"NEW SECTION.  Sec. 1   A new section is added to chapter 36.70A RCW to read as follows:
     (1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "North shore" means a contiguous geographic area that is bordered by:
     (i) The north shoreline of Hood Canal;
     (ii) Northeast north shore road;
     (iii) Northeast shore road;
     (iv) Northeast state route number 300;
     (v) The line starting at the intersection of quail ridge drive and northeast north shore road at Bald Point and running directly perpendicular to Hood Canal; and
     (vi) The line starting at the intersection of northeast state route number 300 and old Belfair highway in Belfair and running directly perpendicular to Hood Canal.
     (b) "South shore" means a contiguous geographic area that is bordered by:
     (i) The south shoreline of Hood Canal;
     (ii) East state route number 106;
     (iii) Main street in the community known as Union; and
     (iv) The line starting at the intersection of east state route number 106 and east state route number 3 and running directly perpendicular to Hood Canal.
     (2) The development of a system of sewerage or the extension of an existing system of sewerage, as defined in RCW 35.67.010 and 36.94.010, to serve areas outside a designated urban growth area within aquatic rehabilitation zone one, as defined in RCW 90.88.010, is permitted when the area serviced by such a development or extension is:
     (a) Within north shore or south shore; or
     (b) One hundred horizontal linear feet or less landward of north shore or south shore.
     (3) Sewerage service, as provided in subsection (2) of this section, is limited to:
     (a) Commercial and residential development in existence on the effective date of this section; or
     (b) Undeveloped legally platted commercial or residential properties, as they are legally platted on the effective date of this section subject to local land use regulations on development of contiguous lots under common ownership.
     (4)(a) A sewerage system and extension, as provided in subsection (2) of this section:
     (i) May be joined with an existing sewerage system servicing an urban growth area, as defined in RCW 36.70A.030, provided that the service area defined by the new sewerage system or extension is contiguous to an urban growth area; and
     (ii) Must have the capacity to meet all existing, applicable sewerage treatment standards, and have all known, available, and reasonable methods of nitrogen removal.
     (b) The sewerage system or extension of an existing sewerage system located outside of an urban growth area must be sized to be no larger than needed to serve the development and properties eligible for service in subsection (3) of this section.
     (5) For purposes of this chapter, the development or extension of a system of sewerage outside an existing urban growth area does not provide a basis for designation of that area as urban, nor does it provide a basis for rezoning of the served area to allow development at a greater density than that which existed before the system of sewerage was created or extended.

Sec. 2   RCW 36.70A.110 and 2004 c 206 s 1 are each amended to read as follows:
     (1) Each county that is required or chooses to plan under RCW 36.70A.040 shall designate an urban growth area or areas within which urban growth shall be encouraged and outside of which growth can occur only if it is not urban in nature. Each city that is located in such a county shall be included within an urban growth area. An urban growth area may include more than a single city. An urban growth area may include territory that is located outside of a city only if such territory already is characterized by urban growth whether or not the urban growth area includes a city, or is adjacent to territory already characterized by urban growth, or is a designated new fully contained community as defined by RCW 36.70A.350.
     (2) Based upon the growth management population projection made for the county by the office of financial management, the county and each city within the county shall include areas and densities sufficient to permit the urban growth that is projected to occur in the county or city for the succeeding twenty-year period, except for those urban growth areas contained totally within a national historical reserve.
     Each urban growth area shall permit urban densities and shall include greenbelt and open space areas. In the case of urban growth areas contained totally within a national historical reserve, the city may restrict densities, intensities, and forms of urban growth as determined to be necessary and appropriate to protect the physical, cultural, or historic integrity of the reserve. An urban growth area determination may include a reasonable land market supply factor and shall permit a range of urban densities and uses. In determining this market factor, cities and counties may consider local circumstances. Cities and counties have discretion in their comprehensive plans to make many choices about accommodating growth.
     Within one year of July 1, 1990, each county that as of June 1, 1991, was required or chose to plan under RCW 36.70A.040, shall begin consulting with each city located within its boundaries and each city shall propose the location of an urban growth area. Within sixty days of the date the county legislative authority of a county adopts its resolution of intention or of certification by the office of financial management, all other counties that are required or choose to plan under RCW 36.70A.040 shall begin this consultation with each city located within its boundaries. The county shall attempt to reach agreement with each city on the location of an urban growth area within which the city is located. If such an agreement is not reached with each city located within the urban growth area, the county shall justify in writing why it so designated the area an urban growth area. A city may object formally with the department over the designation of the urban growth area within which it is located. Where appropriate, the department shall attempt to resolve the conflicts, including the use of mediation services.
     (3) Urban growth should be located first in areas already characterized by urban growth that have adequate existing public facility and service capacities to serve such development, second in areas already characterized by urban growth that will be served adequately by a combination of both existing public facilities and services and any additional needed public facilities and services that are provided by either public or private sources, and third in the remaining portions of the urban growth areas. Urban growth may also be located in designated new fully contained communities as defined by RCW 36.70A.350.
     (4) In general, cities are the units of local government most appropriate to provide urban governmental services. In general, it is not appropriate that urban governmental services be extended to or expanded in rural areas except in those limited circumstances shown to be necessary to protect basic public health and safety and the environment and when such services are financially supportable at rural densities and do not permit urban development, except as provided in section 1 of this act.
     (5) On or before October 1, 1993, each county that was initially required to plan under RCW 36.70A.040(1) shall adopt development regulations designating interim urban growth areas under this chapter. Within three years and three months of the date the county legislative authority of a county adopts its resolution of intention or of certification by the office of financial management, all other counties that are required or choose to plan under RCW 36.70A.040 shall adopt development regulations designating interim urban growth areas under this chapter. Adoption of the interim urban growth areas may only occur after public notice; public hearing; and compliance with the state environmental policy act, chapter 43.21C RCW, and RCW 36.70A.110. Such action may be appealed to the appropriate growth management hearings board under RCW 36.70A.280. Final urban growth areas shall be adopted at the time of comprehensive plan adoption under this chapter.
     (6) Each county shall include designations of urban growth areas in its comprehensive plan.
     (7) An urban growth area designated in accordance with this section may include within its boundaries urban service areas or potential annexation areas designated for specific cities or towns within the county."