H-2120              _______________________________________________

                             SUBSTITUTE HOUSE BILL NO. 641 - CORRECTED COPY

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State of Washington                              50th Legislature                              1987 Regular Session

By House Committee on Local Government (originally sponsored by Representatives Haugen and Beck)

Read first time 2/27/87 and passed to Committee on Rules.

AN ACT Relating to local improvement districts; and amending RCW 35.51.040.

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

        Sec. 1.  Section 8, chapter 397, Laws of 1985 and RCW 35.51.040 are each amended to read as follows:

          For the purpose of securing the payment of the principal of and interest on an issue of local improvement bonds, notes, warrants, or other short-term obligations, the legislative authority of a municipality may create a reserve fund in an amount not exceeding fifteen percent of the principal amount of the bonds, notes, or warrants issued.  The cost of a reserve fund may be included in the cost and expense of any local improvement for assessment against the property in the local improvement district to pay the cost, or any part thereof.  The reserve fund may be provided for from the proceeds of the bonds, notes, warrants, or other short-term obligations, from special assessment payments, or from any other money legally available therefor.  After payment of administrative costs, the legislative authority of a municipality shall provide that a sum in proportion to the ratio between the part of the original assessment against a given lot, tract, or parcel of land in a local improvement district assessed to create a reserve fund, if any, and the total original amount of such assessment shall be credited and applied against any nondelinquent portion of the principal of that assessment paid by a property owner whether during the thirty-day prepayment period referred to in RCW 35.49.010 and 35.49.020 or thereafter whenever all or part of a remaining nondelinquent assessment or any nondelinquent annual installment thereof is paid, the reserve fund balance being reduced accordingly as each such sum is thus credited or applied to a nondelinquent principal payment.  Each payment of a nondelinquent assessment or nondelinquent installment shall be reduced by the amount of credit. The balance of a reserve fund remaining after payment in full and retirement of all local improvement bonds, notes, warrants, or other short-term obligations secured by such fund shall be transferred  to the local improvement guaranty fund.