BILL REQ. #:  H-1296.1 

Read first time 02/02/09.   Referred to Committee on Local Government & Housing.

     AN ACT Relating to assumption of water-sewer districts by cities; and amending RCW 35.13A.020, 35.13A.030, and 35.13A.050.

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

Sec. 1   RCW 35.13A.020 and 1999 c 153 s 28 are each amended to read as follows:
     (1) Whenever all of the territory of a district is included within the corporate boundaries of a city, the city legislative body may ((adopt a resolution or ordinance to)) assume jurisdiction over all of the district, subject to the process in subsection (2) of this section.
     (2)(a) The owners of not less than ten percent of the territory of the district may initiate the assumption by filing a petition for assumption with the city clerk. The city clerk shall immediately serve a copy of the petition upon the secretary of the district board of commissioners. The petition must meet the requirements of RCW 35A.01.040, and must include an accurate legal description of the district and a map of the district. The sufficiency of the petition must be determined in accordance with RCW 35A.01.040. After receiving a certificate of sufficiency from the county assessor pursuant to RCW 35A.01.040, the city clerk shall serve a copy of the certificate upon the secretary of the district board of commissioners. Within thirty days after the date of the certificate of sufficiency, the city council shall determine by resolution whether to pursue further the assumption. If the city council adopts a resolution to pursue further the assumption, the city council and the district board of commissioners shall select jointly, within thirty days after the date of the adoption of the resolution, a consultant to prepare a feasibility study regarding the assumption. If the city council and the district board of commissioners fail to agree upon a consultant within the thirty-day period, the city council shall select a representative from another city, and the district board of commissioners shall select a representative from another district. Within thirty days of selection of both representatives, the representatives shall agree upon a consultant. The scope of work for the feasibility study must include all substantive and procedural topics or matters relating to the assumption that are requested by either the city council or the district board of commissioners, or both. The city council shall approve a contract with the consultant for preparation of the feasibility study, and shall pay for all costs and expenses of the feasibility study, unless the district subsequently decides to pursue the assumption, in which case the city and the district shall share equally the costs and expenses of the feasibility study. Upon receipt of the final feasibility study, the city shall serve a copy of such study on the secretary of the district board of commissioners. Within sixty days of receiving the final feasibility study, the city council and the district board of commissioners each shall hold a public hearing for purposes of discussing the proposed assumption and receiving public comments on the proposed assumption. Notice for each public hearing must be published in a local newspaper of general circulation in the city or the district, as applicable, once each week for two consecutive weeks prior to the public hearing, and must be posted on the web site of the city or the district, as applicable, for two consecutive weeks prior to the public hearing. After the public hearings, the city council and the district board of commissioners shall decide whether to pursue the assumption.
     (b) If the city council and the district board of commissioners both decide by resolution to pursue the assumption, the city council and the district board of commissioners, through their designated representatives, shall attempt to negotiate an agreement for the assumption. The agreement must be consistent with this chapter. If the city and the district representatives negotiate successfully an assumption agreement, the city council shall approve the assumption agreement by ordinance, and the district board of commissioners shall approve the assumption agreement by resolution. The boundary review board may not review and approve the assumption authorized by the assumption agreement.
     (c) The city council at any time may decide not to pursue the assumption. If the city and the district are unable to agree upon the terms and conditions of an assumption agreement within ninety days after commencing negotiation, or if the city council desires to pursue the assumption, the city may pursue further the assumption. The boundary review board shall approve the assumption under chapter 36.93 RCW. If the boundary review board denies the assumption, the assumption must be discontinued. If the boundary review board approves the assumption, the city shall call for a special election in the entire district under Title 29A RCW. If a majority of the qualified electors of the entire district vote in favor of the assumption, it must be approved. If the assumption is approved, the effective date is January 1 of the next calendar year for an election held prior to June 1, or January 1 of the year after the next calendar year for an election held after June 1.
     (3) Upon the assumption, all real and personal property, franchises, rights, assets, taxes levied but not collected for the district for other than indebtedness, water, sewer, and drainage facilities, and all other facilities and equipment of the district shall become the property of the city subject to all financial, statutory, or contractual obligations of the district for the security or performance of which the property may have been pledged. The city, in addition to its other powers, shall have the power to manage, control, maintain, and operate the property, facilities and equipment and to fix and collect service and other charges from owners and occupants of properties so served by the city, subject, however, to any outstanding indebtedness, bonded or otherwise, of the district payable from taxes, assessments, or revenues of any kind or nature and to any other contractual obligations of the district.
     (((3))) (4) The city may by resolution or ordinance of its legislative body, assume the obligation of paying such district indebtedness and of levying and of collecting or causing to be collected the district taxes, assessments, and utility rates and charges of any kind or nature to pay and secure the payment of the indebtedness, according to all of the terms, conditions and covenants incident to the indebtedness, and shall assume and perform all other outstanding contractual obligation of the district in accordance with all of their terms, conditions, and covenants. An assumption shall not be deemed to impair the obligation of any indebtedness or other contractual obligation. During the period until the outstanding indebtedness of the district has been discharged, the territory of the district and the owners and occupants of property therein, shall continue to be liable for its and their proportionate share of the indebtedness, including any outstanding assessments levied within any local improvement district or utility local improvement district thereof. The city shall assume the obligation of causing the payment of the district's indebtedness, collecting the district's taxes, assessments, and charges, and observing and performing the other district contractual obligations. The legislative body of the city shall act as the officers of the district for the purpose of certifying the amount of any property tax to be levied and collected therein, and causing service and other charges and assessments to be collected from the property or owners or occupants thereof, enforcing the collection and performing all other acts necessary to ensure performance of the district's contractual obligations in the same manner and by the same means as if the territory of the district had not been included within the boundaries of a city.
     When a city assumes the obligation of paying the outstanding indebtedness, and if property taxes or assessments have been levied and service and other charges have accrued for this purpose but have not been collected by the district prior to the assumption, the same when collected shall belong and be paid to the city and be used by the city so far as necessary for payment of the indebtedness of the district existing and unpaid on the date the city assumes the indebtedness. Any funds received by the city which have been collected for the purpose of paying any bonded or other indebtedness of the district, shall be used for the purpose for which they were collected and for no other purpose. Any outstanding indebtedness shall be paid as provided in the terms, conditions, and covenants of the indebtedness. All funds of the district on deposit with the county treasurer at the time of title transfer shall be used by the city solely for the benefit of the assumed utility and shall not be transferred to or used for the benefit of the city's general fund.

Sec. 2   RCW 35.13A.030 and 1999 c 153 s 29 are each amended to read as follows:
     Whenever a portion of a district equal to at least sixty percent of the area or sixty percent of the assessed valuation of the real property lying within such district, is included within the corporate boundaries of a city, the city may assume by ordinance the full and complete management and control of that portion of the entire district not included within another city, ((whereupon)) subject to the provisions and process of RCW 35.13A.020 ((shall be operative)); or the city may proceed ((directly under)) according to the provisions and process of RCW 35.13A.050.

Sec. 3   RCW 35.13A.050 and 1971 ex.s. c 95 s 5 are each amended to read as follows:
     When electing under RCW 35.13A.030 or 35.13A.040 to proceed under this section, the city may assume((, by ordinance,)) jurisdiction of the district's responsibilities, property, facilities, and equipment within the corporate limits of the city, subject to the provisions and process of RCW 35.13A.020: PROVIDED, That the petition for assumption is initiated by the owners of not less than ten percent of the territory proposed for assumption. If on the effective date of such an ((ordinance)) assumption the territory of the district included within the city contains any facilities serving or designed to serve any portion of the district outside the corporate limits of the city or if the territory lying within the district and outside the city contains any facilities serving or designed to serve territory included within the city (which facilities are hereafter in this section called the "serving facilities"), the city or district shall for the economically useful life of any such serving facilities make available sufficient capacity therein to serve the sewage or water requirements of such territory, to the extent that such facilities were designed to serve such territory at a rate charged to the municipality being served which is reasonable to all parties.
     In the event a city proceeds under this section, the district may elect upon a favorable vote of a majority of all voters within the district voting upon such propositions to require the city to assume responsibility for the operation and maintenance of the district's property, facilities and equipment throughout the entire district and to pay the city a charge for such operation and maintenance which is reasonable under all of the circumstances.
     A city acquiring property, facilities and equipment under the provisions of this section shall acquire such property, facilities and equipment, and fix and collect service and other charges from owners and occupants of properties served by the city, subject, to any contractual obligations of the district which relate to the property, facilities, or equipment so acquired by the city or which are secured by taxes, assessments or revenues from the territory of the district included within the city. In such cases, the property included within the city and the owners and occupants thereof shall continue to be liable for payment of its and their proportionate share of any outstanding district indebtedness. The district and its officers shall continue to levy taxes and assessments on and to collect service and other charges from such property, or owners or occupants thereof, to enforce such collections, and to perform all other acts necessary to insure performance of the district's contractual obligations in the same manner and by the same means as if the territory of the district had not been included within the boundaries of a city.