BILL REQ. #:  S-2000.2 

Read first time 03/05/09.   Referred to Committee on Ways & Means.

     AN ACT Relating to lodging taxes for, and certain transfers from, the state convention and trade center account; amending RCW 67.40.045, 67.40.107, 67.40.170, 67.40.190, and 67.28.181; reenacting and amending RCW 67.40.040; adding a new section to chapter 67.40 RCW; repealing RCW 67.40.130 and 67.40.140; and declaring an emergency.

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

Sec. 1   RCW 67.40.040 and 2008 c 329 s 917 and 2008 c 328 s 6011 are each reenacted and amended to read as follows:
     (1) The proceeds from the sale of the bonds authorized in RCW 67.40.030, proceeds of the taxes imposed under RCW 67.40.090 and ((67.40.130)) section 3 of this act, and all other moneys received by the state convention and trade center from any public or private source which are intended to fund the acquisition, design, construction, expansion, exterior cleanup and repair of the Eagles building, conversion of various retail and other space to meeting rooms, purchase of the land and building known as the McKay Parcel, development of low-income housing, or renovation of the center((, and those expenditures authorized under RCW 67.40.170)) shall be deposited in the state convention and trade center account hereby created in the state treasury and in such subaccounts as are deemed appropriate by the directors of the corporation.
     (2) Moneys in the account, including unanticipated revenues under RCW 43.79.270, shall be used exclusively for the following purposes in the following priority:
     (a) For reimbursement of the state general fund under RCW 67.40.060;
     (b) After appropriation by statute:
     (i) For payment of expenses incurred in the issuance and sale of the bonds issued under RCW 67.40.030;
     (ii) ((For expenditures authorized in RCW 67.40.170, and)) During the 2007-2009 biennium, the legislature may transfer from the state convention and trade center account to the Washington housing trust account such amounts as reflect the excess fund balance in the account; and during the 2007-2009 biennium, the legislature may transfer from the state convention and trade center account to the general fund such amounts as reflect the excess fund balance in the account;
     (iii) For acquisition, design, and construction of the state convention and trade center;
     (iv) For debt service for the acquisition, design, and construction and retrofit of the museum of history and industry museum property or other future expansions of the convention center as approved by the legislature; and
     (v) For reimbursement of any expenditures from the state general fund in support of the state convention and trade center; and
     (c) For transfer to the state convention and trade center operations account.
     (3) The corporation shall identify with specificity those facilities of the state convention and trade center that are to be financed with proceeds of general obligation bonds, the interest on which is intended to be excluded from gross income for federal income tax purposes. The corporation shall not permit the extent or manner of private business use of those bond-financed facilities to be inconsistent with treatment of such bonds as governmental bonds under applicable provisions of the internal revenue code of 1986, as amended.
     (4) In order to ensure consistent treatment of bonds authorized under RCW 67.40.030 with applicable provisions of the Internal Revenue Code of 1986, as amended, and notwithstanding RCW 43.84.092, investment earnings on bond proceeds deposited in the state convention and trade center account in the state treasury shall be retained in the account, and shall be expended by the corporation for the purposes authorized under chapter 386, Laws of 1995 and in a manner consistent with applicable provisions of the internal revenue code of 1986, as amended.
     (5) Subject to the conditions in subsection (6) of this section, ((starting in fiscal year 2008)) and contingent on the imposition of the tax in section 3 of this act, the state treasurer shall transfer:
     (a) The sum of four million dollars, or as much as may be available pursuant to conditions set forth in this section, from the state convention and trade center account to the tourism enterprise account, with the maximum transfer being four million dollars per fiscal year; and
     (b) The sum of five hundred thousand dollars, or as much as may be available pursuant to conditions set forth in this section, from the state convention and trade center account to the tourism development and promotion account, with the maximum transfer being five hundred thousand dollars per fiscal year.
     (6)(a) Funds required for debt service payments and reserves for bonds issued under RCW 67.40.030; for debt service authorized under RCW 67.40.170; and for the issuance and sale of financial instruments associated with the acquisition, design, construction, and retrofit of the museum of history and industry museum property or for other future expansions of the center, as approved by the legislature, shall be maintained within the state convention and trade center account.
     (b) ((No less than six million one hundred fifty thousand dollars per year shall be retained in the state convention and trade center account for funding capital maintenance as required by the center's long-term capital plan, facility enhancements, unanticipated replacements, and operating reserves for the convention center operation. This amount shall be escalated annually as follows:
     (i) Four percent for annual inflation for capital maintenance, repairs, and replacement;
     (ii) An additional two percent for enhancement to the facility; and
     (iii) An additional three percent for growth in expenditure due to aging of the facility and the need to maintain an operating reserve.
     (c))) Sufficient funds shall be reserved within the state convention and trade center account to fund operating appropriations for the annual operation of the convention center.

Sec. 2   RCW 67.40.045 and 1995 c 386 s 14 are each amended to read as follows:
     (1) The director of financial management, in consultation with the chairpersons of the appropriate fiscal committees of the senate and house of representatives, may authorize temporary borrowing from the state treasury for the purpose of covering cash deficiencies in the state convention and trade center account resulting from project completion costs. Subject to the conditions and limitations provided in this section, lines of credit may be authorized at times and in amounts as the director of financial management determines are advisable to meet current and/or anticipated cash deficiencies. Each authorization shall distinctly specify the maximum amount of cash deficiency which may be incurred and the maximum time period during which the cash deficiency may continue. The total amount of borrowing outstanding at any time shall never exceed the lesser of:
     (a) $58,275,000; or
     (b) An amount, as determined by the director of financial management from time to time, which is necessary to provide for payment of project completion costs.
     (2) Unless the due date under this subsection is extended by statute, all amounts borrowed under the authority of this section shall be repaid to the state treasury by June 30, 1999, together with interest at a rate determined by the state treasurer to be equivalent to the return on investments of the state treasury during the period the amounts are borrowed. Borrowing may be authorized from any excess balances in the state treasury, except the agricultural permanent fund, the Millersylvania park permanent fund, the state university permanent fund, the normal school permanent fund, the permanent common school fund, and the scientific permanent fund.
     (3) As used in this section, "project completion" means:
     (a) All remaining development, construction, and administrative costs related to completion of the convention center; and
     (b) Costs of the McKay building demolition, Eagles building rehabilitation, development of low-income housing, and construction of rentable retail space and an operable parking garage.
     (4) It is the intent of the legislature that project completion costs be paid ultimately from the following sources:
     (a) $29,250,000 to be received by the corporation under an agreement and settlement with Industrial Indemnity Co.;
     (b) $1,070,000 to be received by the corporation as a contribution from the city of Seattle;
     (c) $20,000,000 from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;
     (d) $4,765,000 for contingencies and project reserves from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;
     (e) $13,000,000 for conversion of various retail and other space to meeting rooms, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;
     (f) $13,300,000 for expansion at the 900 level of the facility, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;
     (g) $10,400,000 for purchase of the land and building known as the McKay Parcel, for development of low-income housing, for development, construction, and administrative costs related to completion of the state convention and trade center, including settlement costs related to construction litigation, and for partially refunding obligations under the parking garage revenue note issued by the corporation to Industrial Indemnity Company in connection with the agreement and settlement identified in (a) of this subsection, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090. All proceeds from any sale of the McKay parcel shall be deposited in the state convention and trade center account and shall not be expended without appropriation by law;
     (h) $300,000 for Eagles building exterior cleanup and repair, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090; and
     (i) The proceeds of the sale of any properties owned by the state convention and trade center that are not planned for use for state convention and trade center operations, with the proceeds to be used for development, construction, and administrative costs related to completion of the state convention and trade center, including settlement costs related to construction litigation.
     (5) The borrowing authority provided in this section is in addition to the authority to borrow from the general fund to meet the bond retirement and interest requirements set forth in RCW 67.40.060. To the extent the specific conditions and limitations provided in this section conflict with the general conditions and limitations provided for temporary cash deficiencies in RCW 43.88.260 (section 7, chapter 502, Laws of 1987), the specific conditions and limitations in this section shall govern.
     (6) For expenditures authorized under RCW 67.40.170, the corporation may use the proceeds of the special excise tax authorized under RCW 67.40.090, the sales tax authorized under ((RCW 67.40.130)) section 3 of this act, contributions to the corporation from public or private participants, and investment earnings on any of the funds listed in this subsection.

NEW SECTION.  Sec. 3   A new section is added to chapter 67.40 RCW to read as follows:
     (1) The legislative authority of a city may, by resolution or ordinance for the purposes authorized under RCW 67.40.170 and 67.40.190, fix and impose a sales tax on the charge for rooms to be used for lodging by transients. Such tax must be collected from the persons who are taxable by the state under RCW 67.40.090, but only those taxable persons located within the boundaries of the city imposing the tax. The rate of such tax imposed by a city is two percent of the charge for the rooms to be used for lodging by transients. The tax authorized under this section must be levied and collected in the same manner as those taxes authorized under chapter 82.14 RCW. The provisions of chapter 82.32 RCW apply to this tax.
     (2) As used in this section, the term "city" means a municipality that has within its boundaries a convention and trade facility as described in RCW 67.40.020.

Sec. 4   RCW 67.40.107 and 2008 c 137 s 4 are each amended to read as follows:
     The tax imposed in RCW 67.40.090 and the tax authorized under ((RCW 67.40.130)) section 3 of this act do not apply to sales of temporary medical housing exempt under RCW 82.08.997.

Sec. 5   RCW 67.40.170 and 1995 c 386 s 5 are each amended to read as follows:
     All taxes levied and collected under ((RCW 67.40.130)) section 3 of this act shall be credited to the state convention and trade center account in the state treasury and used solely by the corporation formed under RCW 67.40.020 for the purpose of paying all or any part of the cost associated with: The financing, design, acquisition, construction, equipping, operating, maintaining, and reequipping of convention center facilities related to the expansion recommended by the convention center expansion and city facilities task force created under section 148, chapter 6, Laws of 1994 sp. sess.; the acquisition, construction, and relocation costs of replacement housing; and the repayment of loans and advances from the state, including loans authorized previously under this chapter, or to pay or secure the payment of all or part of the principal of or interest on any state bonds issued for purposes authorized under this chapter.

Sec. 6   RCW 67.40.190 and 1995 c 386 s 7 are each amended to read as follows:
     (1) Moneys received from any tax imposed under ((RCW 67.40.130)) section 3 of this act shall be used for the purpose of providing funds to the corporation for the costs associated with paying all or any part of the cost associated with: The financing, design, acquisition, construction, equipping, operating, maintaining, and reequipping of convention center facilities; the acquisition, construction, and relocation costs of replacement housing; and repayment of loans and advances from the state, including loans authorized previously under this chapter, or to pay or secure the payment of all or part of the principal of or interest on any state bonds issued for purposes authorized under this chapter.
     (2) If any of the revenue from any local sales tax authorized under ((RCW 67.40.130)) section 3 of this act shall have been encumbered or pledged by the state to secure the payment of any state bonds as authorized under RCW 67.40.030, then as long as that agreement or pledge shall be in effect, the legislature shall not withdraw from the municipality the authority to levy and collect the tax ((or the tax credit authorized under RCW 67.40.130 and 67.40.140)) under section 3 of this act.

Sec. 7   RCW 67.28.181 and 2004 c 79 s 8 are each amended to read as follows:
     (1) The legislative body of any municipality may impose an excise tax on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW. The rate of tax shall not exceed the lesser of two percent or a rate that, when combined with all other taxes imposed upon sales of lodging within the municipality under this chapter and chapters 36.100, 67.40, 82.08, and 82.14 RCW, equals twelve percent. A tax under this chapter shall not be imposed in increments smaller than tenths of a percent.
     (2) Notwithstanding subsection (1) of this section:
     (a) If a municipality was authorized to impose taxes under this chapter or RCW 67.40.100 or both with a total rate exceeding four percent before July 27, 1997, such total authorization shall continue through January 31, 1999, and thereafter the municipality may impose a tax under this section at a rate not exceeding the rate actually imposed by the municipality on January 31, 1999.
     (b) If a city or town, other than a municipality imposing a tax under (a) of this subsection, is located in a county that imposed taxes under this chapter with a total rate of four percent or more on January 1, 1997, the city or town may not impose a tax under this section.
     (c) If a city has a population of four hundred thousand or more and is located in a county with a population of one million or more, the rate of tax imposed under this chapter by the city shall not exceed the lesser of four percent or a rate that, when combined with all other taxes imposed upon sales of lodging in the municipality under this chapter and chapters 36.100, 67.40, 82.08, and 82.14 RCW, equals ((fifteen)) seventeen and two-tenths percent.
     (d) If a municipality was authorized to impose taxes under this chapter or RCW 67.40.100, or both, at a rate equal to six percent before January 1, 1998, the municipality may impose a tax under this section at a rate not exceeding the rate actually imposed by the municipality on January 1, 1998.
     (3) Any county ordinance or resolution adopted under this section shall contain a provision allowing a credit against the county tax for the full amount of any city or town tax imposed under this section upon the same taxable event.

NEW SECTION.  Sec. 8   The following acts or parts of acts are each repealed:
     (1) RCW 67.40.130 (Convention and trade facilities -- Tax on transient lodging authorized -- Rates) and 1995 c 386 s 1; and
     (2) RCW 67.40.140 (Convention and trade facilities -- Remittance of tax -- Credit) and 1995 c 386 s 2.

NEW SECTION.  Sec. 9   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.