AN ACT Relating to local government; amending RCW 6.12.100, 35.44.020, 35.45.020, 35.45.050, 35.45.070, 35.45.080, 35.45.130, 35.54.010, 35.54.040, 35.54.050, 35.54.070, 35.54.080, and 36.88.220; adding new sections to chapter 35.45 RCW; adding a new section to chapter 35.54 RCW; adding a new section to chapter 36.88 RCW; and creating a new section.

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

Sec. 1. Section 1, chapter 10, Laws of 1982 as amended by section 16, chapter 260, Laws of 1984 and RCW 6.12.100 are each amended to read as follows:

The homestead is subject to execution or forced sale in satisfaction of judgments obtained:

(1) On debts secured by mechanic's, laborer's, materialmen's or vendor's liens upon the premises or on special assessments secured by liens upon the premises for the purpose of paying the cost and expense in whole or in part of any public improvement;

(2) On debts secured by purchase money security agreements describing as collateral a mobile home located on the premises or mortgages on the premises, executed and acknowledged by the husband and wife or by any unmarried claimant;

(3) On one spouse's or the community's debts existing at the time of that spouse's bankruptcy filing where (a) bankruptcy is filed by both spouses within a six-month period, including as a joint case under 11 U.S.C. Sec. 302, and (b) the other spouse exempts property from property of the estate under the federal exemption provisions of 11 U.S.C. Sec. 522(b)(1);

(4) On debts arising from a lawful court order or decree or administrative order establishing a child support obligation or obligation to pay spousal maintenance.

Sec. 2. Section 35.44.020, chapter 7, Laws of 1965 as last amended by section 8, chapter 116, Laws of 1971 ex. sess. and RCW 35.44.020 are each amended to read as follows:

There shall be included in the cost and expense of every local improvement for assessment against the property in the district created to pay the same, or any part thereof, except that any of the costs enumerated in this section may be excluded from the cost and expense to be assessed against the property in such local improvement district if the legislative body of such city or town so designates by ordinance at any time and may be paid from any other moneys available therefor:

(1) The cost of all of the construction or improvement authorized for the district including, but not limited to, that portion of the improvement within the street intersections;

(2) The estimated cost and expense of all engineering and surveying necessary for the improvement done under the supervision of the city or town engineer;

(3) The estimated cost and expense of ascertaining the ownership of the lots or parcels of land included in the assessment district;

(4) The estimated cost and expense of advertising, mailing, and publishing all necessary notices;

(5) The estimated cost and expense of accounting, clerical labor, and of books and blanks extended or used on the part of the city or town clerk and city or town treasurer in connection with the improvement;

(6) All cost of the acquisition of rights of way, property, easements or other facilities or rights, whether by eminent domain, purchase, gift, or in any other manner((: PROVIDED, That any of the costs enumerated in this section may be excluded from the cost and expense to be assessed against the property in such local improvement district if the legislative body of such city or town so designates by ordinance at any time and may be paid from any other moneys available therefor)).

(7) The cost for legal, financial, and appraisal services and any other expenses incurred by the city or town for the district or in the formation thereof, or by the city or town in connection with such construction or improvement and in the financing thereof, including the issuance of any bonds and the cost of providing for increases in the local improvement guaranty fund or providing for a separate reserve fund or other security for the payment of principal of and interest on such bonds.

Any of the costs enumerated in this section may be excluded from the cost and expense to be assessed against the property in such local improvement district, if the legislative body of such city or town so designates by ordinance at any time. Such costs may be paid from any other moneys available therefor.

Sec. 3. Section 35.45.020, chapter 7, Laws of 1965 as last amended by section 10, chapter 116, Laws of 1971 ex. sess. and RCW 35.45.020 are each amended to read as follows:

(1) Local improvement bonds shall be issued pursuant to ordinance and shall be made payable on or before a date not to exceed thirty years from and after the date of issue, which latter date may be fixed by ordinance or resolution of the council, and bear interest at such rate or rates as authorized by the council. The council may, in addition to issuing bonds callable under the provisions of RCW 35.45.050 whenever sufficient moneys are available, issue bonds with a fixed maturity schedule or with a fixed maximum annual retirement schedule. The bonds may be term bonds or serial bonds or both term and serial bonds.

(2) Notwithstanding subsection (1) of this section, but subject to RCW 35.45.010, such bonds may be issued and sold in accordance with chapter 39.46 RCW.

Sec. 4. Section 35.45.050, chapter 7, Laws of 1965 as last amended by section 43, chapter 167, Laws of 1983 and RCW 35.45.050 are each amended to read as follows:

Except when bonds have been issued with a fixed maturity schedule or with a fixed maximum annual retirement schedule as authorized in RCW 35.45.020. Whenever there is sufficient money in any local improvement fund, against which the bonds have been issued, over and above that which is sufficient for the payment of principal of and interest due on all unpaid bonds of that issue, the city or town treasurer shall call in and pay the principal of one or more bonds of any issue ((in their numerical order whenever there is sufficient money in any local improvement fund, against which the bonds have been issued, over and above that which is sufficient for the payment of interest on all unpaid bonds of that issue. The call shall be made for publication in the city or town official newspaper in its first publication following the date of delinquency of any installment of the assessment or as soon thereafter as practicable. The call shall state that bonds No. ..... (giving the serial number or numbers of the bonds called) will be paid on the day the next interest payments are due and that interest on those bonds will cease upon that date)) prior to their maturity in the manner set forth in the ordinance authorizing the bonds.

Sec. 5. Section 35.45.070, chapter 7, Laws of 1965 and RCW 35.45.070 are each amended to read as follows:

Neither the holder nor owner of any bond, interest coupon, short-term obligation, or warrant issued against a local improvement fund shall have any claim therefor against the city or town by which it is issued, except for payment from the special assessments made for the improvement for which the bond, short-term obligation, or warrant was issued and except also for payment from the local improvement guaranty fund of the city or town as to bonds issued after the creation of a local improvement guaranty fund of that city or town. The city or town shall not be liable to the holder or owner of any bond, interest coupon, short-term obligation, or warrant for any loss to the local improvement guaranty fund occurring in the lawful operation thereof. A copy of the foregoing part of this section shall be plainly written, printed or engraved on each bond.

Sec. 6. Section 35.45.080, chapter 7, Laws of 1965 and RCW 35.45.080 are each amended to read as follows:

If a city or town fails to pay the principal of or interest on any bonds, warrants, or short-term obligations, or to promptly collect any local improvement assessments when due, the owner of the bonds, warrants, or short-term obligations may proceed in his own name to collect the assessment and foreclose the lien thereof in any court of competent jurisdiction and shall recover in addition to the amount of the bond and interest thereon, five percent, together with the cost of suit. Any number of holders or owners of bonds, warrants, or short-term obligations for any single improvement may join as plaintiffs and any number of owners of property upon which the assessments are liens may be joined as defendants in the same suit.

The holders or owners of local improvement bonds, warrants, or short-term obligations issued by a city or town after the creation of a local improvement guaranty fund therein, shall also have recourse against the local improvement guaranty fund of such city or town.

Sec. 7. Section 35.45.130, chapter 7, Laws of 1965 as last amended by section 3, chapter 323, Laws of 1981 and RCW 35.45.130 are each amended to read as follows:

Every city and town may provide by ordinance for the issuance of warrants in payment of the cost and expense of any local improvement, payable out of the local improvement district fund. The warrants shall bear interest at a rate or rates established by the issuing officer under the direction of the legislative authority of the city or town and shall be redeemed either in cash or by local improvement bonds, installment notes, warrants, or other short-term obligations for the same improvement authorized by ordinance.

All warrants against any local improvement fund sold by the city or town or issued to a contractor and by him sold or hypothecated for a valuable consideration shall be claims and liens against the improvement fund against which they are drawn prior and superior to any right, lien, or claim of any surety upon the bond or bonds given to the city or town by or for the contractor to secure the performance of his contract or to secure the payment of persons who have performed work thereon, furnished materials therefor, or provisions and supplies for the carrying on of the work.

NEW SECTION. Sec. 8. A new section is added to chapter 35.45 RCW to read as follows:

For the purpose of securing the payment of the principal of and interest on an issue of local improvement bonds, installment notes, warrants, or other short-term obligations, the legislative authority of a city or town may create a reserve fund in an amount not exceeding fifteen percent of the principal amount of the bonds, notes, or warrants issued. Such reserve fund may be provided for from the proceeds of the bonds, notes, or warrants, from special assessment payments, or from any other money legally available therefor.

NEW SECTION. Sec. 9. A new section is added to chapter 35.45 RCW to read as follows:

Any city or town may establish a fund for the purpose of advancing money to pay the cost and expense of prospective local improvement districts or utility local improvement districts pending the formation of such districts and the receipt of special assessment payments and note and bond proceeds therein. The city or town may borrow money on the credit of such fund and the local improvement guaranty fund or may deposit other money of the city or town in such fund to accomplish the purposes of the fund. Short-term obligations or warrants payable from such fund may be sold in such manner and for such price or prices as the legislative body of the city or town determines. Money received from payments of the principal of and interest on assessments levied in the assessment districts subsequently established, and/or bond proceeds of local improvement district bonds subsequently issued, other funds as may be provided for by the city or town legislative body, or funds available from the sale of short-term obligations or warrants, shall be used to repay the money advanced.

Sec. 10. Section 35.54.010, chapter 7, Laws of 1965 as amended by section 7, chapter 116, Laws of 1971 ex. sess. and RCW 35.54.010 are each amended to read as follows:

There is established in every city and town a fund to be designated the "local improvement guaranty fund" for the purpose of guaranteeing, to the extent of the fund, the payment of its local improvement bonds ((~~and~~)), warrants, installment notes, and short-term obligations issued to pay for any local improvement ordered in the city or town or in any area wholly or partly outside its corporate boundaries: (1) In any city of the first class having a population of more than three hundred thousand, subsequent to June 8, 1927; (2) in any city or town having created and maintained a guaranty fund under chapter 141, Laws of 1923, subsequent to the date of establishment of such fund; and (3) in any other city or town subsequent to April 7, 1926: PROVIDED, That this shall not apply to any city of the first class which maintains a local improvement guaranty fund under chapter 138, Laws of 1917, but any such city maintaining a guaranty fund under chapter 138, Laws of 1917 may by ordinance elect to operate under the provisions of this chapter and may transfer to the guaranty fund created hereunder all the assets of the former fund and, upon such election and transfer, all bonds guaranteed under the former fund shall be guaranteed under the provisions of this chapter.

Sec. 11. Section 35.54.040, chapter 7, Laws of 1965 and RCW 35.54.040 are each amended to read as follows:

Whenever any sum is paid out of the local improvement guaranty fund on account of principal or interest of a local improvement bond ((or)), warrant, installment note, or short-term obligation, the city or town as trustee of the fund shall be subrogated to all the rights of the holder or owner of the bond ((or)), interest coupon ((or)), warrant, installment note, or short-term obligation so paid, and the proceeds thereof, or of the underlying assessment, shall become part of the guaranty fund.

Sec. 12. Section 35.54.050, chapter 7, Laws of 1965 and RCW 35.54.050 are each amended to read as follows:

If in any local improvement fund guaranteed by a local improvement guaranty fund there is a surplus remaining after the payment of all outstanding bonds ((~~and~~)), warrants, installment notes, or short-term obligations payable therefrom, it shall be paid into the local improvement guaranty fund.

Sec. 13. Section 35.54.070, chapter 7, Laws of 1965 and RCW 35.54.070 are each amended to read as follows:

Defaulted bonds, interest coupons ((~~and~~)), warrants, installment notes, or short-term obligations against local improvement funds shall be purchased out of the guaranty fund, and as between the several issues of bonds, coupons, ((or)) warrants, installment notes, or short-term obligations no preference shall exist, but they shall be purchased in the order of their presentation.

Sec. 14. Section 35.54.080, chapter 7, Laws of 1965 and RCW 35.54.080 are each amended to read as follows:

For the purpose of protecting the guaranty fund, so much of the guaranty fund as is necessary may be used to purchase certificates of delinquency for general taxes on property subject to local improvement assessments which underlie the bonds, coupons, ((or)), warrants, installment notes, or short-term obligations guaranteed by the fund, or to purchase such property at county tax foreclosures, or from the county after foreclosure.

The city or town, as trustee of the fund, may foreclose the lien of general tax certificates of delinquency and purchase the property at foreclosure sale; when doing so the court costs, costs of publication, expense for clerical work and other expenses incidental thereto shall be charged to and paid from the local improvement guaranty fund.

After acquiring title to property by purchase at general tax foreclosure sale or from the county after foreclosure, a city or town may lease it or sell it at public or private sale at such price on such terms as may be determined by resolution of the council. All proceeds shall belong to and be paid into the local improvement guaranty fund.

NEW SECTION. Sec. 15. A new section is added to chapter 35.54 RCW to read as follows:

Amounts included in the cost and expense of a local improvement to provide additional money for the local improvement guaranty fund shall be paid into such fund.

Sec. 16. Section 36.88.220, chapter 4, Laws of 1963 as amended by section 63, chapter 145, Laws of 1967 ex. sess. and RCW 36.88.220 are each amended to read as follows:

All counties may establish a fund for the purpose of guaranteeing to the extent of such fund and in the manner hereinafter provided, the payment of its road improvement district bonds and warrants issued to pay for any road improvement ordered under this chapter. If the board of county commissioners shall determine to establish such fund it shall be designated " .......... county road improvement guaranty fund" ((~~and~~)). From moneys available for road purposes, from special assessment payments, and from the proceeds of bonds issued to pay for costs of the improvements, such county shall deposit annually in said guaranty fund such sums as may be necessary to establish and maintain a balance therein equal to at least five percent of the outstanding obligations guaranteed thereby and to make necessary provision in its annual budget therefor. The moneys held in the guaranty fund may be invested in obligations of the government of the United States or of this state.

NEW SECTION. Sec. 17. A new section is added to chapter 36.88 RCW to read as follows:

For the purpose of securing the payment of the principal of and interest on an issue of road improvement bonds or warrants, the legislative authority of a county may create a reserve fund in an amount not exceeding fifteen percent of the principal amount of the bonds, notes, or warrants issued. Such reserve fund may be provided for from the proceeds of the road improvement bonds or warrants, from special assessment payments, or from any other money legally available therefor.

NEW SECTION. Sec. 18. The authority granted by this act is supplemental and in addition to the authority granted by Title 35 or 36 RCW and to any other authority granted to cities, towns, counties, or other municipal corporations to levy special assessments.

NEW SECTION. Sec. 19. 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.