BILL REQ. #:  Z-0972.1 

Read first time 02/03/12.   Referred to Committee on Capital Budget.

     AN ACT Relating to the public works board; amending RCW 43.155.020, 43.155.030, 43.155.050, and 43.155.070; adding new sections to chapter 43.155 RCW; and repealing RCW 43.155.010, 43.155.040, 43.155.055, 43.155.060, 43.155.065, 43.155.068, 43.155.075, 43.155.100, 43.155.110, and 43.155.120.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 43.155 RCW to read as follows:
     (1) The legislature finds that while local governments are responsible for creating, developing, managing, financing, operating, and maintaining local infrastructure systems, state priority policy objectives are served by investing financial and technical resources in these local systems. A significant backlog of projects to repair and improve local public infrastructure systems exists. The state intends to strategically invest resources to address this backlog and to promote the following priority policy objectives:
     (a) Preserving, enhancing, or achieving public health and safety;
     (b) Protecting the state's environment;
     (c) Promoting economic development;
     (d) Encouraging well-managed local infrastructure systems; and
     (e) Sustaining the state's infrastructure assistance capacity.
     (2) It is the policy of the state of Washington to encourage self-reliance by local governments in meeting their public works needs, to finance critical local public works projects, and to provide infrastructure-related technical assistance to local governments.

Sec. 2   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 traditional eligible jurisdiction or a nontraditional eligible jurisdiction in which the state provides an absolute and unconditional commitment to make a loan to a traditional eligible jurisdiction or a nontraditional eligible jurisdiction from the public works assistance account in order to enhance the credit of the borrower.
     (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) "Director" means the director of the department.
     (6) "Emergency" means a public works project made necessary by a natural disaster or an immediate and emergent threat to the public health and safety due to unforeseen or unavoidable circumstances as evidenced by a local government declaration.
     (7) "Financial assistance" means loans, contingent loan agreements, and forgivable loans.
     (8) "Forgivable loan" means a loan for which a portion of the principal and interest may be forgiven upon meeting certain criteria and contract loan provisions.
     (9) "Local government((s))" ((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)) means every city, county, town, port district, district, or other public agency authorized by law to require the execution of public work.
     (((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 from the board, and (b) help local governments improve their ability to plan for, finance, acquire, construct, repair, replace, rehabilitate, and maintain public facilities.))
     (10) "Nontraditional jurisdiction" means port districts.
     (11) "Nontraditional project" means any local government infrastructure project included in its adopted capital facilities plan or equivalent that does not meet the definition of traditional project, and excludes rolling stock.
     (12) "Nontraditional system" means telecommunications, energy, flood levees, public buildings and facilities, rail, criminal justice facilities, and parks and recreation facilities.
     (13) "Planning project" means the process through which a jurisdiction creates and adopts a capital facilities plan, a system plan, or equivalent.
     (14) "Policy objectives" means state priorities that guide the investment of public works assistance account funds and are composed of the following:
     (a) Preservation, enhancement, or achievement of public health and safety;
     (b) Protection of the state's environment;
     (c) Promotion of economic development;
     (d) Encouraging well-managed local infrastructure systems; and
     (e) Sustaining the state infrastructure assistance network.
     (15) "Preconstruction" means activities including but not limited to project planning, design, engineering, bid document preparation, environmental studies, right-of-way acquisition, and other nonconstruction preliminary phases of public works projects as determined by the board.
     (16) "Public works project" means a nontraditional or traditional project.
     (17) "Technical assistance" means training and other services provided to local governments to:
     (a) Plan, apply, and qualify for financial assistance;
     (b) Improve their ability to plan for, finance, acquire, construct, reconstruct, and maintain infrastructure systems; and
     (c) Improve their capacity to manage and operate their infrastructure systems in a manner consistent with long-term sustainability.
     (18) "Traditional eligible jurisdictions" means counties, cities, towns, special purpose districts, and any other municipal or quasi-municipal corporations excluding school districts and port districts.
     (19) "Traditional eligible systems" means drinking water systems, sanitary sewer systems, storm water systems, solid waste/recycling systems, bridges, and roadways.
     (20) "Traditional project" means a project listed in a local government's capital facilities plan or equivalent that results in the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of a traditional eligible system and excludes rolling stock.

Sec. 3   RCW 43.155.030 and 1999 c 153 s 58 are each amended to read as follows:
     (1) The public works board is hereby created.
     (2) The board shall be composed of thirteen members appointed by the governor for terms of four years((, except that five members initially shall be appointed for terms of two years)). The board shall include: (a) Three members, two of whom shall be elected officials and one shall be ((a public works manager)) an appointed official, appointed from a list of ((at least six)) persons nominated by the association of Washington cities or its successor; (b) three members, two of whom shall be elected officials and one shall be ((a public works manager)) an appointed official, appointed from a list of ((at least six)) persons nominated by the Washington state association of counties or its successor; (c) ((three members appointed from a list of at least six persons nominated jointly by the Washington public utility districts association and a state association of water-sewer districts, or their successors; and (d))) one member appointed from a list of persons nominated by the Washington public utility districts association or its successor; (d) two members appointed from a list of persons nominated by the state association of water-sewer districts or its successor; and (e) four members appointed from the general public. In appointing the four general public members, the governor shall endeavor to balance the geographical composition of the board and to include members with special expertise in relevant fields such as public finance, architecture and civil engineering, and public works construction. The governor shall appoint one of the general public members of the board as chair. The term of the chair shall coincide with the term of the governor.
     (3) ((Staff support to the board shall be provided by the department.
     (4))) Members of the board shall receive no compensation but shall be reimbursed for travel expenses under RCW 43.03.050 and 43.03.060.
     (((5))) (4) If a vacancy on the board occurs by death, resignation, or otherwise, the governor shall fill the vacant position for the unexpired term. Each vacancy in a position appointed from lists provided by the associations under subsection (2) of this section shall be filled from a list of ((at least three)) persons nominated by the relevant association or associations. Any members of the board((, appointive or otherwise,)) may be removed by the governor for cause in accordance with RCW 43.06.070 and 43.06.080.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.155 RCW to read as follows:
     (1) In order to aid the financing of public works projects, the board:
     (a) May execute contracts or otherwise financially obligate funds from the public works assistance account for projects approved for funding by the board;
     (b) Shall manage the public works assistance account in such a way as to ensure its sustainability;
     (c) May make low-interest, interest-free, or forgivable loans to local governments for:
     (i) Traditional and nontraditional projects;
     (ii) Traditional and nontraditional preconstruction projects;
     (iii) Capital facilities planning or equivalent;
     (iv) Assisting 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;
     (v) Emergency projects for traditional eligible jurisdictions in traditional eligible systems; and
     (vi) Investment grade efficiency audits;
     (d) 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 must be paid into the public works assistance account for uses consistent with this chapter;
     (e) May not refinance existing debt or financial obligations of local governments;
     (f) May 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 such a contingent loan agreement is financially prudent and is consistent with the provisions of this chapter. Contingent loan agreements may be entered into by the state treasurer only with local governments whose limited tax general obligations or senior revenue obligations, as applicable to the obligations concerned, are rated not higher than A1 or A+ by at least one of the nationally recognized rating agencies. The state's obligation to make any loan to a local government pursuant to the terms of a contingent loan agreement is subject to appropriation from the public works assistance account. The office of the state treasurer may charge a fee to local governments to recover the costs of creating the contingent loan agreements; and
     (g) May create such subaccounts in the public works assistance account as the board deems necessary to carry out the purposes of this chapter.
     (2) In order to provide for the state of Washington's obligations under the terms of contingent loan agreements, the legislature must 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.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.155 RCW to read as follows:
     The board shall provide technical assistance to local governments in accordance with board policy.

NEW SECTION.  Sec. 6   A new section is added to chapter 43.155 RCW to read as follows:
     The board shall:
     (1) Beginning in June 2014 and every four years thereafter, provide the governor and legislature with a comprehensive assessment of local infrastructure needs and potential resources within the state to meet those needs;
     (2) In consultation with the office of the state treasurer, recommend to the governor and the legislature the amount of resources from the public works assistance account to be appropriated for contingent loan agreements;
     (3) Establish and maintain collaborative relations with governmental, private, and other financing organizations, advocate groups, and other stakeholders associated with infrastructure financing;
     (4) Provide information and advice to the governor and legislature on matters related to local government infrastructure financing; and
     (5) At the direction of the governor, provide information and advocacy at the national level on matters related to local government infrastructure financing.

NEW SECTION.  Sec. 7   A new section is added to chapter 43.155 RCW to read as follows:
     The board shall:
     (1) Consistent with the guidelines issued by the office of financial management and in consultation with the department, prepare biennial operating and capital budgets and, as needed, update these budgets during the biennium;
     (2) Accept or reject, from any state or federal agency, loans or grants for the planning or financing of any public works project and enter into agreements with any such agency concerning the loans or grants;
     (3) Accept or reject any gifts, grants, or loans of funds, property, or financial or other aid in any form from any other source on any terms and conditions that are not in conflict with this chapter;
     (4) Adopt rules under chapter 34.05 RCW as necessary to carry out the purposes of this chapter; and
     (5) Do all acts and things necessary or convenient to carry out the powers expressly granted or implied under this chapter.

NEW SECTION.  Sec. 8   A new section is added to chapter 43.155 RCW to read as follows:
     (1) The department shall:
     (a) In collaboration with the board, and in accordance with the board's operating budget, provide staff to the board necessary to efficiently and effectively carry out the duties of this chapter; and
     (b) Submit the board's operating and capital budgets in accordance with guidelines set by the office of financial management.
     (2) The director shall:
     (a) Be accountable to the board for operating and capital expenditures from the account;
     (b) Report to the board not less than quarterly; and
     (c) Represent the interests and concerns of the board as a member of the governor's executive cabinet.

Sec. 9   RCW 43.155.050 and 2011 1st sp.s. c 50 s 951 are each amended to read as follows:
     (1) 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. Money in the public works assistance account shall be used to make loans ((and to give financial guarantees)), forgivable loans, and payments required under contingent loan agreements to local governments 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)) for federal programs.
     (2) 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.)) During the 2011-2013 fiscal biennium, the legislature may transfer from the public works assistance account to the general fund, the water pollution control revolving account, and the drinking water assistance account such amounts as reflect the excess fund balance of the account.
     (3) Not more than ten percent of the biennial capital budget appropriation to the board from the public works assistance account may be obligated by the board as forgivable loans for traditional projects. Based on conditions set in rule by the board, the board may obligate not more than fifty percent forgivable loan to any traditional project.

Sec. 10   RCW 43.155.070 and 2009 c 518 s 16 are each amended to read as follows:
     (1) To qualify for loans or pledges 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.
     (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 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 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)) may not receive financial assistance under this chapter unless it has 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 financial assistance 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 that has not adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040 is not prohibited from receiving financial assistance under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before submitting a request for financial assistance.
     (3) In considering awarding ((loans)) financial assistance for public facilities to special districts 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) Whether the project is referenced in the action agenda developed by the Puget Sound partnership under RCW 90.71.310;
     (d) Whether the project is critical in nature and would affect the health and safety of a great number of citizens;
     (e) 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) The cost of the project compared to the size of the local government and amount of loan money available;
     (g) The number of communities served by or funding the project;
     (h) Whether the project is located in an area of high unemployment, compared to the average state unemployment;
     (i) 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) 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) 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) 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 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.
     (9) Loans made for the purpose of capital facilities plans shall be exempted from subsection (7) of this section.
     (10) To qualify for loans or pledges 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)) In considering awarding financial assistance, the board must consider:
     (a) Whether the entity receiving assistance is a Puget Sound partner, as defined in RCW 90.71.010. Entities that are not eligible to be a Puget Sound partner due to geographic location, composition, exclusion from the scope of the action agenda developed by the Puget Sound partnership under RCW 90.71.310, or for any other reason, may not be given less preferential treatment than Puget Sound partners; and
     (b) Whether the project is referenced in the action agenda developed by the Puget Sound partnership under RCW 90.71.310.

NEW SECTION.  Sec. 11   A new section is added to chapter 43.155 RCW to read as follows:
     The intent of the project selection process is to promote state policy objectives and to maximize the value of projects financed under this chapter. When demand for local financing exceeds available resources from the public works assistance account, some or all of the following criteria may be used by the board to prioritize projects for financing:
     (1) Achieving balanced distribution of funds by geography, system type, and jurisdiction type;
     (2) Whether the project would affect the health and safety of a large percentage of the affected community's population;
     (3) Whether the project consolidates or regionalizes systems;
     (4) Whether the project is located in an area of high unemployment, compared to the average state unemployment;
     (5) Whether the system is being well-managed in the present and for long-term sustainability; and
     (6) Other criteria that the board considers advisable.

NEW SECTION.  Sec. 12   The following acts or parts of acts are each repealed:
     (1) RCW 43.155.010 (Legislative findings and policy) and 1996 c 168 s 1 & 1985 c 446 s 7;
     (2) RCW 43.155.040 (General powers of the board) and 1985 c 446 s 10;
     (3) RCW 43.155.055 (Water storage projects and water systems facilities subaccount) and 2003 c 330 s 1;
     (4) RCW 43.155.060 (Public works financing powers -- Competitive bids on projects) and 1988 c 93 s 2 & 1985 c 446 s 11;
     (5) RCW 43.155.065 (Emergency public works projects) and 2001 c 131 s 3, 1990 c 133 s 7, & 1988 c 93 s 1;
     (6) RCW 43.155.068 (Loans for preconstruction activities) and 2001 c 131 s 4 & 1995 c 363 s 2;
     (7) RCW 43.155.075 (Loans for public works projects -- Statement of environmental benefits -- Development of outcome-focused performance measures) and 2001 c 227 s 10;
     (8) RCW 43.155.100 (Water conservation account) and 2002 c 329 s 11;
     (9) RCW 43.155.110 (Puget Sound partners) and 2007 c 341 s 25; and
     (10) RCW 43.155.120 (Administering funds -- Preference to an evergreen community) and 2008 c 299 s 30.