BILL REQ. #:  S-0822.2 

Read first time 02/08/11.   Referred to Committee on Economic Development, Trade & Innovation.

     AN ACT Relating to community redevelopment financing in apportionment districts; amending RCW 39.88.020, 39.88.030, 39.88.040, 39.88.070, 39.88.080, 39.88.100, 84.52.043, and 84.52.050; and repealing RCW 39.88.060 and 39.88.090.

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

Sec. 1   RCW 39.88.020 and 1982 1st ex.s. c 42 s 3 are each amended to read as follows:
     As used in this chapter the following terms have the following meanings unless a different meaning is clearly indicated by the context:
     (1) "Apportionment district" means the geographic area, within an urban area or within an unincorporated area within the boundaries of a port district, from which ((regular)) special property taxes are to be ((apportioned)) levied and collected to finance a public improvement contained therein.
     (2) (("Assessed value of real property" means the valuation of real property as placed on the last completed assessment roll of the county.
     (3))) "City" means any city or town.
     (((4))) (3) "County" means any county of the state of Washington.
     (4) "Ordinance" means an ordinance, resolution, or any other appropriate method of taking a legislative action by the legislative authority of a county ((or)), port district, or city, whether known as a statute, resolution, ordinance, or otherwise.
     (5) "Port district" means a port district established under chapter 53.04 RCW.
     (6) "Public improvement" means ((an undertaking to provide public facilities in an urban area)) one or more publicly owned facilities in or serving an apportionment district which the sponsor has authority to provide.
     (((6))) (7) "Public improvement costs" means capital expenditures with respect to public improvements, including without limitation the costs of design, planning, acquisition, site preparation, construction, reconstruction, rehabilitation, improvement, and installation of the public improvement; costs of relocation, maintenance, and operation of property pending construction of the public improvement; costs of relocating utilities ((relocated as a result of)) in connection with undertaking the public improvement; costs of financing, including interest during construction, legal and other professional services, taxes, and insurance; ((costs incurred by the assessor to revalue real property for the purpose of determining the tax allocation base value that are in excess of costs incurred by the assessor in accordance with his revaluation plan under chapter 84.41 RCW, and the)) costs of ((apportioning the)) levying and collecting the special property taxes and complying with this chapter and other applicable law; and administrative costs reasonably necessary and related to these costs. These costs may include costs incurred prior to the adoption of the public improvement ordinance, but subsequent to July 10, 1982.
     (((7))) (8) "Public improvement ordinance" means the ordinance passed under RCW 39.88.040(4).
     (((8))) (9) "Regular property taxes" means regular property taxes as now or hereafter defined in RCW 84.04.140((, except regular property taxes levied by port districts or public utility districts specifically for the purpose of making required payments of principal and interest on general indebtedness)).
     (((9))) (10) "Special property taxes" means the special property taxes authorized to be levied and collected within an apportionment district under RCW 39.88.070. Special property taxes are not regular property taxes for any purpose under this chapter or under any other provision of law, but special property taxes are "excess real property taxes" for purposes of RCW 84.36.381 through 84.36.389, are "real property taxes" for purposes of chapters 84.37 and 84.38 RCW, are "property taxes" for purposes of chapter 84.39 RCW, and also constitute "ad valorem taxation" as that term is used in RCW 84.33.040.
     (11) "Sponsor" means any county ((or)), city, or port district initiating and undertaking a public improvement under this chapter.
     (((10))) (12) "Tax allocation base value ((of real property))" means the ((true and fair)) value of ((real)) taxable property within an apportionment district for the year in which the apportionment district was established.
     (((11))) (13) "Tax allocation bonds" means any bonds, notes, or other obligations issued or incurred by a sponsor pursuant to ((section 10 of this act)) RCW 39.88.100.
     (((12))) (14) "Tax allocation increment value" means, as of any time of calculation, the value of taxable property in an apportionment district in excess of the tax allocation base value within that apportionment district.
     (15) "Tax allocation revenues" means those special property tax revenues ((allocated to)) levied and collected by a sponsor under RCW 39.88.070(1)(((b))).
     (((13))) (16) "Taxing districts" means any governmental entity which levies or has levied for it regular property taxes upon real property located within a proposed or approved apportionment district.
     (((14))) (17) "Value of taxable property" means value of taxable property as defined in RCW 39.36.015.
     (((15))) (18) "Urban area" means an area in a city or located ((outside of a city that is characterized by intensive use of the land for the location of structures and receiving such urban services as sewers, water, and other public utilities and services normally associated with urbanized areas. Not more than twenty-five percent of the area within the urban area proposed apportionment district may be vacant land)) in an urban growth area as defined in RCW 36.70A.030.

Sec. 2   RCW 39.88.030 and 1982 1st ex.s. c 42 s 4 are each amended to read as follows:
     (1) Only public improvements which are determined by the legislative authority of the sponsor to meet the following criteria are eligible to be financed under this chapter:
     (a) The public improvement is located within an urban area or, where a port district is a sponsor, in an unincorporated area within the boundaries of that port district;
     (b) The public improvement will encourage private development within the apportionment district;
     (c) The public improvement will increase the ((fair market)) assessed value of the real property located within the apportionment district;
     (d) The private development which is anticipated to occur within the apportionment district as a result of the public improvement is consistent with an existing comprehensive land use plan and approved growth policies of the jurisdiction within which it is located;
     (e) A public improvement located within a city has been approved by the legislative authority of such city; and
     (f) A public improvement located ((within an urban area)) in an unincorporated area has been approved by the legislative authority of the county within whose boundaries the area lies, and a public improvement located within the urban growth area of a city, as defined in RCW 36.70A.030, has also been approved by the legislative authority of that city.
     (2) ((Apportionment of regular)) The levying and collection of special property tax revenues to finance the public improvements ((is subject to the following limitations:
     (a) No apportionment of regular property tax revenues)) may take place within a previously established apportionment district where ((regular property taxes are still apportioned)) special property taxes are still levied and collected to finance public improvements without the concurrence of the sponsor which established the previously established district((;
     (b) No apportionment district may be established which includes any geographic area included within a previously established apportionment district which has outstanding bonds payable in whole or in part from tax allocation revenues;
     (c) The total amount of outstanding bonds payable in whole or in part from tax allocation revenues arising from property located within a city shall not exceed two percent of the value of taxable property within the city, and the total amount of outstanding bonds payable in whole or in part from tax allocation revenues arising from property located within the unincorporated areas of a county shall not exceed two percent of the value of taxable property within the entire unincorporated area of the county; and
     (d) No taxes other than regular property taxes may be apportioned under this chapter)).
     (3) Public improvements may be undertaken and coordinated with other programs or efforts undertaken by the sponsor or others and may be funded in whole or in part from sources other than those provided by this chapter.

Sec. 3   RCW 39.88.040 and 1982 1st ex.s. c 42 s 5 are each amended to read as follows:
     Public improvements funded by tax allocation revenues may only be located within ((an urban area. In order to secure an allocation of regular)) or serve an apportionment district. In order to levy and collect special property taxes to finance a public improvement, a sponsor ((shall)) must:
     (1) Propose by ordinance a plan for the public improvement which includes a description of the contemplated public improvement, the estimated cost thereof, the maximum total amount of the estimated cost to be paid from special property taxes or from tax allocation bonds, the boundaries of the apportionment district, the ((estimated period during which tax revenue apportionment is contemplated)) maximum period (not to exceed thirty years) during which the special property tax is to be levied and collected, and the ways in which the sponsor plans to use ((tax allocation)) special property tax revenues to finance the public improvement((, and which sets at least three)). The ordinance must provide for at least one public hearing((s)) thereon before the legislative authority of the sponsor or a committee thereof((: PROVIDED, That)). However, public hearings for the public improvement that is undertaken in combination or coordination by two or more sponsors may be held jointly; and public hearings, held before the legislative authority or a committee of a majority thereof may be combined with public hearings held for other purposes;
     (2) At least fifteen days in advance of the hearing:
     (a) Deliver notice of the hearing to all taxing districts, the county treasurer, ((and)) the county assessor, ((which)) and the owners or reputed owners of all lots, tracts, and parcels of land within the proposed apportionment district, as shown on the rolls of the county assessor and directed to the address shown thereon. The notice must include((s)) a map or drawing showing the location of the contemplated public improvement and the boundaries of the proposed apportionment district, a brief description of the public improvement, the estimated cost thereof, the maximum total amount of the estimated cost to be paid from special property taxes or from tax allocation bonds, the maximum period during which the special property tax is to be levied and collected, the anticipated increase in ((property)) assessed values within the apportionment district, the location of the sponsor's principal business office where it will maintain information concerning the public improvement for public inspection, and the date and place of hearing; and
     (b) Post notice in at least ((six)) three public places located in the proposed apportionment district and publish notice in a legal newspaper of general circulation within the sponsor's jurisdiction briefly describing the public improvement, the proposed ((apportionment)) special property taxes, the boundaries of the proposed apportionment district, the location where additional information concerning the public improvement may be inspected, and the date and place of hearing;
     (3) At the time and place fixed for the hearing under subsection (1) of this section, and at such times to which the hearing may be adjourned, receive and consider all statements and materials as may be submitted, and objections and letters filed before or within ten days thereafter;
     (4) ((Within)) Not earlier than ten days and not more than one hundred twenty days after completion of the public hearing or hearings, pass an ordinance establishing the apportionment district and authorizing the proposed public improvement, including any modifications which ((in the sponsor's opinion the hearings indicated should be made)) the legislative authority of the sponsor deems appropriate as a result of public comments received, which includes the boundaries of the apportionment district, a description of the public improvement, the estimated cost thereof, ((the portion)) the maximum total amount of the estimated cost thereof to be ((reimbursed from tax allocation revenues, the estimated time during which regular property taxes are to be apportioned, the date upon which apportionment of the regular)) paid from special property taxes or from tax allocation bonds, the date upon which the levying and collection of the special property taxes will commence, the maximum period during which the special property tax is to be levied and collected, and a finding that the public improvement meets the conditions of RCW 39.88.030.
     (5) The jurisdiction of the sponsor to proceed with the levying and collection of special property taxes within an apportionment district will be divested by a protest, filed with the legislative authority of the sponsor within thirty days after the date of passage of the ordinance, signed by the owners of the property within the apportionment district representing more than fifty percent of the value of taxable property within that apportionment district as reflected on rolls of the county assessor for the year in which the ordinance is passed.

Sec. 4   RCW 39.88.070 and 1982 1st ex.s. c 42 s 8 are each amended to read as follows:
     (1) Upon the date established in the public improvement ordinance, but not ((sooner)) earlier than the first day of the calendar year following the passage of the ordinance((, the)) and no earlier than would be permitted under RCW 84.09.030;
     (a) Regular property taxes levied upon the ((assessed value of real)) property within the apportionment district ((shall be divided as follows:
     (a) That portion of the regular property taxes produced by the rate of tax levied each year by or for each of the taxing districts upon the tax allocation base value of real property, or upon the assessed value of real property in each year, whichever is smaller, shall be allocated to and paid to the respective taxing districts; and
     (b) That portion of the regular property taxes levied each year by or for each of the taxing districts upon the assessed value of real property within an apportionment district which is in excess of the tax allocation base value of real property shall be allocated and paid to the sponsor, or the sponsor's designated agent, until all public improvement costs to be paid from the tax allocation revenues have been paid, except that the sponsor may agree to receive less than the full amount of such portion as long as bond debt service, reserve, and other bond covenant requirements are satisfied, in which case the balance of the taxes shall be allocated to the respective taxing districts as the sponsor and the taxing districts may agree.
     (2) The county assessor shall revalue the real)) by taxing districts must continue to be collected in accordance with applicable law, without regard to the existence of the apportionment district or the special property taxes levied or collected therein; and
     (b) The sponsor may levy upon the value of taxable property within the apportionment district, and collect special property taxes in amounts not in excess of the amounts the legislative authority of the sponsor deems necessary to provide for the purposes set forth in RCW 39.88.080, but in annual amounts not in excess of one percent of the tax allocation increment value within the apportionment district. Special property taxes collected within an apportionment district must be paid to the sponsor, or the sponsor's designated agent, until all public improvement costs and tax allocation bonds issued or incurred to be paid from the tax allocation revenues have been paid, but in no event may special property taxes be collected longer than the maximum period set forth in the ordinance establishing the apportionment district.
     (2) Special property taxes are not subject to the limitations imposed by Article VII, section 2 of the Washington state Constitution and are in excess of all statutory and charter limitations otherwise applicable to property taxes levied and collected by any county, city, or port district.
     (3) The county assessor must determine the value of the taxable property within the apportionment district as of January 1st of the year in which the ordinance establishing the district is enacted for the purpose of determining the tax allocation base value for the apportionment district and ((shall)) must certify to the sponsor the tax allocation base value as soon as practicable after the assessor receives notice of the public improvement ordinance and ((shall)) must certify to the sponsor the total ((assessed)) value of ((real)) taxable property within thirty days after the property values for each succeeding year have been established, except that the assessed value of state-assessed real property within the apportionment district ((shall)) must be certified as soon as the values are provided to the assessor by the department of revenue. Nothing in this section authorizes 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.
     (((3))) (4) The date upon which the apportionment district was established ((shall be)) is considered the date upon which the public improvement ordinance was enacted by the sponsor.
     (((4) The apportionment of regular property taxes)) (5) The collection of special property taxes within an apportionment district under this section ((shall)) must cease when tax allocation revenues are no longer necessary or obligated to pay public improvement costs or to pay ((principal of and interest on bonds issued)) tax allocation bonds issued or incurred to finance public improvement costs and payable in whole or in part from tax allocation revenues, but in no event may special property taxes be collected longer than the maximum period set forth in the ordinance establishing the apportionment district. At the time of termination of the ((apportionment)) collection of those special property taxes, any excess money and any earnings thereon held by the sponsor ((shall be returned to the county treasurer and distributed to the taxing districts which were subject to the allocation in proportion to their regular property tax levies due for the year in which the funds are returned)) must be spent on costs of public improvements.
     (6) For purposes of Title 84 RCW, an apportionment district is deemed a "taxing district" and any special property tax levy is deemed a levy of the apportionment district, separate from any other tax levy of the sponsor.

Sec. 5   RCW 39.88.080 and 1982 1st ex.s. c 42 s 9 are each amended to read as follows:
     (1) Tax allocation revenues may be applied, in no particular order, as follows:
     (((1))) (a) To pay public improvement costs;
     (((2))) (b) To ((pay)) provide for payments with respect to principal of and interest on, and to fund any necessary reserves for, tax allocation bonds; or
     (((3) To pay into bond funds established to pay the principal of and interest on general obligation bonds issued pursuant to law to finance public facilities that are specified in the public improvement ordinance and constructed following the establishment of and within the apportionment district; or
     (4))) (c) To pay any combination of the foregoing.
     (2) In the event that the legislative authority of a sponsor determines that public improvements specified in the ordinance establishing an apportionment district are impracticable to carry out, or if unspent tax allocation bond proceeds or tax allocation revenues remain after the completion of the public improvements specified in the ordinance, the legislative authority may by ordinance spend the remaining bond proceeds and tax allocation revenues to retire or defease those bonds or on the costs of other public improvements, after holding a hearing with public notice given substantially in accordance with the procedure described in RCW 39.88.040(2). No such change of use of tax allocation revenues or the proceeds of tax allocation bonds may permit an increase in the maximum period of time during which the special property tax is to be levied and collected, or permit an increase in the total amount of the estimated cost to be paid from special property taxes or from tax allocation bonds as set forth in the ordinance establishing the apportionment district. Upon the retirement or defeasance of all tax allocation bonds secured by special property taxes levied and collected within an apportionment district, any remaining tax allocation revenues must be spent on costs of public improvements.

Sec. 6   RCW 39.88.100 and 1982 1st ex.s. c 42 s 11 are each amended to read as follows:
     (1) A sponsor may issue such tax allocation bonds as it may deem appropriate for the financing of public improvement costs and a reasonable bond reserve and for the refunding of any outstanding tax allocation bonds.
     (2) The principal and interest of tax allocation bonds may be made payable from:
     (a) Tax allocation revenues;
     (b) Project revenues which may include (i) nontax income, revenues, fees, and rents from the public improvement financed with the proceeds of the bonds, or portions thereof, and (ii) contributions, grants, and nontax money available to the sponsor for payment of costs of the public improvement or the debt service of the bonds issued therefor;
     (c) The full faith and credit of the sponsor or of any other taxing district (provision of which is declared to be a proper purpose for any such taxing district) payable from annual ad valorem taxes to be levied within the constitutional and statutory tax limitations provided by law without a vote of the electors of the sponsor or other taxing district on all of the taxable property within the boundaries of that sponsor or other taxing district;
     (d) Any combination of the foregoing.
     (3) Except and to the extent that a sponsor or other taxing district has expressly pledged its full faith and credit to the payment of tax allocation bonds, tax allocation bonds ((shall)) may not be the general obligation of or guaranteed by all or any part of the full faith and credit of the sponsor or any other state or local government, or any tax revenues other than tax allocation revenues, and shall not be considered a debt of the sponsor or other state or local government for general indebtedness limitation purposes.
     (4) The terms and conditions of tax allocation bonds may include provisions for the following matters, among others:
     (a) The date of issuance, maturity date or dates, denominations, form, series, negotiability, registration, rank or priority, place of payment, interest rate or rates which may be fixed or may vary over the life of the tax allocation bonds, bond reserve, coverage, and such other terms related to repayment of the tax allocation bonds;
     (b) The application of tax allocation bond proceeds; the use, sale, or disposition of property acquired; consideration or rents and fees to be charged in the sale or lease of property acquired; consideration or rents and fees to be charged in the sale or lease of property within a public improvement; the application of rents, fees, and revenues within a public improvement; the maintenance, insurance, and replacement of property within a public improvement; other encumbrances, if any, upon all or part of property within a public improvement, then existing or thereafter acquired; and the type of debts that may be incurred;
     (c) The creation of special funds; the money to be so applied; and the use and disposition of the money;
     (d) The securing of the tax allocation bonds by a pledge of property and property rights, by assignment of income generated by the public improvement, or by pledging such additional specifically described resources other than tax revenues as are available to the sponsor;
     (e) The terms and conditions for redemption;
     (f) The replacement of lost and destroyed bond instruments;
     (g) Procedures for amendment of the terms and conditions of the tax allocation bonds;
     (h) The powers of a trustee to enforce covenants and take other actions in event of default; the rights, liabilities, powers, and duties arising upon the breach of any covenant, condition, or obligation; and
     (i) When consistent with the terms of this chapter, such other terms, conditions, and provisions which may make the tax allocation bonds more marketable and further the purposes of this chapter.
     (5) Tax allocation bonds may be issued and sold in such manner as the legislative authority of the sponsor ((shall)) determines. Tax allocation bonds may also be issued and sold in accordance with chapter 39.46 RCW.
     (6) The sponsor may also issue or incur obligations in anticipation of the receipt of tax allocation bond proceeds or other money available to pay public improvement costs.

Sec. 7   RCW 84.52.043 and 2009 c 551 s 6 are each amended to read as follows:
     Within and subject to the limitations imposed by RCW 84.52.050 as amended, the regular ad valorem tax levies upon real and personal property by the taxing districts hereafter named ((shall be)) are as follows:
     (1) Levies of the senior taxing districts ((shall be)) are as follows: (a) The levy by the state ((shall)) may not exceed three dollars and sixty cents per thousand dollars of assessed value adjusted to the state equalized value in accordance with the indicated ratio fixed by the state department of revenue to be used exclusively for the support of the common schools; (b) the levy by any county ((shall)) may not exceed one dollar and eighty cents per thousand dollars of assessed value; (c) the levy by any road district ((shall)) may not exceed two dollars and twenty-five cents per thousand dollars of assessed value; and (d) the levy by any city or town ((shall)) may not exceed three dollars and thirty-seven and one-half cents per thousand dollars of assessed value. However any county is hereby authorized to increase its levy from one dollar and eighty cents to a rate not to exceed two dollars and forty-seven and one-half cents per thousand dollars of assessed value for general county purposes if the total levies for both the county and any road district within the county do not exceed four dollars and five cents per thousand dollars of assessed value, and no other taxing district has its levy reduced as a result of the increased county levy.
     (2) The aggregate levies of junior taxing districts and senior taxing districts, other than the state, ((shall)) may not exceed five dollars and ninety cents per thousand dollars of assessed valuation. The term "junior taxing districts" includes all taxing districts other than the state, counties, road districts, cities, towns, apportionment districts established under chapter 39.88 RCW, port districts, and public utility districts. The limitations provided in this subsection shall not apply to: (a) Levies at the rates provided by existing law by or for any port or public utility district; (b) excess property tax levies authorized in Article VII, section 2 of the state Constitution; (c) levies for acquiring conservation futures as authorized under RCW 84.34.230; (d) levies for emergency medical care or emergency medical services imposed under RCW 84.52.069; (e) levies to finance affordable housing for very low-income housing imposed under RCW 84.52.105; (f) the portions of levies by metropolitan park districts that are protected under RCW 84.52.120; (g) levies imposed by ferry districts under RCW 36.54.130; (h) levies for criminal justice purposes under RCW 84.52.135; (i) the portions of levies by fire protection districts that are protected under RCW 84.52.125; ((and)) (j) levies by counties for transit-related purposes under RCW 84.52.140; and (k) levies by or for apportionment districts established under chapter 39.88 RCW.

Sec. 8   RCW 84.52.050 and 1973 1st ex.s. c 194 s 1 are each amended to read as follows:
     (1) Except as ((hereinafter)) provided otherwise in this section, the aggregate of all tax levies upon real and personal property by the state and all taxing districts, now existing or hereafter created, ((shall)) may not in any year exceed one percentum of the true and fair value of such property in money((: PROVIDED, HOWEVER, That)). Nothing ((herein shall)) in this section prevents levies at the rates now provided by law by or for any port or public utility district or any apportionment district established under chapter 39.88 RCW. The term "taxing district" for the purposes of this section ((shall)) means any political subdivision, municipal corporation, district, or other governmental agency authorized by law to levy, or have levied for it, ad valorem taxes on property, other than a port or public utility district or any apportionment district established under chapter 39.88 RCW. Such aggregate limitation or any specific limitation imposed by law in conformity therewith may be exceeded only as authorized by law and in conformity with the provisions of Article VII, section 2(a), (b), or (c) of the Constitution of the state of Washington, or in conformity with any other provision of Article VII of the Constitution of the state of Washington.
     (2) Nothing ((herein contained shall)) in this section prohibits the legislature from allocating or reallocating the authority to levy taxes between the taxing districts of the state and its political subdivisions in a manner which complies with the aggregate tax limitation set forth in this section.

NEW SECTION.  Sec. 9   The following acts or parts of acts are each repealed:
     (1) RCW 39.88.060 (Disagreements between taxing districts) and 1989 c 378 s 1 & 1982 1st ex.s. c 42 s 7; and
     (2) RCW 39.88.090 (General obligation bonds) and 1982 1st ex.s. c 42 s 10.

NEW SECTION.  Sec. 10   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.