BILL REQ. #:  S-4542.2 

READ FIRST TIME 02/07/12.   

     AN ACT Relating to local government financial soundness; amending RCW 82.14.048; adding new sections to chapter 35.57 RCW; adding new sections to chapter 36.100 RCW; creating a new section; and declaring an emergency.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 35.57 RCW to read as follows:
     (1) An independent financial feasibility review under this section is required to be performed prior to any of the following events:
     (a) The formation of a public facilities district under this chapter;
     (b) The issuance of any indebtedness, excluding the issuance of obligations to refund or replace such indebtedness, by a public facilities district under this chapter; or
     (c) The long-term lease, purchase, or development of a facility under RCW 35.57.020.
     (2) The independent financial feasibility review required by this section must be conducted by the department of commerce through the municipal research and services center under RCW 43.110.030 or under a contract with another entity under the authority of RCW 43.110.080. The review must examine the potential costs to be incurred by the public facility district and the adequacy of revenues or expected revenues to meet those costs. The cost of the independent financial feasibility review must be borne by the public facility district or the local government proposing to form a public facility district.
     (3) The independent financial feasibility review, upon completion, must be a public document and must be submitted to the governor, the state treasurer, the state auditor, the public facility district and participating local political subdivisions, and appropriate committees of the legislature.

NEW SECTION.  Sec. 2   A new section is added to chapter 36.100 RCW to read as follows:
     (1) An independent financial feasibility review under this section is required to be performed prior to any of the following events:
     (a) The formation of a public facilities district under this chapter;
     (b) The issuance of any indebtedness, excluding the issuance of obligations to refund or replace such indebtedness, by a public facilities district under this chapter; or
     (c) The long-term lease, purchase, or development of a facility under this chapter.
     (2) The independent financial feasibility review required by this section must be conducted by the department of commerce through the municipal research and services center under RCW 43.110.030 or under a contract with another entity under the authority of RCW 43.110.080. The review must examine the potential costs to be incurred by the public facility district and the adequacy of revenues or expected revenues to meet those costs. The cost of the independent financial feasibility review must be borne by the public facility district or the local government proposing to form a public facility district.
     (3) The independent financial feasibility review, upon completion, must be a public document and must be submitted to the governor, the state treasurer, the state auditor, the public facility district and participating local political subdivisions, and appropriate committees of the legislature.

NEW SECTION.  Sec. 3   A new section is added to chapter 35.57 RCW to read as follows:
     After the effective date of this section, the statutorily authorized taxing authority of a public facility district may not be restricted in any manner by the forming jurisdiction or jurisdictions or by any action of the public facility district.

NEW SECTION.  Sec. 4   A new section is added to chapter 36.100 RCW to read as follows:
     After the effective date of this section, the statutorily authorized taxing authority of a public facility district may not be restricted in any manner by the forming jurisdiction or jurisdictions or by any action of the public facility district.

NEW SECTION.  Sec. 5   In enacting section 6 of this act, the legislature finds that providing local tools to enable solutions for public facilities districts that are in default on bond anticipation notes or bonds is in the best interest of the state, its municipalities, and its citizens as a whole. The legislature further finds it is necessary to act swiftly to provide the tools necessary to address any defaults on debt issued by public facilities districts.

Sec. 6   RCW 82.14.048 and 2009 c 533 s 3 are each amended to read as follows:
     (1) The following definitions apply throughout this section unless the context clearly requires otherwise.
     (a) "Distressed public facilities district" means a public facilities district that has defaulted on bond anticipation notes or bonds in excess of forty million dollars on or before April 1, 2012; and
     (b) "Anchor jurisdiction" means a city that has entered into an agreement to form a public facilities district under RCW 35.57.010(1)(c) that constitutes a distressed public facilities district under this chapter and in which the largest asset of such public facilities district is located.
     (2)(a) The governing board of a public facilities district under chapter 36.100 or 35.57 RCW may submit an authorizing proposition to the voters of the district, and if the proposition is approved by a majority of persons voting, impose a sales and use tax in accordance with the terms of this chapter.
     (((2))) (b) In addition to the tax authorized pursuant to (a) of this subsection and in addition to any other authority conferred by law, the legislative authority of an anchor jurisdiction may impose a sales and use tax within the geographical boundaries of the anchor jurisdiction in accordance with the terms of this chapter without submitting an authorizing proposition to the voters of the anchor jurisdiction or the distressed public facilities district.
     (3) The tax authorized in this section ((shall be)) is in addition to any other taxes authorized by law and ((shall)) 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 ((shall)) 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. A public facilities district formed under RCW 35.57.010(1)(e) may not impose the tax authorized under this ((subsection)) section at a rate that exceeds two-tenths of one percent minus the rate of the highest tax authorized by this ((subsection)) section that is imposed by any other public facilities district within its boundaries. An anchor jurisdiction may impose the tax authorized by subsection (2)(b) of this section at a rate not to exceed two-tenths of one percent, regardless of whether any other public facilities district (including a distressed public facilities district) within its boundaries imposes the tax authorized by this section or the rate of such tax imposed by the public facilities district. If a public facilities district formed under RCW 35.57.010(1)(e) has imposed a tax under this ((subsection)) section and issued or incurred obligations pledging that tax, so long as those obligations are outstanding no other public facilities district within its boundaries may thereafter impose a tax under this ((subsection)) section at a rate that would reduce the rate of the tax that was pledged to the repayment of those obligations. A public facilities district that imposes a tax under this ((subsection)) section is responsible for the payment of any costs incurred for the purpose of administering the provisions of this ((subsection)) section, RCW 35.57.010(1)(e), and 35.57.020(1)(b), including any administrative costs associated with the imposition of ((a)) the tax under this ((subsection)) section incurred by either the department of revenue or local government, or both.
     (((3))) (4)(a) Moneys received by a public facilities district from any tax imposed by the public facilities district under the authority of this section ((shall)) must be used for the purpose of providing funds for the costs associated with the financing, refinancing, design, acquisition, construction, equipping, operating, maintaining, remodeling, repairing, and reequipping of its public facilities.
     (b) Moneys received by an anchor jurisdiction from any tax imposed by the anchor jurisdiction under the authority of this section must be used for the purpose of providing funds for the costs associated with the financing, refinancing, design, acquisition, construction, equipping, operating, maintaining, remodeling, repairing, and reequipping of the public facilities of the distressed public facilities district, and for all litigation, investigation, and related costs and expenses incurred by the anchor jurisdiction toward resolving matters related to the defaults of the distressed public facilities district. To the extent the distressed public facilities district owes money to an anchor jurisdiction, the anchor jurisdiction may apply money from the sales tax imposed under this section to any such obligations. Any sales tax imposed by an anchor jurisdiction under this section must terminate no later than thirty years after it is first imposed.

NEW SECTION.  Sec. 7   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. 8   Sections 5 and 6 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect immediately.