S-0360.3  _______________________________________________

                         SENATE BILL 5197

          _______________________________________________

State of Washington      57th Legislature     2001 Regular Session

By Senators Winsley and Prentice

Read first time 01/15/2001.  Referred to Committee on Labor, Commerce & Financial Institutions.

Revising private activity bond provisions.

    AN ACT Relating to private activity bonds; and amending RCW 39.86.100 and 39.86.120.

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

    Sec. 1.  RCW 39.86.100 and 1987 c 297 s 1 are each amended to read as follows:

    The federal tax reform act of 1986 imposes an annual ceiling on the aggregate amount of federally tax-exempt private activity bonds, including bonds for housing, student loans, exempt facilities, small issue industrial, redevelopment, and certain public utility projects, that may be issued during any calendar year by or on behalf of states and their political subdivisions.  ((The tax reform act of 1986 establishes a private activity bond ceiling for each state of seventy-five dollars per capita for 1987 and of fifty dollars per capita for 1988 and each year thereafter.))  In 2001, the ceiling will be increased to sixty-two dollars and fifty cents per capita and in 2003 the ceiling will be increased to seventy-five dollars per capita, to be indexed annually, for 2003 and every year thereafter.  However, a study by the department of community development indicates that the dollar amount of the state ceiling is considerably less than the anticipated dollar amount for which issuers would need an allocation from the state ceiling.  The tax reform act of 1986 provides a formula for allocating the annual ceiling among various issuers of private activity bonds within a state, but permits each state to enact a different allocation method that is appropriate to that state's needs.  The purpose of this chapter is to provide a flexible and efficient method of allocating the annual state ceiling in Washington in a manner that recognizes the need of the state and its political subdivisions to finance activities or projects that satisfy a substantial public purpose.

    Sec. 2.  RCW 39.86.120 and 1990 c 50 s 1 are each amended to read as follows:

    (1) Except as provided in subsections (2) and (4) of this section, the initial allocation of the state ceiling shall be for each year as follows:

                              ((1989 and          1990 and

                              THEREAFTER         THEREAFTER

                              (If the small      (If the small

                              issue category     issue category

                              is permitted       is not permitted

BOND USE                      under federal      under federal

CATEGORY        1987 1988          law)            law)

Housing           5%  25%           25%                35%  

Student Loans    10%  15%           15%                15%  

Exempt Facility 40%  20%           20%                35%  

Public Utility   10%  10%           10%                10%  

Small Issue      30%  25%           25%                 0%  

Remainder and

  redevelopment    5%  5%            5%               5%))

BOND USE 2002 and ALTERNATIVE

CATEGORY 2001 THEREAFTER ALLOCATION

Housing 27.5% 30.0% 32.0%

Small Issue 24.5% 24.0% 25.0%

Exempt Facility 19.5% 19.0% 20.0%

Student Loans 14.5% 14.0% 15.0%

Public Utility 10.0% 10.0% 0.0%

Remainder and

  redevelopment 4.0% 3.0% 8.0%

    (2) Initial allocations may be modified by the agency only to reflect an issuer's carryforward amount.  Any reduction of the initial allocation shall be added to the remainder and be available for allocation or reallocation.

    (3) The remainder shall be allocated by the agency among one or more issuers from any bond use category with regard to the criteria specified in RCW 39.86.130.

    (4) Should any bond use category no longer be subject to the state ceiling due to federal or state provisions of law, the agency shall divide the amount of that initial allocation among the remaining categories as necessary or appropriate with regard to the criteria specified in RCW 39.86.130.  Upon the earlier of:  (a) Exhaustion of the seven hundred fifty million dollar authority under I.R.C. 1317(25), or any new federal legislation increasing the amount of authority, or creating additional authority; or (b) waiver of the authority described under (a) of this subsection due to alternative federal authority that does not use a state volume cap, then the alternative allocation schedule in subsection (1) of this section will be used.

    (5)(a) Prior to September 1 of each calendar year, any available portion of an initial allocation may be allocated or reallocated only to an issuer within the same bond use category, except that the remainder category, or portions thereof, may be allocated at any time to any bond use category.

    (b) Beginning September 1 of each calendar year, the agency may allocate or reallocate any available portion of the state ceiling to any bond use category with regard to the criteria specified in RCW 39.86.130.

                            --- END ---