BILL REQ. #:  S-2040.1 

Read first time 02/28/2005.   Referred to Committee on Ways & Means.

     AN ACT Relating to the extension of local taxes to fund arts, cultural and heritage institutions, and publicly owned sports and entertainment facilities; amending RCW 82.14.0485, 82.14.360, 67.28.180, 35.21.280, 82.29A.130, and 39.04.010; adding new sections to chapter 35.21 RCW; and creating new sections.

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

NEW SECTION.  Sec. 101   The definitions in this section apply throughout this act unless the context clearly requires otherwise.
     (1) "Basketball lessee" means a lessee of a multipurpose public arena that owns or controls, on the effective date of this act, a national basketball association franchise and a women's national basketball association franchise and that has provided at least twenty million dollars to the capital costs of an existing multipurpose public arena and related facilities, and generated at least seventy million dollars in revenues from operations at the multipurpose public arena for the public owner of the multipurpose public arena together with related facilities.
     (2) "Capital improvements" means designing, acquiring, constructing, expanding, reconstructing, remodeling, altering, equipping, reequipping, or repairing a multipurpose public arena.
     (3) "Multipurpose public arena" means a multipurpose public arena with a seating capacity of sixteen thousand or more leased to a basketball lessee.
     (4) "Stadium tax revenues" means: (a) After the earlier of the date the bonds issued to finance construction of a baseball stadium in accordance with RCW 82.14.0485 are retired or December 1, 2014, taxes collected pursuant to RCW 82.14.0485 and 82.14.360; and (b) taxes collected pursuant to RCW 67.28.180(3)(d)(i)(A).

Sec. 201   RCW 82.14.0485 and 1995 3rd sp.s. c 1 s 101 are each amended to read as follows:
     (1) The legislative authority of a county with a population of one million or more may impose a sales and use tax in accordance with the terms of this chapter. The tax is in addition to other taxes authorized by law and shall be collected from those persons who are taxable by the state under chapters 82.08 and 82.12 RCW upon the occurrence of any taxable event within the county. The rate of tax shall not exceed 0.017 percent of the selling price in the case of a sales tax or value of the article used in the case of a use tax.
     (2) The tax imposed under subsection (1) of this section shall be deducted from the amount of tax otherwise required to be collected or paid over to the department of revenue under chapter 82.08 or 82.12 RCW. The department of revenue shall perform the collection of such taxes on behalf of the county at no cost to the county.
     (3) Until the date that is the earlier of the date the bonds issued for the construction of a baseball stadium are retired or December 1, 2014, moneys collected under this section shall only be used for the purpose of paying the principal and interest payments on bonds issued by a county to construct a baseball stadium. After the date that is the earlier of the date the bonds issued for the construction of a baseball stadium are retired or December 1, 2014, money collected under this section shall be used for the purposes set forth in section 301 of this act. After the earlier of the date the bonds issued for the construction of a baseball stadium are retired or December 1, 2014, if money collected under this section exceeds the amount needed for the purposes set forth in section 301 of this act in any year, the excess shall be used solely for early retirement of bonds described in section 301(1)(b) of this act.
     (4) No tax may be collected under this section before January 1, 1996, and no tax may be collected under this section unless the taxes under RCW 82.14.360 are being collected. The tax imposed in this section shall expire ((when)) on the later of the following dates:
     (a) The earlier of the date on which the bonds issued for the construction of the baseball stadium are retired((, but not more than twenty years after the tax is first collected)) or December 1, 2014; or
     (b) The date on which all bonds described in section 301(1)(b) of this act are retired.
     (5) As used in this section, "baseball stadium" means a baseball stadium with natural turf and a retractable roof or canopy, together with associated parking facilities, constructed in the largest city in a county with a population of one million or more.

Sec. 202   RCW 82.14.360 and 2000 c 103 s 10 are each amended to read as follows:
     (1) The legislative authority of a county with a population of one million or more may impose a special stadium sales and use tax upon the retail sale or use within the county by restaurants, taverns, and bars of food and beverages that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of the tax shall not exceed five-tenths of one percent of the selling price in the case of a sales tax, or value of the article used in the case of a use tax. The tax imposed under this subsection is in addition to any other taxes authorized by law and shall not be credited against any other tax imposed upon the same taxable event. As used in this section, "restaurant" does not include grocery stores, mini-markets, or convenience stores.
     (2) The legislative authority of a county with a population of one million or more may impose a special stadium sales and use tax upon retail car rentals within the county that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of the tax shall not exceed two percent of the selling price in the case of a sales tax, or rental value of the vehicle in the case of a use tax. The tax imposed under this subsection is in addition to any other taxes authorized by law and shall not be credited against any other tax imposed upon the same taxable event.
     (3) Until the date that is the earlier of the date on which bonds issued for the construction of a baseball stadium are retired or December 1, 2014, the revenue from the taxes imposed under this section shall be used for the purpose of principal and interest payments on bonds, issued by the county, to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium. Revenues from the taxes authorized in this section may be used for design and other preconstruction costs of the baseball stadium until bonds are issued for the baseball stadium. The county shall issue bonds, in an amount determined to be necessary by the public facilities district, for the district to acquire, construct, own, and equip the baseball stadium. The county shall have no obligation to issue bonds in an amount greater than that which would be supported by the tax revenues under this section, RCW 82.14.0485, and 36.38.010(4) (a) and (b).
     (4) Until the date that is the earlier of the date on which the bonds issued for the construction of a baseball stadium are retired or December 1, 2014, if the revenue from the taxes imposed under this section exceeds the amount needed for such principal and interest payments in any year, the excess shall be used solely:
     (a) For early retirement of the bonds issued for the baseball stadium; and
     (b) If the revenue from the taxes imposed under this section exceeds the amount needed for the purposes in (a) of this subsection in any year, the excess shall be placed in a contingency fund which may only be used to pay unanticipated capital costs on the baseball stadium, excluding any cost overruns on initial construction.
     (((4))) (5) The taxes authorized under this section shall not be collected after June 30, 1997, unless the county executive has certified to the department of revenue that a professional major league baseball team has made a binding and legally enforceable contractual commitment to:
     (a) Play at least ninety percent of its home games in the stadium for a period of time not shorter than the term of the bonds issued to finance the initial construction of the stadium;
     (b) Contribute forty-five million dollars toward the reasonably necessary preconstruction costs including, but not limited to architectural, engineering, environmental, and legal services, and the cost of construction of the stadium, or to any associated public purpose separate from bond-financed property, including without limitation land acquisition, parking facilities, equipment, infrastructure, or other similar costs associated with the project, which contribution shall be made during a term not to exceed the term of the bonds issued to finance the initial construction of the stadium. If all or part of the contribution is made after the date of issuance of the bonds, the team shall contribute an additional amount equal to the accruing interest on the deferred portion of the contribution, calculated at the interest rate on the bonds maturing in the year in which the deferred contribution is made. No part of the contribution may be made without the consent of the county until a public facilities district is created under chapter 36.100 RCW to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium. To the extent possible, contributions shall be structured in a manner that would allow for the issuance of bonds to construct the stadium that are exempt from federal income taxes; and
     (c) Share a portion of the profits generated by the baseball team from the operation of the professional franchise for a period of time equal to the term of the bonds issued to finance the initial construction of the stadium, after offsetting any losses incurred by the baseball team after the effective date of chapter 14, Laws of 1995 1st sp. sess. Such profits and the portion to be shared shall be defined by agreement between the public facilities district and the baseball team. The shared profits shall be used to retire the bonds issued to finance the initial construction of the stadium. If the bonds are retired before the expiration of their term, the shared profits shall be paid to the public facilities district.
     (((5))) (6) After the earlier of the date the bonds issued for the construction of a baseball stadium are retired or December 1, 2014, money collected under this section shall be used for the purposes set forth in section 301 of this act. After the earlier of the date the bonds issued for the construction of a baseball stadium are retired or December 1, 2014, if money collected under this section exceeds the amount needed for the purposes set forth in section 301 of this act in any year, the excess shall be used solely for early retirement of bonds described in section 301(1)(b) of this act.
     (7) No tax may be collected under this section before January 1, 1996. Before collecting the taxes under this section or issuing bonds for a baseball stadium, the county shall create a public facilities district under chapter 36.100 RCW to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium.
     (((6))) (8) The county shall assemble such real property as the district determines to be necessary as a site for the baseball stadium. Property which is necessary for this purpose that is owned by the county on October 17, 1995, shall be contributed to the district, and property which is necessary for this purpose that is acquired by the county on or after October 17, 1995, shall be conveyed to the district.
     (((7))) (9) The proceeds of any bonds issued for ((the)) a baseball stadium shall be provided to the public facilities district that owns the baseball stadium.
     (((8))) (10) As used in this section, "baseball stadium" means "baseball stadium" as defined in RCW 82.14.0485.
     (((9))) (11) The taxes imposed under this section shall expire ((when)) on the later of the following dates:
     (a) The earlier of the date on which the bonds issued for the construction of the baseball stadium are retired((, but not later than twenty years after the taxes are first collected)) or December 1, 2014; or
     (b) The date on which all bonds described in section 301(1)(b) of this act are retired.

Sec. 203   RCW 67.28.180 and 2002 c 178 s 2 are each amended to read as follows:
     (1) Subject to the conditions set forth in subsections (2) and (3) of this section, the legislative body of any county or any city, is authorized to levy and collect a special excise tax of not to exceed two percent on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW.
     (2) Any levy authorized by this section shall be subject to the following:
     (a) Any county ordinance or resolution adopted pursuant to this section shall contain, in addition to all other provisions required to conform to this chapter, a provision allowing a credit against the county tax for the full amount of any city tax imposed pursuant to this section upon the same taxable event.
     (b) In the event that any county has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such county shall be exempt from the provisions of (a) of this subsection, to the extent that the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160: PROVIDED, That so much of such pledged tax revenues, together with any investment earnings thereon, not immediately necessary for actual payment of principal and interest on such bonds may be used: (i) In any county with a population of one million or more, for repayment either of limited tax levy general obligation bonds or of any county fund or account from which a loan was made, the proceeds from the bonds or loan being used to pay for constructing, installing, improving, and equipping stadium capital improvement projects, and to pay for any engineering, planning, financial, legal and professional services incident to the development of such stadium capital improvement projects, regardless of the date the debt for such capital improvement projects was or may be incurred; (ii) in any county with a population of one million or more, for repayment or refinancing of bonded indebtedness incurred prior to January 1, 1997, for any purpose authorized by this section or relating to stadium repairs or rehabilitation, including but not limited to the cost of settling legal claims, reimbursing operating funds, interest payments on short-term loans, and any other purpose for which such debt has been incurred if the county has created a public stadium authority to develop a stadium and exhibition center under RCW 36.102.030; or (iii) in other counties, for county-owned facilities for agricultural promotion. A county is exempt under this subsection in respect to city revenue or general obligation bonds issued after April 1, 1991, only if such bonds mature before January 1, 2013.
     As used in this subsection (2)(b), "capital improvement projects" may include, but not be limited to a stadium restaurant facility, restroom facilities, artificial turf system, seating facilities, parking facilities and scoreboard and information system adjacent to or within a county owned stadium, together with equipment, utilities, accessories and appurtenances necessary thereto. The stadium restaurant authorized by this subsection (2)(b) shall be operated by a private concessionaire under a contract with the county.
     (c)(i) No city within a county exempt under subsection (2)(b) of this section may levy the tax authorized by this section so long as said county is so exempt.
     (ii) If bonds have been issued under RCW 43.99N.020 and any necessary property transfers have been made under RCW 36.102.100, no city within a county with a population of one million or more may levy the tax authorized by this section before January 1, 2021. After January 1, 2021, no city within a county with a population of one million or more may levy the tax authorized by this section so long as any bonds described in section 301(1)(b) of this act are outstanding. After all bonds described in section 301(1)(b) of this act are retired, no city within a county with a population of one million or more may levy the tax authorized by this section at a rate in excess of one percent on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW thereafter.
     (iii) However, in the event that any city in a county described in (i) or (ii) of this subsection (2)(c) has levied the tax authorized by this section and has, prior to June 26, 1975, authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such city may levy the tax so long as the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160.
     (3) Any levy authorized by this section by a county that has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160 shall be subject to the following:
     (a) Taxes collected under this section in any calendar year before 2013 in excess of five million three hundred thousand dollars shall only be used as follows:
     (i) Seventy-five percent from January 1, 1992, through December 31, 2000, and seventy percent from January 1, 2001, through December 31, 2012, for art museums, cultural museums, heritage museums, the arts, and the performing arts. Moneys spent under this subsection (3)(a)(i) shall be used for the purposes of this subsection (3)(a)(i) in all parts of the county.
     (ii) Twenty-five percent from January 1, 1992, through December 31, 2000, and thirty percent from January 1, 2001, through December 31, 2012, for the following purposes and in a manner reflecting the following order of priority: Stadium purposes as authorized under subsection (2)(b) of this section; acquisition of open space lands; youth sports activities; and tourism promotion. If all or part of the debt on the stadium is refinanced, all revenues under this subsection (3)(a)(ii) shall be used to retire the debt.
     (b) From January 1, 2013, through December 31, 2015, in a county with a population of one million or more, all revenues under this section shall be used to retire the debt on the stadium, or deposited in the stadium and exhibition center account under RCW 43.99N.060 after the debt on the stadium is retired.
     (c) From January 1, 2016, through December 31, 2020, in a county with a population of one million or more, all revenues under this section shall be deposited in the stadium and exhibition center account under RCW 43.99N.060.
     (d) In a county with a population of one million or more, revenues under this section shall be used as follows:
     (i) From January 1, 2021, until all bonds described in section 301(1)(b) of this act are special excise tax revenues collected under subsection (1) of this section by a county in an amount not to exceed two percent on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW shall be used for the following purposes:
     (A) Fifty percent of the revenues shall be used for the purposes set forth in section 301(1)(b) of this act or for the early retirement of such bonds; and
     (B) Fifty percent of the revenues shall be used for art museums, cultural museums, heritage museums, the arts, and the performing arts in all parts of the county;
     (ii) After the bonds described in section 301(1)(b) of this act are retired, special excise tax revenues collected under subsection (1) of this section by a county in an amount not to exceed one percent on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW shall continue to be used for art museums, cultural museums, heritage museums, the arts, and the performing arts in all parts of the county.
     (e) At least seventy percent of moneys spent under (a)(i) of this subsection for the period January 1, 1992, through December 31, 2000, shall be used only for the purchase, design, construction, and remodeling of performing arts, visual arts, heritage, and cultural facilities, and for the purchase of fixed assets that will benefit art, heritage, and cultural organizations. For purposes of this subsection, fixed assets are tangible objects such as machinery and other equipment intended to be held or used for ten years or more. Moneys received under this subsection (3)(((d))) (e) may be used for payment of principal and interest on bonds issued for capital projects. Qualifying organizations receiving moneys under this subsection (3)(((d))) (e) must be financially stable and have at least the following:
     (i) A legally constituted and working board of directors;
     (ii) A record of artistic, heritage, or cultural accomplishments;
     (iii) Been in existence and operating for at least two years;
     (iv) Demonstrated ability to maintain net current liabilities at less than thirty percent of general operating expenses;
     (v) Demonstrated ability to sustain operational capacity subsequent to completion of projects or purchase of machinery and equipment; and
     (vi) Evidence that there has been independent financial review of the organization.
     (((e))) (f) At least forty percent of the revenues distributed pursuant to (a)(i) of this subsection for the period January 1, 2001, through December 31, 2012, shall be deposited in an account and shall be used to establish an endowment. Principal in the account shall remain permanent and irreducible. The earnings from investments of balances in the account may only be used for the purposes of (a)(i) of this subsection.
     (((f))) (g) School districts and schools shall not receive revenues distributed pursuant to (a)(i) or (d) of this subsection.
     (((g))) (h) Moneys distributed to art museums, cultural museums, heritage museums, the arts, and the performing arts, and moneys distributed for tourism promotion shall be in addition to and may not be used to replace or supplant any other funding by the legislative body of the county.
     (((h))) (i) As used in this section, "tourism promotion" includes activities intended to attract visitors for overnight stays, arts, heritage, and cultural events, and recreational, professional, and amateur sports events. Moneys allocated to tourism promotion in a class AA county shall be allocated to nonprofit organizations formed for the express purpose of tourism promotion in the county. Such organizations shall use moneys from the taxes to promote events in all parts of the class AA county.
     (((i))) (j) No taxes collected under this section may be used for the operation or maintenance of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged. Expenditures for operation or maintenance include all expenditures other than expenditures that directly result in new fixed assets or that directly increase the capacity, life span, or operating economy of existing fixed assets.
     (((j))) (k) No ad valorem property taxes may be used for debt service on bonds issued for a public stadium that is financed by bonds to which the tax is pledged, unless the taxes collected under this section are or are projected to be insufficient to meet debt service requirements on such bonds.
     (((k))) (l) If a substantial part of the operation and management of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged is performed by a nonpublic entity or if a public stadium is sold that is financed directly or indirectly by bonds to which the tax is pledged, any bonds to which the tax is pledged shall be retired. This subsection (3)(((k))) (l) does not apply in respect to a public stadium under chapter 36.102 RCW transferred to, owned by, or constructed by a public facilities district under chapter 36.100 RCW ((or)), a stadium and exhibition center, or a multipurpose public arena as defined in section 101 of this act.
     (((l))) (m) The county shall not lease a public stadium that is financed directly or indirectly by bonds to which the tax is pledged to, or authorize the use of the public stadium by, a professional major league sports franchise unless the sports franchise gives the right of first refusal to purchase the sports franchise, upon its sale, to local government. This subsection (3)(((l))) (m) does not apply to contracts in existence on April 1, 1986, or to contracts with a basketball lessee to lease a multipurpose public arena as defined in section 101 of this act.
     If a court of competent jurisdiction declares any provision of this subsection (3) invalid, then that invalid provision shall be null and void and the remainder of this section is not affected.

Sec. 204   RCW 35.21.280 and 2002 c 363 s 5 are each amended to read as follows:
     (1) Every city and town may levy and fix a tax of not more than one cent on twenty cents or fraction thereof to be paid by the person who pays an admission charge to any place((: PROVIDED,)). However, no city or town shall impose such tax on persons paying an admission to any activity of any elementary or secondary school or any public facility of a public facility district under chapter 35.57 or 36.100 RCW for which a tax is imposed under RCW 35.57.100 or 36.100.210, except the city or town may impose a tax on persons paying an admission to any activity of such public facility if the city or town uses the admission tax revenue it collects on the admission charges to that public facility for the construction, operation, maintenance, repair, replacement, or enhancement of that public facility or to develop, support, operate, or enhance programs in that public facility. Also, except as provided in section 205 of this act, no city or town shall impose such tax on persons paying an admission to any activity at a multipurpose public arena as defined in section 101 of this act.
     (2) Tax authorization under this section includes a tax on persons who are admitted free of charge or at reduced rates to any place for which other persons pay a charge or a regular higher charge for the same privileges or accommodations. A city that is located in a county with a population of one million or more may not levy a tax on events in stadia constructed on or after January 1, 1995, that are owned by a public facilities district under chapter 36.100 RCW and that have seating capacities over forty thousand or, except as provided in section 205 of this act, on events at a multipurpose public arena as defined in section 101 of this act. The city or town may require anyone who receives payment for an admission charge to collect and remit the tax to the city or town.
     (3) The term "admission charge" includes:
     (a) A charge made for season tickets or subscriptions;
     (b) A cover charge, or a charge made for use of seats and tables reserved or otherwise, and other similar accommodations;
     (c) A charge made for food and refreshment in any place where free entertainment, recreation or amusement is provided;
     (d) A charge made for rental or use of equipment or facilities for purposes of recreation or amusement; if the rental of the equipment or facilities is necessary to the enjoyment of a privilege for which a general admission is charged, the combined charges shall be considered as the admission charge;
     (e) Automobile parking charges if the amount of the charge is determined according to the number of passengers in the automobile.

NEW SECTION.  Sec. 205   (1) A city may levy and fix a tax of not more than one cent on twenty cents or fraction thereof to be paid by any person who pays an admission charge to a multipurpose public arena as defined in section 101 of this act. This includes a tax on persons who are admitted free of charge or at reduced rates to the multipurpose public arena if other persons pay a charge or a regular higher charge for the same privileges or accommodations.
     (2) The tax collected under this section shall be used exclusively either: (a) For the purpose of paying the principal and interest on all or a portion of the bonds described in section 301(1)(b) of this act; or (b) to fund capital improvements defined in section 101 of this act and major maintenance to the multipurpose public arena and related facilities.
     (3) The term "admission charge" has the meaning set forth in RCW 35.21.280.

Sec. 206   RCW 82.29A.130 and 1999 c 165 s 21 are each amended to read as follows:
     The following leasehold interests shall be exempt from taxes imposed pursuant to RCW 82.29A.030 and 82.29A.040:
     (1) All leasehold interests constituting a part of the operating properties of any public utility which is assessed and taxed as a public utility pursuant to chapter 84.12 RCW.
     (2) All leasehold interests in facilities owned or used by a school, college or university which leasehold provides housing for students and which is otherwise exempt from taxation under provisions of RCW 84.36.010 and 84.36.050.
     (3) All leasehold interests of subsidized housing where the fee ownership of such property is vested in the government of the United States, or the state of Washington or any political subdivision thereof but only if income qualification exists for such housing.
     (4) All leasehold interests used for fair purposes of a nonprofit fair association that sponsors or conducts a fair or fairs which receive support from revenues collected pursuant to RCW 67.16.100 and allocated by the director of the department of agriculture where the fee ownership of such property is vested in the government of the United States, the state of Washington or any of its political subdivisions: PROVIDED, That this exemption shall not apply to the leasehold interest of any sublessee of such nonprofit fair association if such leasehold interest would be taxable if it were the primary lease.
     (5) All leasehold interests in any property of any public entity used as a residence by an employee of that public entity who is required as a condition of employment to live in the publicly owned property.
     (6) All leasehold interests held by enrolled Indians of lands owned or held by any Indian or Indian tribe where the fee ownership of such property is vested in or held in trust by the United States and which are not subleased to other than to a lessee which would qualify pursuant to this chapter, RCW 84.36.451 and 84.40.175.
     (7) All leasehold interests in any real property of any Indian or Indian tribe, band, or community that is held in trust by the United States or is subject to a restriction against alienation imposed by the United States: PROVIDED, That this exemption shall apply only where it is determined that contract rent paid is greater than or equal to ninety percent of fair market rental, to be determined by the department of revenue using the same criteria used to establish taxable rent in RCW 82.29A.020(2)(b).
     (8) All leasehold interests for which annual taxable rent is less than two hundred fifty dollars per year. For purposes of this subsection leasehold interests held by the same lessee in contiguous properties owned by the same lessor shall be deemed a single leasehold interest.
     (9) All leasehold interests which give use or possession of the leased property for a continuous period of less than thirty days: PROVIDED, That for purposes of this subsection, successive leases or lease renewals giving substantially continuous use of possession of the same property to the same lessee shall be deemed a single leasehold interest: PROVIDED FURTHER, That no leasehold interest shall be deemed to give use or possession for a period of less than thirty days solely by virtue of the reservation by the public lessor of the right to use the property or to allow third parties to use the property on an occasional, temporary basis.
     (10) All leasehold interests under month-to-month leases in residential units rented for residential purposes of the lessee pending destruction or removal for the purpose of constructing a public highway or building.
     (11) All leasehold interests in any publicly owned real or personal property to the extent such leasehold interests arises solely by virtue of a contract for public improvements or work executed under the public works statutes of this state or of the United States between the public owner of the property and a contractor.
     (12) All leasehold interests that give use or possession of state adult correctional facilities for the purposes of operating correctional industries under RCW 72.09.100.
     (13) All leasehold interests used to provide organized and supervised recreational activities for disabled persons of all ages in a camp facility and for public recreational purposes by a nonprofit organization, association, or corporation that would be exempt from property tax under RCW 84.36.030(1) if it owned the property. If the publicly owned property is used for any taxable purpose, the leasehold excise taxes set forth in RCW 82.29A.030 and 82.29A.040 shall be imposed and shall be apportioned accordingly.
     (14) All leasehold interests in the public or entertainment areas of a baseball stadium with natural turf and a retractable roof or canopy that is in a county with a population of over one million, that has a seating capacity of over forty thousand, and that is constructed on or after January 1, 1995. "Public or entertainment areas" include ticket sales areas, ramps and stairs, lobbies and concourses, parking areas, concession areas, restaurants, hospitality and stadium club areas, kitchens or other work areas primarily servicing other public or entertainment areas, public rest room areas, press and media areas, control booths, broadcast and production areas, retail sales areas, museum and exhibit areas, scoreboards or other public displays, storage areas, loading, staging, and servicing areas, seating areas and suites, the playing field, and any other areas to which the public has access or which are used for the production of the entertainment event or other public usage, and any other personal property used for these purposes. "Public or entertainment areas" does not include locker rooms or private offices exclusively used by the lessee.
     (15) All leasehold interests in the public or entertainment areas of a stadium and exhibition center, as defined in RCW 36.102.010, that is constructed on or after January 1, 1998. For the purposes of this subsection, "public or entertainment areas" has the same meaning as in subsection (14) of this section, and includes exhibition areas.
     (16) All leasehold interests in public facilities districts, as provided in chapter 36.100 or 35.57 RCW.
     (17) All leasehold interests in the public or entertainment areas of a multipurpose public arena defined in section 101 of this act. For the purposes of this subsection, "public or entertainment areas" has the same meaning as in subsection (14) of this section and includes exhibition areas.

NEW SECTION.  Sec. 207   Capital improvements as defined in section 101 of this act are exempt from state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW.

NEW SECTION.  Sec. 301   (1) Stadium tax revenues as defined in section 101 of this act shall only be used for the following purposes in the following order of priority:
     (a) Four million dollars in stadium tax revenues collected in any calendar year between and including 2013 and 2020 shall be used for art museums, cultural museums, heritage museums, the arts, and the performing arts in all parts of the county distributing such revenue pursuant to RCW 67.28.180(3)(a).
     (b) Upon certification by a city that owns a multipurpose public arena that a basketball lessee has entered into a lease for a multipurpose public arena that meets the requirements set forth in section 302(3) of this act, stadium tax revenues collected in any calendar year and remaining after application under (a) of this subsection, shall be transferred to the city that owns such multipurpose public arena and used as follows:
     (i) To pay scheduled principal and interest on bonds or refunding bonds issued in an aggregate principal amount not to exceed sixty million dollars to finance or refinance costs, or to reimburse the city for the payment of costs, of the first phase of capital improvements defined in section 101 of this act including costs of issuance and costs associated with interim financing pending issuance of the bonds; and
     (ii) To pay scheduled principal and interest on bonds or refunding bonds issued in an aggregate principal amount necessary to finance or refinance: (A) Costs of the second phase of capital improvements defined in section 101 of this act in an amount not to exceed two hundred five million dollars in 2006 dollars adjusted for inflation annually thereafter using the ENR 20-city construction cost index; (B) costs of issuing the bonds; and (C) costs associated with interim financing pending issuance of the bonds.
     (2) A city that owns a multipurpose public arena shall pledge stadium tax revenues to the repayment of bonds described in subsection (1)(b)(ii) of this section.

NEW SECTION.  Sec. 302   (1) A city that owns a multipurpose public arena, after consulting with the basketball lessee, shall have the authority to determine the overall scope and components of any capital improvements defined in section 101 of this act, to approve the design and specifications of such capital improvements, and to approve the budget for such capital improvements.
     (2) A city that owns a multipurpose public arena shall enter into a development agreement with the basketball lessee under which the basketball lessee undertakes and controls capital improvements defined in section 101 of this act consistent with subsection (1) of this section. Under the development agreement and subject to subsection (1) of this section, the basketball lessee shall, subject to city approval, determine project design, specifications, and budget. In addition, the basketball lessee shall determine procurement procedures, and shall select and engage an architect or architects, other professional service providers, and a contractor or contractors for the capital improvements, provided that any contracts for such capital improvements shall be subject to the prevailing wage requirements of chapter 39.12 RCW and any contracts for capital improvements shall be subject to the goals, if any, established by the city for women and minority business participation. The basketball lessee shall, to the extent feasible, hire local residents in connection with such capital improvements. Under the development agreement, the basketball lessee shall assume responsibility for any cost overruns in connection with capital improvements financed with the proceeds of the bonds described in section 301(1)(b)(ii) of this act. The total public contribution to paying the cost of such capital improvements shall be limited to the bonds described in section 301(1)(b)(ii) of this act.
     (3) In consideration for the city's agreement to issue the bonds described in section 301(1)(b)(ii) of this act, the basketball lessee shall enter into a new sole master tenant lease agreement for the multipurpose public arena, together with related facilities, that includes without limitation the following terms:
     (a) The term of the lease shall be not less than twenty years.
     (b) The basketball lessee shall assume responsibility for marketing, operation, and routine maintenance of the multipurpose public arena at no cost to the city that owns the multipurpose public arena.
     (c) The lessee shall have the authority to sublease and enter into use, license, and concession agreements with various lessees, users, licensees, or concessionaires of the multipurpose public arena. The basketball lessee shall have the right to retain all basketball and nonbasketball revenues derived from the operation of the multipurpose public arena, including revenues from any sublease, use, license and concession agreements, revenues from concessions, ticket sales, suite rentals, suite and seat licenses, advertising, parking, signage, intellectual property rights, and naming rights, subject to section 304 of this act.
     (d) The basketball lessee shall be required to use its good faith best efforts to maintain the use profile of the multipurpose public arena as a multipurpose facility.
     (e) The basketball lessee shall provide for the national basketball association team owned or controlled by the basketball lessee on the effective date of this act to play not less than ninety percent of the team's home regular season and all of its home playoff basketball games in the multipurpose public arena for not less than twenty years, subject to applicable league rules.
     (f) The basketball lessee shall use its good faith best efforts to retain the women's national basketball association team owned or controlled by the basketball lessee on the effective date of this act as a user of the multipurpose public arena playing not less than ninety percent of the team's home regular season and all of its home playoff basketball games in the multipurpose public arena for not less than twenty years, subject to applicable league rules.
     (g) Subject to the terms of the lease, the city is authorized to sell permanent seat licenses to the multipurpose public arena and the basketball lessee may act as sales agent for this purpose.

NEW SECTION.  Sec. 303   A city that owns a multipurpose public arena and a basketball lessee shall enter into an agreement regarding capital improvements as defined in section 101 of this act. The agreement shall address, but shall not be limited to:
     (1) Expedited permit processing for the design and construction of the capital improvements;
     (2) Expedited environmental review processing;
     (3) Expedited processing of requests for street, right of way, and easement vacations necessary for the capital improvements; and
     (4) Other items needed for the design and construction of the capital improvements.
     Nothing in this section limits a city's police power authority consistent with applicable law.

NEW SECTION.  Sec. 304   A basketball lessee shall have the authority to enter into one or more agreements to sell the right to name all or a portion of the multipurpose public arena, subject to any existing naming rights agreements with respect to the multipurpose public arena. Any sale of the right to name all or a portion of the multipurpose public arena shall be subject to the reasonable approval of the city.

Sec. 401   RCW 39.04.010 and 2000 c 138 s 102 are each amended to read as follows:
     The term state shall include the state of Washington and all departments, supervisors, commissioners and agencies thereof.
     The term municipality shall include every city, county, town, district or other public agency thereof which is authorized by law to require the execution of public work, except drainage districts, diking districts, diking and drainage improvement districts, drainage improvement districts, diking improvement districts, consolidated diking and drainage improvement districts, consolidated drainage improvement districts, consolidated diking improvement districts, irrigation districts or any such other districts as shall from time to time be authorized by law for the reclamation or development of waste or undeveloped lands.
     The term public work shall include all work, construction, alteration, repair, or improvement other than ordinary maintenance, executed at the cost of the state or of any municipality, or which is by law a lien or charge on any property therein. All public works, including maintenance when performed by contract shall comply with the provisions of RCW 39.12.020. The term does not include work, construction, alteration, repair, or improvement performed under contracts entered into under RCW 36.102.060(4) or under development agreements entered into under RCW 36.102.060(7) or leases entered into under RCW 36.102.060(8). The term does not include work, construction, alteration, repair, or improvement to a multipurpose public arena and related facilities undertaken and controlled by a basketball lessee pursuant to a development agreement authorized pursuant to section 302(2) of this act or a lease authorized pursuant to section 302(3) of this act or services procured by the basketball lessee in connection with any such work, construction, alteration, repair, or improvement.
     The term contract shall mean a contract in writing for the execution of public work for a fixed or determinable amount duly awarded after advertisement and competitive bid. However, a contract which is awarded from a small works roster need not be advertised.

NEW SECTION.  Sec. 501   Part headings used in this act are not any part of the law.

NEW SECTION.  Sec. 502   Sections 101, 205, 207, and 301 through 304 of this act are each added to chapter 35.21 RCW.

NEW SECTION.  Sec. 503   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. 504   The provisions of this act shall be liberally construed to effect the policies and purposes of this act.