BILL REQ. #: Z-0746.1
| State of Washington | 62nd Legislature | 2011 2nd Special Session |
Prefiled 11/23/11. Read first time 11/28/11. Referred to Committee on Ways & Means.
AN ACT Relating to a plan of finance to prevent the default of bonds issued by distressed public facilities districts; amending RCW 82.14.390, 82.14.050, and 43.79A.040; adding new sections to chapter 35.57 RCW; adding new sections to chapter 82.14 RCW; creating new sections; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1
NEW SECTION. Sec. 2 A new section is added to chapter 35.57 RCW
to read as follows:
When a public facilities district qualifies as a distressed public
facilities district, the provisions of sections 1 through 10 of this
act supersede any agreements or any terms of any agreements between or
among the jurisdictions forming the public facilities district to the
extent agreements or any terms thereof are inconsistent with sections
1 through 10 of this act.
NEW SECTION. Sec. 3 A new section is added to chapter 35.57 RCW
to read as follows:
The definitions in this section apply throughout this section and
sections 1, 2, and 4 through 10 of this act unless the context clearly
requires otherwise.
(1) "Anchor jurisdiction" means the city that has entered into an
agreement to form a public facilities district that constitutes a
distressed public facilities district under this chapter and in which
the largest asset of the distressed public facilities district is
located.
(2) "Distressed public facilities district" means a public
facilities district that is at imminent risk of default due to an
inability to pay indebtedness on or before December 31, 2011, as
determined by the state treasurer.
(3) "Indebtedness" means bonds, notes, or other evidences of
indebtedness together with interest.
(4) "Identified obligation" means an indebtedness of a distressed
public facilities district which, without intervention, is at imminent
risk of default according to its terms. Notwithstanding any form of
refinancing of the identified obligation, including but not limited to
a loan administered by the state and any subsequent refinancing of that
loan in whole or in part, such an obligation will remain the
"identified obligation" until the original amount of the obligation,
plus accrued interest, is paid in full.
(5) "Loan" or "loan administered by the state" means any
expenditure made out of the distressed public facilities district
obligation account pursuant to section 4 of this act.
(6) "Related jurisdiction" means a city or county that has entered
into an agreement to form a public facilities district that is
determined to be a distressed public facilities district under this
chapter.
NEW SECTION. Sec. 4 A new section is added to chapter 35.57 RCW
to read as follows:
(1) The distressed public facilities district obligation account is
created in the custody of the state treasurer. Expenditures from the
account may be used only for loans to distressed public facilities
districts made in accordance with the terms set forth in this section.
Only the state treasurer may authorize expenditures from this account.
(2) The state treasurer is authorized to make a loan from the
distressed public facilities district obligation account to pay the
identified obligation of any distressed public facilities district with
funds transferred pursuant to section 5 of this act.
(3) Any funds applied to the repayment of the loan must be
deposited into the distressed public facilities district obligation
account. After any expenditures from the account are made as directed
in subsection (2) of this section, the state treasurer periodically
must transfer the balance in the distressed public facilities district
obligation account to the local sales and use tax account, which must
include interest accruing on the loan as well as any interest earnings
attributable to the distressed public facilities district obligation
account.
(4) When the state makes a loan to pay an identified obligation,
the state treasurer must collect from the distressed public facilities
district, the anchor jurisdiction, and related jurisdictions an amount
equal to the total amount of the identified obligation including
accrued interest. The conditions of the loan and its repayment are as
follows:
(a) The term of the loan is eleven years subject to prepayment in
whole or in part;
(b) Interest accrues monthly at a variable rate equal to the twenty
bond general obligation bond buyer index plus one percentage point and
begins accruing on January 1, 2012; and
(c) The taxes identified in subsection (5) of this section, and in
the order specified therein, must be diverted from the local sales and
use tax account to the distressed public facilities district obligation
account for repayment of the loan, in amounts sufficient to make equal
monthly payments of principal plus interest over the remaining term.
If a lump sum payment is received on a portion of the loan, the
principal amount on the outstanding loan must be reduced by the lump
sum payment and monthly payments must be recalculated accordingly. In
no event may the requirement to make monthly payments be eliminated in
any month.
(5) The state treasurer must divert taxes collected by the
distressed public facilities district, anchor jurisdiction, and related
jurisdictions each month for deposit into the distressed public
facilities district obligation account in the following priority order
until each respective monthly obligation is met:
(a) If the distressed public facilities district imposes the
maximum tax allowed under section 6 of this act:
(i) First, all taxes collected by or on behalf of the distressed
public facilities district pursuant to RCW 82.14.390 beginning January
1, 2013;
(ii) Second, all taxes collected by or on behalf of the distressed
public facilities district pursuant to section 6 of this act beginning
on the first day such taxes would otherwise be disbursed to the
distressed public facilities district;
(iii) Third, all taxes collected by or on behalf of the anchor
jurisdiction under section 7 of this act beginning on the first day
such taxes would otherwise be disbursed to the anchor jurisdiction;
(iv) Fourth, all taxes collected by or on behalf of any related
jurisdiction under section 7 of this act beginning on the first day
such taxes would otherwise be disbursed to the related jurisdiction;
and
(v) Fifth, taxes collected by or on behalf of the anchor
jurisdiction under RCW 82.14.030 beginning January 1, 2013, to the
extent monthly payment obligations cannot be met with revenues
collected from (a)(i) through (iv) of this subsection (5).
(b) If the distressed public facilities district does not impose
the maximum amount of the tax provided for in section 6 of this act:
(i) First, all taxes collected by or on behalf of the distressed
public facilities district pursuant to RCW 82.14.390 beginning January
1, 2013;
(ii) Second, all taxes collected by or on behalf of the distressed
public facilities district pursuant to section 6 of this act beginning
on the first day such taxes would otherwise be disbursed to the
distressed public facilities district;
(iii) Third, taxes collected by or on behalf of a related
jurisdiction or anchor jurisdiction pursuant to section 7 of this act
beginning on the first day such taxes would otherwise be disbursed to
the jurisdiction. The amount so collected by or on behalf of a
jurisdiction in a given month must be credited against the amount owed
in that month by such jurisdiction under (b)(iv) of this subsection
(5). Any excess collected must also be applied to repayment of the
loan;
(iv) Fourth, taxes collected by or on behalf of the anchor
jurisdiction and related jurisdictions pursuant to RCW 82.14.030 in an
aggregate amount which, when combined with any taxes collected under
section 6 of this act, will equal fifty percent of the monthly payment
due on the loan. Such aggregate amount must be collected from the
anchor jurisdiction and related jurisdictions on a pro rata basis based
on the percentage of local sales tax collected by each jurisdiction in
the preceding calendar year, or based on an allocation among the
jurisdictions specified in an agreement adopted by all of the related
jurisdictions. If a lump sum payment is received on a portion of the
loan, the principal amount on the outstanding loan must be reduced by
the lump sum payment and monthly payments must be recalculated
accordingly; and
(v) Fifth, taxes collected by or on behalf of the anchor
jurisdiction pursuant to RCW 82.14.030 and any other legally available
revenue of the anchor jurisdiction to the extent monthly payment
obligations cannot be met with revenues collected from (b)(i) through
(iv) of this subsection (5).
(6) Diversion of taxes under subsection (5) of this section
terminates once the loan and any accumulated interest have been paid in
full. Any excess remaining in the distressed public facilities
district obligation account must be transferred to the distressed
public facilities district.
(7) Any taxes collected pursuant to RCW 82.14.390 or section 6 or
7 of this act may be pledged by the distressed public facilities
district, anchor jurisdiction, or related jurisdiction respectively, to
bonds issued to retire the loan or any portion of the loan administered
by the state. So long as any portion of the loan to the state is
outstanding, taxes may be pledged accordingly:
(a) If a distressed public facilities district issues bonds to
repay a portion of the loan, taxes authorized to be levied by such
district under RCW 82.14.390 and section 6 of this act may be pledged
by such district to the repayment of the indebtedness provided that
amounts collected but not required for the next scheduled principal and
interest payment must remain available to the state for repayment of
the loan;
(b) If an anchor jurisdiction issues bonds to repay a portion of
the loan, taxes authorized under section 7 of this act and imposed by
the anchor jurisdiction may be pledged by the anchor jurisdiction to
the repayment of the indebtedness provided that amounts collected but
not required for the next scheduled principal and interest payment must
remain available to the state for repayment of the loan; and
(c) If a related jurisdiction issues bonds to repay a portion of
the loan, taxes authorized under section 7 of this act and imposed by
that related jurisdiction may be pledged to the repayment of such
indebtedness. However, amounts collected but not required for the next
scheduled principal and interest payment must remain available to the
state for repayment of the loan.
NEW SECTION. Sec. 5 On the effective date of this section, the
state treasurer must transfer into the distressed public facilities
district obligation account from the local sales and use tax account
the sum of forty-two million dollars.
NEW SECTION. Sec. 6 A new section is added to chapter 82.14 RCW
to read as follows:
(1) Notwithstanding anything to the contrary in law or by agreement
among the cities or counties forming a public facilities district under
chapter 35.57 RCW, the governing body of a public facilities district
that qualifies as a distressed public facilities district, as defined
in section 3 of this act, may, by majority vote, impose a sales and use
tax as described in this section. Alternatively, the governing body
may submit an authorizing proposition to the voters of the district,
and if the proposition is approved by a majority of the persons voting,
impose such a sales and use tax. The tax is in addition to other taxes
authorized by law and is 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. The rate of tax may
not exceed two-tenths of one percent of the selling price, in the case
of a sales tax, or value of the article used, in the case of a use tax.
(2) The governing body of a distressed public facilities district
must provide in its resolution authorizing such a tax:
(a) The maximum amount of the identified obligation, as defined in
section 3 of this act, to be paid with the proceeds of the tax and the
maximum term or terms of its repayment;
(b) The amount of revenue currently collected by the distressed
public facilities district; and
(c) The maximum amount of tax revenue needed to pay the identified
obligation.
(3) Once imposed, this tax remains in effect so long as any portion
of the identified obligation is outstanding.
(4) A distressed public facilities district may not impose the tax
authorized in this section after December 31st of the year in which the
identified obligation has been paid or legally defeased.
NEW SECTION. Sec. 7 A new section is added to chapter 82.14 RCW
to read as follows:
(1) The legislative authority of either an anchor jurisdiction or
a related jurisdiction of a distressed public facilities district as
defined in section 3 of this act, may, by majority vote, impose a sales
and use tax in accordance with the requirements of this section.
Alternatively, the legislative authority may submit an authorizing
proposition to the voters, and if the proposition is approved by a
majority of the persons voting, impose such a sales and use tax. The
tax is in addition to other taxes authorized by law and is 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. The rate of tax may not exceed two-tenths of one
percent of the selling price, in the case of a sales tax, or value of
the article used, in the case of a use tax.
(2) Any tax imposed under this section must be directed in the
following priority order:
(a) First, to make debt service payments or other repayments on
debt issued to which the taxes are pledged by the anchor jurisdiction
or related jurisdiction as defined in section 3 of this act;
(b) Second, to repay the loan administered by the state to the
distressed public facilities district as defined in section 3 of this
act, according to its terms; and
(c) Third, to make payments to the distressed public facilities
district to increase revenues available to it for capital improvements,
operations, or to build reserves.
(3) Neither an anchor jurisdiction nor a related jurisdiction may
impose the tax authorized in this section after December 31st of the
year in which the identified obligation has been paid or legally
defeased.
Sec. 8 RCW 82.14.390 and 2011 1st sp.s. c 50 s 973 are each
amended to read as follows:
(1) Except as provided in subsection (7) of this section, the
governing body of a public facilities district (a) created before July
31, 2002, under chapter 35.57 or 36.100 RCW that commences construction
of a new regional center, or improvement or rehabilitation of an
existing new regional center, before January 1, 2004; (b) created
before July 1, 2006, under chapter 35.57 RCW in a county or counties in
which there are no other public facilities districts on June 7, 2006,
and in which the total population in the public facilities district is
greater than ninety thousand that commences construction of a new
regional center before February 1, 2007; (c) created under the
authority of RCW 35.57.010(1)(d); or (d) created before September 1,
2007, under chapter 35.57 or 36.100 RCW, in a county or counties in
which there are no other public facilities districts on July 22, 2007,
and in which the total population in the public facilities district is
greater than seventy thousand, that commences construction of a new
regional center before January 1, 2009, or before January 1, 2011, in
the case of a new regional center in a county designated by the
president as a disaster area in December 2007, may impose a sales and
use tax in accordance with the terms of this chapter. 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 public
facilities district. The rate of tax may not exceed 0.033 percent of
the selling price in the case of a sales tax or value of the article
used in the case of a use tax.
(2)(a) The governing body of a public facilities district imposing
a sales and use tax under the authority of this section may increase
the rate of tax up to 0.037 percent if, within three fiscal years of
July 1, 2008, the department determines that, as a result of RCW
82.14.490 and the chapter 6, Laws of 2007 amendments to RCW 82.14.020,
a public facilities district's sales and use tax collections for fiscal
years after July 1, 2008, have been reduced by a net loss of at least
0.50 percent from the fiscal year before July 1, 2008. The fiscal year
in which this section becomes effective is the first fiscal year after
July 1, 2008.
(b) The department must determine sales and use tax collection net
losses under this section as provided in RCW 82.14.500 (2) and (3).
The department must provide written notice of its determinations to
public facilities districts. Determinations by the department of a
public facilities district's sales and use tax collection net losses as
a result of RCW 82.14.490 and the chapter 6, Laws of 2007 amendments to
RCW 82.14.020 are final and not appealable.
(c) A public facilities district may increase its rate of tax after
it has received written notice from the department as provided in (b)
of this subsection. The increase in the rate of tax must be made in
0.001 percent increments and must be the least amount necessary to
mitigate the net loss in sales and use tax collections as a result of
RCW 82.14.490 and the chapter 6, Laws of 2007 amendments to RCW
82.14.020. The increase in the rate of tax is subject to RCW
82.14.055.
(3) The tax imposed under subsection (1) of this section must be
deducted from the amount of tax otherwise required to be collected or
paid over to the department of revenue under chapter 82.08 or 82.12
RCW. The department of revenue must perform the collection of such
taxes on behalf of the county at no cost to the public facilities
district. During the 2011-2013 fiscal biennium, distributions by the
state to a public facilities district based on the additional rate
authorized in subsection (2) of this section must be reduced by 3.4
percent.
(4)(a) No tax may be collected under this section before August 1,
2000. Subject to (b) of this subsection, the tax imposed in this
section expires when:
(i) The bonds issued for the construction of the regional center
and related parking facilities are retired((, but)); or
(ii) The identified obligation of a distressed public facilities
district has been paid. For the purposes of this subsection,
"identified obligation" and "distressed public facilities district"
have the same meanings as provided in section 3 of this act.
(b) The tax imposed in this section must expire not more than
twenty-five years after the tax is first collected.
(5) Moneys collected under this section may only be used for the
purposes set forth in RCW 35.57.020 and, sections 2 and 4 of this act
and must be matched with an amount from other public or private sources
equal to thirty-three percent of the amount collected under this
section; however, amounts generated from nonvoter approved taxes
authorized under chapter 35.57 RCW or nonvoter approved taxes
authorized under chapter 36.100 RCW do not constitute a public or
private source. For the purpose of this section, public or private
sources includes, but is not limited to cash or in-kind contributions
used in all phases of the development or improvement of the regional
center, land that is donated and used for the siting of the regional
center, cash or in-kind contributions from public or private
foundations, or amounts attributed to private sector partners as part
of a public and private partnership agreement negotiated by the public
facilities district.
(6) The combined total tax levied under this section may not be
greater than 0.037 percent. If both a public facilities district
created under chapter 35.57 RCW and a public facilities district
created under chapter 36.100 RCW impose a tax under this section, the
tax imposed by a public facilities district created under chapter 35.57
RCW must be credited against the tax imposed by a public facilities
district created under chapter 36.100 RCW.
(7) A public facilities district created under chapter 36.100 RCW
is not eligible to impose the tax under this section if the legislative
authority of the county where the public facilities district is located
has imposed a sales and use tax under RCW 82.14.0485 or 82.14.0494.
Sec. 9 RCW 82.14.050 and 2009 c 469 s 107 are each amended to
read as follows:
(1) The counties, cities, and transportation authorities under RCW
82.14.045, public facilities districts under chapters 36.100 and 35.57
RCW, public transportation benefit areas under RCW 82.14.440, regional
transportation investment districts, and transportation benefit
districts under chapter 36.73 RCW shall contract, prior to the
effective date of a resolution or ordinance imposing a sales and use
tax, the administration and collection to the state department of
revenue, which shall deduct a percentage amount, as provided by
contract, not to exceed two percent of the taxes collected for
administration and collection expenses incurred by the department. The
remainder of any portion of any tax authorized by this chapter that is
collected by the department of revenue shall be deposited by the state
department of revenue in the local sales and use tax account hereby
created in the state treasury. Moneys in the local sales and use tax
account may be withdrawn only for:
(a) Distribution to counties, cities, transportation authorities,
public facilities districts, public transportation benefit areas,
regional transportation investment districts, and transportation
benefit districts imposing a sales and use tax; ((and))
(b) Making refunds of taxes imposed under the authority of this
chapter and RCW 81.104.170 and exempted under RCW 82.08.962 and
82.12.962; and
(c) Transfers to the distressed public facilities district
obligation account as provided in section 5 of this act.
(2) All administrative provisions in chapters 82.03, 82.08, 82.12,
and 82.32 RCW, as they now exist or may hereafter be amended, shall,
insofar as they are applicable to state sales and use taxes, be
applicable to taxes imposed pursuant to this chapter.
(3) Counties, cities, transportation authorities, public facilities
districts, and regional transportation investment districts may not
conduct independent sales or use tax audits of sellers registered under
the streamlined sales tax agreement.
(4) Except as provided in RCW 43.08.190, all earnings of
investments of balances in the local sales and use tax account shall be
credited to the local sales and use tax account and distributed to the
counties, cities, transportation authorities, public facilities
districts, public transportation benefit areas, regional transportation
investment districts, and transportation benefit districts monthly.
Sec. 10 RCW 43.79A.040 and 2011 1st sp.s. c 37 s 603 are each
amended to read as follows:
(1) Money in the treasurer's trust fund may be deposited, invested,
and reinvested by the state treasurer in accordance with RCW 43.84.080
in the same manner and to the same extent as if the money were in the
state treasury, and may be commingled with moneys in the state treasury
for cash management and cash balance purposes.
(2) All income received from investment of the treasurer's trust
fund must be set aside in an account in the treasury trust fund to be
known as the investment income account.
(3) The investment income account may be utilized for the payment
of purchased banking services on behalf of treasurer's trust funds
including, but not limited to, depository, safekeeping, and
disbursement functions for the state treasurer or affected state
agencies. The investment income account is subject in all respects to
chapter 43.88 RCW, but no appropriation is required for payments to
financial institutions. Payments must occur prior to distribution of
earnings set forth in subsection (4) of this section.
(4)(a) Monthly, the state treasurer must distribute the earnings
credited to the investment income account to the state general fund
except under (b), (c), and (d) of this subsection.
(b) The following accounts and funds must receive their
proportionate share of earnings based upon each account's or fund's
average daily balance for the period: The Washington promise
scholarship account, the college savings program account, the
Washington advanced college tuition payment program account, the
accessible communities account, the community and technical college
innovation account, the agricultural local fund, the American Indian
scholarship endowment fund, the foster care scholarship endowment fund,
the foster care endowed scholarship trust fund, the students with
dependents grant account, the basic health plan self-insurance reserve
account, the contract harvesting revolving account, the Washington
state combined fund drive account, the commemorative works account, the
county enhanced 911 excise tax account, the Washington international
exchange scholarship endowment fund, the toll collection account, the
developmental disabilities endowment trust fund, the distressed public
facilities district obligation account, the energy account, the fair
fund, the family leave insurance account, the food animal veterinarian
conditional scholarship account, the fruit and vegetable inspection
account, the future teachers conditional scholarship account, the game
farm alternative account, the GET ready for math and science
scholarship account, the Washington global health technologies and
product development account, the grain inspection revolving fund, the
industrial insurance rainy day fund, the juvenile accountability
incentive account, the law enforcement officers' and firefighters' plan
2 expense fund, the local tourism promotion account, the pilotage
account, the produce railcar pool account, the regional transportation
investment district account, the rural rehabilitation account, the
stadium and exhibition center account, the youth athletic facility
account, the self-insurance revolving fund, the sulfur dioxide
abatement account, the children's trust fund, the Washington horse
racing commission Washington bred owners' bonus fund and breeder awards
account, the Washington horse racing commission class C purse fund
account, the individual development account program account, the
Washington horse racing commission operating account (earnings from the
Washington horse racing commission operating account must be credited
to the Washington horse racing commission class C purse fund account),
the life sciences discovery fund, the Washington state heritage center
account, the reduced cigarette ignition propensity account, and the
reading achievement account.
(c) The following accounts and funds must receive eighty percent of
their proportionate share of earnings based upon each account's or
fund's average daily balance for the period: The advanced right-of-way
revolving fund, the advanced environmental mitigation revolving
account, the federal narcotics asset forfeitures account, the high
occupancy vehicle account, the local rail service assistance account,
and the miscellaneous transportation programs account.
(d) Any state agency that has independent authority over accounts
or funds not statutorily required to be held in the custody of the
state treasurer that deposits funds into a fund or account in the
custody of the state treasurer pursuant to an agreement with the office
of the state treasurer shall receive its proportionate share of
earnings based upon each account's or fund's average daily balance for
the period.
(5) In conformance with Article II, section 37 of the state
Constitution, no trust accounts or funds shall be allocated earnings
without the specific affirmative directive of this section.
NEW SECTION. Sec. 11 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. 12 This act is necessary for the immediate
preservation of the public peace, health, or safety, or support of the
state government and its existing public institutions, and takes effect
immediately.