BILL REQ. #:  S-1931.4 

READ FIRST TIME 03/04/03.   

     AN ACT Relating to assumptions of water-sewer districts; amending RCW 35.13A.020 and 57.08.020; adding a new section to chapter 57.04 RCW; and repealing RCW 35.13A.030, 35.13A.0301, 35.13A.040, 35.13A.050, 35.13A.060, 35.13A.070, 35.13A.080, 35.13A.090, 35.13A.100, and 35.13A.900.

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

Sec. 1   RCW 35.13A.020 and 1999 c 153 s 28 are each amended to read as follows:
     (((1))) Whenever all or part of the territory of a district is included within the corporate boundaries of a city, the city legislative body may adopt a resolution or ordinance to assume jurisdiction over all or part of the district. Upon adoption of a resolution or ordinance to assume jurisdiction of all or part of the district, the city shall petition the district to initiate the conveyance process contained in RCW 57.08.020.
     (((2) Upon the assumption, all real and personal property, franchises, rights, assets, taxes levied but not collected for the district for other than indebtedness, water, sewer, and drainage facilities, and all other facilities and equipment of the district shall become the property of the city subject to all financial, statutory, or contractual obligations of the district for the security or performance of which the property may have been pledged. The city, in addition to its other powers, shall have the power to manage, control, maintain, and operate the property, facilities and equipment and to fix and collect service and other charges from owners and occupants of properties so served by the city, subject, however, to any outstanding indebtedness, bonded or otherwise, of the district payable from taxes, assessments, or revenues of any kind or nature and to any other contractual obligations of the district.
     (3) The city may by resolution or ordinance of its legislative body, assume the obligation of paying such district indebtedness and of levying and of collecting or causing to be collected the district taxes, assessments, and utility rates and charges of any kind or nature to pay and secure the payment of the indebtedness, according to all of the terms, conditions and covenants incident to the indebtedness, and shall assume and perform all other outstanding contractual obligation of the district in accordance with all of their terms, conditions, and covenants. An assumption shall not be deemed to impair the obligation of any indebtedness or other contractual obligation. During the period until the outstanding indebtedness of the district has been discharged, the territory of the district and the owners and occupants of property therein, shall continue to be liable for its and their proportionate share of the indebtedness, including any outstanding assessments levied within any local improvement district or utility local improvement district thereof. The city shall assume the obligation of causing the payment of the district's indebtedness, collecting the district's taxes, assessments, and charges, and observing and performing the other district contractual obligations. The legislative body of the city shall act as the officers of the district for the purpose of certifying the amount of any property tax to be levied and collected therein, and causing service and other charges and assessments to be collected from the property or owners or occupants thereof, enforcing the collection and performing all other acts necessary to ensure performance of the district's contractual obligations in the same manner and by the same means as if the territory of the district had not been included within the boundaries of a city.
     When a city assumes the obligation of paying the outstanding indebtedness, and if property taxes or assessments have been levied and service and other charges have accrued for this purpose but have not been collected by the district prior to the assumption, the same when collected shall belong and be paid to the city and be used by the city so far as necessary for payment of the indebtedness of the district existing and unpaid on the date the city assumes the indebtedness. Any funds received by the city which have been collected for the purpose of paying any bonded or other indebtedness of the district, shall be used for the purpose for which they were collected and for no other purpose. Any outstanding indebtedness shall be paid as provided in the terms, conditions, and covenants of the indebtedness. All funds of the district on deposit with the county treasurer at the time of title transfer shall be used by the city solely for the benefit of the assumed utility and shall not be transferred to or used for the benefit of the city's general fund.))

Sec. 2   RCW 57.08.020 and 1933 c 142 s 1 are each amended to read as follows:
     (1) That water-sewer districts duly organized under the laws of the state of Washington shall have the following powers in addition to those conferred by existing statutes. Whenever any water-sewer district shall have installed a distributing system of mains and laterals and as a source of supply of water shall be purchasing or intending to purchase water from any city or town, and whenever it shall appear to be advantageous to the water or sewer consumers in ((said)) the water-sewer district that such city or town shall take over the water system of the water-sewer district and supply water to the ((said)) water users, the commissioners of ((said)) the water-sewer district, upon being authorized as provided in RCW 57.08.030, shall have the right to convey such distributing system to any such city or town: PROVIDED, Such city or town is willing to accept, maintain and repair the same: PROVIDED, FURTHER, That all bonded and other indebtedness of ((said)) the water-sewer district except local improvement district bonds shall have been paid.
     (2) If a city or town has passed an ordinance or resolution indicating its desire to assume jurisdiction of all or part of a water- sewer district, the water-sewer district board of commissioners shall initiate the conveyance process contained in this chapter.

NEW SECTION.  Sec. 3   The following acts or parts of acts are each repealed:
     (1) RCW 35.13A.030 (Assumption of control if sixty percent or more of area or valuation within city) and 1999 c 153 s 29 & 1971 ex.s. c 95 s 3;
     (2) RCW 35.13A.0301 (Assumption of water-sewer district before July 1, 1999 -- Limitations) and 1998 c 326 s 3;
     (3) RCW 35.13A.040 (Assumption of control if less than sixty percent of area or valuation within city) and 1999 c 153 s 30 & 1971 ex.s. c 95 s 4;
     (4) RCW 35.13A.050 (Territory containing facilities within or without city -- Duties of city or district -- Rates and charges -- Assumption of responsibility -- Outstanding indebtedness -- Properties and rights) and 1971 ex.s. c 95 s 5;
     (5) RCW 35.13A.060 (District in more than one city -- Assumption of responsibilities -- Duties of cities) and 1999 c 153 s 31 & 1971 ex.s. c 95 s 6;
     (6) RCW 35.13A.070 (Contracts) and 1997 c 426 s 2 & 1971 ex.s. c 95 s 7;
     (7) RCW 35.13A.080 (Dissolution of water district or sewer district) and 1997 c 426 s 3 & 1971 ex.s. c 95 s 8;
     (8) RCW 35.13A.090 (Employment and rights of district employees) and 1999 c 153 s 32 & 1971 ex.s. c 95 s 9;
     (9) RCW 35.13A.100 (Assumption of substandard water system -- Limited immunity from liability) and 1994 c 292 s 5; and
     (10) RCW 35.13A.900 (Severability -- 1971 ex.s. c 95) and 1971 ex.s. c 95 s 12.

NEW SECTION.  Sec. 4   A new section is added to chapter 57.04 RCW to read as follows:
     (1)(a) If the board of commissioners of a water-sewer district find it more conducive to the public health, safety, welfare, or convenience that water-sewer services be provided by a cooperative or mutual association or corporation organized under Title 24 RCW or chapter 23.86 RCW, the board may adopt a resolution calling for disincorporation of the district and the transfer to such association or corporation of all the property constituting its system of sewerage, system of water, or combined water and sewerage system, together with any of its other real or personal property used or useful in connection with the operation, maintenance, repair, or replacement of that system, and the association or corporation may acquire such property on such terms as may be mutually agreed upon by the association or corporation and the board of commissioners. Such resolution shall contain the written agreement setting forth the terms and conditions of the transfer and shall be filed with the county.
     (b) In consideration of a transfer of property by a district to an association or corporation in a manner provided in this section, the association or corporation must assume and agree to pay or provide for the payment of all of the indebtedness of a district including the payment and retirement of outstanding general obligation and revenue bonds issued by a district. The association or corporation may cause service and other charges to be collected from such property or owners or occupants thereof and enforce such collection.
     The association or corporation and the district must execute a written agreement setting forth the terms and conditions upon which they have agreed and finding the transfer and acquisition of property pursuant to such agreement to be in the public interest and conducive to the public health, safety, welfare, or convenience. Such written agreement may include provisions, by way of description and not by way of limitation, for the rights, powers, duties, and obligations of such association or corporation and district with regard to the use and ownership of property, the providing of services, the maintenance and operation of facilities, the disposition of liabilities and indebtedness, the performance of contractual obligations, and any other matters relating to the proposed transfer of property. The agreement may provide for a period of time during which the district may continue to exercise certain rights, privileges, powers, and functions authorized to it by law. Such agreement must be presented to the registered voters of the district as part of the resolution to transfer and disincorporate the district. Upon passage of the resolution, the president of the board of commissioners of the district and the person or persons vested with the management of the affairs of the association shall sign and formalize the agreement.
     (2)(a) Upon the filing with the county in which the district is located of the resolution calling for the disincorporation of the district and transfer of functions to an association or corporation, the county legislative authority shall hold a public hearing to determine whether or not the best interests of all persons concerned will be served by the proposed disincorporation of the district and transfer of functions to an association or corporation.
     (b) If the county legislative authority finds that the best interests of all persons concerned will be served by disincorporating the district and transferring functions to an association or corporation, it shall order an election under subsection (4) of this section, specify the manner in which it is to be accomplished, and supervise the liquidation of any assets and the satisfaction of any outstanding indebtedness.
     (3) After all transfers to the association or corporation have been made as required by the written agreement, and the district has been disincorporated, any remaining property shall be sold or liquidated and the proceeds of the sale, together with money on hand in the treasury of the district, shall, after payment of all costs and expenses and all outstanding indebtedness, be placed to the credit of the school district, or districts, in which such district is situated.
     (4) Upon entry of the findings of the hearing by the county that the proposed disincorporation and transfer of assets will be conducive to the public health, welfare, and convenience and will benefit the land therein, the county legislative authority shall present a resolution to the county auditor calling for a special election to be held at a date specified under RCW 29.13.020, that occurs forty-five or more days after the resolution is presented, at which a ballot proposition authorizing the transfer of assets and disincorporation of the district shall be submitted to voters for their approval or rejection. The commissioners shall cause to be published a notice of the election for four successive weeks in a newspaper of general circulation in the district, which notice shall state the hours during which the polls will be open and the object of the election, and the notice shall also be posted ten days in ten public places in the district. The transfer of assets shall be executed as provided in the written agreement and the district shall be disincorporated if the ballot proposition is approved by a majority of the voters voting on the proposition.

NEW SECTION.  Sec. 5   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.