administering agencies shall provide performance accounting reports to the governor and the legislature detailing how the funding provided by this chapter has been expended over the previous two years. Using appropriate performance measures and, if available, environmental monitoring information, the reports shall describe the human health protection, environmental improvement, and other value accruing to the public from the expenditure of funds made available under this chapter.

(5) Environmental Performance. The administering agencies shall prioritize for funding those facilities or expenditures that provide the greatest benefit to human health or the environment. Facilities that eliminate discharges of pollutants or that employ water reuse or conservation measures shall be a high priority. Land or water purchases that restore or protect threatened or endangered species shall also be a high priority.

(6) Riparian Habitat Purchases. At least seventy-five percent of the riparian habitat acquisitions authorized by section 3(4) of this act shall be land that is currently or was within the preceding five years used for agricultural purposes. These acquisitions shall be on a willing-seller basis and the interest conveyed may be a "fee" interest in the property or a permanent conservation easement that protects the land's value as habitat.

(7) Water Right Purchases. Only valid, current water rights may be leased or purchased with funds made available by this chapter. The administering agency shall lease or purchase water rights and convert such rights to trust water rights, as specified in chapter 90.42 RCW, for instream flow protection or restoration where such actions will benefit threatened or endangered species, improve water quality, or restore or maintain other instream values identified in RCW 90.54.020(3). These leases or purchases shall be made on a willing-seller basis only.

(8) Irrigation System Improvements. The evaluation criteria for irrigation system projects shall include improvements in system efficiency, water quality improvements, stream flow restoration, and protection of fish and wildlife. Water conserved as a result of irrigation system improvements paid for in part by funds made available under this chapter shall be returned to the surface or ground water from which it was originally withdrawn or diverted in a volume equal to the percentage of system improvements paid for with funds made available under this chapter.

NEW SECTION. Sec. 6. FORM, TERMS, CONDITIONS, ETC., OF BONDS. The state finance committee is authorized to prescribe the form, terms, conditions, and covenants of the bonds; the time or times of sale of all or any portion of the bonds; and the conditions and manner of their sale and issuance.

NEW SECTION. Sec. 7. ANTICIPATION NOTES‑-PAYMENT‑-PLEDGE AND PROMISE‑-SEAL. When the state finance committee has determined to issue the bonds or a portion thereof, it may, pending the issuance of the bonds, issue, in the name of the state, short-term obligations in anticipation of the money to be derived from the sale of the bonds. The portion of the proceeds of the sale of the bonds as may be required for this purpose shall be applied to the payment of the principal of and interest on the anticipation notes which have been issued. The bonds and notes shall pledge the full faith, credit, and taxing power of the state of Washington and shall contain an unconditional promise to pay the principal and interest when due.

Sec. 8. RCW 82.08.020 and 2000 2nd sp.s. c 4 s 1 are each amended to read as follows:

(1) There is levied and there shall be collected a tax on each retail sale in this state equal to six and five-tenths percent of the selling price.

(2) There is levied and there shall be collected an additional tax on each retail car rental, regardless of whether the vehicle is licensed in this state, equal to five and nine-tenths percent of the selling price. The revenue collected under this subsection shall be deposited in the multimodal transportation account created in RCW 47.66.070.

(3) There is levied and there shall be collected an additional tax on each retail sale in this state equal to one-tenth of one percent of the selling price. The revenue collected under this subsection shall be deposited into the clean water investment bond redemption fund under section 9 of this act.

(4) The taxes imposed under this chapter shall apply to successive retail sales of the same property.

((~~(4)~~)) (5) The rates provided in this section apply to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

NEW SECTION. Sec. 9. RETIREMENT OF BONDS‑-REDEMPTION FUND‑-REMEDIES OF BONDHOLDERS‑-DEBT-LIMIT GENERAL FUND BOND RETIREMENT ACCOUNT. (1) The clean water investment bond redemption fund is created in the state treasury. This fund is exclusively devoted to the payment of interest on and retirement of the bonds authorized by this chapter. The state finance committee shall, on or before June 30th of each year, certify to the state treasurer the amount needed in the ensuing twelve months to meet the bond retirement and interest requirements. On or before the date on which any interest or principal and interest payment is due, the state treasurer shall withdraw from any general state revenues received in the state treasury and deposit in the clean water investment bond redemption fund an amount equal to the amount certified by the state finance committee to be due on the payment date. The owner and holder of each of the bonds or the trustee for the owner and holder of any of the bonds may by mandamus or other appropriate proceeding require the transfer and payment of funds as directed in this section. If a debt-limit general fund bond retirement account is created in the state treasury by chapter 456, Laws of 1997 and becomes effective prior to the issuance of any of the bonds authorized by this chapter, the debt-limit general fund bond retirement account shall be used for the purposes of this chapter in lieu of the clean water investment bond redemption fund.

(2) To the extent revenues in any given year exceed the amount necessary for debt service, the state finance committee shall use such revenues for early purchase, redemption, and retirement of outstanding bonds issued under this act.

NEW SECTION. Sec. 10. LEGISLATURE MAY PROVIDE ADDITIONAL MEANS FOR PAYMENT OF BONDS. The legislature may provide additional means for raising money for the payment of the principal and interest of the bonds authorized in this chapter. This chapter does not provide an exclusive method for the payment.

NEW SECTION. Sec. 11. BONDS LEGAL INVESTMENT FOR PUBLIC FUNDS. The bonds authorized in this act are a legal investment for all state funds or for funds under state control and for all funds of any other public body.

NEW SECTION. Sec. 12. SEVERABILITY. 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. 13. CAPTIONS NOT LAW. Captions used in this chapter are not any part of the law.

NEW SECTION. Sec. 14. Sections 1 through 7 and 9 through 13 of this act constitute a new chapter in Title 90 RCW.