BILL REQ. #:  S-2210.1 

READ FIRST TIME 03/02/09.   

     AN ACT Relating to community revitalization financing; adding a new section to chapter 82.32 RCW; adding new sections to chapter 82.14 RCW; and adding a new chapter to Title 39 RCW.

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

NEW SECTION.  Sec. 101   The legislature recognizes that the state as a whole benefits from investment in public infrastructure because it promotes community and economic development. Public investment stimulates business activity and helps create jobs, stimulates the redevelopment of brownfields and blighted areas in the inner city, lowers the cost of housing, and promotes efficient land use. The legislature finds that these activities generate revenue for the state and that it is in the public interest to invest in these projects through a credit against the state sales and use tax to those local governments that can demonstrate the expected returns to the state.

NEW SECTION.  Sec. 102   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Annual state contribution limit" means two million five hundred thousand dollars statewide per fiscal year.
     (2) "Assessed value" means the valuation of taxable real property as placed on the last completed assessment roll.
     (3) "Department" means the department of revenue.
     (4) "Fiscal year" means the twelve-month period beginning July 1st and ending the following June 30th.
     (5) "Local government" means any city, town, county, and port district.
     (6) "Local property tax allocation revenue" means those tax revenues derived from the receipt of regular property taxes levied on the property tax allocation revenue value and used for local revitalization financing.
     (7) "Local revitalization financing" means the use of revenues from local public sources, and revenues received from the local option sales and use tax authorized in section 601 of this act, dedicated to pay the principal and interest on bonds authorized under section 701 of this act.
     (8) "Local sales and use tax increment" means the estimated annual increase in local sales and use taxes as determined and anticipated by the local government in the calendar years following the approval of the revitalization area by the department from taxable activity within the revitalization area.
     (9) "Local sales and use taxes" means local revenues derived from the imposition of sales and use taxes authorized in RCW 82.14.030.
     (10) "Ordinance" means any appropriate method of taking legislative action by a local government.
     (11) "Participating local government" means a local government having a revitalization area within its geographic boundaries that has taken action as provided in section 107(1) of this act to allow the use of all or some of its local sales and use tax increment or other revenues from local public sources dedicated for local revitalization financing.
     (12) "Participating taxing district" means a local government having a revitalization area within its geographic boundaries that has not taken action as provided in section 106(2) of this act.
     (13) "Property tax allocation revenue base value" means the assessed value of real property located within a revitalization area, less the property tax allocation revenue value.
     (14)(a)(i) "Property tax allocation revenue value" means seventy-five percent of any increase in the assessed value of real property in a revitalization area resulting from:
     (A) The placement of new construction, improvements to property, or both, on the assessment roll, where the new construction and improvements are initiated after the revitalization area is approved by the department;
     (B) The cost of new housing construction, conversion, and rehabilitation improvements, when the cost is treated as new construction for purposes of chapter 84.55 RCW as provided in RCW 84.14.020, and the new housing construction, conversion, and rehabilitation improvements are initiated after the revitalization area is approved by the department;
     (C) The cost of rehabilitation of historic property, when the cost is treated as new construction for purposes of chapter 84.55 RCW as provided in RCW 84.26.070, and the rehabilitation is initiated after the revitalization area is approved by the department.
     (ii) Increases in the assessed value of real property in a revitalization area resulting from (a)(i)(A) through (C) of this subsection are included in the property tax allocation revenue value in the initial year. These same amounts are also included in the property tax allocation revenue value in subsequent years unless the property becomes exempt from property taxation.
     (b) "Property tax allocation revenue value" includes seventy-five percent of any increase in the assessed value of new construction consisting of an entire building in the years following the initial year, unless the building becomes exempt from property taxation.
     (c) Except as provided in (b) of this subsection, "property tax allocation revenue value" does not include any increase in the assessed value of real property after the initial year.
     (d) There is no property tax allocation revenue value if the assessed value of real property in a revitalization area has not increased as a result of any of the reasons specified in (a)(i)(A) through (C) of this subsection.
     (e) For purposes of this subsection, "initial year" means:
     (i) For new construction and improvements to property added to the assessment roll, the year during which the new construction and improvements are initially placed on the assessment roll;
     (ii) For the cost of new housing construction, conversion, and rehabilitation improvements, when the cost is treated as new construction for purposes of chapter 84.55 RCW, the year when the cost is treated as new construction for purposes of levying taxes for collection in the following year; and
     (iii) For the cost of rehabilitation of historic property, when the cost is treated as new construction for purposes of chapter 84.55 RCW, the year when such cost is treated as new construction for purposes of levying taxes for collection in the following year.
     (15) "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;
     (d) Financing public improvements, including interest during construction, legal and other professional services, taxes, insurance, principal and interest costs on general indebtedness issued to finance public improvements, and any necessary reserves for general indebtedness; and
     (e) Administrative expenses and feasibility studies reasonably necessary and related to these costs, including related costs that may have been incurred before adoption of the ordinance authorizing the public improvements and the use of local revitalization financing to fund the costs of the public improvements.
     (16) "Public improvements" means:
     (a) Infrastructure improvements within the revitalization area that include:
     (i) Street, road, bridge, and rail construction and maintenance;
     (ii) Water and sewer system construction and improvements;
     (iii) Sidewalks, streetlights, landscaping, and streetscaping;
     (iv) Parking, terminal, and dock facilities;
     (v) Park and ride facilities of a transit authority;
     (vi) Park facilities, recreational areas, and environmental remediation;
     (vii) Storm water and drainage management systems;
     (viii) Electric, gas, fiber, and other utility infrastructures; and
     (b) Expenditures for any of the following purposes:
     (i) Providing environmental analysis, professional management, planning, and promotion within the revitalization area, including the management and promotion of retail trade activities in the revitalization area;
     (ii) Providing maintenance and security for common or public areas in the revitalization area; or
     (iii) Historic preservation activities authorized under RCW 35.21.395.
     (17) "Real property" has the same meaning as in RCW 84.04.090 and also includes any privately owned improvements located on publicly owned land that are subject to property taxation.
     (18) "Regular property taxes" means regular property taxes as defined in RCW 84.04.140, except: (a) Regular property taxes levied by public utility districts specifically for the purpose of making required payments of principal and interest on general indebtedness; (b) regular property taxes levied by the state for the support of common schools under RCW 84.52.065; and (c) regular property taxes authorized by RCW 84.55.050 that are limited to a specific purpose. "Regular property taxes" do not include excess property tax levies that are exempt from the aggregate limits for junior and senior taxing districts as provided in RCW 84.52.043.
     (19)(a) "Revenues from local public sources" means:
     (i) The local sales and use tax amounts received as a result of interlocal agreement, local sales and use tax amounts from sponsoring local governments based on its local sales and use tax increment, and local property tax allocation revenues, which are dedicated by a sponsoring local government, participating local governments, and participating taxing districts, for payment of bonds under section 701 of this act; and
     (ii) Any other local revenues, except as provided in (b) of this subsection, including revenues derived from federal and private sources, which are dedicated for the payment of bonds under section 701 of this act.
     (b) Revenues from local public sources do not include any local funds derived from state grants, state loans, or any other state moneys including any local sales and use taxes credited against the state sales and use taxes imposed under chapter 82.08 or 82.12 RCW.
     (20) "Revitalization area" means the geographic area adopted by a sponsoring local government and approved by the department, from which local sales and use tax increments are estimated and property tax allocation revenues are derived for local revitalization financing.
     (21) "Sponsoring local government" means a city, town, county, or any combination thereof, that adopts a revitalization area and applies to the department to use local revitalization financing.
     (22) "State contribution" means the lesser of:
     (a) Five hundred thousand dollars;
     (b) The project award amount approved by the department as provided in section 401 of this act; or
     (c) The total amount of revenues from local public sources dedicated in the preceding calendar year to the payment of principal and interest on bonds issued under section 701 of this act.
     (23) "State property tax increment" means the estimated amount of annual tax revenues estimated to be received by the state from the imposition of property taxes levied by the state for the support of common schools under RCW 84.52.065 on the property tax allocation revenue value, as determined by the sponsoring local government in an application under section 401 of this act.
     (24) "State sales and use tax increment" means the estimated amount of annual increase in state sales and use taxes to be received by the state from taxable activity within the revitalization area in the years following the approval of the revitalization area by the department as determined by the sponsoring local government in an application under section 401 of this act.
     (25) "State sales and use taxes" means state retail sales and use taxes under RCW 82.08.020(1) and 82.12.020 at the rate provided in RCW 82.08.020(1), less the amount of tax distributions from all local retail sales and use taxes, other than the local sales and use taxes authorized by section 601 of this act for the applicable revitalization area, imposed on the same taxable events that are credited against the state retail sales and use taxes under RCW 82.08.020(1) and 82.12.020.
     (26) "Taxing district" means a government entity that levies or has levied for it regular property taxes upon real property located within a proposed or approved revitalization area.

NEW SECTION.  Sec. 103   CONDITIONS. A local government may finance public improvements using local revitalization financing subject to the following conditions:
     (1) The local government has adopted an ordinance designating a revitalization area within its boundaries and specified the public improvements proposed to be financed in whole or in part with the use of local revitalization financing;
     (2) The public improvements proposed to be financed in whole or in part using local revitalization financing are expected to encourage private development within the revitalization area and to increase the fair market value of real property within the revitalization area;
     (3) The local government has entered into a contract with a private developer relating to the development of private improvements within the revitalization area or has received a letter of intent from a private developer relating to the developer's plans for the development of private improvements within the revitalization area;
     (4) Private development that is anticipated to occur within the revitalization area, as a result of the public improvements, will be consistent with the countywide planning policy adopted by the county under RCW 36.70A.210 and the local government's comprehensive plan and development regulations adopted under chapter 36.70A RCW;
     (5) The local government may not use local revitalization financing to finance the costs associated with the financing, design, acquisition, construction, equipping, operating, maintaining, remodeling, repairing, and reequipping of public facilities funded with taxes collected under RCW 82.14.048 or 82.14.390;
     (6) The governing body of the local government must make a finding that local revitalization financing:
     (a) Will not be used for the purpose of relocating a business from outside the revitalization area, but within this state, into the revitalization area unless convincing evidence is provided that the firm being relocated would otherwise leave the state;
     (b) Will improve the viability of existing business entities within the revitalization area; and
     (c) Will be used exclusively in areas within the jurisdiction of the local government deemed in need of either economic development or redevelopment, or both, and absent the financing available under this chapter and sections 601 and 602 of this act the proposed economic development or redevelopment would more than likely not occur; and
     (7) The governing body of the local government finds that the public improvements proposed to be financed in whole or in part using local revitalization financing are reasonably likely to:
     (a) Increase private investment within the revitalization area;
     (b) Increase employment within the revitalization area; and
     (c) Generate, over the period of time that the local sales and use tax will be imposed under section 601 of this act, increases in state and local property, sales, and use tax revenues that are equal to or greater than the respective state and local contributions made under this chapter.

NEW SECTION.  Sec. 104   CREATING A REVITALIZATION AREA. (1) Before adopting an ordinance creating the revitalization area, a sponsoring local government must:
     (a) Provide notice to all taxing districts and local governments with geographic boundaries within the proposed revitalization area of the sponsoring local government's intent to create a revitalization area. Notice must be provided in writing to the governing body of the taxing districts and local governments at least thirty days in advance of the public hearing as required by (b) of this subsection. The notice must include at least the following information:
     (i) The name of the proposed revitalization area;
     (ii) The date for the public hearing as required by (b) of this subsection;
     (iii) The earliest anticipated date when the sponsoring local government will take action to adopt the proposed revitalization area; and
     (iv) The name of a contact person with phone number of the sponsoring local government and mailing address where a copy of an ordinance adopted under sections 105 and 106 of this act may be sent; and
     (b) Hold a public hearing on the proposed financing of the public improvements in whole or in part with local revitalization financing. Notice of the public hearing must be published in a legal newspaper of general circulation within the proposed revitalization area at least ten days before the public hearing and posted in at least six conspicuous public places located in the proposed revitalization area. 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 local revitalization financing, describe any other sources of revenue to finance the public improvements, describe the boundaries of the proposed revitalization area, and estimate the period during which local revitalization financing is contemplated to be used. The public hearing may be held by either the governing body of the sponsoring local government, or a committee of the governing body that includes at least a majority of the whole governing body.
     (2) To create a revitalization area, a sponsoring local government must adopt an ordinance establishing the revitalization area that:
     (a) Describes the public improvements proposed to be made in the revitalization area;
     (b) Describes the boundaries of the revitalization area, subject to the limitations in section 105 of this act;
     (c) Estimates the cost of the proposed public improvements and the portion of these costs to be financed by local revitalization financing;
     (d) Estimates the time during which local property tax allocation revenues, and other revenues from local public sources, such as amounts of local sales and use taxes from participating local governments, are to be used for local revitalization financing;
     (e) Provides the date when the use of local property tax allocation revenues will commence and a list of the taxing districts that have not adopted an ordinance as described in section 106 of this act to be removed as a participating taxing district;
     (f) Finds that all of the requirements in section 103 of this act are met;
     (g) Provides the anticipated rate of sales and use tax under section 601 of this act that the local government will impose if awarded a state contribution under section 401 of this act;
     (h) Provides the anticipated date when the criteria for the sales and use tax in section 601 of this act will be met and the anticipated date when the sales and use tax in section 601 of this act will be imposed.
     (3) The sponsoring local government must deliver a certified copy of the adopted ordinance to the county treasurer, the governing body of each participating taxing authority and participating taxing district within which the revitalization area is located, and the department.

NEW SECTION.  Sec. 105   LIMITATIONS ON REVITALIZATION AREAS. The designation of a revitalization area is subject to the following limitations:
     (1) No revitalization area may have within its geographic boundaries any part of a hospital benefit zone under chapter 39.100 RCW, any part of a revenue development area created under chapter 39.102 RCW, any part of an increment area under chapter 39.89 RCW, or any part of another revitalization area under this chapter;
     (2) A revitalization area is limited to contiguous tracts, lots, pieces, or parcels of land without the creation of islands of property not included in the revitalization area;
     (3) The boundaries may not be drawn to purposely exclude parcels where economic growth is unlikely to occur;
     (4) The public improvements financed through bonds issued under section 701 of this act must be located in the revitalization area;
     (5) A revitalization area cannot comprise an area containing more than twenty-five percent of the total assessed value of the taxable real property within the boundaries of the sponsoring local government at the time the revitalization area is created;
     (6) The boundaries of the revitalization area may not be changed for the time period that local property tax allocation revenues, local sales and use taxes of participating local governments, and the local sales and use tax under section 601 of this act are used to pay bonds issued under section 701 of this act; and
     (7) A revitalization area must be geographically restricted to the location of the public improvement and adjacent locations that the sponsoring local government finds to have a high likelihood of receiving direct positive business and economic impacts due to the public improvement, such as a neighborhood or a block.

NEW SECTION.  Sec. 106   OPTING OUT AS A PARTICIPATING TAXING DISTRICT. (1) Participating taxing districts must allow the use of all of their local property tax allocation revenues for local revitalization financing.
     (2)(a) If a taxing district does not want to allow the use of its property tax revenues for the local revitalization financing of public improvements in a revitalization area, its governing body must adopt an ordinance to remove itself as a participating taxing district and must notify the sponsoring local government.
     (b) The taxing district must provide a copy of the adopted ordinance and notice to the sponsoring local government creating the revitalization area before the anticipated date that the sponsoring local government proposes to adopt the ordinance creating the revitalization area as provided in the notice required by section 104(1)(a) of this act.

NEW SECTION.  Sec. 107   OPTING IN OR OUT AS A PARTICIPATING LOCAL GOVERNMENT. (1) A participating local government must enter into an interlocal agreement as provided in chapter 39.34 RCW to participate in local revitalization financing with the sponsoring local government.
     (2)(a) If a local government that imposes a sales and use tax under RCW 82.14.030 does not want to participate in the local revitalization financing of public improvements in a revitalization area, its governing body must adopt an ordinance and notify the sponsoring local government that the taxing authority will not be a participating local government.
     (b) The local government must provide a copy of the adopted ordinance and the notice to the sponsoring local government creating the revitalization area before the anticipated date that the sponsoring local government proposes to adopt an ordinance creating the revitalization area as provided in the notice required by section 104(1)(a) of this act.

NEW SECTION.  Sec. 201   LOCAL PROPERTY TAX ALLOCATION REVENUES. (1) Commencing in the second calendar year following the creation of a revitalization area by a sponsoring local government, the county treasurer shall distribute receipts from regular taxes imposed on real property located in the revitalization area as follows:
     (a) Each participating taxing district and the sponsoring local government must receive that portion of its regular property taxes produced by the rate of tax levied by or for the taxing district on the property tax allocation revenue base value for that local revitalization financing project in the taxing district; and
     (b) The sponsoring local government must receive an additional portion of the regular property taxes levied by it and by or for each participating taxing district upon the property tax allocation revenue value within the revitalization area. However, if there is no property tax allocation revenue value, the sponsoring local government may not receive any additional regular property taxes under this subsection (1)(b). The sponsoring local government may agree to receive less than the full amount of the additional portion of regular property taxes under this subsection (1)(b) as long as bond debt service, reserve, and other bond covenant requirements are satisfied, in which case the balance of these tax receipts shall be allocated to the participating taxing districts that levied regular property taxes, or have regular property taxes levied for them, in the revitalization area for collection that year in proportion to their regular tax levy rates for collection that year. The sponsoring local government may request that the treasurer transfer this additional portion of the property taxes to its designated agent. The portion of the tax receipts distributed to the sponsoring local government or its agent under this subsection (1)(b) may only be expended to finance public improvement costs associated with the public improvements financed in whole or in part by local revitalization financing.
     (2) The county assessor shall determine the property tax allocation revenue value and property tax allocation revenue base value. This section does not authorize revaluations of real property by the assessor for property taxation that are not made in accordance with the assessor's revaluation plan under chapter 84.41 RCW or under other authorized revaluation procedures.
     (3) The distribution of local property tax allocation revenue to the sponsoring local government must cease when local property tax allocation revenues are no longer obligated to pay the costs of the public improvements. Any excess local property tax allocation revenues, and earnings on the revenues, remaining at the time the distribution of local property tax allocation revenue terminates, must be returned to the county treasurer and distributed to the participating taxing districts that imposed regular property taxes, or had regular property taxes imposed for it, in the revitalization area for collection that year, in proportion to the rates of their regular property tax levies for collection that year.
     (4) The allocation to the revitalization area of that portion of the sponsoring local government's and each participating taxing district's regular property taxes levied upon the property tax allocation revenue value within that revitalization area is declared to be a public purpose of and benefit to the sponsoring local government and each participating taxing district.
     (5) The distribution of local property tax allocation revenues under this section may not affect or be deemed to affect the rate of taxes levied by or within any sponsoring local government and participating taxing district or the consistency of any such levies with the uniformity requirement of Article VII, section 1 of the state Constitution.

NEW SECTION.  Sec. 301   LOCAL SALES AND USE TAX INCREMENTS. (1) A sponsoring local government may use annually local sales and use tax amounts equal to some or all of its local sales and use tax increments to finance public improvements in the revitalization area. The amounts of local sales and use tax dedicated by a participating local government must begin and cease on the dates specified in an interlocal agreement authorized in chapter 39.34 RCW. Sponsoring local governments and participating local governments are authorized to allocate some or all of their local sales and use tax increment to the sponsoring local government as provided by section 107(1) of this act.
     (2) The department must assist sponsoring local governments in estimating sales and use tax revenues from estimated taxable activity in the proposed or adopted revitalization area. The sponsoring local government must provide the department with accurate information describing the geographical boundaries of the revitalization area in an electronic format or in a manner as otherwise prescribed by the department.

NEW SECTION.  Sec. 401   APPLICATION PROCESS--DEPARTMENT OF REVENUE APPROVAL. (1) Prior to applying to the department to receive a state contribution, a sponsoring local government shall adopt a revitalization area within the limitations in section 105 of this act and in accordance with section 104 of this act.
     (2) As a condition to imposing a sales and use tax under section 601 of this act, a sponsoring local government must apply to the department and be approved for a project award amount. The application must be in a form and manner prescribed by the department and include, but not be limited to:
     (a) Information establishing that over the period of time that the local sales and use tax will be imposed under section 601 of this act, increases in state and local property, sales, and use tax revenues as a result of public improvements in the revitalization area will be equal to or greater than the respective state and local contributions made under this chapter;
     (b) Information demonstrating that the sponsoring local government will meet the requirements necessary to receive the full amount of state contribution it is requesting on an annual basis;
     (c) The amount of state contribution it is requesting;
     (d) The anticipated effective date for imposing the tax under section 601 of this act;
     (e) The estimated number of years that the tax will be imposed;
     (f) The anticipated rate of tax to be imposed under section 601 of this act, subject to the rate-setting conditions in section 601(3) of this act, should the sponsoring local government be approved for a project award; and
     (g) The anticipated date when bonds under section 701 of this act will be issued.
The department shall make available electronic forms to be used for this purpose. As part of the application, each applicant must provide to the department a copy of the adopted ordinance creating the revitalization area as required in section 104 of this act, copies of any adopted interlocal agreements from participating local governments, and any notices from taxing districts that elect not to be a participating taxing district.
     (3)(a) Project awards must be determined on:
     (i) A first-come basis for applications completed in their entirety and submitted electronically;
     (ii) The availability of a state contribution;
     (iii) Whether the sponsoring local government would be able to generate enough tax revenue under section 601 of this act to generate the amount of project award requested.
     (b) The total of all project awards may not exceed the annual state contribution limit.
     (c) If the level of available state contribution is less than the amount requested by the next available applicant, the applicant must be given the first opportunity to accept the lesser amount of state contribution but only if the applicant produces a new application within sixty days of being notified by the department and the application describes the impact on the proposed project as a result of the lesser award in addition to new application information outlined in subsection (2) of this section.
     (d) Applications that are not approved for a project award due to lack of available state contribution will be returned to the applicant.
     (e) Once total project awards reach the amount of annual state contribution limit, no more applications will be accepted.
     (f) If the annual contribution limit is increased, applications will be accepted again beginning sixty days after the effective date of the increase.
     (4) The department shall notify the sponsoring local government of approval or denial of a project award within sixty days of the department's receipt of the sponsoring local government's application. Determination of a project award by the department is final. Notification must include the earliest date when the tax authorized under section 601 of this act may be imposed, subject to conditions in chapter 82.14 RCW. The project award notification must specify the rate requested in the application and any adjustments to the rate that would need to be made based on the project award and rate restrictions in section 601 of this act.
     (5) The department must begin accepting applications on September 1, 2009.

NEW SECTION.  Sec. 501   A new section is added to chapter 82.32 RCW to read as follows:
     REPORTING REQUIREMENTS. (1) A sponsoring local government receiving a project award under section 401 of this act must provide a report to the department by March 1st of each year beginning March 1st after the project award has been approved. The report must contain the following information:
     (a) The amounts of local property tax allocation revenues received in the preceding calendar year broken down by sponsoring local government and participating taxing district;
     (b) The amount of state property tax allocation revenues estimated to have been received by the state in the preceding calendar year;
     (c) The amount of local sales and use tax or other revenue from local public sources dedicated by any participating local government used for the payment of bonds under section 701 of this act in the preceding calendar year;
     (d) The amount of local sales and use tax dedicated by the sponsoring local government, as it relates to the sponsoring local government's local sales and use tax increment, used for the payment of bonds under section 701 of this act;
     (e) The amounts, other than those listed in (a) through (d) of this subsection, from local public sources, broken down by type or source, used for payment of bonds under section 701 of this act in the preceding calendar year;
     (f) The anticipated date when bonds under section 701 of this act are expected to be retired;
     (g) The names of any businesses locating within the revitalization area as a result of the public improvements undertaken by the sponsoring local government and financed in whole or in part with local revitalization financing;
     (h) An estimate of the cumulative number of permanent jobs created in the revitalization area as a result of the public improvements undertaken by the sponsoring local government and financed in whole or in part with local revitalization financing;
     (i) An estimate of the average wages and benefits received by all employees of businesses locating within the revitalization area as a result of the public improvements undertaken by the sponsoring local government and financed in whole or in part with local revitalization financing;
     (j) A list of public improvements financed by bonds issued under section 701 of this act and the date on which the bonds are anticipated to be retired;
     (k) That the sponsoring local government is in compliance with section 103 of this act and the date on which the bonds are anticipated to be retired;
     (l) At least once every three years, updated estimates of the amounts of state and local sales and use tax increments estimated to have been received since the approval by the department of the project award under section 401 of this act; and
     (m) Any other information required by the department to enable the department to fulfill its duties under this chapter and section 601 of this act.
     (2) The department shall make a report available to the public and the legislature by June 1st of each year. The report shall include a summary of the information provided to the department by sponsoring local governments under subsection (1) of this section.

NEW SECTION.  Sec. 601   LOCAL SALES AND USE TAX. (1) Any city or county that has been approved for a project award under section 401 of this act may impose a sales and use tax under the authority of this section in accordance with the terms of this chapter. Except as provided in this section, the tax is in addition to other taxes authorized by law and must be collected from those persons who are taxable by the state under chapters 82.08 and 82.12 RCW upon the occurrence of any taxable event within the taxing jurisdiction of the city or county.
     (2) The tax authorized under subsection (1) of this section is credited against the state taxes imposed under RCW 82.08.020(1) and 82.12.020 at the rate provided in RCW 82.08.020(1). The department must perform the collection of such taxes on behalf of the city or county at no cost to the city or county. The taxes must be distributed to cities and counties as provided in RCW 82.14.060.
     (3) The rate of tax imposed by a city or county may not exceed the lesser of:
     (a) The rate provided in RCW 82.08.020(1), less:
     (i) The aggregate rates of all other local sales and use taxes imposed by any taxing authority on the same taxable events;
     (ii) The aggregate rates of all taxes under RCW 82.14.465 and 82.14.475 and this section that are authorized but have not yet been imposed on the same taxable events by a city or county that has been approved to receive a state contribution by the department or the community economic revitalization board under chapter 39.-- RCW (the new chapter created in section 805 of this act) or chapter 39.100 or 39.102 RCW; and
     (iii) The percentage amount of distributions required under RCW 82.08.020(5) multiplied by the rate of state taxes imposed under RCW 82.08.020(1); and
     (b) The rate, as determined by the city or county in consultation with the department, reasonably necessary to receive the project award under section 401 of this act over ten months.
     (4) The department, upon request, must assist a city or county in establishing its tax rate in accordance with subsection (3) of this section. Once the rate of tax is selected through the application process and approved under section 401 of this act, it may not be increased.
     (5)(a) No tax may be imposed under the authority of this section before:
     (i) July 1, 2011;
     (ii) July 1st of the second calendar year following the year in which the department approved the application made under section 401 of this act;
     (iii) The state sales and use tax increment for the preceding calendar year equals or exceeds the amount of the project award approved by the department under section 401 of this act; and
     (iv) Bonds have been issued according to section 701 of this act.
     (b) The tax imposed under this section expires the earlier of the date that the bonds issued under the authority of section 701 of this act are retired or twenty-five years after the tax is first imposed.
     (6) An ordinance or resolution adopted by the legislative authority of the city or county imposing a tax under this section must provide that:
     (a) The tax will first be imposed on the first day of a fiscal year;
     (b) The cumulative amount of tax received by the city or county, in any fiscal year, may not exceed the amount approved by the department under subsection (10) of this section;
     (c) The department must cease distributing the tax for the remainder of any fiscal year in which either:
     (i) The amount of tax received by the city or county equals the amount of distributions approved by the department for the fiscal year under subsection (10) of this section; or
     (ii) The amount of revenue from taxes imposed under this section by all cities and counties equals the annual state contribution limit;
     (d) The tax will be distributed again, should it cease to be distributed for any of the reasons provided in (c) of this subsection, at the beginning of the next fiscal year, subject to the restrictions in this section; and
     (e) The state is entitled to any revenue generated by the tax in excess of the amounts specified in (c) of this subsection.
     (7) If a city or county receives approval for more than one revitalization area within its jurisdiction, the city or county may impose a sales and use tax under this section for each revitalization area.
     (8) The department must determine the amount of tax receipts distributed to each city and county imposing a sales and use tax under the authority of this section and must advise a city or county when tax distributions for the fiscal year equal the amount determined by the department in subsection (10) of this section. Determinations by the department of the amount of tax distributions attributable to a city or county are not appealable. The department must remit any tax receipts in excess of the amounts specified in subsection (6)(c) of this section to the state treasurer who must deposit the money in the general fund.
     (9) If a city or county fails to comply with section 501 of this act, no tax may be distributed in the subsequent fiscal year until such time as the city or county complies and the department calculates the state contribution amount according to subsection (10) of this section for the fiscal year.
     (10)(a) For each fiscal year that a city or county imposes the tax under the authority of this section, the department must approve the amount of taxes that may be distributed to the city or county. The amount approved by the department under this subsection is the lesser of:
     (i) The state contribution;
     (ii) The amount of project award granted by the department as provided in section 401 of this act; or
     (iii) The total amount of revenues from local public sources dedicated in the preceding calendar year, as reported in the required annual report under section 501 of this act.
     (b) A city or county may not receive, in any fiscal year, more revenues from taxes imposed under the authority of this section than the amount approved annually by the department.
     (11) The amount of tax distributions received from taxes imposed under the authority of this section by all cities and counties is limited annually to not more than the amount of annual state contribution limit.
     (12) The definitions in section 102 of this act apply to this section subject to subsection (13) of this section and unless the context clearly requires otherwise.
     (13) For purposes of this section, the following definitions apply:
     (a) "Local sales and use taxes" means sales and use taxes imposed by cities, counties, public facilities districts, and other local governments under the authority of this chapter, chapter 67.28 or 67.40 RCW, or any other chapter, and that are credited against the state sales and use taxes.
     (b) "State sales and use taxes" means the taxes imposed in RCW 82.08.020(1) and 82.12.020(1).
     (c) "Initiation of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031.

NEW SECTION.  Sec. 602   USE OF SALES AND USE TAX FUNDS. Money collected from the taxes imposed under section 601 of this act may be used only for the purpose of paying debt service on bonds issued under the authority in section 701 of this act.

NEW SECTION.  Sec. 701   ISSUANCE OF GENERAL OBLIGATION BONDS. (1) A sponsoring local government creating a revitalization area and authorizing the use of local revitalization financing may incur general indebtedness, and issue general obligation bonds, to finance the public improvements and retire the indebtedness in whole or in part from local revitalization financing it receives, subject to the following requirements:
     (a) The ordinance adopted by the sponsoring local government creating the revitalization area and authorizing the use of local revitalization financing indicates an intent to incur this indebtedness and the maximum amount of this indebtedness that is contemplated; and
     (b) The sponsoring local government includes this statement of the intent in all notices required by RCW 39.89.050.
     (2) The general indebtedness incurred under subsection (1) of this section may be payable from other tax revenues, the full faith and credit of the sponsoring local government, and nontax income, revenues, fees, and rents from the public improvements, as well as contributions, grants, and nontax money available to the local government for payment of costs of the public improvements or associated debt service on the general indebtedness.
     (3) In addition to the requirements in subsection (1) of this section, a sponsoring local government creating a revitalization area and authorizing the use of local revitalization financing may require any nonpublic participants to provide adequate security to protect the public investment in the public improvement within the revitalization area.
     (4) Bonds issued under this section must be authorized by ordinance of the sponsoring local government and may be issued in one or more series and must bear a date or dates, be payable upon demand or mature at a time or times, bear interest at a rate or rates, be in a denomination or denominations, be in a form either coupon or registered as provided in RCW 39.46.030, carry conversion or registration privileges, have a rank or priority, be executed in a manner, be payable in a medium of payment, at a place or places, and be subject to terms of redemption with or without premium, be secured in a manner, and have other characteristics, as may be provided by an ordinance or trust indenture or mortgage issued pursuant thereto.
     (5) The sponsoring local government may annually pay into a fund to be established for the benefit of bonds issued under this section a fixed proportion or a fixed amount of any local property tax allocation revenues derived from property or business activity within the revitalization area containing the public improvements funded by the bonds, the payment to continue until all bonds payable from the fund are paid in full. The local government may also annually pay into the fund established in this section a fixed proportion or a fixed amount of any revenues derived from taxes imposed under section 601 of this act, such payment to continue until all bonds payable from the fund are paid in full. Revenues derived from taxes imposed under section 601 of this act are subject to the use restriction in section 602 of this act.
     (6) In case any of the public officials of the sponsoring local government whose signatures appear on any bonds or any coupons issued under this chapter cease to be the officials before the delivery of the bonds, the signatures must, nevertheless, be valid and sufficient for all purposes, the same as if the officials had remained in office until the delivery. Any provision of any law to the contrary notwithstanding, any bonds issued under this chapter are fully negotiable.
     (7) Notwithstanding subsections (4) through (6) of this section, bonds issued under this section may be issued and sold in accordance with chapter 39.46 RCW.

NEW SECTION.  Sec. 702   USE OF TAX REVENUE FOR BOND REPAYMENT. A sponsoring local government that issues bonds under section 701 of this act to finance public improvements may pledge for the payment of such bonds all or part of any local property tax allocation revenues derived from the public improvements. The sponsoring local government may also pledge all or part of any revenues derived from taxes imposed under section 601 of this act and held in connection with the public improvements. All of such tax revenues are subject to the use restriction in section 602 of this act.

NEW SECTION.  Sec. 703   LIMITATION ON BONDS ISSUED. The bonds issued by a local government under section 701 of this act to finance public improvements do not constitute an obligation of the state of Washington, either general or special.

NEW SECTION.  Sec. 801   SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 802   CAPTIONS AND PART HEADINGS NOT LAW. Captions and part headings used in this act do not constitute any part of the law.

NEW SECTION.  Sec. 803   AUTHORITY. Nothing in this act may be construed to give port districts the authority to impose a sales or use tax under chapter 82.14 RCW.

NEW SECTION.  Sec. 804   ADMINISTRATION BY THE DEPARTMENT. The department of revenue may adopt any rules under chapter 34.05 RCW it considers necessary for the administration of this chapter.

NEW SECTION.  Sec. 805   Sections 101 through 401 and 701 through 804 of this act constitute a new chapter in Title 39 RCW.

NEW SECTION.  Sec. 806   Sections 601 and 602 of this act are each added to chapter 82.14 RCW.