AN ACT Relating to economic development; amending RCW 43.160.030, 43.160.050, and 43.160.900; adding a new chapter to Title 43 RCW; adding a new chapter to Title 39 RCW; adding new sections to chapter 43.160 RCW; creating new sections; repealing RCW 43.63A.200, 43.79.450, and 43.79.452; repealing section 1, chapter ___ (ESSB 3798), Laws of 1985; repealing section 2, chapter ___ (ESSB 3798), Laws of 1985; repealing section 3, chapter ___ (ESSB 3798), Laws of 1985; repealing section 4, chapter ___ (ESSB 3798), Laws of 1985; repealing section 5, chapter ___ (ESSB 3798), Laws of 1985; repealing section 6, chapter ___ (ESSB 3798), Laws of 1985; repealing section 8, chapter ___ (ESSB 3798), Laws of 1985; repealing section 15, chapter ___ (ESSB 3798), Laws of 1985; repealing section 16, chapter ___ (ESSB 3798), Laws of 1985; repealing section 17, chapter ___ (ESSB 3798), Laws of 1985; repealing section 18, chapter ___ (ESSB 3798), Laws of 1985; repealing section 19, chapter ___ (ESSB 3798), Laws of 1985; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. LEGISLATIVE FINDINGS AND POLICY. The legislature finds that there exists in the state of Washington over four billion dollars worth of critical projects for the planning, acquisition, construction, repair, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, and storm and sanitary sewage systems. The December, 1983 Washington state public works report prepared by the planning and community affairs agency documented that local governments expect to be capable of financing over two billion dollars worth of the costs of those critical projects but will not be able to fund nearly half of the documented needs. It is the policy of the state of Washington to encourage self-reliance by local governments in meeting their public works needs and to assist in the financing of critical public works projects by making loans, financing guarantees, and technical assistance available to local governments for these projects.

NEW SECTION. Sec. 2. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.

(1) "Board" means the community economic revitalization board as created by chapter 43.160 RCW.

(2) "Public works subcommittee" means the subcommittee created by section 12 of this act.

(3) "Department" means the department of community development.

(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) "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.

(7) "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.

NEW SECTION. Sec. 3. GENERAL POWERS OF THE BOARD. For the purpose of implementing this chapter, 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 34.04 RCW as necessary to carry out the purposes of this chapter;

(5) Delegate to the public works subcommittee of the board, by rule, any of its powers under this chapter; and

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

NEW SECTION. Sec. 4. PUBLIC WORKS FINANCING POWERS. In order to aid the financing of public works projects, the board may:

(1) 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. 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.

(2) Pledge 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. The board shall not pledge any amount greater than the sum of money in the public works assistance account plus money to be received from the payment of the debt service on loans made from that account, nor shall the board pledge the faith and credit or the taxing power of the state or any agency or subdivision thereof to the repayment of obligations issued by any local government.

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

(4) Provide a method for the allocation of loans and financing guarantees and the provision of technical assistance under this chapter which shall be based on the recommendations of the public works subcommittee.

All local public works projects aided in whole or in part under the provisions of this chapter shall be put out for competitive bids. 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.

NEW SECTION. Sec. 5. PRIORITIES FOR LOANS AND PLEDGES. The board shall set up a system of priorities it will use in making loans and providing financial guarantees and technical assistance under this chapter. Top priority will be given to (1) projects of local governments that have developed and implemented a financial plan to assure the continued funding for the repair and maintenance of existing public works; (2) projects of local governments that are contributing substantial local funds, but distressed areas with high unemployment may have a lower contribution requirement; and (3) projects that involve existing public works as defined in section 2(6) of this act. Additional factors to be considered include:

(a) The level of need of state assistance to each local government receiving such assistance;

(b) Public works projects that serve a number of communities or are funded by two or more local governments to share the costs of the assisted public works projects;

(d) The occurrence of natural disasters that create the need for assistance for public works projects;

(e) The existence of federal and state projects that create the need for assistance for public works projects;

(f) The need in a community to attract new employers, expand existing employers, or otherwise and the need for economic development and recognition of such need by the department of commerce and economic development which results in a community economic revitalization board allocation; and

(g) Such other criteria as the board deems appropriate.

In issuing rules setting forth the method of weighing the criteria set forth in this section, and selecting public works projects for assistance, the board shall endeavor to provide clear and understandable rules that will indicate to local governments the likelihood of receiving assistance from the board on particular public works projects. In adopting these rules the board shall consider the recommendations of the public works subcommittee.

NEW SECTION. Sec. 6. RECORDS, AUDITS, AND REPORTS. The board and the public works subcommittee shall keep proper records of accounts and shall be subject to audit by the state auditor. Annual reports on the activities of the board and the public works subcommittee in implementing this chapter shall be made by the department to the governor and the legislature at the start of each annual legislative session.

NEW SECTION. Sec. 7. REPEALER. The following acts or parts of acts are each repealed:

(1) Section 1, chapter 244, Laws of 1984 and RCW 43.63A.200;

(2) Section 2, chapter 244, Laws of 1984 and RCW 43.79.450; and

(3) Section 3, chapter 244, Laws of 1984 and RCW 43.79.452.

NEW SECTION. Sec. 8. CAPTIONS. As used in this act, section captions constitute no part of the law.

NEW SECTION. Sec. 9. CODIFICATION. Sections 1 through 6 of this act shall constitute a new chapter in Title 43 RCW.

COMMUNITY ECONOMIC REVITALIZATION BOARD

Sec. 10. Section 3, chapter 40, Laws of 1982 1st ex. sess. as last amended by section 89, chapter 287, Laws of 1984 and RCW 43.160.030 are each amended to read as follows:

(1) The community economic revitalization board is hereby created to exercise the powers granted under this chapter.

(2) The board shall consist of ((~~nine~~)) eleven persons appointed by the governor ((~~and~~)), the director of commerce and economic development, the director of ((~~planning and community affairs~~)) community development, the director of revenue, the commissioner of employment security, ((~~and~~)) the chairmen of the committee on ((~~commerce~~)) trade and economic development of the house of representatives and the committee on commerce and labor of the senate, and the chairmen and the ranking minority member of the committees on ways and means of the senate and house of representatives, or the equivalent standing committees, for a total of ((~~seventeen~~)) twenty-one members. The appointive members shall be as follows: A recognized private or public sector economist selected from the governor's council of economic advisors; one port district official; one county official; one city official; one representative of the public; one representative of small businesses each from: (a) The area west of Puget Sound, (b) the area east of Puget Sound and west of the Cascade range, (c) the area east of the Cascade range and west of the Columbia river, and (d) the area east of the Columbia river; one executive from large businesses each from the area west of the Cascades and the area east of the Cascades. The appointive members shall initially be appointed to terms as follows: Three members for one-year terms, three members for two-year terms, and three members for three-year terms which shall include the chairman. Thereafter each succeeding term shall be for three years. The representative from the governor's council of economic advisors shall serve as chairman of the board. The director of the department of commerce and economic development shall serve as vice chairman.

(3) Staff support shall be provided by the department of commerce and economic development to assist the board in implementing this chapter and the allocation of private activity bonds under chapter 39.-- RCW (sections 14 through 22 of this 1985 act).

(4) Staff support shall be provided by the department of community development to assist the board in implementing the public works provisions of chapter 43.-- RCW (sections 1 through 6 of this 1985 act).

(5) All appointive members of the board shall be compensated in accordance with RCW 43.03.240 and shall be reimbursed for travel expenses as provided in RCW 43.03.050 and 43.03.060.

((~~(5)~~)) (6) If a vacancy occurs by death, resignation, or otherwise of appointive members of the board, the governor shall fill the same for the unexpired term. Any members of the board, appointive or otherwise, may be removed for malfeasance or misfeasance in office, upon specific written charges by the governor, under chapter 34.04 RCW.

Sec. 11. Section 5, chapter 40, Laws of 1982 1st ex. sess. and RCW 43.160.050 are each amended to read as follows:

In addition to powers and duties granted elsewhere in this chapter, the board may:

(1) Adopt bylaws for the regulation of its affairs and the conduct of its business;

(2) Adopt an official seal and alter the seal at its pleasure;

(3) Contract with any consultants as may be necessary or desirable for its purposes and to fix the compensation of the consultants;

(4) Utilize the services of other governmental agencies;

(5) Accept from any federal agency loans or grants for the planning or financing of any project and enter into an agreement with the agency respecting the loans or grants;

(6) Conduct examinations and investigations and take testimony at public or private hearings of any matter material for its information that will assist in determinations related to the exercise of the board's lawful powers;

(7) Make allocations of the state's private activity bonds pursuant to chapter 39.--!sc ,1RCW (sections 14 through 22 of this 1985 act);

(8) Make pledges and loans and provide technical assistance pursuant to chapter 43.--!sc ,1RCW (sections 1 through 6 of this 1985 act);

(9) 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;

((~~(8)~~)) (10) Adopt rules under chapter 34.04 RCW as necessary to carry out the purposes of this chapter, chapter 39.-- RCW (sections 14 through 22 of this 1985 act), and chapter 43.-- RCW (sections 1 through 6 of this 1985 act);

((~~(9)~~)) (11) Do all acts and things necessary or convenient to carry out the powers expressly granted or implied under this chapter.

NEW SECTION. Sec. 12. A new section is added to chapter 43.160 RCW to read as follows:

(1) There is hereby created the public works subcommittee of the board.

(2) The subcommittee shall be primarily responsible for providing the board with recommendations for: (a) Establishing a method of allocation for loans and financing guarantees; (b) providing technical assistance to local governments; and (c) adopting rules which set forth the method of weighing the criteria and selection of public works projects for assistance, pursuant to chapter 43.__ RCW (sections 1 through 6 of this act) and as authorized by rules adopted by the board.

(3) The subcommittee shall consist of six members appointed by the governor to four-year terms, except that initially two members shall be appointed to two-year terms, and three members of the board: (a) The chairman; (b) the county official; and (c) the city official. The appointed members shall include: (i) One member appointed from a list of at least three persons nominated by the association of Washington cities or its successor; (ii) one member appointed from a list of at least three persons nominated by the Washington state association of counties or its successor; (iii) two members appointed from a list of at least four persons nominated jointly by the Washington state association of water districts and the Washington state association of sewer districts or their successors; and (iv) two members appointed from the general public. In appointing the two general public members, the governor shall endeavor to balance the geographical composition of the board and to include members with special expertise in relevant fields such as public finance, architecture and civil engineering, and public works construction. The chairman of the board shall serve as chair of the subcommittee.

(4) Staff support to the subcommittee shall be provided by the department of community development.

(5) Members of the subcommittee shall receive no compensation but shall be reimbursed for travel expenses under RCW 43.03.050 and 43.03.060.

(6) If a vacancy on the subcommittee occurs by death, resignation, failure to hold the office from which the member was appointed, or otherwise, the governor shall fill the vacant position for the unexpired term. Each vacancy in a position appointed from lists provided by the associations under subsection (3) of this section shall be filled from a list of at least three persons nominated by the relevant association or associations. Any members of the subcommittee, appointive or otherwise, may be removed by the governor for cause in accordance with RCW 43.06.070 and 43.06.080.

NEW SECTION. Sec. 13. A new section is added to chapter 43.160 RCW to read as follows:

(1) There is hereby created the private activity bond subcommittee of the board.

(2) The subcommittee shall be primarily responsible for reviewing and making recommendations to the board on requests for certification and allocation pursuant to the provisions of chapter 39.__ RCW (sections 14 through 22 of this act) and as authorized by rules adopted by the board.

(3) The subcommittee shall consist of the following members:(a) Five members of the board including: (i) The chairman; (ii) the county official; (iii) the city official; (iv) the port district official; and (v) the representative of the public; and (b) four members of the public works subcommittee created by section 12 of this act including: (i) The county official who is not a member of the board; (ii) the city official who is not a member of the board; (iii) a special purpose district official designated to serve on this subcommittee by the governor; and (iv) a general public representative designated to serve on this subcommittee by the governor. The members' terms shall coincide with their terms of appointment to the board or public works subcommittee, as appropriate.

(4) Staff support to the subcommittee shall be provided by the department of commerce and economic development.

(5) Members of the subcommittee shall receive no compensation but shall be reimbursed for travel expenses under RCW 43.03.050 and 43.03.060.

(6) If a vacancy on the subcommittee occurs by death, resignation, failure to hold the office from which the member was appointed, or otherwise, the vacancy shall be filled through the procedures specified for filling the corresponding vacancy on the board or the public works subcommittee. PRIVATE ACTIVITY BONDS

NEW SECTION. Sec. 14. LEGISLATIVE FINDINGS AND POLICY. The federal deficit reduction act of 1984 imposes an annual ceiling on the aggregate amount of federally tax-exempt private activity bonds, including student loan bonds, industrial development bonds, and certain government activity bonds, that may be issued during any calendar year by or on behalf of states and their political subdivisions. The deficit reduction act of 1984 provides a formula for allocating the annual ceiling among various issuers of private activity bonds within a state, but permits each state to enact a different allocation method that is appropriate to that state's needs. The purpose of this chapter is to provide a flexible and efficient method of allocating the state ceiling in Washington in a manner that recognizes the need of the state and its political subdivisions to finance public improvements which are owned by those public entities and also promotes industrial and economic development, encourages private investment, and assists students seeking financial aid.

NEW SECTION. Sec. 15. DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Board" means the community economic revitalization board as created by chapter 43.160 RCW.

(2) "Private activity bond subcommittee" means the subcommittee created by section 13 of this act.

(3) "Bonds" means bonds, notes, or other obligations of an issuer.

(4) "Bond purchase agreement" means an executed agreement for the purchase of bonds which may or may not be contingent on the allocation of a portion of the state ceiling for the bonds.

(5) "Bond use category" means any of the following categories of bonds: Government activity bonds, industrial development bonds, or student loan bonds.

(6) "Code" means the federal internal revenue code as it exists, with amendments, on the effective date of this act. It also means the code as amended after the effective date of this act, but only if the amendments are approved by the board as provided in section 19 of this act.

(7) "Department" means the department of commerce and economic development or its successor with respect to the powers and duties granted by this chapter.

(8) "Director" means the director of the department or the director's designee.

(9) "Government activity bonds" means bonds that are classified as private activity bonds under the code and that are neither student loan bonds nor revenue bonds issued under Article XXXII of the state Constitution.

(10) "Industrial development bonds" means nonrecourse revenue bonds issued under Article XXXII of the state Constitution.

(11) "Issuer" means the state, any agency or instrumentality of the state, any political subdivision, or any other entity authorized to issue private activity bonds in the state.

(12) "Private activity bonds" means bonds that are private activity bonds as defined in the code.

(13) "State" means the state of Washington.

(14) "State ceiling" means for any calendar year the aggregate amount of private activity bonds that may be issued in the state under the code.

(15) "Student loan bonds" means bonds issued by an issuer that are student loan bonds as defined in the code.

NEW SECTION. Sec. 16. ALLOCATION. (1) The state ceiling shall be allocated each year initially as follows: Forty-five percent to government activity bonds; forty-five percent to industrial development bonds; and ten percent to student loan bonds. The allocation is subject to revision by the board as provided in section 24 of this act.

(2)(a) No issuer is eligible to file a notification form or receive an allocation for the financing of an individual project of more than seven and one-half million dollars of any government activity bond or industrial development bond allocation of the state ceiling without a certificate of approval from the board.

(b) In determining whether to issue a certificate of approval, the board may consider but is not limited to the following criteria:

(i) The number of employment opportunities the project is likely to create in relation to the amount of the bond issuance;

(ii) The level of unemployment in the geographic area likely to be affected by the project;

(iii) Public health and safety benefits;

(iv) The amount of state ceiling which remains unallocated;

(v) The number of persons who will benefit from the project; and

(vi) Other such criteria the board deems appropriate.

(3) The board shall issue or deny a certificate of approval within sixty days of the filing for an application for the certificate.

(4) The board may delegate to the private activity bond subcommittee of the board, by rule, any of its powers under this chapter.

(5) Subject to the provisions of this chapter, the portion of the state ceiling allocated to a bond use category shall be allocated automatically to an issuer of bonds in that category in the order of the date and time the issuer files a properly completed and signed notification form with the department.

NEW SECTION. Sec. 17. (1) The notification form filed by an issuer shall identify: (a) The amount of the state ceiling allocation that is sought; (b) the bond use category from which the allocation is to be made; (c) a certification by the issuer that a bond purchase agreement has been executed with respect to the bonds for which an allocation is sought; and (d) such other information or evidence of the issuer's intention to issue bonds as the director prescribes.

(2) If the principal amount of the bonds for which an allocation of the state ceiling is sought does not exceed the amount of the state ceiling available in the bond use category applicable to the bonds, the director shall mail a written allocation confirmation notice to the issuer within five business days after the filing of the issuer's notification form for the bonds.

(3) If the principal amount of the bonds for which an allocation of the state ceiling is sought exceeds the amount of the state ceiling available in the bond use category applicable, the director shall mail a written deficiency notice to the issuer within five business days after the filing of the issuer's notification form for such bonds and in that notice advise the issuer of the amount by which the principal amount of the bonds described in the notification form exceeds the available state ceiling. The issuer shall be entitled to an allocation of the remaining available state ceiling in the applicable bond use category upon its filing with the department within fifteen calendar days after the date of the director's deficiency notice, a written notice of the amount of the available state ceiling it will consume.

(4) State ceiling allocation notification forms filed in any year for which a full or partial deficiency notice was given by the director shall be retained on a waiting list. When any state ceiling becomes available that year or on January 1 of the following year for the bond use category for which the notification form was filed, the following rules apply: (a) The director shall notify by mail the issuers on the waiting list; and (b) those issuers who, within five business days of receipt of such notice, certify to the director their intention to issue bonds up to the amount stated in the original notification form, shall receive an allocation of the available state ceiling in the order the original notification forms were filed.

(5) Except as provided in section 18 (2) and (3) of this act, all allocations of the state ceiling shall expire on the ninety-first day after mailing of the director's allocation confirmation or the notice of allocation, unless the bonds described in the issuer's state ceiling allocation notification form have been delivered to their original purchaser. Each issuer shall file a confirmation of delivery notice with the department within ten days after delivery of the bonds.

NEW SECTION. Sec. 18. REALLOCATION. (1) After June 1 of any year the board may reallocate any bond use category it determines unlikely to exceed the amount allocated in section 16(1) of this act. (2) The board may in its discretion grant an advanced allocation of the state ceiling in any future year of a portion of the state ceiling for a bond use category, upon such conditions as the board may determine, and may waive the requirements under section 17(5) of this act that the bonds be issued within ninety days of the director's allocation confirmation and notice of allocation. Advanced allocations shall be deemed to have been received by issuers on January 1 of the year for which they are granted in each year, and in the order they were granted. Any advanced allocation shall be contingent on the existence of available state ceiling. Such advanced allocations shall be considered received before any new allocations are made in a given year.

(3) In December of any year, if the board finds that it is reasonably likely that a portion of the state ceiling otherwise would not be consumed, the board, in its discretion, may grant an allocation of the state ceiling to an issuer for financing of a specific project and waive the requirements under section 17(5) of this act that bonds be issued within ninety days after mailing of the director's allocation confirmation or notice of allocation. The issuer may then carry forward the allocation for the project for a period of time permitted by the code.

NEW SECTION. Sec. 19. RULE-MAKING AUTHORITY. (1) The board may adopt such rules as are necessary to carry out the purposes of this chapter.

(2) In order to permit the full use of the authorized state ceiling under the federal law, the board may adopt rules approving any amendments made to the code after the effective date of this act.

NEW SECTION. Sec. 20. ANNUAL REPORT. The department shall report annually at the start of each annual legislative session to the legislature and the governor on the allocations of the state ceiling made during the previous year.

NEW SECTION. Sec. 21. TERMINATION. The method for making new allocations of the state ceiling provided in sections 16, 17, and 18 of this act shall expire on December 31, 1988, unless extended by law for an additional fixed period of time, except that any guaranteed allocations granted under section 18(2) of this act and any allocations carried forward under section 18(3) of this act shall remain in full force and effect after that date.

NEW SECTION. Sec. 22. RATIFICATION. Any state ceiling allocations taken during 1984 or 1985 in conformance with the code and an applicable executive order of the governor are ratified and confirmed and shall remain in full force and effect notwithstanding any other provision of this act.

Sec. 23. Section 10, chapter 40, Laws of 1982 1st ex. sess. and RCW 43.160.900 are each amended to read as follows:

The community economic revitalization board and its powers and duties shall be terminated on June 30, 1987, and shall be subject to the procedures required by chapter 43.131 RCW. This chapter expires June 30, ((~~1987~~)) 1988. Any remaining duties of the community economic revitalization board after June 30, 1987, are transferred to the department of revenue on June 30, 1987.

NEW SECTION. Sec. 24. Sections 14 through 22 of this act shall constitute a new chapter in Title 39 RCW.

NEW SECTION. Sec. 25. The following acts or parts of acts are each repealed:

(1) Section 1, chapter ___ (ESSB 3798), Laws of 1985;

(2) Section 2, chapter ___ (ESSB 3798), Laws of 1985;

(3) Section 3, chapter ___ (ESSB 3798), Laws of 1985;

(4) Section 4, chapter ___ (ESSB 3798), Laws of 1985;

(5) Section 5, chapter ___ (ESSB 3798), Laws of 1985;

(6) Section 6, chapter ___ (ESSB 3798), Laws of 1985;

(7) Section 8, chapter ___ (ESSB 3798), Laws of 1985;

(8) Section 15, chapter ___ (ESSB 3798), Laws of 1985;

(9) Section 16, chapter ___ (ESSB 3798), Laws of 1985;

(10) Section 17, chapter ___ (ESSB 3798), Laws of 1985;

(11) Section 18, chapter ___ (ESSB 3798), Laws of 1985; and

(12) Section 19, chapter ___ (ESSB 3798), Laws of 1985.

NEW SECTION. Sec. 26. 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. 27. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect July 1, 1985.