BILL REQ. #:  H-1700.1 

Read first time 02/18/2005.   Referred to Committee on Local Government.

     AN ACT Relating to urban impact districts; and adding a new chapter to Title 36 RCW.

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

NEW SECTION.  Sec. 1   LEGISLATIVE INTENT. Counties provide regional services to all residents living in both incorporated and unincorporated areas. They also provide an array of additional local governmental services to those living in unincorporated areas. Those services often include sheriff patrols, misdemeanor prosecution, public defense, district courts, misdemeanant detention, land use regulation and oversight, parks and recreation facilities, and road construction and maintenance.
     Counties across Washington are facing difficult budget challenges in providing all of these services. These challenges are especially difficult in counties that include urban areas. The challenges are further exacerbated by unincorporated urban "islands" -- areas of urban density and service demands that remain unincorporated because surrounding cities lack the incentives to annex them.
     The legislature therefore finds that it is in the best interest of the people of the state of Washington to be able to establish urban impact districts as municipal corporations and independent taxing units to address the particular needs of unincorporated areas that are characterized by urban growth and demand for urban governmental services. These districts are intended to facilitate the annexation or incorporation of unincorporated areas that lie within designated urban growth areas and to provide resources to support the provision of urban governmental services to areas that remain unincorporated.

NEW SECTION.  Sec. 2   DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Annexation priority neighborhood" means an unincorporated area characterized by urban growth and/or a demand for urban governmental services, as those terms are defined in RCW 36.70A.030, that a county legislative authority has, by resolution or ordinance, designated as a priority for annexation or incorporation into one or more cities.
     (2) "Local governmental services" includes county rural governmental services, county urban governmental services, and those services historically and typically provided by city government to its residents.
     (3) "Urban governmental services" or "urban services" has the meaning given in RCW 36.70A.030.
     (4) "Utility service" means a light and power business or a natural gas distribution business, as defined in RCW 82.16.010; a telephone business, as defined in RCW 82.04.065; cable television services; sewer or water services; drainage services; solid waste services; steam services; and any other business or service traditionally taxed as a utility.

NEW SECTION.  Sec. 3   URBAN IMPACT DISTRICT--AUTHORIZED--BOUNDARIES--POWERS--GOVERNING BOARD. (1) The legislative authority of any county that is required to plan under chapter 36.70A RCW is authorized to establish one or more urban impact districts within the county for the purpose of: (a) Providing significant incentives and financial support to cities to promote annexation of unincorporated areas that lie within designated urban growth areas; (b) providing incentives and financial support to new cities that may be incorporated within such areas; and (c) providing resources to support the provision by the county of urban governmental services to areas that remain outside of incorporated cities.
     (2) An urban impact district shall include all unincorporated territory within its boundaries that is designated as an urban growth area pursuant to chapter 36.70A RCW, and shall not include any area within the corporate limits of a city or town. The county legislative authority may modify the boundaries of the urban impact district, consistent with these requirements, by the same procedure used to establish the boundaries of the district.
     (3) The county legislative authority shall be the governing board of an urban impact district. The electors of an urban impact district shall be all registered voters residing within the district.

NEW SECTION.  Sec. 4   URBAN IMPACT DISTRICT--ESTABLISHMENT, MODIFICATION, OR DISSOLUTION--HEARING--NOTICE. (1) A county legislative authority proposing to establish an urban impact district, or to modify an existing urban impact district, shall conduct a hearing at the time and place specified in a notice published at least once not less than fifteen days prior to the hearing in a newspaper of general circulation within the proposed urban impact district. This notice shall be in addition to any other notice required by law to be published. Additional notice of such hearing may be given by mail, posting within the proposed urban impact district, or in any manner local authorities deem advisable to notify affected persons. All hearings shall be public and the county legislative authority shall hear objections from any person affected by the formation or modification of the urban impact district and make such changes in the boundaries of the district or any other modifications that the county legislative authority deems necessary.
     (2) No urban impact district shall be established within a county unless the county legislative authority determines, following a hearing held pursuant to this section, that it is in the public interest to form the district and the county legislative authority adopts an ordinance creating the urban impact district and establishing its boundaries. The creation of an urban impact district is not subject to review by a boundary review board under chapter 36.93 RCW. Notwithstanding any other statute or county charter provision, the creation of an urban impact district shall not be the subject of a local initiative or be subject to local referendum.
     (3) The governing board of an urban impact district may dissolve the district by holding public hearings in the same manner required for formation of the district and adopting a resolution declaring that the district has wound up its affairs. Alternatively, an urban impact district shall be automatically dissolved upon annexation of all of the territory included within the district into one or more cities and the adoption of a resolution of its governing board declaring that the district has wound up its affairs.

NEW SECTION.  Sec. 5   URBAN IMPACT DISTRICT--POWERS--RESTRICTIONS--EXCISE TAX. (1) An urban impact district is a quasi-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. An urban impact district shall constitute a body corporate and shall possess 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 power to enter into contracts, to sue and be sued, and all other powers necessary or incident to carrying out its purpose. An urban impact district shall not have the power of eminent domain. An urban impact district may, by interlocal agreement or otherwise: (a) Make payments, with or without consideration, to a county for the support of urban governmental services; and (b) make annexation incentive payments to one or more cities to offset costs connected with annexation of the area and costs related to extending municipal services and infrastructure to the residents of the district. Nothing in this chapter permits urban impact districts to provide local governmental services except indirectly, by contracting with a county or city to support those services provided by the county or city.
     (2) An urban impact district may, by resolution of the governing board, levy and collect an excise tax on the privilege of engaging in any business that provides a utility service to customers within the district. This utility tax shall be measured by the gross receipts or gross income received from the business of providing a utility service to customers within the district, and shall not exceed a maximum rate of five percent except with the approval of a majority of the electors residing in the district. Voter approval shall not otherwise be required.
     (3) All money received by an urban impact district shall be used exclusively for district purposes as follows:
     (a)(i) For a period of twenty-four months following the date that a district first collects any utility tax under this chapter, the district shall create one or more special funds or accounts for the support of: (A) Specific annexation priority neighborhoods, and (B) one or more urban services areas, which may be identified individually or as a class. All utility tax revenues received by the district shall be allocated to these funds or accounts on such basis as the district governing board shall determine, after considering factors such as: The number of residents in the corresponding area, the amount of utility gross receipts generated by utility customers within that area, the cost of providing local governmental services in the area, or any other factor deemed reasonable.
     (ii) Money in any fund or account for a specific annexation priority neighborhood shall be used to provide incentive payments to cities to encourage annexation of that neighborhood. Incentive payments authorized by this section shall be determined by interlocal agreement between the district and the city or cities annexing the neighborhood, and shall be authorized only in relation to annexations with effective dates earlier than thirty months from the date the utility tax is first collected. Any funds remaining unused in an annexation priority neighborhood fund or account more than thirty months after the date of first collection may be transferred to an urban services area fund or account and used for the purposes of that account.
     (iii) Money in any fund or account for an urban services area may be used to: (A) Provide incentive payments to cities to encourage annexation of areas within the urban services area; (B) supplement annexation incentive payments for an annexation priority neighborhood under (a)(ii) of this subsection; or (C) support urban governmental services.
     (b) Upon the expiration of the twenty-four-month period described in (a) of this subsection, the district governing board may cease allocating revenues into separately designated funds or accounts, in which case utility tax revenues may be used for any proper district purpose.

NEW SECTION.  Sec. 6   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. 7   CAPTIONS. Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 8   CODIFICATION. Sections 1 through 7 of this act constitute a new chapter in Title 36 RCW.