Z-439                 _______________________________________________

                                                    HOUSE BILL NO. 263

                        _______________________________________________

State of Washington                              50th Legislature                              1987 Regular Session

By Representatives Haugen, Prince, Hine, L. Smith and P. King; by request of Department of Community Development

Read first time 1/22/87 and referred to Committee on Local Government.

AN ACT Relating to local government debt; adding a new chapter to Title 39 RCW; adding a new section to chapter 39.36 RCW; adding a new section to chapter 43.155 RCW; creating a new section; and declaring an emergency.

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

NEW SECTION. Sec. 1.     The growing trend at the state and federal levels of government to assist municipal corporations through the use of loans is a departure from historic funding methods which were almost entirely in the form of grants.  Changes in state law are required to enable municipal corporations to accept the loans and to use them efficiently.  As the legislature recognizes the need to amend existing law in response to the increasing use of loans by the state and federal governments, the legislature also intends to provide necessary safeguards for state and federal loans so that the rights of recovery of the agency making the loan are not in doubt.

NEW SECTION. Sec. 2.     As used in this chapter, "municipal corporation" includes counties, cities, towns, port districts, school districts, metropolitan park districts, or such other units of local government which are authorized by the legislature to incur debt without the assent of the voters thereof.

NEW SECTION. Sec. 3.     Loan agreements entered into by municipal corporations shall be evidence of indebtedness, and no bond or other evidence of indebtedness need be issued.  The agency making the loan shall have all rights of recovery in the event of default in payment or other breach of the loan agreement as may be provided in the loan agreement or by general law.  In addition, the agency making the loan shall have all rights of recovery that are given to bond holders.

NEW SECTION. Sec. 4.     Nothing in this chapter authorizes municipal corporations to incur indebtedness beyond constitutional indebtedness limitations.

NEW SECTION. Sec. 5.     The authority under this chapter is in addition to the authority to issue short-term obligations under chapter 39.50 RCW.

NEW SECTION. Sec. 6.  A new section is added to chapter 39.36 RCW to read as follows:

          This chapter does not apply to a loan made pursuant to a loan agreement under chapter 39.-- RCW (sections 2 through 5 of this act), and any computation of indebtedness under this chapter shall exclude the amount of any loan under such a loan agreement.

NEW SECTION. Sec. 7.  A new section is added to chapter 43.155 RCW to read as follows:

          Loans from the public works assistance account under this chapter shall be made by loan agreement under chapter 39.-- RCW (sections 2 through 5 of this act).

NEW SECTION. Sec. 8.     Sections 2 through 5 of this act shall constitute a new chapter in Title 39 RCW.

NEW SECTION. Sec. 9.     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.