BILL REQ. #:  H-1444.2 

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

     AN ACT Relating to financing the state contribution to replacement of a viaduct through the creation of a transportation infrastructure improvement zone; adding a new section to chapter 82.32 RCW; and adding a new chapter to Title 39 RCW.

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

NEW SECTION.  Sec. 1   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Transportation infrastructure improvement zone" or "improvement zone" means the geographic zone from which taxes are to be appropriated to finance public improvements authorized under this chapter.
     (2) "Department" means the department of revenue.
     (3) "City" means a city with a population of more than five hundred fifty thousand persons.
     (4) "Ordinance" means any appropriate method of taking legislative action by a city.
     (5) "Public improvements" means infrastructure improvements that relate to the removal of a viaduct damaged by an earthquake and the construction of a new tunnel as its replacement. Public improvements also include:
     (a) Water and sewer system improvements; and
     (b) Storm water and drainage management systems.
     (6) "Public improvement costs" means the costs of: (a) Design, planning, acquisition including land acquisition, site preparation including land clearing, construction, reconstruction, rehabilitation, improvement, and installation of public improvements; (b) demolishing, relocating, maintaining, and operating property pending construction of public improvements; (c) relocating utilities as a result of public improvements; and (d) financing public improvements, including interest during construction, legal and other professional services, taxes, insurance, principal and interest costs on indebtedness issued to finance public improvements, and any necessary reserves for indebtedness.
     (7) "State equivalency payments" means the equivalent amount of state property taxes derived within the improvement zone.
     (8) "Tax allocation revenues" means all tax revenues derived from state and local sales taxes, state and local business and occupation taxes, state and local public utility taxes, local regular property taxes, state and local real estate excise taxes, and state and local leasehold excise taxes within the improvement zone from all taxing districts included within the improvement zone. "Tax allocation revenues" also includes state equivalency payments and state and local sales taxes from the initial construction of any new development in the improvement zone.

NEW SECTION.  Sec. 2   A city must finance public improvements using transportation infrastructure improvement zone financing subject to the following conditions:
     (1) The city adopts an ordinance designating an improvement zone within its boundaries and specifying the public improvements proposed to be financed in whole or in part with the use of transportation tax allocation revenues.
     (2) The boundaries of an improvement zone may not change once the improvement zone is established by ordinance.
     (3) The ordinance must specify the initial date tax allocation revenues will be distributed to the city to fund public improvement costs.
     (4) Tax allocation revenues distributed to the city to fund public improvement costs must cease twenty-five years from the date described in subsection (3) of this section.
     (5) The boundaries of the improvement zone may only include territory around the location where a viaduct damaged by earthquake is razed. As part of this determination, the city may include an estimate of the increase in tax allocation revenues upon completion of the construction of the public improvements and any associated private development.

NEW SECTION.  Sec. 3   (1) Before adopting an ordinance creating the improvement zone, a city must hold a public hearing on the proposed financing of the public improvement in whole or in part with improvement zone financing.
     (a) Notice of the public hearing must be published in a legal newspaper of general circulation within the proposed improvement zone at least ten days before the public hearing and posted in at least six conspicuous public places located in the proposed improvement zone.
     (b) Notices must describe the contemplated public improvements, estimate the costs of the public improvements, describe the portion of the costs of the public improvements to be borne by tax allocation revenues, describe any other sources of revenue to finance the public improvements, describe the boundaries of the proposed improvement zone, and estimate the period during which the improvement zone financing is contemplated to be used. The public hearing may be held by either the governing body of the city, or a committee of the governing body that includes at least a majority of the whole governing body.
     (2) In order to create an improvement zone, a city must adopt an ordinance establishing the improvement zone that:
     (a) Describes the public improvements;
     (b) Describes the boundaries of the improvement zone;
     (c) Estimates the cost of the public improvements and the portion of these costs to be financed by transportation tax allocation revenues;
     (d) Estimates the time during which tax allocation revenues are to be used to finance public improvement costs associated with the public improvements financed in whole or in part by improvement zone financing;
     (e) Provides the date when the use of improvement zone tax allocation revenues will commence; and
     (f) Provides a schedule for when development rights above the location where a viaduct damaged by earthquake is razed will be available for purchase.

NEW SECTION.  Sec. 4   (1) A city that adopts an ordinance creating an improvement zone under this chapter must, within ninety days of adopting the ordinance:
     (a) Publish notice in a legal newspaper of general circulation within the improvement zone that describes the public improvement, describes the boundaries of the improvement zone, and identifies the location and times where the ordinance and other public information concerning the public improvement may be inspected; and
     (b) Deliver a certified copy of the ordinance to the county treasurer, the county assessor, the department of revenue, and the governing body of each taxing authority within which the improvement zone is located.
     (2) Any challenge to the formation must be brought within sixty days of the later of the date of its formation or July 1, 2008.

NEW SECTION.  Sec. 5   A city that adopts an ordinance creating an improvement zone under this chapter must sell development rights in the area where a viaduct damaged by earthquake is razed. All proceeds from the sale of development rights shall be deposited in the special fund or funds described under section 7 of this act and must be used to defease bonds for public improvements.

NEW SECTION.  Sec. 6   The city must use all tax allocation revenues for the razing of a viaduct damaged by an earthquake and the construction of a new tunnel as its replacement and related public improvements. Tax allocation revenues shall be deposited in a special fund or funds described under section 7 of this act or other segregated account of the city to be used exclusively for the funding of public improvements. By December 31st of each year, the state treasurer must transfer from the state general fund to the city the amount of the state equivalency payment for that year. By December 31st of each year, the county treasurer must transfer to the appropriate fund or funds of the city the amount of any local property taxes levied for collection in that year within the improvement zone. On a quarterly basis, the state treasurer must transfer tax allocation revenues derived from state and local sales taxes, state business and occupation taxes, state and local real estate excise taxes, and state and local leasehold excise taxes to the city.

NEW SECTION.  Sec. 7   (1) A city must issue revenue bonds to fund public improvements, or portions of public improvements, that are located within an improvement zone and that it is authorized to provide or operate. Whenever revenue bonds are to be issued, the legislative authority of the city must create or have created a special fund or funds from which, along with any reserves created pursuant to RCW 39.44.140, the principal and interest on these revenue bonds must exclusively be payable. The legislative authority of the city may obligate the city to set aside and pay into the special fund or funds a fixed proportion or a fixed amount of the tax allocation revenues obtained within the improvement zone. This amount or proportion is a lien and charge against these revenues, subject only to operating and maintenance expenses. The city must have due regard for the cost of operation and maintenance of the public improvements that are funded by the revenue bonds, and shall not set aside into the special fund or funds a greater amount or proportion of the revenues that in its judgment will be available over and above the cost of maintenance and operation and the amount or proportion, if any, of the revenue previously pledged. The city may also provide that revenue bonds payable out of the same source or sources of revenue may later be issued on a parity with any revenue bonds being issued and sold.
     (2) Revenue bonds issued pursuant to this section are not an indebtedness of the city issuing the bonds, and the interest and principal on the bonds must only be payable from the revenues lawfully pledged to meet the principal and interest requirements and any reserves created pursuant to RCW 39.44.140. The owner or bearer of a revenue bond or any interest coupon issued pursuant to this section shall not have any claim against the city arising from the bond or coupon except for payment from the revenues lawfully pledged to meet the principal and interest requirements and any reserves created pursuant to RCW 39.44.140. The substance of the limitations included in this subsection must be plainly printed, written, or engraved on each bond issued pursuant to this section.
     (3) Revenue bonds with a maturity in excess of twenty-five years may not be issued. The legislative authority of the city must by resolution determine for each revenue bond issue the amount, date, form, terms, conditions, denominations, maximum fixed or variable interest rate or rates, maturity or maturities, redemption rights, registration privileges, manner of execution, manner of sale, callable provisions, if any, and covenants including the refunding of existing revenue bonds. Facsimile signatures may be used on the bonds and any coupons. Refunding revenue bonds may be issued in the same manner as revenue bonds are issued.

NEW SECTION.  Sec. 8   The tax allocation revenues and state equivalency payments constitute part of the state contribution to the replacement of a viaduct damaged by earthquake. The state contribution to this project must not exceed two billion four hundred million dollars.

NEW SECTION.  Sec. 9   A new section is added to chapter 82.32 RCW to read as follows:
     The tax imposed and collected under chapters 82.08 and 82.12 RCW on the construction of a tunnel must be transferred to a city that creates a transportation infrastructure improvement zone. The city must deposit any revenues received under this section into the special fund or funds described in section 7 of this act and must be used to reduce project costs

NEW SECTION.  Sec. 10   Sections 1 through 8 of this act constitute a new chapter in Title 39 RCW.