AN ACT Relating to community redevelopment financing in apportionment districts; amending RCW 39.88.030, 39.88.040, 39.88.070, 39.88.080, 39.88.100, 84.52.043, 84.52.043, and 84.52.050; reenacting and amending RCW 39.88.020; adding a new section to chapter 39.88 RCW; repealing RCW 39.88.060 and 39.88.090; providing an effective date; and providing an expiration date.

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

Sec. 1.  RCW 39.88.020 and 2011 c 336 s 815 are each reenacted and 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:)) The definitions in this section apply throughout this act unless the context clearly requires otherwise.

(1) "Apportionment district" means the geographic area, within an urban area, from which ((regular property taxes are to be apportioned to finance a public improvement contained therein.

(15) "Value of taxable property" means value of taxable property as defined in RCW 39.36.015)) special property taxes are to be levied and collected to finance a public improvement contained therein.

(iii) Not zoned to permit low density commercial development with a floor area ratio of one or less.

NEW SECTION.  Sec. 2.  A new section is added to chapter 39.88 RCW to read as follows:

(1) Prior to imposing the special tax authorized in RCW 39.88.070, a sponsor must adopt an ordinance in accordance with subsection (3) of this section, dedicating to the funding of community benefit activities an amount equal to twenty percent of the maximum stated principal amount of tax allocation bonds expected to be issued as set forth in the public improvement ordinance. Amounts dedicated to community benefit activities must be in addition to those treated as having been expended on public improvement costs under this chapter. The community benefit funding requirement must be satisfied in accordance with the periodic goals set forth in that ordinance.

(2)(a) For purposes of this chapter, community benefit activities must include:

(i) Activities supporting development of low-income and moderate-income housing within walking or transit-connected distance of the apportionment district;

(ii) The conservation of open space, forestlands, and farmlands, including but not limited to the transfer of development rights or the acquisition for conservation purposes of lands (or conservation interests therein), which bear a nexus to the location of the apportionment district. Such a nexus may include without limitation, location within the same watershed, designation as corresponding sending and receiving sites for transfer of development rights under chapter 39.108 RCW, or other similar environmental nexus; and

(iii) Activities that further the sponsor's affordable housing, environmental, and any other social equity and public goals described in an ordinance passed pursuant to subsection (3) of this section. By way of example and without limitation, such goals may include: Retaining small businesses within the apportionment district; developing the workforce and supporting fair labor practices within the apportionment district; increasing energy and water use efficiency, managing wastewater, and conserving natural resources within the apportionment district; and other activities intended to increase social equity.

(b) The amount required to be dedicated to funding community benefit activities under subsection (1) of this section must be allocated among the purposes set forth in (a) of this subsection (2) by the legislative body of the sponsor in an ordinance adopted pursuant to subsection (3) of this section. The legislative authority of the sponsor must set the allocation after opportunity for public comment. However, no more than twenty percent of the available funding may be dedicated to the purposes described in (a)(iii) of this subsection (2), and the remaining available funding must be divided among the purposes described in (a)(i) and (ii) of this subsection (2).

(3) The sponsor's legislative authority must adopt an ordinance after opportunity for public comment, which sets periodic goals for the timing of funding community benefit activities during successive reporting periods of up to five calendar years each:

(a) The first such reporting period must begin with the calendar year during which the special property tax under RCW 39.88.070 is first collected. The last such required reporting period ends with the earlier of:

(i) The last calendar year during which the special property tax authorized in RCW 39.88.070 is collected; or

(ii) The total community benefit funding requirement has been satisfied.

(b) In setting the funding goals, the sponsor may take into account projected revenues of the special property tax, projected debt service coverage ratios set forth in covenants made or entered into in connection with the issuance of tax allocation bonds, and other relevant factors. "Debt service coverage ratio" means the ratio of projected tax allocation revenues to the expected aggregate annual debt service on tax allocation bonds.

(c) At a minimum, the funding goals must provide that within the first year of the first reporting period, an amount equal to five percent of the maximum stated principal amount of tax allocation bonds expected to be issued (as set forth in the public improvement ordinance) must be dedicated to the acquisition of real property, or an interest therein, to be made available for the development of low-income and moderate-income housing within walking or transit-connected distance of the apportionment district. A sponsor may meet this goal by depositing such amount with the Washington state housing finance commission, created under chapter 43.180 RCW, with a public housing authority or by acquiring the real property directly. This amount must be deemed a portion of the allocation dedicated to the purposes under subsection (2)(a) of this section.

(d) The ordinance may be combined with the public improvement ordinance or may be a separate ordinance.

(4) A sponsor is held accountable for meeting its periodic community benefit funding goals as follows:

(a) As soon as practicable after the June 1st that follows the end of each reporting period, the finance officer (or other administrative officer) of the sponsor must report to the legislative authority of the sponsor at a regular meeting on the amount dedicated by the sponsor to community benefit activities under this section on an annual basis and in total over the preceding reporting period. The report must also include a description of the sponsor's goals for timing of dedication of community benefit funding over the preceding reporting period and the total goals set forth in the ordinance adopted pursuant to subsection (3) of this section. After receiving the report, the legislative body must make a determination as to whether the sponsor has met its goals over that reporting period.

(b) If a sponsor determines that it has not met its goals for funding community benefit activities over the reporting period, or if a taxpayer challenge under (c) of this subsection is upheld, then on or before the next January 1st, the sponsor must pay the amount by which the sponsor fell short of its goal for that period, in accordance with the proportional allocation established under subsection (3)(b) of this section, for the purposes of furthering the community benefit activities described in the ordinance adopted under subsection (3) of this section, as follows:

(i) For the purposes of meeting any obligation to fund the activities under subsection (2)(a)(i) of this section, to the housing trust fund created pursuant to chapter 43.185 RCW, to the housing finance commission created pursuant to chapter 43.180 RCW, or to a local housing authority; and

(ii) For meeting obligations pursuant to subsection (2)(a)(ii) of this section, to a rural conservation fund established by the sponsor or to a qualified county agency or accredited land trust.

(c) Any person who pays the special property tax levied within the apportionment district may challenge the sponsor's determination that it has met its community benefit activity funding goals during the preceding reporting period by filing an objection with the clerk of the sponsor's legislative body within thirty days after the date of the sponsor's determination. Upon receipt of such an objection, the clerk must forward such objection to the chair of the legislative body who must schedule at the next practicable opportunity, a public hearing at which the matter of the community benefit funding goals must be heard. Notice of the public hearing must be mailed to the taxpayer submitting the objection and must be given in accordance with the requirements for giving notice of a special meeting under RCW 42.30.080. If, after due consideration, the legislative body determines that the sponsor has not met the community benefit funding goals, the remedy in (b) of this subsection applies. If the legislative body determines that the sponsor has met the community benefit funding goals, the taxpayer has the right to bring action in superior court to compel payment of the amounts required under (b) of this subsection.

(5) The legislative authority of a sponsor may periodically amend the community benefit funding goals after opportunity for public comment, so long as the overall goals remain consistent with the allocation requirements of subsection (2) of this section. If a sponsor has not issued the maximum amount of tax allocation bonds set forth in the public improvement ordinance by the date that is five years after that ordinance was passed, the legislative body may by ordinance revise downward the maximum expected amount of such bonds and the amounts required to be dedicated to the community benefit funding goals must be adjusted accordingly.

(6) The community benefit funding requirement expires at the earlier of thirty years after the special property tax under RCW 39.88.070 is first collected or when the total community benefit funding requirement has been satisfied. A sponsor may at any time satisfy all or a portion of its community benefit funding requirement by contributing money, in accordance with the allocations pursuant to subsection (2) of this section to one or more of the entities listed in subsection (4)(b) of this section.

(7) Nothing in this section may be deemed to permit expenditures of public funds prohibited by Article VIII, sections 5 or 7 of the state Constitution. Nothing in this section may be interpreted to grant to any sponsor the authority to engage in any community benefit activities that are not otherwise authorized to be undertaken by the sponsor.

Sec. 3.  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;

(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.

(3) Public improvements)) in an unincorporated area has been approved by the legislative authority of the county within whose boundaries the apportionment district lies and by the legislative authority of a city having a nexus to the urban growth area in which the apportionment district lies, if any.

(3) Public improvements and community benefit activities 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. 4.  RCW 39.88.040 and 1982 1st ex.s. c 42 s 5 are each amended to read as follows:

(1) Public improvements funded by tax allocation revenues may only be located within ((an urban area. In order to secure an allocation of regular property taxes to finance a public improvement, a sponsor shall:

(4) Within one hundred twenty days after completion of the public 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, which includes the boundaries of the apportionment district, a description of the public improvement, the estimated cost thereof, the portion 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 property taxes will commence, and a finding that the public improvement meets the conditions of RCW 39.88.030)) or serve an apportionment district. In order to levy and collect special property taxes to finance a public improvement, a sponsor must:

(b) The owners of sixty-five percent of the parcels comprising the apportionment district as reflected on rolls of the county assessor for the year in which the ordinance is passed.

Sec. 5.  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 than the first day of the calendar year following the passage of the ordinance, the regular property taxes levied upon the assessed value of real property within the apportionment district shall be divided as follows:

(4) The apportionment of regular property taxes under this section shall 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 to finance public improvement costs and payable in whole or in part from tax allocation revenues. At the time of termination of the apportionment, 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)) earlier than the first day of the calendar year following the passage of the ordinance and no earlier than would be permitted under RCW 84.09.030:

(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. 6.  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 for public improvements including 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;

(((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 fund community benefit activities in accordance with section 2 of this act; or

(d) To pay any combination of the foregoing.

Sec. 7.  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) Proceeds of tax allocation bonds, if needed to capitalize interest for up to thirty-six months following completion of construction, or as necessary to accomplish a refunding or refinancing of a prior issue of tax allocation bonds, consistent with applicable federal tax regulations;

(e) 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)) may 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 determine)) determines. Notwithstanding anything in subsection (4) of this section, tax allocation bonds may 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. 8.  RCW 84.52.043 and 2011 c 275 s 2 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 are as follows:

(1) Levies of the senior taxing districts are as follows: (a) The levy by the state 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 may not exceed one dollar and eighty cents per thousand dollars of assessed value; (c) the levy by any road district may not exceed two dollars and twenty-five cents per thousand dollars of assessed value; and (d) the levy by any city or town 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, 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 do 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; (j) levies by counties for transit-related purposes under RCW 84.52.140; ((and)) (k) the protected portion of the levies imposed under RCW 86.15.160 by flood control zone districts in a county with a population of seven hundred seventy-five thousand or more that are coextensive with a county; and (l) levies by or for apportionment districts established under chapter 39.88 RCW.

Sec. 9.  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)) must be 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 not exceed one dollar and eighty cents per thousand dollars of assessed value; (c) the levy by any road district shall not exceed two dollars and twenty-five cents per thousand dollars of assessed value; and (d) the levy by any city or town shall 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 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. 10.  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, the aggregate of all tax levies upon real and personal property by the state and all taxing districts, now existing or hereafter created, shall not in any year exceed one percentum of the true and fair value of such property in money: PROVIDED, HOWEVER, That nothing herein shall prevent levies at the rates now provided by law by or for any port or public utility district. The term "taxing district" for the purposes of this section shall mean)) 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, may not in any year exceed one percentum of the true and fair value of such property in money. Nothing 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 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. 11.  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.

--- END ---