AN ACT Relating to the state convention and trade center; amending RCW 67.40.020, 67.40.025, 67.40.030, 67.40.040, 67.40.055, and 67.40.090; amending section 1, chapter 8, Laws of 1987 1st ex. sess. (uncodified); amending section 9, chapter 8, Laws of 1987 1st ex. sess. (uncodified); adding a new section to chapter 67.40 RCW; creating a new section; making appropriations; and declaring an emergency.

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

Sec. 1. Section 2, chapter 34, Laws of 1982 as last amended by section 2, chapter 8, Laws of 1987 1st ex. sess. and RCW 67.40.020 are each amended to read as follows:

(1) The governor is authorized to form a public nonprofit corporation in the same manner as a private nonprofit corporation is formed under chapter 24.03 RCW. The public corporation shall be an instrumentality of the state and have all the powers and be subject to the same restrictions as are permitted or prescribed to private nonprofit corporations, but shall exercise those powers only for carrying out the purposes of this chapter and those purposes necessarily implied therefrom. The governor shall appoint a board of nine directors for the corporation who shall serve terms of six years, except that two of the original directors shall serve for two years and two of the original directors shall serve for four years. After January 1, 1991, at least one position on the board shall be filled by a member representing management in the hotel or motel industry subject to taxation under RCW 67.40.090. The directors may provide for the payment of their expenses. The corporation may cause a state convention and trade center with an overall size of approximately three hundred thousand square feet to be designed and constructed on a site in the city of Seattle. In acquiring, designing, and constructing the state convention and trade center, the corporation shall consider the recommendations and proposals issued on December 11, 1981, by the joint select committee on the state convention and trade center.

(2) The corporation may acquire and transfer real and personal property by lease, sublease, purchase, or sale, and further acquire property by condemnation of privately owned property or rights to and interests in such property pursuant to the procedure in chapter 8.04 RCW((~~, or~~)). However, acquisitions and transfers of real property, other than by lease, may be made only if the acquisition or transfer is approved by the director of financial management in consultation with the chairpersons of the committees on ways and means of the senate and house of representatives. The corporation may accept gifts((~~, accept~~)) or grants, request the financing provided for in RCW 67.40.030, cause the state convention and trade center facilities to be constructed, and do whatever is necessary or appropriate to carry out those purposes. ((The corporation may enter into lease and sublease contracts for a term exceeding the fiscal period in which such lease and sublease contracts are made: PROVIDED, That such contracts are approved by the director of financial management in consultation with the chairpersons of the ways and means committees of the house of representatives and the senate.)) Upon approval by the director of financial management in consultation with the chairpersons of the ways and means committees of the house of representatives and the senate, the corporation may enter into lease and sublease contracts for a term exceeding the fiscal period in which these lease and sublease contracts are made. The terms of sale or lease of properties acquired by the corporation on February 9, 1987, pursuant to the property purchase and settlement agreement entered into by the corporation on June 12, 1986, ((~~excepting~~)) including the McKay parcel which the corporation is contractually obligated to sell under that agreement, shall also be subject to the approval of the director of financial management in consultation with the chairpersons of the ways and means committees of the house of representatives and the senate. No approval by the director of financial management is required for leases of individual retail space, meeting rooms, or convention-related facilities. In order to allow the corporation flexibility to secure appropriate insurance by negotiation, the corporation is exempt from RCW 48.30.270. The corporation shall maintain, operate, promote, and manage the state convention and trade center.

(3) In order to allow the corporation flexibility in its personnel policies, the corporation is exempt from chapter 41.06 RCW, chapter 41.05 RCW, RCW 43.01.040 through 43.01.044, chapter 41.04 RCW and chapter 41.40 RCW.

Sec. 2. Section 2, chapter 233, Laws of 1985 as amended by section 3, chapter 8, Laws of 1987 1st ex. sess. and RCW 67.40.025 are each amended to read as follows:

All operating revenues received by the corporation formed under RCW 67.40.020 shall be deposited in the state ((~~trade and~~)) convention and trade center operations account, hereby created in the state treasury. Moneys in the account, including unanticipated revenues under RCW 43.79.270, may be spent only after appropriation by statute, and may be used only for operation and promotion of the center.

Subject to approval by the office of financial management under RCW 43.88.260, the corporation may expend moneys for operational purposes in excess of the balance in the account, to the extent the corporation receives or will receive additional operating revenues.

((~~(4)~~)) As used in this section, "operating revenues" does not include any moneys required to be deposited in the state convention and trade center account.

Sec. 3. Section 3, chapter 34, Laws of 1982 as last amended by section 12, chapter 3, Laws of 1987 1st ex. sess. and RCW 67.40.030 are each amended to read as follows:

For the purpose of providing funds for the state convention and trade center, the state finance committee is authorized to issue, upon request of the corporation formed under RCW 67.40.020 and in one or more offerings, general obligation bonds of the state of Washington in the sum of one hundred ((~~three~~)) sixty million, seven hundred sixty-five thousand dollars, or so much thereof as may be required, to finance this project and all costs incidental thereto, to capitalize all or a portion of interest during construction, to provide for expansion, renovation, exterior cleanup and repair of the Eagles building, conversion of various retail and other space to meeting rooms, and contingency costs of the center, purchase of the McKay Parcel as defined in the property and purchase agreement entered into by the corporation on June 12, 1986, and to reimburse the general fund for expenditures in support of the project. The state finance committee may make such bond covenants as it deems necessary to carry out the purposes of this section and this chapter. No bonds authorized in this section may be offered for sale without prior legislative appropriation.

Sec. 4. Section 4, chapter 34, Laws of 1982 as last amended by section 4, chapter 8, Laws of 1987 1st ex. sess. and RCW 67.40.040 are each amended to read as follows:

(1) The proceeds from the sale of the bonds authorized in RCW 67.40.030, earnings from the investment of the proceeds, proceeds of the tax imposed under RCW 67.40.090, and all other moneys received by the state convention and trade center from any public or private source which are intended to fund the acquisition, design, construction, expansion, exterior cleanup and repair of the Eagles building, conversion of various retail and other space to meeting rooms, purchase of the land and building known as the McKay Parcel, or renovation of the center, shall be deposited in the state convention and trade center account hereby created in the state treasury and in such subaccounts as are deemed appropriate by the directors of the corporation.

(2) Seventy-five percent of the income from the investment of the corporation's funds deposited in the account, including interest earned thereon, before and after May 10, 1985, shall be credited against any future borrowings by the state convention and trade center corporation from the general fund for debt service or otherwise at the time such funds are needed after July 1, 1987.

(3) Moneys in the account, including unanticipated revenues under RCW 43.79.270, shall be used exclusively for the following purposes in the following priority:

(a) For reimbursement of the state general fund under RCW 67.40.060;

(b) After appropriation by statute:

(i) For payment of expenses incurred in the issuance and sale of the bonds issued under RCW 67.40.030;

(ii) For acquisition, design, and construction of the state convention and trade center; and

(iii) For reimbursement of any expenditures from the state general fund in support of the state convention and trade center;

((~~(iv) To establish a subaccount of up to fifty million dollars for expansion or renovation of the center;~~

~~(v) For early retirement of the bonds issued under RCW 67.40.030; and~~

~~(vi) To reduce or eliminate the tax imposed under RCW 67.40.090.~~

~~!ixPROVIDED, That no proceeds from the sale of bonds or earnings from the investment of the proceeds shall be used to fund subsection (4) or (8) of this section~~)) and

Sec. 5. Section 11, chapter 8, Laws of 1987 1st ex. sess. and RCW 67.40.055 are each amended to read as follows:

The state treasurer shall from time to time transfer from the state general fund, or such other funds as the state treasurer deems appropriate, to the state convention and trade center operations account such amounts as are necessary to fund appropriations from the account, other than, after August 31, 1988, for appropriations for the purpose of marketing the facilities or services of the state convention and trade center. All amounts borrowed under the authority of this section shall be repaid to the appropriate fund, together with interest at a rate determined by the state treasurer to be equivalent to the return on investments of the state treasury during the period the amounts are borrowed.

Sec. 6. Section 9, chapter 34, Laws of 1982 as amended by section 6, chapter 8, Laws of 1987 1st ex. sess. and RCW 67.40.090 are each amended to read as follows:

(1) Commencing April 1, 1982, there is imposed, and the department of revenue shall collect, in King county a special excise tax on the sale of or charge made for the furnishing of lodging by a hotel, rooming house, tourist court, motel, or trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, except that no such tax may be levied on any premises having fewer than sixty lodging units. It shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes rental or lease of real property and not a mere license to use or enjoy the same. The legislature on behalf of the state pledges to maintain and continue this tax until the bonds authorized by this chapter are fully redeemed, both principal and interest.

((~~(1)~~)) (2) The rate of the tax imposed under this section shall be((:)) as provided in this subsection.

(a) From April 1, 1982, through December 31, 1982, inclusive, the rate shall be three percent in the city of Seattle and two percent in King county outside the city of Seattle((~~; and~~)).

(b) ((~~On and after~~)) From January 1, 1983, through June 30, 1988, inclusive, the rate shall be five percent in the city of Seattle and two percent in King county outside the city of Seattle. ((The tax levied under this subsection (b) shall expire on the first day of the next calendar quarter after the director of financial management certifies that (i) the bonds issued pursuant to RCW 67.40.030 have been fully retired and (ii) all borrowings by the convention center for (A) bond retirement, and (B) operating expenses of the convention center incurred through June 30, 1992, have been repaid together with interest at a rate determined by the state treasurer to be equivalent to the return on investments of the state treasury during the period the amounts are borrowed.

(2) On and after October 1, 1993, in addition to the tax specified in subsection (1) of this section, there is levied a surtax for the purpose of reimbursing moneys borrowed to pay actual net operating deficits of the convention center incurred after June 30, 1992, as provided in this subsection. On or before October 1, 1993, and on or before October 1 of each succeeding year, the director of financial management shall certify the actual net operating deficit, if any, of the convention center for the prior fiscal year and shall determine the rate of surtax which, if imposed during the succeeding twelve months, will be sufficient to reimburse moneys borrowed for the actual net operating deficit of the convention center in the prior fiscal year plus any surtax deficiencies in prior years less any surtax surpluses in prior years. As used in this section, (a) "surtax deficiency" means any excess of (i) the convention center net operating deficit over (ii) receipts from the surtax imposed under this subsection to reimburse such deficit; and (b) "surtax surplus" means any excess of (i) receipts from a surtax imposed to reimburse a convention center net operating deficit over (ii) the convention center operating deficit which the surtax is intended to reimburse. The surtax so determined shall be effective, and shall be imposed and collected, beginning October 1 of each year for the succeeding twelve months: PROVIDED, That the surtax shall not exceed forty percent of the tax in effect under subsection (1) of this section in the city of Seattle and in King county outside the city of Seattle. The director of financial management shall determine the amount of the surtax based upon actual receipts from the tax provided for in RCW 67.40.090 during the last complete fiscal year. The surtax imposed on hotels and motels in King county outside the city of Seattle shall be forty percent of the surtax imposed on hotels and motels in the city of Seattle.

(3) The surcharge under subsection (2) of this section shall be forty percent of the tax in effect under subsection (1) of this section, effective on the day either of the following events occurs, whichever is earlier:

~~(a) A temporary or permanent injunction or order becomes effective which prohibits in whole or in part the collection of surtax at the rates specified in subsection (2) of this section; or~~

~~(b) A decision of a court in this state invalidating in whole or in part subsection (2) of this section.~~

~~The proceeds of the special excise tax shall be deposited in the state convention and trade center account~~))

(c) From July 1, 1988, through December 31, 1992, inclusive, the rate shall be six percent in the city of Seattle and two and four-tenths percent in King county outside the city of Seattle.

(d) From January 1, 1993, until the change date, the rate shall be seven percent in the city of Seattle and two and eight-tenths percent in King county outside the city of Seattle.

(e) On and after the change date, the rate shall be six percent in the city of Seattle and two and four-tenths percent in King county outside the city of Seattle.

(f) As used in this section, "change date" means the October 1st next occurring after certification occurs under (g) of this subsection.

(g) On August 1st of 1993 and of each year thereafter until certification occurs under this subsection, the state treasurer shall calculate seventy-one and forty-three one-hundredths percent of the revenues actually collected and deposited with the state treasurer for the tax imposed under this section during the twelve months ending June 30th of that year, excluding penalties and interest. If seventy-one and forty-three one-hundredths percent of the revenues exceed the amount actually paid in debt service during the same period for bonds issued under RCW 67.40.030 by at least four million dollars, the state treasurer shall so certify to the department of revenue.

(3) The proceeds of the special excise tax shall be deposited as provided in this subsection.

(a) Through June 30, 1989, inclusive, all proceeds shall be deposited in the state convention and trade center account.

(b) From July 1, 1989, through December 31, 1992, inclusive, eighty-three and thirty-three one-hundredths percent of the proceeds shall be deposited in the state convention and trade center account. The remainder shall be deposited in the state convention and trade center operations account and shall be used only for marketing the facilities and services of the center.

(c) From January 1, 1993, until the change date, eighty-three and thirty-three one-hundredths percent of the proceeds shall be deposited in the state convention and trade center account. The remainder shall be deposited in the state convention and trade center operations account and shall be used only for marketing the facilities and services of the center.

(d) On and after the change date, eighty-three and thirty-three one-hundredths percent of the proceeds shall be deposited in the state convention and trade center account. The remainder shall be deposited in the state convention and trade center operations account and shall be used only for marketing the facilities and services of the center.

(4) Chapter 82.32 RCW applies to the tax imposed under this section.

NEW SECTION. Sec. 7. The legislature intends that the additional revenue generated by the increase in the special excise tax from five to six percent in the city of Seattle and from two percent to two and four-tenths percent in King county outside the city of Seattle be used for marketing. Actual use of these funds shall be determined through biennial appropriation by the legislature.

NEW SECTION. Sec. 8. A new section is added to chapter 67.40 RCW to read as follows:

The state convention and trade center corporation may contract with the Seattle-King county convention and visitors bureau for marketing the convention and trade center facility and services. Any contract with the Seattle-King county convention and visitors bureau shall include, but is not limited to, the following condition: Each dollar in convention and trade center operations account funds provided to the Seattle-King county convention and visitors bureau shall be matched by at least eighty-nine cents in nonstate funds.

Sec. 9. Section 1, chapter 8, Laws of 1987 1st ex. sess. (uncodified) is amended to read as follows:

(1) The director of financial management, in consultation with the chairpersons of the ways and means committees of the senate and house of representatives, may authorize temporary borrowing from the state treasury for the purpose of covering cash deficiencies in the state convention and trade center account resulting from project completion costs. Subject to the conditions and limitations provided in this section, lines of credit may be authorized at times and in amounts as the director of financial management determines are advisable to meet current and/or anticipated cash deficiencies. Each authorization shall distinctly specify the maximum amount of cash deficiency which may be incurred and the maximum time period during which the cash deficiency may continue. The total amount of borrowing outstanding at any time shall never exceed the lesser of:

(a) $58,275,000; or

(b) An amount, as determined by the director of financial management from time to time, which is necessary to provide for payment of project completion costs.

(2) Unless the due date under this subsection is extended by statute, all amounts borrowed under the authority of this section shall be repaid to the state treasury by June 30, ((~~1989~~)) 1991, together with interest at a rate determined by the state treasurer to be equivalent to the return on investments of the state treasury during the period the amounts are borrowed. Borrowing may be authorized from any excess balances in the state treasury, except the agricultural permanent fund, the Millersylvania park permanent fund, the state university permanent fund, the normal school permanent fund, the permanent common school fund, and the scientific permanent fund.

(3) As used in this section, "project completion" means:

(a) All remaining development, construction, and administrative costs related to completion of the convention center; and

(b) Costs of the McKay building demolition, Eagles building rehabilitation, and construction of rentable retail space and an operable parking garage.

(4) It is the intent of the legislature that project completion costs be paid ultimately from the following sources:

(a) $29,250,000 to be received by the corporation under an agreement and settlement with Industrial Indemnity Co.;

(b) $1,070,000 to be received by the corporation as a contribution from the city of Seattle;

(c) $20,000,000 ((~~to be received by the corporation under an anticipated agreement with a private developer~~)) from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;

(d) ((~~$7,955,000 to be provided by a private developer for McKay building demolition, Eagles building rehabilitation, and construction of rentable retail space and an operable parking garage; and~~

~~(e)~~)) $4,765,000 for contingencies and project reserves from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;

(e) $13,000,000 for conversion of various retail and other space to meeting rooms, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;

(f) $13,300,000 for expansion at the 900 level of the facility, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090;

(g) $10,400,000 for purchase of the land and building known as the McKay Parcel, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090; and

(h) $300,000 for Eagles building exterior cleanup and repair, from additional general obligation bonds to be repaid from the special excise tax under RCW 67.40.090.

(5) The borrowing authority provided in this section is in addition to the authority to borrow from the general fund to meet the bond retirement and interest requirements set forth in RCW 67.40.060. To the extent the specific conditions and limitations provided in this section conflict with the general conditions and limitations provided for temporary cash deficiencies in RCW 43.88.260 (section 7, chapter ((~~... (SSB 5606)~~)) 502, Laws of 1987), the specific conditions and limitations in this section shall govern.

Sec. 10. Section 9, chapter 8, Laws of 1987 1st ex. sess. (uncodified) is amended to read as follows:

There is appropriated to the state convention and trade center corporation from the state convention and trade center account, for the fiscal period beginning on the effective date of this section and ending June 30, 1989, the following amounts:

(1) $51,618,000 for development, construction, and administrative costs of completion; ((~~and~~))

(2) ((~~$12,720,000 for McKay building demolition, Eagles building rehabilitation, construction of rentable retail space and an operable parking garage, and~~)) $4,765,000 for project reserves and contingency funds;

(3) $13,000,000 for conversion of various retail and other space to meeting rooms;

(4) $13,300,000 for expansion at the 900 level of the facility;

(5) $10,400,000 for purchase of the land and building known as the McKay Parcel; and

(6) $300,000 for Eagles building exterior cleanup and repair.

NEW SECTION. Sec. 11. The sum of $1,540,000 is appropriated to the state convention and trade center corporation from the state convention and trade center operations account, for the biennium beginning July 1, 1987, and ending June 30, 1989, for marketing the convention center facility and services.

NEW SECTION. Sec. 12. 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. 13. 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 immediately.