BILL REQ. #:  H-1468.2 

Read first time 02/06/09.   Referred to Committee on Capital Budget.

     AN ACT Relating to state funding for local projects; amending RCW 43.155.070, 43.160.060, 43.160.900, 39.102.040, and 47.26.282; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that the state capital budget provides billions of dollars for projects in communities across the state of Washington. These state dollars and policies shape the map of urban, suburban, and rural communities in every region of the state. This state investment sometimes leads to the unintended consequences of failed small businesses, displaced jobs moved from one community to another with no net gain in the number of jobs created, additional requests for state funding to adjust for the unintended consequences, and developed infrastructure on the margins of a community instead of addressing the infrastructure needs in a community's core where higher density is encouraged. Without careful analysis, state funded capital projects may lead to sprawl and inefficiencies in access to goods, services, transportation, and may contradict the state's greenhouse gas emission reduction goals.
     The legislature also finds that the 2007 study committee on public infrastructure programs and funding structures recommended that state infrastructure assistance to local governments should support projects that are consistent with state policy goals, including the growth management act, energy policy, transportation policy, sustainable communities, workforce development goals, and economic development goals.
     Therefore, it is the intent of the legislature that state funded capital projects create a net gain in economic activity, limit land use patterns that contribute to the production of greenhouse gases, and result in the following benefits to communities and the business environment:
     (1) Creation of additional family wage jobs, rather than displacing jobs from one location to another;
     (2) Promotion of the development and sustainability of small businesses;
     (3) A reduction of the overall cost for public infrastructure;
     (4) Efficiencies in the delivery of goods and services, public transit, and transportation; and
     (5) The avoidance of additional costs to state and local governments that adversely impact local residents and small businesses.

Sec. 2   RCW 43.155.070 and 2008 c 299 s 25 are each amended to read as follows:
     (1) To qualify for loans or pledges under this chapter the board must determine that a local government meets all of the following conditions:
     (a) The city or county must be imposing a tax under chapter 82.46 RCW at a rate of at least one-quarter of one percent;
     (b) The local government must have developed a capital facility plan; and
     (c) The local government must be using all local revenue sources which are reasonably available for funding public works, taking into consideration local employment and economic factors.
     (2) Except where necessary to address a public health need or substantial environmental degradation, a county, city, or town planning under RCW 36.70A.040 must have adopted a comprehensive plan, including a capital facilities plan element, and development regulations as required by RCW 36.70A.040. This subsection does not require any county, city, or town planning under RCW 36.70A.040 to adopt a comprehensive plan or development regulations before requesting or receiving a loan or loan guarantee under this chapter if such request is made before the expiration of the time periods specified in RCW 36.70A.040. A county, city, or town planning under RCW 36.70A.040 which has not adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040 is not prohibited from receiving a loan or loan guarantee under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before submitting a request for a loan or loan guarantee.
     (3) In considering awarding loans for public facilities to special districts requesting funding for a proposed facility located in a county, city, or town planning under RCW 36.70A.040, the board shall consider whether the county, city, or town planning under RCW 36.70A.040 in whose planning jurisdiction the proposed facility is located has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.
     (4) In awarding loans, the board must consider whether the local government has adopted policies to reduce greenhouse gas emissions that, at least, include policies consistent with the requirements of (a) through (c) of this subsection. If the local government has not adopted policies to reduce greenhouse gas emissions, the board must consider whether the project is consistent with the following:
     (a) The state's limits on the emissions of greenhouse gases established in RCW 70.235.020;
     (b) Statewide goals to reduce annual per capita vehicle miles traveled by 2050, in accordance with RCW 47.01.440; and
     (c) Applicable federal emissions reduction requirements.
     (5) The board shall develop a priority process for public works projects as provided in this section. The intent of the priority process is to maximize the value of public works projects accomplished with assistance under this chapter. The board shall attempt to assure a geographical balance in assigning priorities to projects. The board shall consider at least the following factors in assigning a priority to a project:
     (a) Whether the local government receiving assistance has experienced severe fiscal distress resulting from natural disaster or emergency public works needs;
     (b) Except as otherwise conditioned by RCW 43.155.110, whether the entity receiving assistance is a Puget Sound partner, as defined in RCW 90.71.010;
     (c) Whether the project is referenced in the action agenda developed by the Puget Sound partnership under RCW 90.71.310;
     (d) Whether the project is critical in nature and would affect the health and safety of a great number of citizens;
     (e) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007;
     (f) The cost of the project compared to the size of the local government and amount of loan money available;
     (g) The number of communities served by or funding the project;
     (h) Whether the project is located in an area of high unemployment, compared to the average state unemployment;
     (i) Whether the project is the acquisition, expansion, improvement, or renovation by a local government of a public water system that is in violation of health and safety standards, including the cost of extending existing service to such a system;
     (j) Except as otherwise conditioned by RCW 43.155.120, and effective one calendar year following the development of model evergreen community management plans and ordinances under RCW 35.105.050, whether the entity receiving assistance has been recognized, and what gradation of recognition was received, in the evergreen community recognition program created in RCW 35.105.030;
     (k) The relative benefit of the project to the community, considering the present level of economic activity in the community and the existing local capacity to increase local economic activity in communities that have low economic growth; and
     (l) Other criteria that the board considers advisable.
     (((5))) (6) Existing debt or financial obligations of local governments shall not be refinanced under this chapter. Each local government applicant shall provide documentation of attempts to secure additional local or other sources of funding for each public works project for which financial assistance is sought under this chapter.
     (((6))) (7) Before November 1st of each year, the board shall develop and submit to the appropriate fiscal committees of the senate and house of representatives a description of the loans made under RCW 43.155.065, 43.155.068, and subsection (((9))) (10) of this section during the preceding fiscal year and a prioritized list of projects which are recommended for funding by the legislature, including one copy to the staff of each of the committees. The list shall include, but not be limited to, a description of each project and recommended financing, the terms and conditions of the loan or financial guarantee, the local government jurisdiction and unemployment rate, demonstration of the jurisdiction's critical need for the project, a description of local policies or project consistency with state greenhouse emissions goals, and documentation of local funds being used to finance the public works project. The list shall also include measures of fiscal capacity for each jurisdiction recommended for financial assistance, compared to authorized limits and state averages, including local government sales taxes; real estate excise taxes; property taxes; and charges for or taxes on sewerage, water, garbage, and other utilities.
     (((7))) (8) The board shall not sign contracts or otherwise financially obligate funds from the public works assistance account before the legislature has appropriated funds for a specific list of public works projects. The legislature may remove projects from the list recommended by the board. The legislature shall not change the order of the priorities recommended for funding by the board.
     (((8))) (9) Subsection (((7))) (8) of this section does not apply to loans made under RCW 43.155.065, 43.155.068, and subsection (((9))) (10) of this section.
     (((9))) (10) Loans made for the purpose of capital facilities plans shall be exempted from subsection (((7))) (8) of this section.
     (((10))) (11) To qualify for loans or pledges for solid waste or recycling facilities under this chapter, a city or county must demonstrate that the solid waste or recycling facility is consistent with and necessary to implement the comprehensive solid waste management plan adopted by the city or county under chapter 70.95 RCW.
     (((11))) (12) After January 1, 2010, any project designed to address the effects of storm water or wastewater on Puget Sound may be funded under this section only if the project is not in conflict with the action agenda developed by the Puget Sound partnership under RCW 90.71.310.

Sec. 3   RCW 43.160.060 and 2008 c 327 s 5 are each amended to read as follows:
     The board is authorized to make direct loans to political subdivisions of the state and to federally recognized Indian tribes for the purposes of assisting the political subdivisions and federally recognized Indian tribes in financing the cost of public facilities, including development of land and improvements for public facilities, project-specific environmental, capital facilities, land use, permitting, feasibility, and marketing studies and plans; project design, site planning, and analysis; project debt and revenue impact analysis; as well as the construction, rehabilitation, alteration, expansion, or improvement of the facilities. A grant may also be authorized for purposes designated in this chapter, but only when, and to the extent that, a loan is not reasonably possible, given the limited resources of the political subdivision or the federally recognized Indian tribe and the finding by the board that financial circumstances require grant assistance to enable the project to move forward. However, no more than twenty-five percent of all financial assistance approved by the board in any biennium may consist of grants to political subdivisions and federally recognized Indian tribes.
     Application for funds shall be made in the form and manner as the board may prescribe. In making grants or loans the board shall conform to the following requirements:
     (1) The board shall not provide financial assistance:
     (a) For a project the primary purpose of which is to facilitate or promote a retail shopping development or expansion.
     (b) For any project that evidence exists would result in a development or expansion that would displace existing jobs in any other community in the state.
     (c) For a project the primary purpose of which is to facilitate or promote gambling.
     (d) For a project located outside the jurisdiction of the applicant political subdivision or federally recognized Indian tribe.
     (2) The board shall only provide financial assistance:
     (a) For a project demonstrating convincing evidence that a specific private development or expansion is ready to occur and will occur only if the public facility improvement is made that:
     (i) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted; and
     (ii) Will improve the opportunities for the successful maintenance, establishment, or expansion of industrial or commercial plants or will otherwise assist in the creation or retention of long-term economic opportunities;
     (b) For a project that cannot meet the requirement of (a) of this subsection but is a project that:
     (i) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted;
     (ii) Is part of a local economic development plan consistent with applicable state planning requirements;
     (iii) Can demonstrate project feasibility using standard economic principles; and
     (iv) Is located in a rural community as defined by the board, or a rural county;
     (c) For site-specific plans, studies, and analyses that address environmental impacts, capital facilities, land use, permitting, feasibility, marketing, project engineering, design, site planning, and project debt and revenue impacts, as grants not to exceed fifty thousand dollars.
     (3) The board shall develop guidelines for local participation and allowable match and activities.
     (4) In awarding loans and grants the board must consider whether the applicant has adopted policies to reduce greenhouse gas emissions that, at least, include policies consistent with the requirements of (a) through (c) of this subsection. If the applicant has not adopted policies to reduce greenhouse gas emissions, the board must consider whether the project is consistent with (a) through (c) of this subsection.
     (a) The state's limits on the emissions of greenhouse gases established in RCW 70.235.020;
     (b) Statewide goals to reduce annual per capita vehicle miles traveled by 2050, in accordance with RCW 47.01.440; and
     (c) Applicable federal emissions reduction requirements.
     (5) An application must demonstrate local match and local participation, in accordance with guidelines developed by the board.
     (((5))) (6) An application must be approved by the political subdivision and supported by the local associate development organization or local workforce development council or approved by the governing body of the federally recognized Indian tribe.
     (((6))) (7) The board may allow de minimis general system improvements to be funded if they are critically linked to the viability of the project.
     (((7))) (8) An application must demonstrate convincing evidence that the median hourly wage of the private sector jobs created after the project is completed will exceed the countywide median hourly wage.
     (((8))) (9) The board shall prioritize each proposed project according to:
     (a) The relative benefits provided to the community by the jobs the project would create, not just the total number of jobs it would create after the project is completed, but also giving consideration to the unemployment rate in the area in which the jobs would be located;
     (b) The rate of return of the state's investment, including, but not limited to, the leveraging of private sector investment, anticipated job creation and retention, and expected increases in state and local tax revenues associated with the project;
     (c) Whether the proposed project offers a health insurance plan for employees that includes an option for dependents of employees;
     (d) Whether the public facility investment will increase existing capacity necessary to accommodate projected population and employment growth in a manner that supports infill and redevelopment of existing urban or industrial areas that are served by adequate public facilities. Projects should maximize the use of existing infrastructure and provide for adequate funding of necessary transportation improvements; and
     (e) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007.
     (((9))) (10) A responsible official of the political subdivision or the federally recognized Indian tribe shall be present during board deliberations and provide information that the board requests.
     Before any financial assistance application is approved, the political subdivision or the federally recognized Indian tribe seeking the assistance must demonstrate to the community economic revitalization board that no other timely source of funding is available to it at costs reasonably similar to financing available from the community economic revitalization board.

Sec. 4   RCW 43.160.900 and 2008 c 327 s 9 are each amended to read as follows:
     (1) The community economic revitalization board shall conduct biennial outcome-based evaluations of the financial assistance provided under this chapter. The evaluations shall include information on the number of applications for community economic revitalization board assistance; the number and types of projects approved; the grant or loan amount awarded each project; the projected number of jobs created or retained by each project; the actual number and cost of jobs created or retained by each project; the wages and health benefits associated with the jobs; a description of local policies or project consistency with state greenhouse emissions goals; the amount of state funds and total capital invested in projects; the number and types of businesses assisted by funded projects; the location of funded projects; the transportation infrastructure available for completed projects; the local match and local participation obtained; the number of delinquent loans; and the number of project terminations. The evaluations may also include additional performance measures and recommendations for programmatic changes.
     (2)(a) By September 1st of each even-numbered year, the board shall forward its draft evaluation to the Washington state economic development commission for review and comment((, as required in section 10 of this act)). The board shall provide any additional information as may be requested by the commission for the purpose of its review.
     (b) Any written comments or recommendations provided by the commission as a result of its review shall be included in the board's completed evaluation. The evaluation must be presented to the governor and appropriate committees of the legislature by December 31st of each even-numbered year. The initial evaluation must be submitted by December 31, 2010.

Sec. 5   RCW 39.102.040 and 2007 c 229 s 2 are each amended to read as follows:
     (1) Prior to applying to the board to use local infrastructure financing, a sponsoring local government shall:
     (a) Designate a revenue development area within the limitations in RCW 39.102.060;
     (b) Certify that the conditions in RCW 39.102.070 are met;
     (c) Complete the process in RCW 39.102.080;
     (d) Provide public notice as required in RCW 39.102.100; and
     (e) Pass an ordinance adopting the revenue development area as required in RCW 39.102.090.
     (2) Any local government that has created an increment area under chapter 39.89 RCW and has not issued bonds to finance any public improvement may apply to the board and have its increment area considered for approval as a revenue development area under this chapter without adopting a new revenue development area under RCW 39.102.090 and 39.102.100 if it amends its ordinance to comply with RCW 39.102.090(1) and otherwise meets the conditions and limitations under this chapter.
     (3) As a condition to imposing a sales and use tax under RCW 82.14.475, a sponsoring local government, including any cosponsoring local government seeking authority to impose a sales and use tax under RCW 82.14.475, must apply to the board and be approved for a project award amount. The application shall be in a form and manner prescribed by the board and include but not be limited to information establishing that the applicant is an eligible candidate to impose the local sales and use tax under RCW 82.14.475, the anticipated effective date for imposing the tax, the estimated number of years that the tax will be imposed, and the estimated amount of tax revenue to be received in each fiscal year that the tax will be imposed. The board shall make available forms to be used for this purpose. As part of the application, each applicant must provide to the board a copy of the ordinance or ordinances creating the revenue development area as required in RCW 39.102.090. A notice of approval to use local infrastructure financing shall contain a project award that represents the maximum amount of state contribution that the applicant, including any cosponsoring local governments, can earn each year that local infrastructure financing is used. The total of all project awards shall not exceed the annual state contribution limit. The determination of a project award shall be made based on information contained in the application and the remaining amount of annual state contribution limit to be awarded. Determination of a project award by the board is final.
     (4)(a) Sponsoring local governments, and any cosponsoring local governments, applying in calendar year 2007 for a competitive project award, must submit completed applications to the board no later than July 1, 2007. By September 15, 2007, in consultation with the department of revenue and the department of community, trade, and economic development, the board shall approve competitive project awards from competitive applications submitted by the 2007 deadline. No more than two million five hundred thousand dollars in competitive project awards shall be approved in 2007. For projects not approved by the board in 2007, sponsoring and cosponsoring local governments may apply again to the board in 2008 for approval of a project.
     (b) Sponsoring local governments, and any cosponsoring local governments, applying in calendar year 2008 for a competitive project award, must submit completed applications to the board no later than July 1, 2008. By September 18, 2008, in consultation with the department of revenue and the department of community, trade, and economic development, the board shall approve competitive project awards from competitive applications submitted by the 2008 deadline.
     (c) Except as provided in RCW 39.102.050(2), a total of no more than five million dollars in competitive project awards shall be approved for local infrastructure financing.
     (d) The project selection criteria and weighting developed prior to July 22, 2007, for the application evaluation and approval process shall apply to applications received prior to November 1, 2007. In evaluating applications for a competitive project award after November 1, 2007, the board shall, in consultation with the Washington state economic development commission, develop the relative weight to be assigned to the following criteria:
     (i) The project's potential to enhance the sponsoring local government's regional and/or international competitiveness;
     (ii) The project's ability to encourage mixed use and transit-oriented development and the redevelopment of a geographic area;
     (iii) Achieving an overall distribution of projects statewide that reflect geographic diversity;
     (iv) The estimated wages and benefits for the project is greater than the average labor market area;
     (v) The estimated state and local net employment change over the life of the project;
     (vi) The current economic health and vitality of the proposed revenue development area and the contiguous community and the estimated impact of the proposed project on the proposed revenue development area and contiguous community;
     (vii) The estimated state and local net property tax change over the life of the project;
     (viii) The estimated state and local sales and use tax increase over the life of the project;
     (ix) An analysis that shows that, over the life of the project, neither the local excise tax allocation revenues nor the local property tax allocation revenues will constitute more than eighty percent of the total local funds as described in RCW 39.102.020(29)(c); and
     (x) If a project is located within an urban growth area, evidence that the project utilizes existing urban infrastructure and that the transportation needs of the project will be adequately met through the use of local infrastructure financing or other sources.
     (e)(i) Except as provided in this subsection (4)(e), the board may not approve the use of local infrastructure financing within more than one revenue development area per county.
     (ii) In a county in which the board has approved the use of local infrastructure financing, the use of such financing in additional revenue development areas may be approved, subject to the following conditions:
     (A) The sponsoring local government is located in more than one county; and
     (B) The sponsoring local government designates a revenue development area that comprises portions of a county within which the use of local infrastructure financing has not yet been approved.
     (iii) In a county where the local infrastructure financing tool is authorized under RCW 39.102.050, the board may approve additional use of the local infrastructure financing tool.
     (5) As part of the approval process, the board must consider whether the sponsoring local government has adopted policies to reduce greenhouse gas emissions that, at least, include policies consistent with (a) through (c) of this subsection.
     (a) The state's limits on the emissions of greenhouse gases established in RCW 70.235.020;
     (b) Statewide goals to reduce annual per capita vehicle miles traveled by 2050, in accordance with RCW 47.01.440; and
     (c) Applicable federal emissions reduction requirements.
     (6) Once the board has approved the sponsoring local government, and any cosponsoring local governments, to use local infrastructure financing, notification must be sent by the board to the sponsoring local government, and any cosponsoring local governments, authorizing the sponsoring local government, and any cosponsoring local governments, to impose the local sales and use tax authorized under RCW 82.14.475, subject to the conditions in RCW 82.14.475.

Sec. 6   RCW 47.26.282 and 2002 c 189 s 5 are each amended to read as follows:
     In any project funded by the transportation improvement board, except for projects in cities having a population of less than five thousand persons, and in addition to any other items required to be considered by statute, the board also shall consider the land use implications of the project, such as whether the programs and projects:
     (1) Support development in and revitalization of existing downtowns;
     (2) Implement local comprehensive plans for rural and urban residential and nonresidential densities;
     (3) Have land use planning and regulations encouraging compact development for rural and urban residential and nonresidential densities; ((and))
     (4) Promote the use of multimodal transportation; and
     (5) Are located in jurisdictions that have adopted policies to reduce greenhouse gas emissions that, at least, include policies consistent with (a) the state's limits on the emissions of greenhouse gases established in RCW 70.235.020; (b) statewide goals to reduce annual per capita vehicle miles traveled by 2050, in accordance with RCW 47.01.440; and (c) applicable federal emissions reduction requirements.