AN ACT Relating to financing essential public infrastructure; amending RCW 43.155.020, 43.155.040, 43.155.060, 43.155.065, 43.155.068, 43.155.070, 43.155.075, and 43.155.120; reenacting and amending RCW 43.155.050; adding new sections to chapter 43.155 RCW; creating a new section; and providing a contingent effective date.

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

PART 1

FINDINGS AND INTENT

PART 2

CHANGES TO THE EXISTING PUBLIC WORKS PROGRAM

Sec. 201.  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 unless the context clearly requires otherwise.

(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) "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))) "Local governments" 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.

(((6))) (5) "Public works financing assistance program" is the program established in sections 301 through 305 of this act.

(7) "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))) (8) "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))) (9) "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.

Sec. 202.  RCW 43.155.040 and 1985 c 446 s 10 are each amended to read as follows:

The board may:

(1) Accept 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;

(2) Provide technical assistance to local governments;

(3) Accept 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 which 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;

(5) Do all acts and things necessary or convenient to carry out the powers expressly granted or implied under this chapter;

(6) Implement the public works financing assistance program.

Sec. 203.  RCW 43.155.050 and 2015 3rd sp.s. c 4 s 959 and 2015 3rd sp.s. c 3 s 7032 are each reenacted and amended to read as follows:

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)) to local governments for public works projects. Moneys in the account may also be appropriated or transferred to the water pollution control revolving account and the drinking water assistance account 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. Not more than fifteen percent of the biennial capital budget appropriation to the public works board from this account may be expended or obligated)). Money in the account may also be appropriated for the administration of the public works financing assistance program. Money in the account may also be appropriated for preconstruction loans((,)) and 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. During the 2015-2017 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. During the 2013-2015 fiscal biennium, the legislature may transfer from the public works assistance account to the education legacy trust account such amounts as specified by the legislature)). During the 2015-2017 fiscal biennium, the legislature may appropriate moneys from the account for activities related to the growth management act and the voluntary stewardship program. During the 2015-2017 fiscal biennium, the legislature may transfer from the public works assistance account to the state general fund such amounts as specified by the legislature. In the 2017-2019 fiscal biennium the legislature intends to allocate seventy-three million dollars of future loan repayments paid into the public works assistance account to support basic education.

Sec. 204.  RCW 43.155.060 and 1988 c 93 s 2 are each amended to read as follows:

(1) In order to aid the financing of public works projects, the board may:

(((1))) (a) Make low-interest or interest-free loans to local governments from the public works assistance account ((or other funds and accounts)) for the purpose of assisting local governments in financing public works projects. The board 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)) section. Money received from local governments in repayment of loans made under this section shall be paid into the public works assistance account for uses consistent with this chapter.

(3))) (b) Create such subaccounts in the public works assistance account as the board deems necessary to carry out the purposes of this chapter.

(((4))) (c) Provide a method for the allocation of loans ((and financing guarantees)) and the provision of technical assistance under this chapter.

(2) All local public works projects aided in whole or in part under the provisions of this chapter shall be put out for competitive bids, except for emergency public works under RCW 43.155.065 for which the recipient jurisdiction shall comply with this requirement to the extent feasible and practicable. The competitive bids called for shall be administered in the same manner as all other public works projects put out for competitive bidding by the local governmental entity aided under this chapter.

Sec. 205.  RCW 43.155.065 and 2001 c 131 s 3 are each amended to read as follows:

The board may make low-interest or interest-free loans to local governments for emergency public works projects from the public works assistance account. Emergency public works projects shall include the construction, repair, reconstruction, replacement, rehabilitation, or improvement of a public water system that is in violation of health and safety standards and is being operated by a local government on a temporary basis. The loans may be used to help fund all or part of an emergency public works project less any reimbursement from any of the following sources: (1) Federal disaster or emergency funds, including funds from the federal emergency management agency; (2) state disaster or emergency funds; (3) insurance settlements; or (4) litigation.

Sec. 206.  RCW 43.155.068 and 2001 c 131 s 4 are each amended to read as follows:

(1) The board may make low-interest or interest-free loans to local governments from the public works assistance account for preconstruction activities on public works projects before the legislature approves the construction phase of the project. Preconstruction activities include design, engineering, bid-document preparation, environmental studies, right-of-way acquisition, and other preliminary phases of public works projects as determined by the board. The purpose of the loans authorized in this section is to accelerate the completion of public works projects by allowing preconstruction activities to be performed before the approval of the construction phase of the project by the legislature.

(2) Projects receiving loans for preconstruction activities under this section must be evaluated using the priority process and factors in RCW 43.155.070(((2))) (4). The receipt of a loan for preconstruction activities does not ensure the receipt of a construction loan for the project under this chapter. Construction loans for projects receiving a loan for preconstruction activities under this section are subject to legislative approval under RCW 43.155.070 (((4) and (5))) (7) and (8). The board shall adopt a single application process for local governments seeking both a loan for preconstruction activities under this section and a construction loan for the project from the public works assistance account.

Sec. 207.  RCW 43.155.070 and 2015 3rd sp.s. c 3 s 7033 are each amended to read as follows:

(1) To qualify for financial assistance from the public works assistance account 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 may not receive financial assistance from the public works assistance account 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 may apply for and receive financial assistance under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before executing a contractual agreement for financial assistance with the board.

(3) In considering awarding financial assistance from the public works assistance account 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 must 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 must develop a priority process for public works projects financed from the public works assistance account 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 must attempt to ((assure)) ensure a geographical balance in assigning priorities to projects. The board must 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's permitting process has been certified as streamlined by the office of regulatory assistance;

(f) 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;

(g) The cost of the project compared to the size of the local government and amount of loan money available;

(h) The number of communities served by or funding the project;

(i) Whether the project is located in an area of high unemployment, compared to the average state unemployment;

(j) 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;

(k) 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;

(l) 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

(m) Other criteria that the board considers advisable.

(5) For the 2015-2017 fiscal biennium, in place of the criteria, ranking, and submission processes for construction loan lists provided in subsections (4) and (7) of this section:

(a) The board must develop a process for numerically ranking applications for construction loans submitted by local governments. The board must consider, at a minimum and in any order, the following factors in assigning a numerical ranking to a project:

(i) Whether the project is critical in nature and would affect the health and safety of many people;

(ii) The extent to which the project leverages nonstate funds;

(iii) The extent to which the project is ready to proceed to construction;

(iv) Whether the project is located in an area of high unemployment, compared to the average state unemployment;

(v) Whether the project promotes the sustainable use of resources and environmental quality;

(vi) Whether the project consolidates or regionalizes systems;

(vii) Whether the project encourages economic development through mixed-use and mixed income development consistent with chapter 36.70A RCW;

(viii) Whether the system is being well-managed in the present and for long-term sustainability;

(ix) Achieving equitable distribution of funds by geography and population;

(x) The extent to which the project meets the following state policy objectives:

(A) Efficient use of state resources;

(B) Preservation and enhancement of health and safety;

(C) Abatement of pollution and protection of the environment;

(D) Creation of new, family-wage jobs, and avoidance of shifting existing jobs from one Washington state community to another;

(E) Fostering economic development consistent with chapter 36.70A RCW;

(F) Efficiency in delivery of goods and services, public transit, and transportation;

(G) Avoidance of additional costs to state and local governments that adversely impact local residents and small businesses; and

(H) Reduction of the overall cost of public infrastructure; and

(xi) Other criteria that the board considers necessary to achieve the purposes of this chapter.

(b) Before November 1, 2016, the board must develop and submit to the appropriate fiscal committees of the senate and house of representatives a ranked list of qualified public works projects which have been evaluated by the board and are recommended for funding by the legislature. The maximum amount of funding that the board may recommend for any jurisdiction is ten million dollars per biennium. For each project on the ranked list, as well as for eligible projects not recommended for funding, the board must document the numerical ranking that was assigned.

(6) Existing debt or financial obligations of local governments may not be refinanced under this chapter. Each local government applicant must 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.

(7) Before November 1st of each even-numbered year, the board must 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 (10) 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 must 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 must 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.

(8) The board may 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 may not change the order of the priorities recommended for funding by the board.

(9) Subsection (8) of this section does not apply to loans made under RCW 43.155.065, 43.155.068, and subsection (10) of this section.

(10) Loans made for the purpose of capital facilities plans are exempted from subsection (8) of this section.

(11) To qualify for loans ((or pledges)) from the public works assistance account 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.

(12) After January 1, 2010, any project designed to address the effects of storm water or wastewater on Puget Sound may be funded from the public works assistance account 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.

(13) During the 2015-2017 fiscal biennium, for projects funded from the public works assistance account involving repair, replacement, or improvement of a wastewater treatment plant or other public works facility for which an investment grade efficiency audit is obtainable, the public works board must require as a contract condition that the project sponsor undertake an investment grade efficiency audit. The project sponsor may finance the costs of the audit as part of its public works assistance account program loan.

(14)(((a))) For public works assistance account application rounds conducted during the 2015-2017 fiscal biennium, the board must implement policies and procedures designed to maximize local government use of federal funds to finance local infrastructure including, but not limited to, drinking water and clean water state revolving funds operated by the state departments of health and ecology. Projects that are eligible for the drinking water and clean water state revolving funds may receive public works board preconstruction loans. Projects that are eligible for the drinking water and clean water state revolving funds are not eligible for public works board construction loans. For purposes of this subsection "eligible for drinking water and clean water state revolving funds" means:

(((i))) (a) Projects that have applied to the state revolving funds and are awaiting a funding decision;

(((ii))) (b) Projects that have been rejected for funding solely due to not meeting readiness requirements; and

(((iii))) (c) Projects that have not applied, but would likely be eligible if the project applied and met the project readiness requirements.

Sec. 208.  RCW 43.155.075 and 2001 c 227 s 10 are each amended to read as follows:

In providing loans for public works projects from the public works assistance account, the board shall require recipients to incorporate the environmental benefits of the project into their applications, and the board shall utilize the statement of environmental benefits in its prioritization and selection process. The board shall also develop appropriate outcome-focused performance measures to be used both for management and performance assessment of the loan program. To the extent possible, the department should coordinate its performance measure system with other natural resource-related agencies as defined in RCW 43.41.270. The board shall consult with affected interest groups in implementing this section.

Sec. 209.  RCW 43.155.120 and 2008 c 299 s 30 are each amended to read as follows:

When administering funds from the public works assistance account under this chapter, the board shall give preference only to an evergreen community recognized under RCW 35.105.030 in comparison to other entities that are eligible to receive evergreen community designation. Entities not eligible for designation as an evergreen community shall not be given less preferential treatment than an evergreen community.

PART 3

PUBLIC WORKS FINANCING ASSISTANCE PROGRAM

NEW SECTION.  Sec. 301.  A new section is added to chapter 43.155 RCW to read as follows:

(1) A public infrastructure project eligible for the public works financing assistance program is a capital project by an eligible local government, as identified in subsection (2) of this section, that is necessary to:

(a) Provide safe and adequate drinking water;

(b) Collect, manage, and treat wastewater and storm water;

(c) Provide safe and efficient transportation, including public parking facilities, public transit facilities, and nonmotorized transportation;

(d) Provide or renovate facilities for safe and readily accessible recreation;

(e) Provide flood control and floodplain management facilities and improvements;

(f) Provide water supply improvements and water basin management enhancements, including culvert replacement projects to improve fish passage;

(g) Provide or renovate county or city criminal justice facilities;

(h) Provide or renovate fire protection or emergency medical response services facilities; or

(i) Provide or renovate public library facilities.

(2) In order to be eligible for the public works financing assistance program a local government must:

(a) Demonstrate difficulties accessing existing private credit markets for borrowings at reasonable interest rates. The public works board must determine compliance with this requirement under guidance and advice by the state treasurer's office;

(b) Demonstrate the ability to reliably pay all periodic financing costs to retire the loan or loans provided under the public works financing assistance program. The public works board must determine compliance with this requirement under guidance and advice by the state treasurer's office; and

(c) Demonstrate that bond proceeds loaned to the local government would be expended for capital expenditures on a public works project eligible to be financed with the proceeds of tax-exempt bonds under the internal revenue code. The public works board must determine compliance with this requirement under guidance and advice by the state treasurer's office.

(3) The board must prioritize applications for assistance under the public works financing assistance program to achieve the greatest community benefit in jurisdictions that would most benefit from this assistance as measured by the difference in the total cost of financing under this program compared to financing cost from private capital markets. The board must adopt criteria for prioritizing applications and submit the scoring under those criteria in the annual report required in section 302 of this act.

NEW SECTION.  Sec. 302.  A new section is added to chapter 43.155 RCW to read as follows:

(1) The board must not sign contracts or otherwise financially obligate funds from the public works financing assistance account created in section 303 of this act unless the legislature has authorized the necessary bonds and appropriated sufficient amounts from the account for the approved projects.

(2) The board must execute contracts for project loans with local governments under the public works financing program to ensure that:

(a) Disbursements against authorized loans are in predictable amounts as required to meet project expenditures without resulting in prolonged and excessive project fund balances;

(b) Repayments by local governments are sufficient and timely to cover the state's repayment obligations of public works financing bond issued on behalf of the project; and

(c) All other requirements are met, including compliance with state laws regarding the issuance and limits on local government debt.

(3) By July 1st of each year, the board must submit a report to the state treasurer, the office of financial management, and the fiscal committees of the legislature. The report must include:

(a) The list of projects approved in the preceding fiscal year with the project scores against the board's prioritization criteria;

(b) The total amount of loan disbursements made from the public works financing assistance bond repayment account, created in section 304 of this act, in the preceding fiscal year;

(c) The total amount of loan repayments in the preceding fiscal year for outstanding loans made from the public works financing assistance account;

(d) The total amount of loan repayments due from local governments for outstanding loans by fiscal year over the following ten-year period; and

(e) Any further information required by the state treasurer's office necessary to meet internal revenue service requirements for tax compliance, or for determining whether projected revenues are sufficient to meet projected debt service obligations.

NEW SECTION.  Sec. 303.  A new section is added to chapter 43.155 RCW to read as follows:

The public works financing assistance account is created in the state treasury. All bond proceeds issued to support public works financing assistance projects must be deposited in the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the public works financing assistance program.

NEW SECTION.  Sec. 304.  A new section is added to chapter 43.155 RCW to read as follows:

The public works financing assistance bond repayment account is created in the custody of the state treasury. All repayments for public works financing loans from local governments must be deposited in the account. Expenditures from the account must only be made for payment of principal and interest to retire bonds issued pursuant to this section. The account is subject to the allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

NEW SECTION.  Sec. 305.  A new section is added to chapter 43.155 RCW to read as follows:

(1) To ensure that sufficient revenues are collected to meet debt service requirements on bonds issued in accordance with this chapter:

(a) The board:

(i) May charge an additional amount on public works financing loans to local governments to create a reserve to meet potential shortfalls; or

(ii) Must take other actions as are necessary to ensure that sufficient revenues are collected to meet debt service obligations on bonds issued to support a public works financing loan.

(2) If the board is unable to collect sufficient revenues to meet debt service obligations on bonds issued to support public works financing loans, the legislature must take any action legally authorized to raise such revenue from loan repayments to meet this obligation, including, but not limited to, collect loan repayments directly from distributions to local governments in the event of nonpayment, or any other method deemed appropriate to ensure that adequate revenues are received to meet debt service obligations.

(3) If there is insufficient revenue to meet projected debt service obligations, as determined by the office of the state treasurer, the state finance committee may not approve the issuance or sale of bonds for this purpose until such time as the projected amount of revenue is at least equal to the projected amount of debt service then owed on bonds issued to support public works financing loans.

PART 4

MISCELLANEOUS PROVISIONS

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