BILL REQ. #:  H-4472.1 

Read first time 01/19/10.   Referred to Committee on Local Government & Housing.

     AN ACT Relating to alternative city assumption and tax authority provisions pertaining to water-sewer districts; amending RCW 35.13A.020, 35.13A.030, and 35.13A.040; adding a new section to chapter 35.21 RCW; and adding a new chapter to Title 35 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 35.21 RCW to read as follows:
     (1) A city in which a water-sewer district operates works, plants, or facilities for the distribution and sale of water or sewer services may levy and collect from the district a tax on the gross revenues derived by the district from the sale of water or sewer services within the city, exclusive of the revenues derived from the sale of water or sewer services for purposes of resale. The tax when levied must be a debt of the district, and may be collected as such. The district may add the amount of tax to the rates or charges it makes for water or sewer services sold within the limits of the city.
     (2)(a) A city imposing a tax under this section:
     (i) May not impose a franchise fee or other charge on the water-sewer district; and
     (ii) May only do so through an interlocal agreement with the district under chapter 39.34 RCW.
     (b) The interlocal agreement required by this subsection (2) must identify the district as the collection and pass-through entity, with revenues submitted to the city. The interlocal agreement may include provisions addressing city assumptions of the water-sewer district and the expenditure of revenues collected under this section in areas of the district that are located within the corporate limits of the city.
     (3) For purposes of this section, the term "city" has the same meaning as defined in RCW 35.13A.010.

NEW SECTION.  Sec. 2   (1) A city choosing to impose a tax under section 1 of this act that adopts a resolution to assume all or part of a water-sewer district must complete a feasibility study of the assumption. The study must be completed within six months of the passage of the resolution to assume all or part of the district. The study is not required if the board of commissioners of the district consents to the assumption.
     (2) The study must be jointly and equally funded by the city and the district through a mutually agreed upon contract with a qualified independent consultant with professional expertise involving public water and sewer systems. The study must address the impact of the proposed assumption on the city and district. Issues to be considered must be mutually agreed upon by the city and district and must include, but are not limited to, engineering and operational impacts, assumption costs to the city and district, including potential impacts on future water-sewer rates, bond ratings and future borrowing costs, the status of existing water rights, and other issues jointly agreed upon.
     (3) The findings of the study must be presented as a public record and must be available to the registered voters of the entire district. If the method of assumption requires the submission of a ballot proposition to all registered voters of the district, the findings of the study must be made available to these voters prior to a vote on the proposed assumption.

NEW SECTION.  Sec. 3   (1) A city choosing to impose a tax under section 1 of this act may not assume jurisdiction of all or part of a water-sewer district under RCW 35.13A.020, 35.13A.030, or 35.13A.040 without voter approval of a ballot proposition authorizing the assumption. Ballot propositions under this section must be submitted to all registered voters of the district. If a majority of the votes cast on the proposition are in favor of the assumption, the assumption may proceed as authorized under chapter 35.13A RCW.
     (2) Elections under this section must be conducted in accordance with general election law, and the election costs must be borne by the city seeking approval to assume jurisdiction of the district.

NEW SECTION.  Sec. 4   For purposes of this chapter, the term "city" has the same meaning as defined in RCW 35.13A.010.

NEW SECTION.  Sec. 5   (1) The assumption provisions in sections 2 through 4 of this act are alternative and in addition to other provisions in chapter 35.13A RCW.
     (2) Nothing in sections 2 through 4 of this act: (a) Limits or otherwise modifies the assumption authority under chapter 35.13A RCW for cities that do not impose a tax under section 1 of this act; or (b) abrogates city and water-sewer district agreements for cities that do not impose a tax under section 1 of this act.

Sec. 6   RCW 35.13A.020 and 1999 c 153 s 28 are each amended to read as follows:
     (1) Except as provided in section 3 of this act, 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.
     (2) 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) 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. 7   RCW 35.13A.030 and 1999 c 153 s 29 are each amended to read as follows:
     Except as provided in section 3 of this act, 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 the provisions of RCW 35.13A.020 shall be operative; or the city may proceed directly under the provisions of RCW 35.13A.050.

Sec. 8   RCW 35.13A.040 and 1999 c 153 s 30 are each amended to read as follows:
     Except as provided in section 3 of this act, whenever the portion of a district included within the corporate boundaries of a city is less than sixty percent of the area of the district and less than sixty percent of the assessed valuation of the real property within the district, the city may elect to proceed under the provisions of RCW 35.13A.050.

NEW SECTION.  Sec. 9   Sections 2 through 5 of this act constitute a new chapter in Title 35 RCW.