BILL REQ. #:  H-4471.2 

Read first time 01/25/2006.   Referred to Committee on Economic Development, Agriculture & Trade.

     AN ACT Relating to community and economic development; amending RCW 84.55.010; adding a new chapter to Title 39 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   DECLARATION--PURPOSE. (1) It is declared to be the public policy of the state of Washington to promote and facilitate community and economic development of its communities. Community and economic development and renewal is found to be in the interest of and a benefit to all local taxing districts. In furtherance of this, local governments need the ability to finance specific public improvements that encourage community and economic development in both rural and urban areas characterized by high levels of unemployment and stagnant employment and income growth. The construction of necessary public improvements and the redevelopment of depressed areas in accordance with local economic development and growth management plans will benefit all local taxing districts, encourage investment in job-producing private development, and expand the public tax base for all local taxing districts.
     (2) It is the purpose of this chapter:
     (a) To encourage local taxing districts to cooperate in and contribute tax revenues to the financing of public improvements that will encourage private development and community renewal in selected areas;
     (b) To assist those local governments that have a competitive disadvantage in attracting business, private investment, or commercial development due to its location near a state or international border; and
     (c) To prevent or arrest the decay of selected areas due to the inability of existing financial methods to provide needed public improvements and community development, and to encourage private investment designed to promote and facilitate the orderly redevelopment of selected areas.

NEW SECTION.  Sec. 2   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Assessed value" shall have the meaning given in RCW 84.04.030.
     (2) "Community improvement district" means a district created pursuant to this chapter.
     (3) "Increment value" means the assessed value of property for the relevant levy year less the tax allocation base value for that property.
     (4) "Local government" means any city, town, county, or port district.
     (5) "Ordinance" means any appropriate method of taking legislative action by a local government.
     (6) "Public improvements" means:
     (a) Publicly owned infrastructure improvements including without limitation:
     (i) Street, road, and other transportation facilities construction and maintenance;
     (ii) Water and sewer system construction and improvements;
     (iii) Sidewalks and streetlights;
     (iv) Parking, terminal, and dock facilities;
     (v) Transit facility construction and maintenance, including park and ride facilities;
     (vi) Park facilities and recreational areas;
     (vii) Storm water and drainage management systems;
     (viii) Any housing project as defined in RCW 35.82.020;
     (ix) To the extent not already described in this subsection, any project that is a community renewal project as set forth in RCW 35.81.015; and
     (b) Expenditures for any of the following purposes:
     (i) Historic preservation activities authorized under RCW 35.21.395;
     (ii) Housing for "persons of low income" as defined in RCW 35.82.020; or
     (iii) Any costs of carrying out a community renewal plan under chapter 35.81 RCW.
     (7) "Public improvement costs" means the costs of: (a) Design, planning, acquisition, site preparation, construction, reconstruction, rehabilitation, improvement, and installation of public improvements; (b) relocating, maintaining, and operating property pending construction of public improvements; (c) relocating utilities as a result of public improvements; (d) financing public improvements, including interest during construction, legal and other professional services, taxes, insurance, principal and interest costs on general indebtedness issued to finance public improvements, and any necessary reserves for general indebtedness; (e) administrative costs incurred in determining the tax allocation base value and the increment value, to the extent that such costs are in excess of costs normally incurred by the assessor in accordance with the revaluation plan under chapter 84.41 RCW, and the administrative costs of allocating taxes and complying with this chapter and other applicable law; (f) administrative expenses and feasibility studies reasonably necessary and related to these costs, including related costs that may have been incurred before adoption of the ordinance authorizing the public improvements and the use of community improvement financing to fund the costs of the public improvements; and (g) expenses of carrying out a community renewal plan under chapter 35.81 RCW.
     (8) "Local regular property taxes" means regular property taxes as defined in RCW 84.04.140, except regular property taxes levied by the state for the support of the common schools under RCW 84.52.065.
     (9) "Tax allocation base value" means the assessed value of real property located within a community improvement district as determined for the calendar year in which the ordinance creating the community improvement district is adopted.
     (10) "Tax allocation revenues" means an amount equal to seventy-five percent of the total revenues derived from the levy of local regular property taxes on the increment value within a community improvement district.
     (11) "Local taxing district" means any taxing district, as defined in RCW 84.04.120, that levies or has levied for it, local regular property taxes upon real property located within a proposed or approved community improvement district. "Local taxing district" does not include the state of Washington.

NEW SECTION.  Sec. 3   AUTHORITY--CONDITIONS. A local government may finance public improvements using community improvement district financing if the following conditions are met:
     (1) The local government must adopt an ordinance that complies with section 5 of this act, designating a community improvement district within its boundaries and specifying the public improvements proposed to be financed in whole or in part with the use of community improvement financing;
     (2) The boundaries of the community improvement district:
     (a) Shall include, as near as may be determined in the sole discretion of the local government, only such properties as are reasonably expected to increase in assessed value as a result of the public improvements identified in subsection (3) of this section, provided that a community improvement district may include all or any part of a community renewal area created under chapter 35.81 RCW;
     (b) Shall consist of contiguous tracts, lots, or parcels of land which, in the aggregate, comprise no more than twenty-five percent of the total assessed value of taxable real property within the boundaries of the local government creating the community improvement district; and
     (c) Shall not be subject to challenge by any local taxing district or subject to review by a boundary review board;
     (3) The local government must find that public improvements proposed to be financed in whole or in part using community improvement district financing are expected to encourage private development within the community improvement district and to increase the assessed value of real property within the community improvement district;
     (4) The local government must obtain assurances, through development agreements or other permitting processes, that all private development that is anticipated to occur within the community improvement district, as a result of the public improvements, will be consistent with the growth management plan or plans applicable to the area within the community improvement district and the community renewal plan adopted under RCW 35.81.060;
     (5) At least twenty percent of the public improvements proposed to be financed must be housing for "persons of low income," as defined in RCW 35.82.020, and the housing is to be located either within or without the community improvement district; and
     (6) No community improvement district may include territory that is within any other community improvement district.

NEW SECTION.  Sec. 4   ADMINISTRATION--COORDINATION WITH OTHER PROGRAMS--IMPROVEMENTS BY PRIVATE DEVELOPER MUST MEET APPLICABLE STATE AND LOCAL LAWS. (1) A local government may use community improvement district financing in coordination with other programs or efforts undertaken by the local government alone, or in cooperation with other local taxing districts, and may be funded in part from revenue sources other than community improvement financing.
     (2) A local government that creates a community improvement district may itself administer the functions of the community improvement district or may elect to have such functions administered by a community renewal agency appointed by the local government, or by a public development authority created by the local government under RCW 35.21.730. Appointment of an administrator shall be by ordinance that includes a finding that the action is in the public interest and describes the extent of the appointment. In the event the local governing body elects to appoint an administrator, all subsequent community improvement plans and community improvement public improvements must be approved by the local government in such manner as the local government may specify. In addition, a local government may provide by interlocal contract that powers relating to a community improvement district may be exercised jointly under chapter 39.34 RCW in accordance with the terms of that interlocal contract, including being exercised by an entity created pursuant to RCW 39.34.030.
     (3) Public improvements within a community improvement district that are constructed, improved, developed, or redeveloped by a private developer must meet all applicable state and local laws.

NEW SECTION.  Sec. 5   PROCEDURE FOR CREATING A COMMUNITY IMPROVEMENT DISTRICT. (1) Before adopting an ordinance creating a community improvement district, a local government shall:
     (a) Obtain written agreement for the use of community improvement financing that is entered into by local taxing districts whose local regular property tax levies, in the aggregate, account for at least seventy-five percent of the local regular property tax revenues collected within the community improvement district. The agreement shall constitute concurrence by each local taxing district having territory within the community improvement district that the specified public improvements in the proposed community improvement district will benefit the taxpayers of each such local taxing district.
     (b) Hold a public hearing, notice of which must be published at least once, in a newspaper of general circulation within each local taxing district having territory within the proposed community improvement district, at least ten days before the public hearing and posted in at least three conspicuous public places located in the proposed community improvement district. The notice must describe the specified public improvements, estimate the costs of the public improvements, describe the portion of the costs of the public improvements to be borne by community improvement financing, describe any other sources of revenue to finance the public improvements, describe the boundaries of the proposed community improvement district, and estimate the period during which community improvement financing is contemplated to be used. The public hearing may be held either by the entire governing body of the local government or by a committee of the governing body. The public hearing shall provide members of the public and representatives of all local taxing districts the opportunity to comment on the proposed formation of the community improvement district.
     (2) The ordinance establishing the community improvement district shall describe the public improvements, describe the boundaries of the community improvement district, estimate the cost of the public improvements and the portion of these costs to be financed by community improvement district financing, estimate the length of time for which local regular property taxes are to be allocated, and provide the date when the allocation of the local regular property taxes will commence, and find that the conditions of section 3 of this act are met.
     (3) A community improvement district shall be created upon adoption of an ordinance described in this section and the publication of notice required under section 6 of this act in accordance with the following:
     (a) For a community improvement district for which the formation ordinance was adopted on or before September 30th of any given calendar year, the community improvement district shall be established as of January 1st of the upcoming calendar year; and
     (b) For a community improvement district for which the formation ordinance was adopted on or after October 1st of any given calendar year, the community improvement district shall be established as of January 1st of the year following the upcoming calendar year.

NEW SECTION.  Sec. 6   PUBLIC NOTICE--CONCLUSIVE PRESUMPTION OF VALIDITY. (1) Upon formation of a community improvement district, the local government shall:
     (a) Publish notice in a legal newspaper of general circulation within the community improvement district that describes the public improvements, describes the boundaries of the community improvement district, and identifies the location and times where the ordinance forming the community improvement district and other public information concerning the public improvements may be inspected; and
     (b) Deliver a certified copy of the formation ordinance to the county treasurer, the county assessor, and the governing body of each local taxing district having territory within the community improvement district.
     (2) No direct or collateral attack on a public improvement, community improvement district formation ordinance, or community improvement district purported to be authorized or created in conformance with applicable legal requirements, including this chapter, may be commenced more than thirty days after publication of notice as required by subsection (1) of this section.

NEW SECTION.  Sec. 7   ALLOCATION OF TAXES. (1) Commencing in the calendar year during which a community improvement district is first established in accordance with section 5(3) of this act, the county treasurer, or county treasurers, if a community improvement district extends to more than a single county, shall allocate receipts from local regular property taxes levied on real property located within the community improvement district as follows:
     (a) Each local taxing district, including the local government that created the community improvement district, shall receive an amount equal to: (i) The local taxing district's levy rate multiplied by the tax allocation base value of the property located within the local taxing district, plus (ii) twenty-five percent of the local taxing district's levy rate multiplied by the increment value of the property located within the local taxing district; and
     (b) The local government that created the community improvement district shall receive the tax allocation revenues for deposit into the community improvement district funds and accounts. However, if the local government that created the community improvement district determines that the full amount of the tax allocation revenues is not necessary to satisfy any and all pledges, obligations, and covenants of the district, it may by ordinance direct the county treasurer to allocate to the district less than the full amount of the tax allocation revenues. In such case, the balance of tax receipts from the community improvement district shall be reallocated to the local taxing districts in accordance with their local regular property tax levies. The tax receipts deposited into the community improvement district funds and accounts under this subsection (1)(b) may be expended solely to finance public improvement costs.
     (2) Upon receipt of a formation ordinance for a community improvement district under section 6 of this act, the county assessor, or assessors, if the district extends to more than a single county, shall determine and notify each local taxing district of the tax allocation base value for all property within that taxing district that is also within the community improvement district. Thereafter, for as long as the community improvement district exists, the county assessor, or assessors, shall annually calculate the increment value for the property by subtracting the tax allocation base value from the assessed value. This section does not authorize revaluations of real property by the assessor for property taxation that are not made in accordance with the assessor's revaluation plan under chapter 84.41 RCW or under other authorized revaluation procedures.
     (3) The county treasurer and assessor shall continue to perform the duties described in this section until tax allocation revenues are no longer necessary or obligated to pay the costs of the public improvements, as determined by ordinance of the local government in accordance with section 10 of this act. However, no community improvement district shall continue to exist, and no allocation of tax allocation revenues within a community improvement district shall continue, for a period longer than thirty years after taxes are first allocated under this chapter.
     (4) The allocation to the community improvement district of portions of the local regular property taxes levied by or for each local taxing district upon the increment value within that community improvement district, is declared to be a public purpose of and benefit to each such local taxing district.
     (5) The allocation of tax allocation revenues pursuant to this section shall not affect or be deemed to affect the rate of taxes levied by or within any local taxing district or the consistency of any such levies with the uniformity requirement of Article VII, section 1 of the state Constitution.

NEW SECTION.  Sec. 8   GENERAL INDEBTEDNESS--SECURITY. (1) In order to finance the public improvements and retire the indebtedness in whole or in part from tax allocation revenues it receives, a local government, whether or not it is the local government that created the community improvement district, may authorize and issue general obligation bonds, notes, or other evidences of indebtedness not exceeding an amount, together with any existing indebtedness of the community improvement district, equal to one and one-half percent of the value of the taxable property within the boundaries of the local government.
     (2) The obligations issued under subsection (1) of this section may be payable from tax allocation revenues and from other tax revenues or the full faith and credit of the local government if the legislative authority of the local government pledges such tax revenues or its full faith and credit. The obligations issued under subsection (1) of this section may also be secured by nontax income, revenues, fees, and rents from the public improvements, as well as contributions, grants, and nontax money available to the community improvement district for payment of costs of the public improvements or associated debt service on the general obligation indebtedness. A community improvement district may also accept gifts or grants of money or property of any kind for the same purposes for which it is authorized to borrow money in subsection (1) of this section.
     (3) In addition to the provisions of subsections (1) and (2) of this section, a local government may, in connection with the use of community improvement financing, require any nonpublic participant to provide adequate security to protect the public investment in the public improvement within the community improvement district.
     (4) Bonds authorized under this section may be issued and sold in accordance with chapter 39.46 RCW.

NEW SECTION.  Sec. 9   REVENUE BONDS. (1) A local government, whether or not it is the local government that created the community improvement district, a community renewal agency, or a public development authority may issue revenue bonds to fund public improvements, or portions of public improvements, that are located within a community improvement district that it is authorized to provide or operate. Whenever revenue bonds are to be issued, the legislative authority of the local government shall create or have created a special fund or funds from which, along with any reserves, the principal of and interest on these revenue bonds shall exclusively be payable. The legislative authority of the local government may obligate the local government to set aside and pay into the special fund or funds a fixed proportion or a fixed amount of tax allocation revenues pledged to be transferred to the local government from the community improvement district and other revenues available to the community improvement district. This amount or proportion shall be a lien and charge against those revenues. The local government may also provide that revenue bonds payable out of the same source or sources of revenue may later be issued on a parity with any revenue bonds being issued and sold. Revenue bonds issued under this section that are issued by an entity other than a local taxing district may pledge tax allocation revenues that have been made available to it for community improvement district purposes.
     (2) Revenue bonds issued pursuant to this section shall not be considered an indebtedness of a local government or other entity issuing the bonds unless the local government expressly pledges its full faith, credit, and taxing power to the repayment of the bonds. The principal of and interest on the bonds shall, unless that full faith and credit pledge has been expressly provided, be payable solely from the revenues lawfully pledged to meet the principal and interest requirements and providing for any required reserves and the owner of any such revenue bond issued shall not have any claim against the local government arising from the bond except for payment from the revenues lawfully pledged to meet the principal and interest requirements and any required reserves.
     (3) The legislative authority of the local government shall by ordinance determine for each revenue bond issued the amount, date, form, terms, conditions, denominations, maximum fixed or variable interest rate or rates, maturity or maturities, redemption rights, registration privileges, manner of execution, manner of sale, callable provisions, if any, and covenants including the refunding of existing revenue bonds. Facsimile signatures may be used on the bonds and any coupons. Refunding revenue bonds may be issued in the same manner as revenue bonds are issued. Notwithstanding the forgoing, bonds may be issued and sold in accordance with chapter 39.46 RCW.

NEW SECTION.  Sec. 10   DISSOLUTION OF COMMUNITY IMPROVEMENT DISTRICT. A community improvement district may be dissolved by ordinance of the local government which created that community improvement district, when all obligations, including all indebtedness to which community improvement district revenues are pledged, have been discharged and all other contractual obligations of the community improvement district have been discharged or assumed by another governmental entity. Each community improvement district shall be dissolved on or before December 31st of the year that is thirty years after the first year in which it received tax allocation revenues.
     Any amounts remaining in the funds and accounts of the community improvement district at the time of its dissolution shall be transferred to the county treasurer and then allocated to the local taxing district that imposed local regular property taxes, or had local regular property taxes imposed for it, in the community improvement district for collection that year, in proportion to their current levy rates.

Sec. 11   RCW 84.55.010 and 1997 c 3 s 202 are each amended to read as follows:
     Except as provided in this chapter, the levy for a taxing district in any year shall be set so that the regular property taxes payable in the following year shall not exceed the limit factor multiplied by the amount of regular property taxes lawfully levied for such district in the highest of the three most recent years in which such taxes were levied for such district plus an additional dollar amount calculated by multiplying the increase in assessed value in that district resulting from new construction, improvements to property, any increase in assessed value of property within a community improvement district created under chapter 39.-- RCW (sections 1 through 10 and 12 of this act), and any increase in the assessed value of state-assessed property by the regular property tax levy rate of that district for the preceding year.

NEW SECTION.  Sec. 12   SUPPLEMENTAL NATURE OF CHAPTER. This chapter supplements and neither restricts nor limits any powers which the state or any local government might otherwise have under any laws of this state.

NEW SECTION.  Sec. 13   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. 14   Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 15   Sections 1 through 10 and 12 of this act constitute a new chapter in Title 39 RCW.