BILL REQ. #:  H-2293.3 

Read first time 03/30/11.   Referred to Committee on Capital Budget.

     AN ACT Relating to state assistance for financing infrastructure and economic development; amending RCW 43.155.020, 43.155.050, 43.155.060, 43.155.070, and 43.160.060; creating new sections; and providing an expiration date.

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

NEW SECTION.  Sec. 1   The legislature finds that timely access to capital, credit, and lending opportunities is vitally important for the health and economic security of all individuals in the state. The lack of these financial opportunities, especially in times of economic downturn, exacerbates the economic hardships faced by working families and communities.
     The legislature finds that investing in public works projects around the state is an essential component in the recovery of the state's economy. There are numerous unmet needs in the state's communities that would be met if the state had a direct role in identifying and financing infrastructure projects that serve a public purpose.
     The legislature finds that students seeking to attain higher education and other career opportunities are stifled by their own limited financial resources and that existing programs are not adequately meeting their needs. These students would be better served if the state assisted in obtaining sufficient funds to meet the cost of attending school.
     The legislature further finds that the best use of state funds is to establish a means to use state funds and use them for initiatives that promote the common good and public benefit of all residents of the state.
     It is the intent of the legislature to develop a means to promote education, community development, economic development, housing, and public works projects in Washington by building a resource to help stabilize and grow the state's economy; use the resources of the people of the state within the state; support the common good and public benefit of the state; and use the state's financial capital and resources.

NEW SECTION.  Sec. 2   (1)(a) A task force is established, with twenty members as provided in this subsection.
     (i) The president of the senate shall appoint one member from each of the two largest caucuses of the senate.
     (ii) The speaker of the house of representatives shall appoint one member from each of the two largest caucuses of the house of representatives.
     (iii) The president of the senate and the speaker of the house of representatives jointly shall appoint:
     (A) A member representing a state-chartered financial institution;
     (B) A member representing a federally chartered financial institution;
     (C) Two nonvoting members representing local governments;
     (D) Two members representing small business owners; and
     (E) Seven citizen members representing labor, education, housing, financial, agricultural, economic development, and infrastructure interests.
     (iv) The director of the department of financial institutions and the state treasurer, or their designees, shall be nonvoting members of the task force.
     (v) The public works board shall select one board member to be a nonvoting member of the task force.
     (b) The task force shall choose its chair from among its membership. The legislative members of the task force shall convene the initial meeting of the task force within thirty days after the effective date of this section.
     (2) The task force shall develop a means to use the state's money to finance public works infrastructure, student loans, and economic development. The task force shall also review and make recommendations on the following issues:
     (a) Methods to coordinate and cooperate with existing public entities that are engaged in work related to local government infrastructure and economic development;
     (b) Identification of existing infrastructure and economic development programs that could be eliminated, accounts that could be consolidated, or other means of streamlining government bureaucracies in economic development;
     (c) Alternate approaches that the state can use to assist in the financing of local infrastructure, such as the contingent loan agreements authorized in RCW 43.155.060, and the manner in which this assistance could be provided;
     (d) Cash management and banking needs of the state and an alternative method of meeting these needs;
     (e) Additional legislation necessary to implement this act; and
     (f) Other matters as determined by the task force.
     (3) Staff support for the task force must be provided by the senate committee services and the house of representatives office of program research.
     (4) Legislative members of the task force must be reimbursed for travel expenses in accordance with RCW 44.04.120. Nonlegislative members, except those representing an employer or organization, are entitled to be reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060.
     (5) The expenses of the task force must be paid jointly by the senate and the house of representatives. Task force expenditures are subject to approval by the senate facilities and operations committee and the house of representatives executive rules committee, or their successor committees.
     (6) The task force shall report its recommendations and implementation plan to the appropriate committees of the legislature by December 1, 2011.
     (7) The task force may contract with additional persons who have specific technical expertise if the expertise is necessary to carry out the mandates of the review and development of the implementation plan. The task force may accept gifts, grants, loans, or other aid from public or private entities to contract with additional persons.
     (8) The task force, where appropriate, may consult with individuals from the public and private sector or ask the individuals to establish an advisory committee. Members of such an advisory committee are not entitled to expense reimbursement.
     (9) The department of financial institutions and the state treasurer shall cooperate with the task force and provide information as the chair may reasonably request.
     (10) This section expires December 31, 2012.

Sec. 3   RCW 43.155.020 and 2009 c 565 s 33 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.
     (1) "Board" means the public works board created in RCW 43.155.030.
     (2) "Capital facility plan" means a capital facility plan required by the growth management act under chapter 36.70A RCW or, for local governments not fully planning under the growth management act, a plan required by the public works board.
     (3) "Contingent loan agreement" means an agreement between the state and a local government in which the state provides an absolute and unconditional commitment to make a loan to a local government from the public works assistance account in order to enhance the credit of local government borrowing.
     (4) "Department" means the department of commerce.
     (((4) "Financing guarantees" means the pledge of money in the public works assistance account, or money to be received by the public works assistance account, to the repayment of all or a portion of the principal of or interest on obligations issued by local governments to finance public works projects.))
     (5) "Local governments" means cities, towns, counties, special purpose districts, and any other municipal corporations or quasi-municipal corporations in the state excluding school districts and port districts.
     (6) "Public works project" means a project of a local government for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of ((streets and roads, bridges,)) water systems, ((or)) storm and sanitary sewage systems ((and)), solid waste facilities, including recycling facilities. A planning project may include the compilation of biological, hydrological, or other data on a county, drainage basin, or region necessary to develop a base of information for a capital facility plan.
     (7) "Solid waste or recycling project" means remedial actions necessary to bring abandoned or closed landfills into compliance with regulatory requirements and the repair, restoration, and replacement of existing solid waste transfer, recycling facilities, and landfill projects limited to the opening of landfill cells that are in existing and permitted landfills.
     (8) "Technical assistance" means training and other services provided to local governments to: (a) Help such local governments plan, apply, and qualify for loans and ((financing guarantees)) contingent loan agreements from the board, and (b) help local governments improve their ability to plan for, finance, acquire, construct, repair, replace, rehabilitate, and maintain public facilities.

Sec. 4   RCW 43.155.050 and 2010 1st sp.s. c 37 s 932 are each amended to read as follows:
     The public works assistance account is hereby established in the state treasury. Money may be placed in the public works assistance account from the proceeds of bonds when authorized by the legislature or from any other lawful source. Moneys in the account may be expended only after appropriation. Money in the public works assistance account shall be used to make loans ((and to give financial guarantees)) to local governments for public works projects and to make payments required under contingent loan agreements for public works projects. Moneys in the account may also be appropriated to provide for state match requirements under federal law for projects and activities conducted and financed by the board under the drinking water assistance account. Not more than fifteen percent of the biennial capital budget appropriation to the public works board from this account may be expended or obligated for preconstruction loans, emergency loans, or loans for capital facility planning under this chapter; of this amount, not more than ten percent of the biennial capital budget appropriation may be expended for emergency loans and not more than one percent of the biennial capital budget appropriation may be expended for capital facility planning loans. For the 2007-2009 biennium, moneys in the account may be used for grants for projects identified in section 138, chapter 488, Laws of 2005 and section 1033, chapter 520, Laws of 2007. During the 2009-2011 fiscal biennium, sums in the public works assistance account may be used for the water pollution control revolving fund program match in section 3013, chapter 36, Laws of 2010 1st sp. sess. During the 2009-2011 fiscal biennium, the legislature may transfer from the job development fund to the general fund such amounts as reflect the excess fund balance of the fund.

Sec. 5   RCW 43.155.060 and 1988 c 93 s 2 are each amended to read as follows:
     (1) In order to aid the financing of public works projects, the board may:
     (((1))) (a) Make low-interest or interest-free loans to local governments from the public works assistance account or other funds and accounts for the purpose of assisting local governments in financing public works projects. The board may require such terms and conditions and may charge such rates of interest on its loans as it deems necessary or convenient to carry out the purposes of this chapter. Money received from local governments in repayment of loans made under this section shall be paid into the public works assistance account for uses consistent with this chapter((.));
     (((2) Pledge money in the public works assistance account, or money to be received by the public works assistance account, to the repayment of all or a portion of the principal of or interest on obligations issued by local governments to finance public works projects. The board shall not pledge any amount greater than the sum of money in the public works assistance account plus money to be received from the payment of the debt service on loans made from that account, nor shall the board pledge the faith and credit or the taxing power of the state or any agency or subdivision thereof to the repayment of obligations issued by any local government.
     (3))) (b) Make loans to local governments to assist those local governments to pay all or a portion of the principal of or interest on obligations issued to finance infrastructure projects pursuant to contingent loan agreements;
     (c) Until July 1, 2013, coordinate with the Washington state treasurer, who, on behalf of the state of Washington, may prescribe the terms of and enter into a contingent loan agreement between the state and a local government if the state treasurer determines that a contingent loan agreement is financially prudent and is consistent with the provisions of this chapter. The office of the state treasurer may charge a fee to local governments to recover the costs of creating the contingent loan agreements. After July 1, 2013, contingent loan agreements must be entered into in the manner developed by the task force in section 2, chapter ..., Laws of 2011 (section 2 of this act);
     (i) The state's obligation to make any loan to a local government pursuant to the terms of a contingent loan agreement shall be subject to appropriation from the public works assistance account;
     (ii) In order to provide for the state of Washington's obligations under the terms of contingent loan agreements, the legislature shall make provision, from time to time in appropriations acts, for such amounts as may be required to make timely payments from the public works assistance account;
     (d) Create such subaccounts in the public works assistance account as the board deems necessary to carry out the purposes of this chapter((.)); and
     (((4))) (e) Provide a method for the allocation of loans ((and financing guarantees)) and contingent loan agreements, and for the provision of technical assistance under this chapter.
     (2) Neither the board nor the state treasurer may pledge the faith and credit or the taxing power of the state or any agency or subdivision thereof to the repayment of obligations issued by any local government.
     (3) The board shall consult with the community economic revitalization board established in chapter 43.160 RCW to explore opportunities for coordination and consistency.
     (4) All local public works projects aided in whole or in part under the provisions of this chapter shall be put out for competitive bids, except for emergency public works under RCW 43.155.065 for which the recipient jurisdiction shall comply with this requirement to the extent feasible and practicable. The competitive bids called for shall be administered in the same manner as all other public works projects put out for competitive bidding by the local governmental entity aided under this chapter.

Sec. 6   RCW 43.155.070 and 2009 c 518 s 16 are each amended to read as follows:
     (1) To qualify for a loan((s)) or ((pledges)) contingent loan agreement under this chapter the board must determine that a local government meets all of the following conditions:
     (a) The city or county must be imposing a tax under chapter 82.46 RCW at a rate of at least one-quarter of one percent;
     (b) The local government must have developed a capital facility plan; ((and))
     (c) The local government must be using all local revenue sources which are reasonably available for funding public works, taking into consideration local employment and economic factors;
     (d) The local government must have an equitable sewer user charge system for residential, commercial, and industrial users that the governing body of the local government determines will provide for the maintenance and operation of that system and for the timely payment of all financial obligations of the planned sewer utility;
     (e) The connection fees for new connections to a sewer system must reflect a fair share cost of infrastructure from which new connections will benefit;
     (f) The local government must have a capital wastewater facilities reserve fund dedicated to paying for wastewater infrastructure and equipment replacement; and
     (g) A sewer use ordinance must restrict certain connections and wastes to protect a local government's investment and enhance the wastewater treatment's process stability and effluent quality. The ordinance must, at a minimum:
     (i) Require new sewers and connections to be properly designed and constructed;
     (ii) Require a provision with a timeline and proximity in which existing and future residences must connect to the sewer system;
     (iii) Prohibit inflow sources into the sewer system; and
     (iv) Prohibit introduction of toxic or hazardous wastes into the sewer system in an amount or concentration that endangers the public's safety or the physical integrity of the system which may cause violations of the national pollutant discharge elimination system permit or state waste discharge permit; and
     (h) For projects involving repair, replacement, or improvement of a wastewater treatment plant or other public works facility for which an investment grade audit is available, the local government must have received such an audit in order to be eligible for a loan or contingent loan agreement.
     (2) Except where necessary to address a public health need or substantial environmental degradation, a county, city, or town planning under RCW 36.70A.040 must have adopted a comprehensive plan, including a capital facilities plan element, and development regulations as required by RCW 36.70A.040. This subsection does not require any county, city, or town planning under RCW 36.70A.040 to adopt a comprehensive plan or development regulations before requesting or receiving a loan or ((loan guarantee)) entering into a contingent loan agreement under this chapter if such request is made before the expiration of the time periods specified in RCW 36.70A.040. A county, city, or town planning under RCW 36.70A.040 which has not adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040 is not prohibited from receiving a loan or ((loan guarantee)) from entering into a contingent loan agreement under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before submitting a request for a loan or ((loan guarantee)) contingent loan agreement.
     (3) In considering awarding loans ((for public facilities to)) or entering into contingent loan agreements with a special district((s)) requesting funding for a proposed facility located in a county, city, or town planning under RCW 36.70A.040, the board shall consider whether the county, city, or town planning under RCW 36.70A.040 in whose planning jurisdiction the proposed facility is located has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.
     (4) The board shall develop a priority process for public works projects as provided in this section. The intent of the priority process is to maximize the value of public works projects accomplished with assistance under this chapter. The board shall attempt to assure a geographical balance in assigning priorities to projects. The board shall consider at least the following factors in assigning a priority to a project:
     (a) Whether the local government receiving assistance has experienced severe fiscal distress resulting from natural disaster or emergency public works needs;
     (b) ((Except as otherwise conditioned by RCW 43.155.110, whether the entity receiving assistance is a Puget Sound partner, as defined in RCW 90.71.010;
     (c))) If the project is located in the Puget Sound region, whether the project is referenced in the action agenda developed by the Puget Sound partnership ((under RCW 90.71.310)). Any project designed to address the effects of storm water or wastewater on Puget Sound may receive assistance under this section only if the project is not in conflict with the action agenda developed by the Puget Sound partnership under RCW 90.71.310;
     (((d))) (c) Whether the project is critical in nature and would affect the health and safety of a great number of citizens;
     (((e))) (d) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007;
     (((f))) (e) The cost of the project compared to the size of the local government and amount of loan money available;
     (((g))) (f) The number of communities served by or funding the project;
     (((h))) (g) Whether the project is located in an area of high unemployment, compared to the average state unemployment;
     (((i))) (h) Whether the project is the acquisition, expansion, improvement, or renovation by a local government of a public water system that is in violation of health and safety standards, including the cost of extending existing service to such a system;
     (((j))) (i) Except as otherwise conditioned by RCW 43.155.120, and effective one calendar year following the development of model evergreen community management plans and ordinances under RCW 35.105.050, whether the entity receiving assistance has been recognized, and what gradation of recognition was received, in the evergreen community recognition program created in RCW 35.105.030;
     (((k))) (j) The relative benefit of the project to the community, considering the present level of economic activity in the community and the existing local capacity to increase local economic activity in communities that have low economic growth; and
     (((l))) (k) Other criteria that the board considers advisable.
     (5) Existing debt or financial obligations of local governments shall not be refinanced under this chapter. Each local government applicant shall provide documentation of attempts to secure additional local or other sources of funding for each public works project for which financial assistance is sought under this chapter.
     (6) Before November 1st of each even-numbered year, the board shall develop and submit to the appropriate fiscal committees of the senate and house of representatives a description of the loans made under RCW 43.155.065, 43.155.068, and subsection (9) of this section and the contingent loan agreements made under RCW 43.160.030, during the preceding fiscal year, and a prioritized list of projects which are recommended for funding by the legislature((, including one copy to the staff of each of the committees)). The list shall include, but not be limited to, a description of each project and recommended financing, the terms and conditions of the loan ((or financial guarantee)), the local government jurisdiction and unemployment rate, demonstration of the jurisdiction's critical need for the project, and documentation of local funds being used to finance the public works project. The list shall also include measures of fiscal capacity for each jurisdiction recommended for financial assistance, compared to authorized limits and state averages, including local government sales taxes; real estate excise taxes; property taxes; and charges for or taxes on sewerage, water, garbage, and other utilities.
     (7) The board shall not sign contracts or otherwise financially obligate funds from the public works assistance account before the legislature has appropriated funds for a specific list of public works projects. The legislature may remove projects from the list recommended by the board. The legislature shall not change the order of the priorities recommended for funding by the board.
     (8) Subsection (7) of this section does not apply to loans made under RCW 43.155.065, 43.155.068, and subsection (9) of this section or the contingent loan agreements made under RCW 43.160.030.
     (9) Loans made for the purpose of capital facilities plans shall be exempted from subsection (7) of this section.
     (10) To qualify for a loan((s)) or ((pledges)) contingent loan agreement for solid waste or recycling facilities under this chapter, a city or county must demonstrate that the solid waste or recycling facility is consistent with and necessary to implement the comprehensive solid waste management plan adopted by the city or county under chapter 70.95 RCW.
     (((11) After January 1, 2010, any project designed to address the effects of storm water or wastewater on Puget Sound may be funded under this section only if the project is not in conflict with the action agenda developed by the Puget Sound partnership under RCW 90.71.310.))

Sec. 7   RCW 43.160.060 and 2008 c 327 s 5 are each amended to read as follows:
     (1) The board is authorized to make direct loans to political subdivisions of the state and to federally recognized Indian tribes for the purposes of assisting the political subdivisions and federally recognized Indian tribes in financing the cost of public facilities, including development of land and improvements for public facilities, project-specific environmental, capital facilities, land use, permitting, feasibility, and marketing studies and plans; project design, site planning, and analysis; project debt and revenue impact analysis; as well as the construction, rehabilitation, alteration, expansion, or improvement of the facilities. A grant may also be authorized for purposes designated in this chapter, but only when, and to the extent that, a loan is not reasonably possible, given the limited resources of the political subdivision or the federally recognized Indian tribe and the finding by the board that financial circumstances require grant assistance to enable the project to move forward. However, no more than twenty-five percent of all financial assistance approved by the board in any biennium may consist of grants to political subdivisions and federally recognized Indian tribes.
     (2) Application for funds shall be made in the form and manner as the board may prescribe. In making grants or loans the board shall conform to the following requirements:
     (((1))) (a) The board shall not provide financial assistance:
     (((a))) (i) For a project the primary purpose of which is to facilitate or promote a retail shopping development or expansion.
     (((b))) (ii) For any project that evidence exists would result in a development or expansion that would displace existing jobs in any other community in the state.
     (((c))) (iii) For a project the primary purpose of which is to facilitate or promote gambling.
     (((d))) (iv) For a project located outside the jurisdiction of the applicant political subdivision or federally recognized Indian tribe.
     (((2))) (b) The board shall only provide financial assistance:
     (((a))) (i) For a project demonstrating convincing evidence that a specific private development or expansion is ready to occur and will occur only if the public facility improvement is made that:
     (((i))) (A) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted; and
     (((ii))) (B) Will improve the opportunities for the successful maintenance, establishment, or expansion of industrial or commercial plants or will otherwise assist in the creation or retention of long-term economic opportunities;
     (((b))) (ii) For a project that cannot meet the requirement of (((a))) (b)(i) of this subsection but is a project that:
     (((i))) (A) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted;
     (((ii))) (B) Is part of a local economic development plan consistent with applicable state planning requirements;
     (((iii))) (C) Can demonstrate project feasibility using standard economic principles; and
     (((iv))) (D) Is located in a rural community as defined by the board, or a rural county;
     (((c))) (iii) For site-specific plans, studies, and analyses that address environmental impacts, capital facilities, land use, permitting, feasibility, marketing, project engineering, design, site planning, and project debt and revenue impacts, as grants not to exceed fifty thousand dollars.
     (((3))) (c) The board shall consult with the public works board established in chapter 43.155 RCW to explore opportunities for coordination and consistency.
     (d) The board shall develop guidelines for local participation and allowable match and activities.
     (((4))) (e) An application must demonstrate local match and local participation, in accordance with guidelines developed by the board.
     (((5))) (f) An application must be approved by the political subdivision and supported by the local associate development organization or local workforce development council or approved by the governing body of the federally recognized Indian tribe.
     (((6))) (g) The board may allow de minimis general system improvements to be funded if they are critically linked to the viability of the project.
     (((7))) (h) An application must demonstrate convincing evidence that the median hourly wage of the private sector jobs created after the project is completed will exceed the countywide median hourly wage.
     (((8))) (i) The board shall prioritize each proposed project according to:
     (((a))) (i) The relative benefits provided to the community by the jobs the project would create, not just the total number of jobs it would create after the project is completed, but also giving consideration to the unemployment rate in the area in which the jobs would be located;
     (((b))) (ii) The rate of return of the state's investment, including, but not limited to, the leveraging of private sector investment, anticipated job creation and retention, and expected increases in state and local tax revenues associated with the project;
     (((c))) (iii) Whether the proposed project offers a health insurance plan for employees that includes an option for dependents of employees;
     (((d))) (iv) Whether the public facility investment will increase existing capacity necessary to accommodate projected population and employment growth in a manner that supports infill and redevelopment of existing urban or industrial areas that are served by adequate public facilities. Projects should maximize the use of existing infrastructure and provide for adequate funding of necessary transportation improvements; and
     (((e))) (v) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007.
     (((9))) (j) A responsible official of the political subdivision or the federally recognized Indian tribe shall be present during board deliberations and provide information that the board requests.
     Before any financial assistance application is approved, the political subdivision or the federally recognized Indian tribe seeking the assistance must demonstrate to the community economic revitalization board that no other timely source of funding is available to it at costs reasonably similar to financing available from the community economic revitalization board.