BILL REQ. #:  H-2732.2 

Read first time 04/09/2003.   Referred to Committee on Capital Budget.

     AN ACT Relating to authorization for higher education institutions to issue local bonds for capital purposes; and amending RCW 28B.50.340, 28B.50.350, 28B.50.370, 28B.20.710, 28B.20.715, 28B.20.720, 28B.30.720, 28B.30.730, 28B.30.740, 28B.35.720, 28B.35.730, and 28B.35.750.

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

Sec. 1   RCW 28B.50.340 and 1991 c 238 s 49 are each amended to read as follows:
     In addition to the powers conferred under RCW 28B.50.090, the college board is authorized and shall have the power:
     (1) To permit the district boards of trustees to contract for the construction, reconstruction, erection, equipping, maintenance, demolition, and major alterations of buildings and other capital assets, and the acquisition of sites, ((rights-of-way)) rights of way, easements, improvements, or appurtenances of the college as approved by the state board.
     (2) To finance the same by the issuance of bonds secured by the pledge of up to one hundred percent of the building fees.
     (3) To permit the district board of trustees to contract for the repair, modernization, or preservation of existing facilities and the construction or repair of infrastructure necessary to support the academic mission of the institutions as approved by the college board and to finance these by the issuance of bonds secured by the pledge of operating fees. The amount of bonds issued under this subsection is limited as follows: No new bonds may be issued if the annual debt service from outstanding bonds under this subsection and the annual debt service on bonds being issued under this subsection will exceed one percent of the operating fees received in the previous fiscal year.
     (4) Without limitation of the foregoing, to accept grants from the United States government, or any federal or state agency or instrumentality, or private corporation, association, or person to aid in defraying the costs of any such projects.
     (((4))) (5) To retain bond counsel and professional bond consultants to aid it in issuing bonds pursuant to RCW 28B.50.340 through 28B.50.400.

Sec. 2   RCW 28B.50.350 and 1991 c 238 s 50 are each amended to read as follows:
     For the purpose of financing the cost of any projects, the college board is hereby authorized to adopt the resolution or resolutions and prepare all other documents necessary for the issuance, sale, and delivery of the bonds or any part thereof at such time or times as it shall deem necessary and advisable. Said bonds:
     (1) Shall not constitute:
     (a) An obligation, either general or special, of the state; or
     (b) A general obligation of the college or of the college board;
     (2) Shall be:
     (a) Either registered or in coupon form; and
     (b) Issued in denominations of not less than one hundred dollars; and
     (c) Fully negotiable instruments under the laws of this state; and
     (d) Signed on behalf of the college board with the manual or facsimile signature of the ((chairman)) chair of the board, attested by the secretary of the board, have the seal of the college board impressed thereon or a facsimile of such seal printed or lithographed in the bottom border thereof, and the coupons attached thereto shall be signed with the facsimile signatures of ((such chairman)) the chair and the secretary;
     (3) Shall state:
     (a) The date of issue; and
     (b) The series of the issue and be consecutively numbered within the series; and
     (c) That the bond is payable both principal and interest solely out of the bond retirement fund created for retirement thereof;
     (4) Each series of bonds shall bear interest, payable either annually or semiannually, as the board may determine;
     (5) Shall be payable both principal and interest out of the bond retirement fund;
     (6) Shall be payable at such times over a period of not to exceed forty years from date of issuance, at such place or places, and with such reserved rights of prior redemption, as the board may prescribe;
     (7) Shall be sold in such manner and at such price as the board may prescribe;
     (8) Shall be issued under and subject to such terms, conditions, and covenants providing for the payment of the principal thereof and interest thereon and such other terms, conditions, covenants, and protective provisions safeguarding such payment, not inconsistent with RCW 28B.50.330 through 28B.50.400, and as found to be necessary by the board for the most advantageous sale thereof, which may include but not be limited to:
     (a) A covenant that a reserve account shall be created in the bond retirement fund to secure the payment of the principal of and interest on all bonds issued and a provision made that certain amounts be set aside and maintained therein;
     (b) A covenant that sufficient moneys may be transferred from the capital projects account of the college board issuing the bonds to the bond retirement fund of the college board when ordered by the board in the event there is ever an insufficient amount of money in the bond retirement fund to pay any installment of interest or principal and interest coming due on the bonds or any of them;
     (c) A covenant fixing conditions under which bonds on a parity with any bonds outstanding may be issued.
     The proceeds of the sale of all bonds, exclusive of accrued interest which shall be deposited in the bond retirement fund, shall be deposited in the state treasury to the credit of the capital projects account of the college board and shall be used solely for paying the costs of the projects, the costs of bond counsel and professional bond consultants incurred in issuing the bonds, and for the purposes set forth in subsection (8)(b) of this section;
     (9) Shall constitute a prior lien and charge against the building fees of the community and technical colleges. For bonds issued under RCW 28B.50.340(3), the bonds shall constitute a prior lien and charge against operating fees necessary to cover debt service.

Sec. 3   RCW 28B.50.370 and 1991 c 238 s 52 are each amended to read as follows:
     For the purpose of paying and securing the payment of the principal of and interest on the bonds as the same shall become due, there shall be paid into the state treasury and credited to the bond retirement fund of the college board, the following:
     (1) Amounts derived from building fees as are necessary to pay the principal of and interest on the bonds and to secure the same;
     (2) Amounts derived from operating fees necessary to pay the principal of and interest on the bonds issued under RCW 28B.50.340(3) and any related reserves;
     (3) Any grants which may be made, or may become available for the purpose of furthering the construction of any authorized projects, or for the repayment of the costs thereof;
     (((3))) (4) Such additional funds as the legislature may provide.
     Said bond retirement fund shall be kept segregated from all moneys in the state treasury and shall, while any of such bonds or any interest thereon remains unpaid, be available solely for the payment thereof. As a part of the contract of sale of such bonds, the college board shall charge and collect building fees as established by this chapter and deposit such fees in the bond retirement fund in amounts which will be sufficient to pay and secure the payment of the principal of, and interest on all such bonds outstanding. For bonds issued under RCW 28B.50.340(3), the college board shall deposit the appropriate amount of operating fees in the bond retirement fund which will be sufficient to pay and secure the payment of the principal of, and interest on all such bonds outstanding.

Sec. 4   RCW 28B.20.710 and 1969 ex.s. c 223 s 28B.20.710 are each amended to read as follows:
     In addition to the powers conferred under existing law, the board is authorized and shall have the power:
     (1) To contract for the construction, completion, reconstruction, remodeling, rehabilitation, and improvement of such buildings or other facilities of the university as are and which may hereafter be authorized by the legislature.
     (2) To finance the same by the issuance of bonds secured by the pledge of any or all of the revenues and receipts of the bond retirement fund.
     (3) To contract for the repair, modernization, or preservation of existing facilities and the construction or repair of infrastructure necessary to support the academic mission of the institutions and to finance these by the issuance of bonds secured by the pledge of operating fees. The amount of bonds issued under this subsection is limited as follows: No new bonds may be issued if the annual debt service from outstanding bonds under this subsection and the annual debt service on bonds being issued under this subsection will exceed one percent of the operating fees received in the previous fiscal year.
     (4) Without limitation of the foregoing, to accept grants from the United States government, or any federal or state agency or instrumentality, or any public or private corporation, association, or person to aid in defraying the costs of any such projects.

Sec. 5   RCW 28B.20.715 and 1985 c 390 s 38 are each amended to read as follows:
     For the purpose of financing the cost of any projects, the board is hereby authorized to adopt the resolution or resolutions and prepare all other documents necessary for the issuance, sale, and delivery of the bonds or any part thereof at such time or times as it shall deem necessary and advisable. Said bonds:
     (1) Shall not constitute
     (a) An obligation, either general or special, of the state; or
     (b) A general obligation of the University of Washington or of the board;
     (2) Shall be
     (a) Either registered or in coupon form; and
     (b) Issued in denominations of not less than one hundred dollars; and
     (c) Fully negotiable instruments under the laws of this state; and
     (d) Signed on behalf of the university by the president of the board, attested by the secretary of the board, have the seal of the university impressed thereon or a facsimile of such seal printed or lithographed in the bottom border thereof, and the coupons attached thereto shall be signed with the facsimile signatures of such president and secretary;
     (3) Shall state
     (a) The date of issue; and
     (b) The series of the issue and be consecutively numbered within the series; and
     (c) That the bond is payable both principal and interest solely out of the bond retirement fund;
     (4) Each series of bonds shall bear interest, payable either annually or semiannually, as the board may determine;
     (5) Shall be payable both principal and interest out of the bond retirement fund;
     (6) Shall be payable at such times over a period of not to exceed forty years from date of issuance, at such place or places, and with such reserved rights of prior redemption, as the board may prescribe;
     (7) Shall be sold in such manner and at such price as the board may prescribe;
     (8) Shall be issued under and subject to such terms, conditions, and covenants providing for the payment of the principal thereof and interest thereon and such other terms, conditions, covenants, and protective provisions safeguarding such payment, not inconsistent with this chapter, and as found to be necessary by the board for the most advantageous sale thereof, which may include but not be limited to:
     (a) A covenant that the building fees shall be established, maintained, and collected in such amounts, and the appropriate amount of operating fees for bonds issued under RCW 28B.20.710(3), that will provide money sufficient to pay the principal of and interest on all bonds payable out of the bond retirement fund, to set aside and maintain the reserves required to secure the payment of such principal and interest, and to maintain any coverage which may be required over such principal and interest;
     (b) A covenant that a reserve account shall be created in the bond retirement fund to secure the payment of the principal of and interest on all bonds issued and a provision made that certain amounts be set aside and maintained therein;
     (c) A covenant that sufficient moneys may be transferred from the University of Washington building account to the bond retirement fund when ordered by the board of regents in the event there is ever an insufficient amount of money in the bond retirement fund to pay any installment of interest or principal and interest coming due on the bonds or any of them;
     (d) A covenant fixing conditions under which bonds on a parity with any bonds outstanding may be issued.
     The proceeds of the sale of all bonds, exclusive of accrued interest which shall be deposited in the bond retirement fund, shall be deposited in the state treasury to the credit of the University of Washington building account and shall be used solely for paying the costs of the projects.

Sec. 6   RCW 28B.20.720 and 1985 c 390 s 39 are each amended to read as follows:
     For the purpose of paying and securing the payment of the principal of and interest on the bonds as the same shall become due, there shall be paid into the state treasury and credited to a special trust fund to be known as the University of Washington bond retirement fund, the following:
     (1) One-half of such building fees as the board may from time to time determine, or such larger portion as may be necessary to prevent default in the payments required to be made out of the bond retirement fund, and in no event shall such one-half be less than twelve dollars and fifty cents per each resident student per quarter and less than thirty-seven dollars and fifty cents per each nonresident student per quarter;
     (2) Amounts derived from operating fees necessary to pay the principal of and interest on the bonds issued under RCW 28B.20.710(3) and any related reserve requirements;
     (3) Any gifts, bequests, or grants which may be made, or may become available, for the purpose of furthering the construction of any authorized projects, or for the repayment of the costs thereof;
     (((3))) (4) Such additional funds as the legislature may provide.
     Said bond retirement fund shall be kept segregated from all moneys in the state treasury and shall, while any of such bonds or any interest thereon remains unpaid, be available solely for the payment thereof except as provided in RCW 28B.20.725(5). As a part of the contract of sale of such bonds, the board undertakes to charge and collect building fees and to deposit the portion of such fees in the bond retirement fund in amounts which will be sufficient to pay the principal of, and interest on all such bonds outstanding.

Sec. 7   RCW 28B.30.720 and 1969 ex.s. c 223 s 28B.30.720 are each amended to read as follows:
     In addition to the powers conferred under existing law, the board is authorized and shall have the power:
     (1) To contract for the construction, completion, reconstruction, remodeling, rehabilitation, and improvement of such buildings or other facilities of the university as are or may be authorized by the legislature.
     (2) To finance the same by the issuance of bonds secured by the pledge of any or all of the revenues and receipts of the bond retirement fund.
     (3) To contract for the repair, modernization, or preservation of existing facilities and the construction or repair of infrastructure necessary to support the academic mission of the institutions and to finance these by the issuance of bonds secured by the pledge of operating fees. The amount of bonds issued under this subsection is limited as follows: No new bonds may be issued if the annual debt service from outstanding bonds under this subsection and the annual debt service on bonds being issued under this subsection will exceed one percent of the operating fees received in the previous fiscal year.
     (4) Without limitation of the foregoing, to accept grants from the United States government, or any federal or state agency or instrumentality, or any public or private corporation, association, or person to aid in defraying the costs of any such projects.

Sec. 8   RCW 28B.30.730 and 2002 c 238 s 302 are each amended to read as follows:
     For the purpose of financing the cost of any projects, the board is hereby authorized to adopt the resolution or resolutions and prepare all other documents necessary for the issuance, sale, and delivery of the bonds or any part thereof at such time or times as it shall deem necessary and advisable. Said bonds:
     (1) Shall not constitute
     (a) An obligation, either general or special, of the state; or
     (b) A general obligation of Washington State University or of the board;
     (2) Shall be
     (a) Either registered or in coupon form; and
     (b) Issued in denominations of not less than one hundred dollars; and
     (c) Fully negotiable instruments under the laws of this state; and
     (d) Signed on behalf of the university by the president of the board, attested by the secretary or the treasurer of the board, have the seal of the university impressed thereon or a facsimile of such seal printed or lithographed in the bottom border thereof, and the coupons attached thereto shall be signed with the facsimile signatures of such president and secretary;
     (3) Shall state
     (a) The date of issue; and
     (b) The series of the issue and be consecutively numbered within the series; and
     (c) That the bond is payable both principal and interest solely out of the bond retirement fund;
     (4) Each series of bonds shall bear interest, payable either annually or semiannually, as the board may determine;
     (5) Shall be payable both principal and interest out of the bond retirement fund;
     (6) Shall be payable at such times over a period of not to exceed forty years from date of issuance, at such place or places, and with such reserved rights of prior redemption, as the board may prescribe;
     (7) Shall be sold in such manner and at such price as the board may prescribe;
     (8) Shall be issued under and subject to such terms, conditions, and covenants providing for the payment of the principal thereof and interest thereon and such other terms, conditions, covenants, and protective provisions safeguarding such payment, not inconsistent with RCW 28B.30.700 through 28B.30.780, and as found to be necessary by the board for the most advantageous sale thereof, which may include but not be limited to:
     (a) A covenant that the building fees shall be established, maintained and collected in such amounts, and the appropriate amount of operating fees for bonds issued under RCW 28B.30.720(3), that will provide money sufficient to pay the principal of and interest on all bonds payable out of the bond retirement account, to set aside and maintain the reserves required to secure the payment of such principal and interest, and to maintain any coverage which may be required over such principal and interest;
     (b) A covenant that a reserve account shall be created in the bond retirement fund to secure the payment of the principal of and interest on all bonds issued and a provision made that certain amounts be set aside and maintained therein;
     (c) A covenant that sufficient moneys may be transferred from the Washington State University building account to the bond retirement account when ordered by the board of regents in the event there is ever an insufficient amount of money in the bond retirement account to pay any installment of interest or principal and interest coming due on the bonds or any of them;
     (d) A covenant fixing conditions under which bonds on a parity with any bonds outstanding may be issued.
     The proceeds of the sale of all bonds shall be deposited in the state treasury to the credit of the Washington State University building account and shall be used solely for paying the costs of the projects. The Washington State University building account shall be credited with the investment income derived pursuant to RCW 43.84.080 on the ((investible)) investable balances of scientific permanent fund and agricultural permanent fund, less the allocation to the state treasurer's service fund pursuant to RCW 43.08.190. During the 2001-2003 fiscal biennium, the legislature may transfer from the Washington State University building account to the state general fund such amounts as reflect the excess fund balance of the account.

Sec. 9   RCW 28B.30.740 and 1985 c 390 s 44 are each amended to read as follows:
     For the purpose of paying and securing the payment of the principal of and interest on the bonds as the same shall become due, there shall be paid into the state treasury and credited to a special trust fund to be known as the Washington State University bond retirement fund, which fund is hereby created in the state treasury, the following:
     (1) One-half of such building fees as the board may from time to time determine, or such larger portion as may be necessary to prevent default in the payments required to be made out of the bond retirement fund;
     (2) Amounts derived from operating fees necessary to pay the principal of and interest on the bonds issued under RCW 28B.30.720(3) and any related reserve requirements;
     (3) Any grants which may be made, or may become available, for the purpose of furthering the construction of any authorized projects, or for the repayment of the costs thereof;
     (((3))) (4) Such additional funds as the legislature may provide.
     Said bond retirement fund shall be kept segregated from all moneys in the state treasury and shall, while any of such bonds or any interest thereon remain unpaid, be available solely for the payment thereof except as provided in ((subdivision (5) of)) RCW 28B.30.750(5). As a part of the contract of sale of such bonds, the board shall undertake to charge and collect building fees and to deposit the portion of such fees in the bond retirement fund in amounts which will be sufficient to pay the principal of, and interest on all such bonds outstanding.

Sec. 10   RCW 28B.35.720 and 1985 c 390 s 50 are each amended to read as follows:
     In addition to the powers conferred under existing law, each of the boards is authorized and shall have the power:
     (1) To contract for the construction, completion, reconstruction, remodeling, rehabilitation, and improvement of such buildings or other facilities of the university or college as are authorized by the legislature to be financed by the issuance and sale of bonds.
     (2) To finance the same by the issuance of bonds secured by the pledge of any or all of the building fees.
     (3) To contract for the repair, modernization, or preservation of existing facilities and the construction or repair of infrastructure necessary to support the academic mission of the institutions and to finance these by the issuance of bonds secured by the pledge of operating fees. The amount of bonds issued under this subsection is limited as follows: No new bonds may be issued if the annual debt service from outstanding bonds under this subsection and the annual debt service on bonds being issued under this subsection will exceed one percent of the operating fees received in the previous fiscal year.
     (4) Without limitation of the foregoing, to accept grants from the United States government, or any federal or state agency or instrumentality, or private corporation, association, or person to aid in defraying the costs of any such projects.

Sec. 11   RCW 28B.35.730 and 1985 c 390 s 51 are each amended to read as follows:
     For the purpose of financing the cost of any projects, each of the boards is hereby authorized to adopt the resolution or resolutions and prepare all other documents necessary for the issuance, sale, and delivery of the bonds or any part thereof at such time or times as it shall deem necessary and advisable. Said bonds:
     (1) Shall not constitute:
     (a) An obligation, either general or special, of the state; or
     (b) A general obligation of the university or college or of the board;
     (2) Shall be:
     (a) Either registered or in coupon form; and
     (b) Issued in denominations of not less than one hundred dollars; and
     (c) Fully negotiable instruments under the laws of this state; and
     (d) Signed on behalf of the university or college by the ((chairman)) chair of the board, attested by the secretary of the board, have the seal of the university or college impressed thereon or a facsimile of such seal printed or lithographed in the bottom border thereof, and the coupons attached thereto shall be signed with the facsimile signatures of ((such chairman)) the chair and the secretary;
     (3) Shall state:
     (a) The date of issue; and
     (b) The series of the issue and be consecutively numbered within the series; and
     (c) That the bond is payable both principal and interest solely out of the bond retirement fund;
     (4) Each series of bonds shall bear interest, payable either annually or semiannually, as the board may determine;
     (5) Shall be payable both principal and interest out of the bond retirement fund;
     (6) Shall be payable at such times over a period of not to exceed forty years from date of issuance, at such place or places, and with such reserved rights of prior redemption, as the board may prescribe;
     (7) Shall be sold in such manner and at such price as the board may prescribe;
     (8) Shall be issued under and subject to such terms, conditions, and covenants providing for the payment of the principal thereof and interest thereon and such other terms, conditions, covenants, and protective provisions safeguarding such payment, not inconsistent with RCW 28B.35.700 through 28B.35.790, as now or hereafter amended, and as found to be necessary by the board for the most advantageous sale thereof, which may include but not be limited to:
     (a) A covenant that the building fees shall be established, maintained, and collected in such amounts, and the appropriate amount of operating fees for bonds issued under RCW 28B.35.720(3), that will provide money sufficient to pay the principal of and interest on all bonds payable out of the bond retirement fund, to set aside and maintain the reserves required to secure the payment of such principal and interest, and to maintain any coverage which may be required over such principal and interest;
     (b) A covenant that a reserve account shall be created in the bond retirement fund to secure the payment of the principal of and interest on all bonds issued and a provision made that certain amounts be set aside and maintained therein;
     (c) A covenant that sufficient moneys may be transferred from the capital projects account of the university or college issuing the bonds to the bond retirement fund of such university or college when ordered by the board of trustees in the event there is ever an insufficient amount of money in the bond retirement fund to pay any installment of interest or principal and interest coming due on the bonds or any of them;
     (d) A covenant fixing conditions under which bonds on a parity with any bonds outstanding may be issued.
     The proceeds of the sale of all bonds, exclusive of accrued interest which shall be deposited in the bond retirement fund, shall be deposited in the state treasury to the credit of the capital projects account of the university or college issuing the bonds and shall be used solely for paying the costs of the projects.

Sec. 12   RCW 28B.35.750 and 1985 c 390 s 52 are each amended to read as follows:
     For the purpose of paying and securing the payment of the principal of and interest on the bonds as the same shall become due, there shall be paid into the state treasury and credited to the respective bond retirement fund of each university or college issuing bonds, the following:
     (1) Amounts derived from building fees as the board shall certify as necessary to prevent default in the payments required to be paid into such bond retirement fund;
     (2) Amounts derived from operating fees necessary to pay the principal of and interest on the bonds issued under RCW 28B.35.720(3) and any related reserve requirements;
     (3) Any grants which may be made, or may become available, for the purpose of furthering the construction of any authorized projects, or for the repayment of the costs thereof;
     (((3))) (4) Such additional funds as the legislature may provide.
     Said bond retirement fund shall be kept segregated from all moneys in the state treasury and shall, while any of such bonds or any interest thereon remains unpaid, be available solely for the payment thereof. As a part of the contract of sale of such bonds, the board shall undertake to charge and collect building fees and to deposit the portion of such fees in the bond retirement fund in amounts which will be sufficient to pay and secure the payment of the principal of, and interest on all such bonds outstanding.

NEW SECTION.  Sec. 13   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.