BILL REQ. #:  S-3571.2 

Read first time 01/11/12.   Referred to Committee on Government Operations, Tribal Relations & Elections.

     AN ACT Relating to fees and charges related to the operation of sewerage systems operated by the county; amending RCW 35.23.251, 35.27.330, 35A.47.040, 36.94.170, and 36.94.180; adding a new section to chapter 35.21 RCW; adding a new section to chapter 35A.47 RCW; adding a new section to chapter 35.22 RCW; creating new sections; and declaring an emergency.

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

NEW SECTION.  Sec. 1   It is the intent of the legislature to clarify when a fee can be imposed by a city or town on a county in connection with a county's operation of a sewerage system. While fees that are imposed in conjunction with a franchise agreement are seen as regulatory fees, these fees often exceed the amount necessary for the cost and administration of a franchise. While the state supreme court held in Lakewood v. Pierce County, 106 Wn. App. 63 (2001) that a franchise fee was permissible as long as the amount of the fee is limited to the costs associated with the franchise, the state supreme court has condoned under specific facts the imposition of other fees in conjunction with a franchise agreement in Burns v. The City of Seattle, 161 Wn.2d 129 (2007). The legislature finds that publicly provided essential service such as sewerage should not be utilized by cities and towns as a source of general fund revenue outside their legislatively authorized taxing authority. Therefore, the legislature intends to limit fees and charges associated with a franchise agreement to the amount necessary to administer the franchise, prohibit any other fee or charge of any nature, and require all revenue be reserved in a dedicated account for the allowed purposes.

NEW SECTION.  Sec. 2   A new section is added to chapter 35.21 RCW to read as follows:
     (1) No city or town may impose a franchise fee or any other fee or charge of whatever nature or description upon a county in connection with a franchise to allow the use of the right-of-way when the purpose of the franchise is to allow the county to construct, own, operate, or maintain a sewerage system.
     (2) No city or town may impose a fee or charge of whatever nature or description for foregoing the right to establish a sewerage system as provided in RCW 36.94.170, the promise not to compete with a county sewerage system by establishing their own sewerage system as provided for in RCW 36.94.170, or foregoing the right to assume all or part of a county sewerage system pursuant to an annexation as provided for in RCW 36.94.180.
     (3) No city or town may impose any fee or charge of whatever nature in relation to or in conjunction with a franchise agreement with a county relating to the county's ability to construct, own, operate, or maintain a sewerage system unless the fee or charge compensates such city or town for its reasonable costs, expenses, and obligations actually incurred or contracted which are directly related to and which benefit the area which the county proposes to serve.
     (4) Any fee or charge of whatever nature or description collected by a city or town from a county in relation to or in conjunction with a franchise agreement relating to sewerage system shall be placed in a dedicated account and used for the specific purposes provided in subsection (3) of this section.

NEW SECTION.  Sec. 3   A new section is added to chapter 35A.47 RCW to read as follows:
     (1) No code city may impose a franchise fee or any other fee or charge of whatever nature or description upon a county in connection with a franchise to allow the use of the right-of-way when the purpose of the franchise is to allow the county to construct, own, operate, or maintain a sewerage system.
     (2) No code city may impose a fee or charge of whatever nature or description for foregoing the right to establish a sewerage system as provided in RCW 36.94.170, the promise not to compete with a county sewerage system by establishing their own sewerage system as provided for in RCW 36.94.170, or foregoing the right to assume all or part of a county sewerage system pursuant to an annexation as provided for in RCW 36.94.180.
     (3) No code city may impose any fee or charge of whatever nature in relation to or in conjunction with a franchise agreement with a county relating to the county's ability to construct, own, operate, or maintain a sewerage system unless the fee or charge compensates such code city for its reasonable costs, expenses, and obligations actually incurred or contracted which are directly related to and which benefit the area which the county proposes to serve.
     (4) Any fee or charge of whatever nature or description collected by a code city from a county in relation to or in conjunction with a franchise agreement relating to sewerage system shall be placed in a dedicated account and used for the specific purposes provided in subsection (3) of this section.

NEW SECTION.  Sec. 4   A new section is added to chapter 35.22 RCW to read as follows:
     The authority to grant franchises is subject to the restriction under section 2 of this act regarding agreements between cities and counties relating to sewerage systems.

Sec. 5   RCW 35.23.251 and 1965 c 7 s 35.24.250 are each amended to read as follows:
     No ordinance or resolution granting any franchise for any purpose shall be passed by the city council on the day of its introduction, nor for five days thereafter, nor at any other than a regular meeting nor without first being submitted to the city attorney.
     No franchise or valuable privilege shall be granted unless by the vote of at least five members of the city council.
     The city council may require a bond in a reasonable amount for any person or corporation obtaining a franchise from the city conditioned for the faithful performance of the conditions and terms of the franchise and providing a recovery on the bond in case of failure to perform the terms and conditions of franchise.
     The authority granted in this section is subject to the restriction under section 2 of this act regarding agreements between cities and counties relating to sewerage systems.

Sec. 6   RCW 35.27.330 and 2009 c 549 s 2063 are each amended to read as follows:
     No ordinance or resolution granting any franchise for any purpose shall be passed by the council on the day of its introduction, nor within five days thereafter, nor at any other than a regular meeting, and no such ordinance or resolution shall have any validity or effect unless passed by the vote of at least three councilmembers. The town council may require a bond in a reasonable amount from any persons and corporations obtaining a franchise from the town conditioned for the faithful performance of the conditions and terms of the franchise and providing a recovery on the bond in case of failure to perform the terms and conditions of the franchise.
     The authority granted in this section is subject to the restriction under section 2 of this act regarding agreements between towns and counties relating to sewerage systems.

Sec. 7   RCW 35A.47.040 and 1967 ex.s. c 119 s 35A.47.040 are each amended to read as follows:
     Every code city shall have authority to permit and regulate under such restrictions and conditions as it may set by charter or ordinance and to grant nonexclusive franchises for the use of public streets, bridges or other public ways, structures or places above or below the surface of the ground for railroads and other routes and facilities for public conveyances, for poles, conduits, tunnels, towers and structures, pipes and wires and appurtenances thereof for transmission and distribution of electrical energy, signals and other methods of communication, for gas, steam and liquid fuels, for water, sewer and other private and publicly owned and operated facilities for public service. The power hereby granted shall be in addition to the franchise authority granted by general law to cities.
     No ordinance or resolution granting any franchise in a code city for any purpose shall be adopted or passed by the city's legislative body on the day of its introduction nor for five days thereafter, nor at any other than a regular meeting nor without first being submitted to the city attorney, nor without having been granted by the approving vote of at least a majority of the entire legislative body, nor without being published at least once in a newspaper of general circulation in the city before becoming effective.
     The city council may require a bond in a reasonable amount for any person or corporation obtaining a franchise from the city conditioned upon the faithful performance of the conditions and terms of the franchise and providing a recovery on the bond in case of failure to perform the terms and conditions of the franchise.
     A code city may exercise the authority hereby granted, notwithstanding a contrary limitation of any preexisting charter provision.
     The authority granted in this section is subject to the restriction under section 3 of this act regarding agreements between code cities and counties relating to sewerage systems.

Sec. 8   RCW 36.94.170 and 1971 ex.s. c 96 s 7 are each amended to read as follows:
     The primary authority to construct, operate and maintain a system of sewerage and/or water within the boundaries of a municipal corporation which lies within the area of the county's sewerage and/or water general plan shall remain with such municipal corporation. A county, after it has adopted and received the necessary approvals of its sewer and/or water general plan under the provisions of chapter 36.94 RCW may construct, own, operate and maintain a system of sewerage and/or water within the boundaries of a city or town with the written consent of such city or town and within any other municipal corporation provided such municipal corporation (1) has the legislative authority to operate such a utility; and (2)(a) has given its written consent to the county to operate therein; or (b) after adoption of a comprehensive plan or an amendment thereto for the area involved, the municipal corporation has not within twelve months after receiving notice by the county of its intention to serve that area held a formation hearing for a utility local improvement district.
     Prior to exercising any authority granted in this section, the county shall compensate such municipal corporation for its reasonable costs, expenses and obligations actually incurred or contracted which are directly related to and which benefit the area which the county proposes to serve. The county may contract with a municipal corporation to furnish such utility service within any municipal corporation.
     Except in the case of annexations provided for in RCW 36.94.180, once a county qualifies under this section to serve within a municipal corporation, no municipal corporation may construct or operate a competing utility in the same territory to be served by the county if the county proceeds within a reasonable period of time with the construction of its proposed facilities including the sale of any bonds to finance the same.
     When the county has established a sewerage system under this subsection in part or throughout all of a city or town, the city or town may not impose a fee or charge of whatever nature or description in relation to or in conjunction with the county's franchise agreement relating to sewerage system, including a fee in exchange for the city or town's promise not to compete with the county in any part of the town or city, unless the fee is directly related to its reasonable costs, expenses, and obligations actually incurred or contracted which are directly related to and which benefit the area which the county is serving.
     The authority granted in this section shall be subject to the restriction under sections 2 and 3 of this act regarding agreements between cities or towns and counties relating to sewerage.
     As may be permitted by other statutes, a city or town may provide water or sewer service outside of its corporate limits, but such service may not conflict with the county plan or any county, sewer or water facilities installed or being installed.
     A county proposing to exercise any authority granted in this section shall give written notice of such intention to the municipal corporation involved and to the boundary review board, if any, of such county. Within sixty days of the filing of such notice of intention, review by the boundary review board of the proposed action may be requested as provided by the provisions of RCW 36.93.100 through 36.93.180. In the event of such review, the board shall consider the factors set forth in this section in addition to the factors and objectives set forth in RCW 36.93.170 and 36.93.180.

Sec. 9   RCW 36.94.180 and 1986 c 234 s 34 are each amended to read as follows:
     (1) In the event of the annexation to a city or town of an area, or incorporation of an area, in which a county is operating a sewerage and/or water system, the property, facilities, and equipment of such sewerage and/or water system lying within the annexed or incorporated area may be transferred to the city or town if such transfer will not materially affect the operation of any of the remaining county system, subject to the assumption by the city or town of the county's obligations relating to such property, facilities, and equipment, under the procedures specified in, and pursuant to the authority contained in, chapter 35.13A RCW.
     (2) The right to assume a sewerage system provided in subsection (1) of this section shall not be used by the city or town to impose a fee or charge of whatever nature or description in relation to or in conjunction with a franchise agreement relating to sewerage system, including a fee in exchange for the city or town's promise not to compete with the county in the newly annexed area, on a county unless the fee is directly related to its reasonable costs, expenses, and obligations actually incurred or contracted that are directly related to and that benefit the area that is being annexed and the county is serving.
     (3) The authority granted in this section is subject to the restriction under sections 2 and 3 of this act, regarding agreements between cities or towns and counties relating to sewerage systems.

NEW SECTION.  Sec. 10   This act applies to all agreements between a city or town and a county that exist on or after the effective date of this section, regardless of when the agreement was entered into. To this extent, this act applies retroactively, but in all other respects it applies prospectively.

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.