BILL REQ. #:  S-3860.1 

Read first time 01/19/10.   Referred to Committee on Economic Development, Trade & Innovation.

     AN ACT Relating to local conservation area financing; amending RCW 84.55.010 and 36.70A.080; 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. 101   INTENT. (1) The legislature has adopted planning goals through the growth management act, chapter 36.70A RCW, to conserve productive forest and agricultural lands and discourage incompatible uses, to encourage development in urban areas where adequate public facilities and services exist or can be provided efficiently, and to reduce sprawl, and in RCW 36.70A.090 has encouraged the use of innovative land use management techniques, including the transfer of development rights, to meet these planning goals.
     (2) The legislature also has recognized in RCW 43.362.005 that creation of a regional transfer of development rights marketplace in central Puget Sound will assist in conserving rural, agricultural, and forest land.
     (3) The legislature finds that a regional transfer of development rights marketplace is most urgently needed for conserving a subset of these lands: Agricultural and forest land of long-term commercial significance in the central Puget Sound where a rapid and increasing loss of such lands is occurring. Transferring the development rights from these lands of statewide importance to receiving cities in the central Puget Sound will help keep them in farming and forestry. Targeting a state program on conservation of agricultural and forest land of long-term commercial significance, and not on rural lands in general, will increase the likelihood that enough development rights from these lands will be absorbed by receiving cities to secure the conservation of sufficient acres of agricultural and forest land to maintain a viable industry of farming and forestry in the central Puget Sound. Counties and cities are encouraged to use all of the mechanisms available to them under the growth management act and zoning laws to conserve other rural lands, such as land whose conservation meets other state and regionally adopted priorities.
     (4) The legislature finds that such a central Puget Sound marketplace will also encourage compact development while preventing sprawl, thereby advancing state goals regarding climate change and protection of Puget Sound. Transferring growth from agricultural and forest land of long-term commercial significance will reduce costs to the counties that otherwise would be responsible for the provision of infrastructure and other services to development on these lands. Transferring growth to urban areas where public facilities and services exist or can be provided efficiently and cost-effectively will ensure vibrant, economically viable communities. Directing growth to communities where people can live close to where they work or have access to transportation choices will reduce vehicle miles traveled, reducing fuel consumption and emissions that contribute to climate change. Directing growth to these communities will also help reduce the impacts of storm water runoff to Puget Sound by reducing impervious surfaces in watershed uplands.
     (5) The legislature further finds that, to be successful, a regional transfer of development rights marketplace in the central Puget Sound specifically focused on agricultural and forest land of long-term commercial significance must be accompanied by adequate funding for development of public facilities and services within the cities willing to accept these transferable development rights.
     (6) Accordingly, the legislature finds that it is in the public interest to invest in a regional transfer of development rights marketplace in the central Puget Sound specifically focused on agricultural and forest land of long-term commercial significance. The legislature recognizes that the state as a whole benefits from investment in public infrastructure that facilitates the transfer of development from agricultural and forest lands of long-term commercial significance into urban areas. Public infrastructure investment stimulates business activity and helps create jobs, stimulates the redevelopment of brown fields and blighted areas in urban areas, 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. 201   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Allocation rate" means the number of development rights per parcel that a sending area landowner can sell for a given parcel under the zoning in effect upon the effective date of this act.
     (2) "Annual state contribution limit" means five million dollars statewide per fiscal year.
     (3) "Assessed value" means the valuation of taxable real property as placed on the last completed assessment roll.
     (4) "By-right permitting" means that project applications for permits that use transferable development rights would be subject to administrative review. Administrative review allows a local planning official to approve a project without noticed public hearings.
     (5) "Department" means the department of revenue.
     (6) "Eligible county" means any county that borders Puget Sound, that has a population of six hundred thousand or more, and that has an established program for transfer of development rights.
     (7) "Employment" means total employment in a county or city, as applicable, estimated by the state office of financial management.
     (8) "Exchange rate" means the development bonus or increment of development beyond what base zoning allows that is assigned to a development right for use in a receiving area.
     (9) "Fiscal year" means the twelve-month period beginning July 1st and ending the following June 30th.
     (10) "Local conservation finance area" means the geographic area identified by a sponsoring city, from which local sales and use tax increments are estimated and property tax allocation revenues are derived for local conservation area financing.
     (11) "Local conservation area financing" means the use of revenues from local public sources and from the local option sales and use tax authorized in section 1001 of this act, in each case dedicated to pay the principal and interest on bonds authorized under section 1101 of this act or to pay public improvement costs within the local conservation finance area.
     (12) "Local government" means any incorporated city within an eligible county.
     (13) "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 conservation area financing.
     (14) "Local sales and use tax increment" means the estimated annual increase in local sales and use taxes as determined by the local government in the calendar years following the approval of the local conservation finance area by the department from taxable activity within the local conservation finance area.
     (15) "Local sales and use taxes" means local revenues derived from the imposition of sales and use taxes authorized in RCW 82.14.030.
     (16) "Ordinance" means any appropriate method of taking legislative action by a local government or taxing district.
     (17) "Participating local government" means any local government and any eligible county having a local conservation finance area within its geographic boundaries that has taken action as provided in section 801 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 conservation area financing.
     (18) "Participating taxing district" means a taxing district having a local conservation finance area within its geographic boundaries.
     (19) "Population" means the population of a city or county, as applicable, estimated by the state office of financial management.
     (20) "Property tax allocation revenue base value" means the assessed value of real property located within a local conservation finance area, less the property tax allocation revenue value.
     (21)(a)(i) "Property tax allocation revenue value" means that portion of any increase in the assessed value of real property in a local conservation finance area equal to the sponsoring city ratio and 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 local conservation finance 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 local conservation finance 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 local conservation finance area is approved by the department.
     (ii) Increases in the assessed value of real property in a local conservation finance 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 that portion equal to the sponsoring city ratio of any increase in the assessed value of:
     (i) New construction consisting of an entire building in the years following the initial year, unless the building becomes exempt from property taxation; and
     (ii) Property developed using transferable development rights, as defined in this section, unless the property 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 local conservation finance 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 (21), "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.
     (22) "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 capitalized interest during construction and for up to six months following completion of construction, legal and other professional services, taxes, insurance, principal of and interest on bonds issued to finance public improvements, and any necessary reserves for bonds issued to finance public improvements; 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 conservation area financing to fund the costs of the public improvements.
     (23) "Public improvements" means:
     (a) Infrastructure improvements within the local conservation finance 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 facilities and improvements that support affordable housing as defined in RCW 43.63A.510;
     (ii) Providing maintenance and security for common or public areas in the local conservation finance area; or
     (iii) Historic preservation activities authorized under RCW 35.21.395.
     (24) "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.
     (25) "Receiving areas" are those lands within and designated by a receiving city in which transferable development rights from sending areas may be used.
     (26) "Receiving city" means any incorporated city with population plus employment equal to twenty-two thousand five hundred or greater within an eligible county.
     (27) "Receiving city allocated share" means the total number of transferable development rights from agricultural and forest land of long-term commercial significance within the eligible counties allocated to a receiving city under section 304(1) of this act, as updated under section 304(2) of this act.
     (28) "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.
     (29)(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 participating local governments based on its local sales and use tax increment, and local property tax allocation revenues, which are dedicated by a sponsoring city, participating local governments, and participating taxing districts, to pay principal of and interest on bonds issued under section 1101 of this act or to pay public improvement costs within the local conservation finance area; 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 to pay principal of and interest on bonds issued under section 1101 of this act or to pay public improvement costs within the local conservation finance area.
     (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.
     (30) "Sending areas" means those lands within an eligible county that meet conservation criteria as described in section 301 of this act.
     (31) "Sponsoring city" means a receiving city that accepts all or a portion of its receiving city allocated share, adopts a plan for development of adequate infrastructure within receiving areas in accordance with section 401 of this act, adopts a program in accordance with section 402 of this act for transfer of development rights, and creates one or more local conservation finance areas, all as specified in section 304(3) of this act.
     (32) "Sponsoring city allocated share" means the total number of transferable development rights from agricultural and forest land of long-term commercial significance within the eligible counties allocated to the sponsoring city under section 304(1) of this act, as updated under section 304(2) of this act, plus the total number of transferable development rights transferred to the sponsoring city from another receiving city under section 304(4) of this act.
     (33) "Sponsoring city ratio" means the sponsoring city specified portion divided by the sponsoring city allocated share multiplied by three-fourths; provided that no sponsoring city ratio shall apply until the sponsoring city has issued permits for properties within one or more local conservation finance areas that, on an aggregate basis, use development rights representing at least twenty-five percent of the sponsoring city specified portion. The sponsoring city ratio may be increased from time to time to reflect increases in the sponsoring city specified portion by the sponsoring city under section 401 of this act; provided that no increase in the sponsoring city ratio may apply until the sponsoring city has issued permits for properties within one or more local conservation finance areas that, on an aggregate basis, use development rights representing at least twenty-five percent of the increased sponsoring city specified portion.
     (34) "Sponsoring city specified portion" means all or the portion of a sponsoring city allocated share to be accommodated within one or more local conservation finance areas, as set forth in the sponsoring city's plan for development of adequate infrastructure within receiving areas under section 401 of this act, as may be amended as provided in section 401 of this act.
     (35) "State contribution" means the lesser of:
     (a) Five hundred thousand dollars;
     (b) The project award amount approved by the department based on the sponsoring city specified portion; or
     (c) The total amount of revenues from local public sources dedicated in the preceding calendar year to pay principal of and interest on bonds issued under section 1101 of this act or to pay public improvement costs within the local conservation finance area. Revenues from local public sources dedicated in the preceding calendar year that are in excess of the project award may be carried forward and used in later years for the purpose of this subsection (35)(c).
     (36) "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 city in an application under section 901 of this act and updated periodically as required in section 902 of this act.
     (37) "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 local conservation finance area in the years following the approval of the local conservation finance area by the department as determined by the sponsoring city in an application under section 901 of this act and updated periodically as required in section 902 of this act.
     (38) "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 1001 of this act for the applicable local conservation finance 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.
     (39) "Taxing district" means any city, county, or port that levies or has levied for it regular property taxes upon real property located within a proposed or approved local conservation finance area.
     (40) "Transfer of development rights" includes methods for protecting land from development by voluntarily removing the development rights from a sending area and transferring them to one or more receiving areas for the purpose of increasing development density or intensity in the receiving area.
     (41) "Transferable development rights" means a right to develop one or more residential units in a sending area that can be sold and transferred for use consistent with an exchange rate for development in a designated receiving area consistent with this act.

NEW SECTION.  Sec. 301   DESIGNATION OF SENDING AREAS--INCLUSION OF AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE. An eligible county must designate all agricultural and forest land of long-term commercial significance within its jurisdiction as sending areas for conservation under the eligible county's program for transfer of development rights. The development rights from all such agricultural and forest land of long-term commercial significance within the eligible counties must be available for transfer to receiving cities under this chapter.

NEW SECTION.  Sec. 302   DEVELOPMENT RIGHTS FROM AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE. (1) The number of development rights from agricultural and forest land of long-term commercial significance under land use or zoning classifications in effect as of the effective date of this act that a sending site within a sending area is eligible to send to a receiving site under this act must be determined by the eligible county under its program for transfer of development rights as of the effective date of this act.
     (2) The number of development rights includes the development rights from agricultural and forest lands of long-term commercial significance that have been previously issued by the eligible county as transferable development rights but that have not as yet been transferred to a receiving area under the eligible county's program for transfer of development rights as of the effective date of this act.
     (3) The number of development rights do not include development rights from agricultural and forest lands of long-term commercial significance that have previously been removed or extinguished, such as through an existing conservation easement, except where the development rights have been specifically issued by the eligible county as transferable development rights as of the effective date of this act.

NEW SECTION.  Sec. 303   DETERMINATION OF TOTAL NUMBER OF DEVELOPMENT RIGHTS FOR AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE. (1) On or before September 1, 2010, each eligible county must report to the Puget Sound regional council the total number of development rights from agricultural and forest land of long-term commercial significance within the eligible county that may be available for allocation to receiving cities under this act, as determined under section 302 of this act.
     (2) On or before September 1, 2017, and September 1, 2024, each eligible county must report to the Puget Sound regional council an updated total number of development rights from agricultural and forest land of long-term commercial significance within the eligible county under land use or zoning classifications in effect as of the effective date of this act that still may be available for allocation to receiving cities under this act.

NEW SECTION.  Sec. 304   ALLOCATION AMONG LOCAL GOVERNMENTS OF DEVELOPMENT RIGHTS FROM AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE. (1) The department of commerce must work with the Puget Sound regional council to allocate among receiving cities the total number of development rights reported by eligible counties under section 303 of this act. Each receiving city allocated share must be determined by the Puget Sound regional council, in consultation with eligible counties and receiving cities, based on factors such as actual and projected population growth.
     (2) The department of commerce, working with the Puget Sound regional council, must report to each receiving city its receiving city allocated share on or before March 1, 2011, and must provide updated receiving city allocated shares to each receiving city on or before March 1, 2018, and March 1, 2025.
     (3) A receiving city may become a sponsoring city by accepting all or a portion of its receiving city allocated share, and adopting a plan in accordance with section 401 of this act for development of adequate infrastructure within one or more receiving areas, or portions thereof, within the receiving city sufficient to accommodate its sponsoring city specified portion, adopting a program in accordance with section 402 of this act for transfer of the development rights into the receiving area or receiving areas, and adopting one or more local conservation finance areas within the limitations in section 603 of this act and in accordance with sections 601 and 602 of this act to pay for the public improvements.
     (4) A receiving city may, by interlocal agreement, transfer all or a portion of its receiving city allocated share to a sponsoring city. The transferred portion of the receiving city allocated share must be included in the sponsoring city allocated share for the purposes of sections 701 and 901 of this act.

NEW SECTION.  Sec. 401   DEVELOPMENT PLAN FOR ADEQUATE INFRASTRUCTURE. (1) Before adopting an ordinance creating one or more local conservation finance areas under section 602 of this act, a sponsoring city must adopt a plan for development of adequate infrastructure within one or more receiving areas, or portions thereof, within one or more local conservation finance areas sufficient to accommodate, on an aggregate basis, all of the sponsoring city allocated share or a specified portion equal to or greater than twenty percent of the sponsoring city allocated share, in each case over a specified time period not to exceed ten years following creation of the local conservation finance area or areas.
     (2) The plan must be developed in consultation with taxing districts within the local conservation finance areas to be created, be consistent with the transfer of development rights policies or development regulations adopted by the sponsoring city under section 402 of this act, specify the public improvements to be financed using local conservation area financing under section 601 of this act, estimate the number of development rights that will be used within the local conservation finance areas to be created, and estimate the cost of the public improvements.
     (3) A plan adopted under this section may be revised by the sponsoring city, in consultation with the taxing districts within the local conservation finance areas, to increase the sponsoring city specified portion or to account for updated receiving city allocated shares pursuant to section 304(2) of this act.

NEW SECTION.  Sec. 402   PROGRAM FOR TRANSFER OF DEVELOPMENT RIGHTS INTO RECEIVING AREAS--REQUIREMENTS. (1) Before adopting an ordinance creating one or more local conservation finance areas under section 601 of this act, a sponsoring city must adopt transfer of development rights policies or implement development regulations that:
     (a) Comply with chapter 36.70A RCW;
     (b) Designate one or more receiving areas;
     (c) Adopt permitting or environmental review incentives for developers to participate consistent with subsection (2) of this section;
     (d) Adopt an exchange rate;
     (e) Are not based upon downzone(s) within one or more receiving areas solely to create a market for the transferable development rights; and
     (f) Require that the sale of a development right from agricultural or forest land of long-term commercial significance be evidenced by its current or prior removal or extinguishment from the sending site, such as through a conservation easement on the sending site.
     (2) Developer incentives should be designed to:
     (a) Accommodate the densities or intensities reasonably likely to result from absorption of the sponsoring city specified portion identified in the plan under section 401 of this act;
     (b) Include streamlined permitting strategies such as by-right permitting;
     (c) Include streamlined environmental review strategies such as development and substantial environmental review of a subarea plan for a receiving area that benefits projects that use transferable development rights, adoption of a categorical exemption for infill under RCW 43.21C.229 for a receiving area, and adoption of a planned action under RCW 43.21C.031 for the receiving area; and
     (d) Each sponsoring city may determine, at its option, what developer incentives to adopt within its jurisdiction.
     (3) Exchange rates should be designed to:
     (a) Create a marketplace in which development rights are priced at a level at which sending site landowners are willing to sell and receiving site developers are willing to buy development rights;
     (b) Accommodate the densities or intensities reasonably likely to result from absorption of the sponsoring city specified portion identified in the plan under section 401 of this act;
     (c) Allow for translation to commodities other than residential density, such as building height, commercial floor area, parking ratio, impervious surface, parkland and open space, setbacks, floor area ratio, and carbon offsets;
     (d) Allow for exemptions from other land use or building requirements; and
     (e) Be flexible, allowing modification on a project-by-project basis.
     (4) A sponsoring city must designate all agricultural and forest land of long-term commercial significance within the eligible counties as available sending areas for conservation from which it may receive transferable development rights to be used in its designated receiving area(s).
     (5) A sponsoring city, in accordance with its existing comprehensive planning and development regulation authority under chapter 36.70A RCW, and in accordance with section 1201 of this act, may elect to adopt an optional comprehensive plan element and optional development regulations that apply within one or more receiving areas that are, or that are intended to become local conservation finance areas under this act.

NEW SECTION.  Sec. 403   DEVELOPMENT RIGHTS AVAILABLE FOR TRANSFER TO RECEIVING CITIES. Only development rights from agricultural and forest land of long-term commercial significance within the eligible counties, as determined under section 302 of this act and reported under section 303 of this act, may be available for transfer to receiving cities in accordance with this act.

NEW SECTION.  Sec. 501   TECHNICAL ASSISTANCE. Subject to the availability of funds appropriated for this specific purpose or other source of funding made available for this specific purpose, the department of commerce must provide the technical assistance described in RCW 43.362.030(4) to implement the regional transfer of development rights program under this chapter.

NEW SECTION.  Sec. 502   QUANTITATIVE AND QUALITATIVE PERFORMANCE MEASURES--REPORTING--POSTING ON WEB SITE. The department of commerce must develop quantitative and qualitative performance measures for monitoring the regional transfer of development rights program under this chapter. The performance measures may address conservation of agricultural and forest land of long-term commercial significance within the eligible counties and creation of compact communities within the receiving cities, as well as other measures identified by the department. The department of commerce may require eligible counties and sponsoring cities to report on these performance measures biannually. The department of commerce must compile any performance measure information that has been reported by the eligible counties and sponsoring cities and post it on its web site.

NEW SECTION.  Sec. 601   CONDITIONS. A sponsoring city may finance public improvements using local conservation area financing subject to the following conditions:
     (1) The sponsoring city has adopted an ordinance designating one or more local conservation finance areas within its boundaries and specified the public improvements proposed to be financed in whole or in part with the use of local conservation area financing;
     (2) The public improvements proposed to be financed in whole or in part using local conservation area financing are expected to encourage private development within the applicable local conservation finance area, to increase the fair market value of real property within the applicable local conservation finance area, and are identified in the plan under section 401 of this act;
     (3) The sponsoring city:
     (a) Has entered into a contract with a private developer that owns or has an option to purchase transferable development rights; or
     (b) Has received a letter of intent from a private developer that owns or has an option to purchase transferable development rights, which contract or letter of intent relates to the developer's plans for the development of private improvements within the applicable local conservation finance area;
     (4) The sponsoring city may not use local conservation area 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;
     (5) The governing body of the sponsoring city must make findings that local conservation area financing:
     (a) Will not be used for the purpose of relocating a business from outside the local conservation finance area, but within this state, into the local conservation finance 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 local conservation finance area; and
     (c) Will be used exclusively in areas within the jurisdiction of the sponsoring city deemed in need of either economic development or redevelopment, or both, and absent the financing available under this act the proposed economic development or redevelopment would more than likely not occur; and
     (6) The governing body of the sponsoring city finds that the public improvements proposed to be financed in whole or in part using local conservation area financing are reasonably likely to:
     (a) Increase private investment within the local conservation finance area;
     (b) Increase employment within the local conservation finance area;
     (c) Result in the use within the local conservation finance areas of the sponsoring city specified portion identified in the plan under section 401 of this act; and
     (d) Generate, over the period of time that the local sales and use tax will be imposed under section 1001 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. 602   CREATING A LOCAL CONSERVATION FINANCE AREA. (1) Before adopting an ordinance creating one or more local conservation finance areas, a sponsoring city must:
     (a) Provide notice to all taxing districts and local governments with geographic boundaries within the proposed local conservation finance areas of the sponsoring city's intent to create one or more local conservation finance areas. Notice must be provided in writing to the governing body of the taxing districts and local governments at least one hundred twenty 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 local conservation finance areas;
     (ii) The date for the public hearing as required by (b) of this subsection;
     (iii) The earliest anticipated date when the sponsoring city will take action to adopt the proposed local conservation finance areas;
     (iv) Whether the sponsoring city expects to issue bonds pursuant to section 1101 of this act and, if so, the estimated principal amount of the bonds; and
     (v) The name of a contact person with the phone number of the sponsoring city and mailing address where a copy of an ordinance adopted under section 604 or 605 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 conservation area financing. Notice of the public hearing must be published in a newspaper of general circulation within the proposed local conservation finance areas at least ten days before the public hearing and posted in at least six conspicuous public places located in each proposed local conservation finance 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 conservation area financing, describe any other sources of revenue to finance the public improvements, describe the boundaries of the proposed local conservation finance areas, and estimate the period during which local conservation area financing is contemplated to be used. The public hearing may be held by either the governing body of the sponsoring city, or a committee of the governing body that includes at least a majority of the whole governing body.
     (2) To create one or more local conservation finance areas, a sponsoring city must adopt an ordinance that:
     (a) Includes within each local conservation finance area all or a portion of one or more receiving areas for transferable development rights;
     (b) Describes the public improvements proposed to be made in each local conservation finance area;
     (c) Describes the boundaries of each local conservation finance area, subject to the limitations in section 603 of this act;
     (d) Estimates the cost of the proposed public improvements and the portion of these costs to be financed by local conservation area financing;
     (e) 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 conservation area financing;
     (f) Provides the date when the use of local property tax allocation revenues will commence;
     (g) Provides the anticipated rate of sales and use tax under section 1001 of this act that the local government will impose if awarded a state contribution under this act; and
     (h) Provides the anticipated date when the sales and use tax in section 1001 of this act will be imposed.
     (3) The sponsoring city 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 local conservation finance area is located, and the department.

NEW SECTION.  Sec. 603   LIMITATIONS ON LOCAL CONSERVATION FINANCE AREAS. The designation of any local conservation finance area is subject to the following limitations:
     (1) A local conservation finance area is limited to contiguous tracts, lots, pieces, or parcels of land without the creation of islands of property not included in the local conservation finance area;
     (2) The boundaries may not be drawn to purposely exclude parcels where economic growth is unlikely to occur;
     (3) The public improvements paid with local conservation area financing must be located in the local conservation finance area;
     (4) All local conservation finance areas created by a sponsoring city cannot, in the aggregate, 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 city at the time the local conservation finance areas are created;
     (5) The boundaries of each local conservation finance 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 1001 of this act are used to pay the principal of and interest on bonds issued under section 1101 of this act or public improvement costs within the local conservation finance area, as provided under this chapter;
     (6) Each local conservation finance area must be geographically restricted to the location of the public improvement and adjacent locations that the sponsoring city finds to have a high likelihood of receiving direct positive business and economic impacts due to the public improvement, such as an urban center, areas designated for transit-oriented development, a neighborhood, or a block; and
     (7) All local conservation finance areas created by the sponsoring city must comprise, in the aggregate, an area that the sponsoring city determines (a) is sufficient to accommodate the sponsoring city specified portion, and (b) is no larger than reasonably necessary to accommodate the sponsoring city specified portion, within the context of the overall development planned for such area.

NEW SECTION.  Sec. 604   PARTICIPATING TAXING DISTRICTS. Taxing districts must allow the use of all of their local property tax allocation revenues for local conservation area financing.

NEW SECTION.  Sec. 605   OPTING IN OR OUT AS A PARTICIPATING LOCAL GOVERNMENT. (1) A local government or eligible county that has not opted out of the local conservation financing area pursuant to subsection (2) of this section must enter into an interlocal agreement as provided in chapter 39.34 RCW to participate in local conservation area financing with the sponsoring city.
     (2)(a) If a local government or an eligible county that imposes a sales and use tax under RCW 82.14.030 does not want to participate in the local conservation area financing of public improvements in a local conservation finance area, its governing body must adopt an ordinance and notify the sponsoring city that the local government or eligible county will not be a participating local government.
     (b) The local government or eligible county must provide a copy of the adopted ordinance and the notice to the sponsoring city creating the local conservation finance area before the anticipated date that the sponsoring city proposes to adopt an ordinance creating the local conservation finance area as provided in the notice required by section 602 of this act.

NEW SECTION.  Sec. 701   LOCAL PROPERTY TAX ALLOCATION REVENUES. (1) Commencing in the second calendar year following the date on which the sponsoring city certifies to the county treasurer that a sponsoring city ratio applies, the county treasurer must distribute receipts from regular taxes imposed on real property located in the local conservation finance area as follows:
     (a) Each participating taxing district and the sponsoring city 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 conservation area financing project in the taxing district; and
     (b) The sponsoring city 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 local conservation finance area. However, if there is no property tax allocation revenue value, the sponsoring city may not receive any additional regular property taxes under this subsection (1)(b). The sponsoring city 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 must be allocated to the participating taxing districts that levied regular property taxes, or have regular property taxes levied for them, in the local conservation finance area for collection that year in proportion to their regular tax levy rates for collection that year. The sponsoring city may request that the county treasurer transfer this additional portion of the property taxes to its designated agent. The sponsoring city must notify the county treasurer of any increase in the sponsoring city ratio at least one hundred eighty days prior to the first full calendar year for which the increased sponsoring city ratio will be used to calculate the property tax allocation revenue value. The portion of the tax receipts distributed to the sponsoring city 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 conservation area financing.
     (2) The county assessor must 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 city 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 local conservation finance 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 local conservation finance area of that portion of the sponsoring city's and each participating taxing district's regular property taxes levied upon the property tax allocation revenue value within that local conservation finance area is declared to be a public purpose of and benefit to the sponsoring city 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 city and participating taxing district or the consistency of any such levies with the uniformity requirement of Article VII, section 1 of the state Constitution.

Sec. 702   RCW 84.55.010 and 2006 c 184 s 1 are each amended to read as follows:
     Except as provided in this chapter, the levy for a taxing district in any year ((shall)) must be set so that the regular property taxes payable in the following year ((shall)) may not exceed the limit factor multiplied by the amount of regular property taxes lawfully levied for ((such)) the district in the highest of the three most recent years in which ((such)) the taxes were levied for ((such)) the district plus an additional dollar amount calculated by multiplying the increase in assessed value in that district resulting from new construction, increases in assessed value due to construction of electric generation wind turbine facilities classified as personal property, improvements to property, and any increase in the assessed value of state-assessed property or property within any local conservation finance area, as defined in section 201 of this act, in each case by the regular property tax levy rate of that district for the preceding year.

NEW SECTION.  Sec. 801   LOCAL SALES AND USE TAX INCREMENTS. (1) A participating 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 local conservation finance 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 cities and participating local governments are authorized to allocate some or all of their local sales and use tax increment to the sponsoring city as provided by section 605 of this act.
     (2) The department, upon request, must assist sponsoring cities in estimating sales and use tax revenues from estimated taxable activity in the proposed or adopted local conservation finance area. The sponsoring city must provide the department with accurate information describing the geographical boundaries of the local conservation finance area in an electronic format or in a manner as otherwise prescribed by the department.

NEW SECTION.  Sec. 901   APPLICATION PROCESS--DEPARTMENT OF REVENUE APPROVAL. (1) Prior to applying to the department to receive a state contribution for one or more local conservation finance areas, a sponsoring city must develop a plan in accordance with section 401 of this act and adopt the local conservation finance areas within the limitations in section 603 of this act and in accordance with sections 601 and 602 of this act.
     (2)(a) As a condition to imposing a sales and use tax under section 1001 of this act, a sponsoring city 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:
     (i) Information establishing that over the period of time that the local sales and use tax will be imposed under section 1001 of this act, increases in state and local property, sales, and use tax revenues as a result of public improvements in the local conservation finance area will be equal to or greater than the respective state and local contributions made under this chapter;
     (ii) Information demonstrating that the sponsoring city will meet the requirements necessary to receive the full amount of state contribution it is requesting on an annual basis;
     (iii) The amount of state contribution it is requesting;
     (iv) The anticipated effective date for imposing the tax under section 1001 of this act;
     (v) The estimated number of years that the tax will be imposed;
     (vi) The anticipated rate of tax to be imposed under section 1001 of this act should the sponsoring city be approved for a project award; and
     (vii) The anticipated date when any bonds under section 1101 of this act will be issued.
     (b) The department must 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 plan for development of adequate infrastructure within receiving areas developed under section 401 of this act, a copy of the adopted ordinance creating one or more local conservation finance areas as required in section 601 of this act, and copies of any adopted interlocal agreements from participating local governments.
     (3)(a) Project awards will be made to sponsoring cities that submit an application within a sixty-day application period designated by the department and whose application includes a plan developed under section 401 of this act that the department determines can reasonably be expected to result in use of the sponsoring city specified portion within the time period set forth therein.
     (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 applicants meeting the requirements set forth in (a) of this subsection, the amount of each project award will be adjusted so that the annual state contribution is allocated on a pro rata basis among all applicants meeting the requirements set forth in (a) of this subsection based on their then respective sponsoring city specified portions.
     (d) If the annual contribution limit is increased or if project award amounts are recaptured under subsection (6) of this section, applications will be accepted again during a sixty-day application period beginning sixty days after the effective date of the increase or recapture of project award amounts. The increased annual contribution limit or recaptured project awards will be allocated on a pro rata basis among all applicants meeting the requirements set forth in (a) of this subsection based on their then respective sponsoring city specified portions, taking into account any previous allocation of state contribution to the sponsoring city.
     (4) The department must notify the sponsoring city of approval or denial of a project award within sixty days of the department's receipt of the sponsoring city's application. Determination of a project award by the department is final. Notification must include the earliest date when the tax authorized under section 1001 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.
     (5) The department must begin accepting applications September 1, 2011.
     (6) If a sponsoring city receiving a project award in 2011 has not imposed a tax authorized under section 1001 of this act by September 1, 2018, the project award to such sponsoring city will be recaptured and become available for reallocation to sponsoring cities pursuant to subsection (3)(d) of this section. If a sponsoring city receiving a project award in 2018 has not imposed a tax authorized under section 1001 of this act by September 1, 2025, the project award to such sponsoring city will be recaptured and become available for reallocation to sponsoring cities pursuant to subsection (3)(d) of this section.

NEW SECTION.  Sec. 902   A new section is added to chapter 82.32 RCW to read as follows:
     REPORTING REQUIREMENTS. (1) A sponsoring city receiving a project award under section 901 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 city 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) Revenue from local public sources dedicated by any participating local government to pay the principal of or interest on bonds issued under section 1101 of this act or to pay public improvement costs within the local conservation finance area in the preceding calendar year;
     (d) The anticipated date when any bonds under section 1101 of this act are expected to be retired;
     (e) The names of any businesses locating within the local conservation finance area as a result of the public improvements undertaken by the sponsoring city and financed in whole or in part with local conservation area financing;
     (f) An estimate of the cumulative number of permanent jobs created in the local conservation finance area as a result of the public improvements undertaken by the sponsoring city and financed in whole or in part with local conservation area financing;
     (g) An estimate of the average wages and benefits received by all employees of businesses locating within the local conservation finance area as a result of the public improvements undertaken by the sponsoring city and financed in whole or in part with local conservation area financing;
     (h) A list of public improvements financed by bonds issued under section 1101 of this act and the date on which the bonds are anticipated to be retired;
     (i) 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 901 of this act;
     (j) The number of permits using transferable development rights issued by the sponsoring city; and
     (k) Any other information required by the department to enable the department to fulfill its duties under this chapter and section 901 of this act.
     (2) The department must make a report available to the public and the legislature by June 1st of each year. The report must include a summary of the information provided to the department by sponsoring cities under subsection (1) of this section.

NEW SECTION.  Sec. 1001   LOCAL SALES AND USE TAX. (1) Any sponsoring city that has been approved for a project award under section 901 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 sponsoring city at no cost to the sponsoring city. The taxes must be distributed to the sponsoring city as provided in RCW 82.14.060.
     (3) The rate of tax imposed by a sponsoring city 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 sponsoring city that has been approved to receive a state contribution by the department or the community economic revitalization board under chapter 39.100, 39.102, or 39.104 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 sponsoring city in consultation with the department, reasonably necessary to receive the project award under section 901 of this act over ten months. This rate may be increased, as determined by the sponsoring city in consultation with the department, to reflect an increased project award under section 901(3)(d) of this act. If a sponsoring city specified portion has not increased since the prior project award, the rate for that sponsoring city may be increased to reflect the increased project award, commencing on the first day of the next succeeding calendar quarter. If a sponsoring city specified portion has increased under section 401 of this act since the prior project award, the rate for that sponsoring city may be increased to reflect the increased project award, commencing on the first day of the calendar quarter following the date on which the sponsoring city certifies to the department that it has issued permits for properties within one or more local conservation finance areas that, on an aggregate basis, use development rights representing at least fifty percent of the sponsoring city specified portion that was the basis for the increased project award.
     (4) The department, upon request, must assist a sponsoring city in establishing its tax rate in accordance with subsection (3) of this section. Once the rate of tax is established, it may not be increased except as set forth in subsection (3) of this section.
     (5)(a) No tax may be imposed under the authority of this section before:
     (i) The date on which the sponsoring city certifies to the department that it has issued permits for properties within one or more local conservation finance areas that, on an aggregate basis, use development rights representing at least fifty percent of the sponsoring city specified portion that was the basis for the project award; and
     (ii) July 1st of the second calendar year following the year in which the department approved the application made under section 901 of this act.
     (b) The tax imposed under this section expires the earlier of the date that any bonds issued under the authority of section 1101 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 sponsoring city 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 sponsoring city, in any fiscal year, may not exceed the amount approved by the department under subsection (9) 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 sponsoring city equals the amount of distributions approved by the department for the fiscal year under subsection (9) of this section; or
     (ii) The amount of revenue from taxes imposed under this section by all sponsoring cities 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) The department must determine the amount of tax receipts distributed to each sponsoring city imposing a sales and use tax under the authority of this section and must advise a sponsoring city when tax distributions for the fiscal year equal the amount determined by the department in subsection (9) of this section. Determinations by the department of the amount of tax distributions attributable to a sponsoring city 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.
     (8) If a sponsoring city fails to comply with section 902 of this act, no tax may be distributed in the subsequent fiscal year until such time as the sponsoring city complies and the department calculates the state contribution amount according to subsection (9) of this section for the fiscal year.
     (9)(a) For each fiscal year that a sponsoring city imposes the tax under the authority of this section, the department must approve the amount of taxes that may be distributed to the sponsoring city. 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 901 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 902 of this act. Revenues from local public sources dedicated in the preceding calendar year that are in excess of the project award may be carried forward and used in later years for the purpose of this subsection.
     (b) A sponsoring city 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.
     (10) The amount of tax distributions received from taxes imposed under the authority of this section by all sponsoring cities is limited annually to not more than the amount of annual state contribution limit.
     (11) For purposes of this section, the following definitions, and not the definitions in section 201 of this act for the same terms, 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.

NEW SECTION.  Sec. 1002   USE OF SALES AND USE TAX FUNDS. Money collected from the taxes imposed under section 1001 of this act may be used only for the purpose of paying the principal of or interest on bonds issued under section 1101 of this act or for paying costs of public improvements.

NEW SECTION.  Sec. 1101   ISSUANCE OF BONDS. (1) A sponsoring city that has created a local conservation finance area may issue bonds to finance public improvements. The bonds may be issued as general obligation bonds pursuant to chapter 39.46 RCW or as revenue bonds pursuant to chapter 35.41 RCW. Bonds issued under this section may be issued and sold in accordance with chapter 39.46 RCW.
     (2) Bonds issued under subsection (1) of this section as general obligation bonds may be payable from the full faith and credit of the sponsoring city, income, revenues, fees, and rents from the public improvements, and other funds legally available for payment of costs of the public improvements or debt service on the general obligations.
     (3) Bonds issued under subsection (1) of this section as revenue bonds may be issued to fund revenue-generating public improvements that are located within a local conservation finance area. Revenue bonds issued pursuant to this subsection are not an indebtedness of the sponsoring city issuing the bonds, and the interest and principal on the bonds are only payable from the revenues lawfully pledged therefor and from the special fund and any reserves created pursuant to chapter 35.41 RCW.

NEW SECTION.  Sec. 1102   USE OF REVENUE FOR BOND REPAYMENT. A sponsoring city that issues bonds under section 1101 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. However, any local property tax allocation revenues consisting of taxes imposed by the sponsoring city may be pledged only to pay the principal of and interest on general obligation bonds and not revenue bonds. The sponsoring city may also pledge all or part of any revenues derived from taxes imposed under section 1001 of this act and held in connection with the public improvements to pay principal of and interest on general obligation or revenue bonds.

NEW SECTION.  Sec. 1103   LIMITATION OF BONDS ISSUED. The bonds issued by a sponsoring city under section 1101 of this act to finance public improvements do not constitute an obligation of the state of Washington, either general or special.

Sec. 1201   RCW 36.70A.080 and 1990 1st ex.s. c 17 s 8 are each amended to read as follows:
     (1) A comprehensive plan may include additional elements, items, or studies dealing with other subjects relating to the physical development within its jurisdiction, including, but not limited to:
     (a) Conservation;
     (b) Solar energy; and
     (c) Recreation.
     (2) A comprehensive plan may include, where appropriate, subarea plans, each of which is consistent with the comprehensive plan.
     (3)(a) Cities that qualify as a receiving city may adopt a comprehensive plan element and associated development regulations that apply within receiving areas that have been or will be designated as local conservation finance areas under chapter 39.--- RCW (the new chapter created in section 1403 of this act).
     (b) For purposes of this subsection (3), the terms "receiving city," "receiving areas," and "local conservation finance areas" have the same meaning as in section 201 of this act.

NEW SECTION.  Sec. 1301   ADMINISTRATION BY THE DEPARTMENT. The department may adopt any rules under chapter 34.05 RCW it considers necessary for the administration of this chapter.

NEW SECTION.  Sec. 1302   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. 1303   Sections 101 through 701, 801, 901, 1001 through 1103, and 1301 of this act constitute a new chapter in Title 39 RCW.