"Sec. 1   RCW 47.60.645 and 1995 2nd sp.s. c 14 s 558 are each amended to read as follows:
     There is hereby established in the transportation fund the passenger ferry account. Money in the account shall be used for ((capital improvements for passenger ferry projects including, but not limited to, pedestrian and transit facilities at ferry terminals and passenger-only ferry vessels)) operating or capital grants for ferry systems as provided in chapters 36.54 and 36.57A RCW. Moneys in the account shall be expended with legislative appropriation.

NEW SECTION.  Sec. 2   By October 31, 2006, the department of transportation shall have an independent appraisal of the market value of the Washington state ferries Snohomish and Chinook and present it to the transportation committees of the legislature and the governor by November 1, 2006. The department of transportation shall sell or otherwise dispose of the Washington state ferries Snohomish and Chinook for market value and deposit the proceeds of the sales into the passenger ferry account created in RCW 47.60.645 as soon as practicable upon approval by the governor of the business plan described in RCW 36.54.110(5).

NEW SECTION.  Sec. 3   A new section is added to chapter 47.60 RCW to read as follows:
     The department shall maintain the level of service existing on January 1, 2006, for the Vashon to Seattle passenger-only ferry route until such time as the legislature approves a county ferry district's assumption of the route, as authorized under RCW 36.54.110(5), providing a level of service at or exceeding the state level.

NEW SECTION.  Sec. 4   A new section is added to chapter 47.01 RCW to read as follows:
     (1) The department of transportation shall establish a ferry grant program subject to availability of amounts appropriated for this specific purpose. The purpose of the grant program is to provide operating or capital grants for ferry systems as provided in chapters 36.54 and 36.57A RCW to operate passenger-only ferry service.
     (2) In providing grants under this section, the department may enter into multiple year contracts with the stipulation that future year allocations are subject to the availability of funding as provided by legislative appropriation.
     (3) Priority shall be given to grant applications that provide continuity of existing passenger-only service and the provision of local or federal matching funds.

NEW SECTION.  Sec. 5   A new section is added to chapter 47.60 RCW to read as follows:
     The Washington state ferry system shall collaborate with new and potential passenger-only ferry service providers, as described in RCW 36.54.110(5), for terminal operations at its existing terminal facilities.

NEW SECTION.  Sec. 6   A new section is added to chapter 47.01 RCW to read as follows:
     The office of financial management shall contract to develop a back-up plan for operating the Vashon to Seattle passenger-only ferry route existing on January 1, 2006, that does not include operations by state government.

Sec. 7   RCW 36.54.110 and 2003 c 83 s 301 are each amended to read as follows:
     (1) The legislative authority of a county ((with a population over one million persons and having a boundary on Puget Sound)) may adopt an ordinance creating a ferry district in all or a portion of the area of the county, including the area within the corporate limits of any city or town within the county. The ordinance may be adopted only after a public hearing has been held on the creation of a ferry district, and the county legislative authority makes a finding that it is in the public interest to create the district. ((A ferry district is limited to providing passenger-only ferry service.))
     (2) A ferry district is a municipal corporation, an independent taxing "authority" within the meaning of Article VII, section 1 of the state Constitution, and a "taxing district" within the meaning of Article VII, section 2 of the state Constitution.
     (3) A ferry district is a body corporate and possesses all the usual powers of a corporation for public purposes as well as all other powers that may now or hereafter be specifically conferred by statute, including, but not limited to, the authority to hire employees, staff, and services, to enter into contracts, and to sue and be sued.
     (4) The members of the county legislative authority, acting ex officio and independently, shall compose the governing body of any ferry district that is created within the county. The voters of a ferry district must be registered voters residing within the boundaries of the district.
     (5) ((For the purposes of this section, Puget Sound is considered as extending north as far as the Canadian border and west as far as Port Angeles.)) A county with a population greater than one million persons and having a boundary on Puget Sound, or a county to the west of Puget Sound with a population greater than two hundred thirty thousand but less than three hundred thousand persons, proposing to create a ferry district to assume a passenger-only ferry route between Vashon and Seattle, including an expansion of that route to include Southworth, shall first receive approval from the governor after submitting a complete business plan to the governor and the legislature by November 1, 2006. The business plan must, at a minimum, include hours of operation, vessel needs, labor needs, proposed routes, passenger terminal facilities, passenger rates, anticipated federal and local funding, coordination with Washington state ferry system, coordination with existing transit providers, long-term operation and maintenance needs, and long-term financial plan. The business plan may include provisions regarding coordination with an appropriate county to participate in a joint ferry under RCW 36.54.030 through 36.54.070. In order to be considered for assuming the route, the ferry district shall ensure that the route will be operated only by the ferry district and not contracted out to a private entity, all existing labor agreements will be honored, and operations will begin no later than July 1, 2007. If the route is to be expanded to include serving Southworth, the ferry district shall enter into an interlocal agreement with the public transportation benefit area serving the Southworth ferry terminal within thirty days of beginning Southworth ferry service. For the purposes of this subsection, Puget Sound is considered as extending north to Admiralty Inlet.

NEW SECTION.  Sec. 8   A new section is added to chapter 36.57A RCW to read as follows:
     A public transportation benefit area seeking funding for a passenger-only ferry route between Kingston and Seattle shall first receive approval from the governor after submitting a complete business plan to the governor and the legislature by November 1, 2006. The business plan must, at a minimum, include hours of operation, vessel needs, labor needs, proposed routes, passenger terminal facilities, passenger rates, anticipated federal and local funding, coordination with Washington state ferry system, coordination with existing transit providers, long-term operation and maintenance needs, and long-term financial plan.

Sec. 9   RCW 36.54.130 and 2003 c 83 s 303 are each amended to read as follows:
     (1) To carry out the purposes for which ferry districts are created, the governing body of a ferry district may levy each year an ad valorem tax on all taxable property located in the district not to exceed seventy-five cents per thousand dollars of assessed value. The levy must be sufficient for the provision of ferry services as shown to be required by the budget prepared by the governing body of the ferry district.
     (2) A tax imposed under this section may be used only for providing ((passenger-only)) ferry services, including the purchase, lease, or rental of ((passenger-only)) ferry vessels and dock facilities, the operation and maintenance of ((passenger-only)) ferry vessels and dock facilities, and related personnel costs.

Sec. 10   RCW 36.54.050 and 1963 c 4 s 36.54.050 are each amended to read as follows:
     The joint commission is authorized to transact all business necessary in carrying out the purposes of RCW 36.54.030 through 36.54.070 and its acts shall be binding upon the two counties, and one-half of all bills and obligations created by the commission shall be binding and a legal charge against the road fund of each county and the claims therefor shall be allowed and paid out of the county road fund the same as other claims against said fund are allowed and paid, unless otherwise provided in an agreement between the two counties.

Sec. 11   RCW 81.84.020 and 2005 c 313 s 609 and 2005 c 121 s 7 are each reenacted and amended to read as follows:
     (1) Upon the filing of an application the commission shall give reasonable notice to the department, affected cities, counties, and public transportation benefit areas and any common carrier which might be adversely affected, of the time and place for hearing on such application. The commission shall have power after notice and an opportunity for a hearing, to issue the certificate as prayed for, or to refuse to issue it, or to issue it for the partial exercise only of the privilege sought, and may attach to the exercise of the rights granted by said certificate such terms and conditions as in its judgment the public convenience and necessity may require; but the commission shall not have power to grant a certificate to operate between districts and/or into any territory prohibited by RCW 47.60.120 or already served by an existing certificate holder, unless such existing certificate holder has failed or refused to furnish reasonable and adequate service, has failed to provide the service described in its certificate or tariffs after the time period allowed to initiate service has elapsed, or has not objected to the issuance of the certificate as prayed for: PROVIDED, A certificate shall be granted when it shall appear to the satisfaction of the commission that the commercial ferry was actually operating in good faith over the route for which such certificate shall be sought, on January 15, 1927: PROVIDED, FURTHER, That in case two or more commercial ferries shall upon said date have been operating vessels upon the same route, or between the same districts the commission shall determine after public hearing whether one or more certificates shall issue, and in determining to whom a certificate or certificates shall be issued, the commission shall consider all material facts and circumstances including the prior operation, schedules, and services rendered by either of the ferries, and in case more than one certificate shall issue, the commission shall fix and determine the schedules and services of the ferries to which the certificates are issued to the end that duplication of service be eliminated and public convenience be furthered.
     (2) Before issuing a certificate, the commission shall determine that the applicant has the financial resources to operate the proposed service for at least twelve months, based upon the submission by the applicant of a pro forma financial statement of operations. Issuance of a certificate shall be determined upon, but not limited to, the following factors: Ridership and revenue forecasts; the cost of service for the proposed operation; an estimate of the cost of the assets to be used in providing the service; a statement of the total assets on hand of the applicant that will be expended on the proposed operation; and a statement of prior experience, if any, in such field by the applicant. The documentation required of the applicant under this section shall comply with the provisions of RCW 9A.72.085.
     (3) Subsection (2) of this section does not apply to an application for a certificate that is pending as of July 25, 1993.
     (4) In granting a certificate for passenger-only ferries and determining what conditions to place on the certificate, the commission shall consider and give substantial weight to the effect of its decisions on public agencies operating, or eligible to operate, passenger-only ferry service.
     (5) Until July 1, ((2006)) 2007, the commission shall not accept or consider an application for passenger-only ferry service serving any county in the Puget Sound area with a population of over one million people. Applications for passenger-only ferry service serving any county in the Puget Sound area with a population of over one million pending before the commission as of May 9, 2005, shall be held in abeyance and not considered before July 1, ((2006)) 2007."