WHEREAS, Babies are miracles with endless promise and hope; and

    WHEREAS, Each child brings new hope for a happier, more peaceful world; and

    WHEREAS, Luke Alan Owen, born June 19, 2003, and Jaidyn Shaina Zion, born March 1, 2004, are the new grandchildren of Lieutenant Governor Brad Owen; and

    WHEREAS, William Michael Guarino, born February 12, 2004, is the new grandson of Senator Hale; and

    WHEREAS, Lindsay Lyn Roach, born December 21, 2003, is the new granddaughter of Senator Roach; and

    WHEREAS, Nils Johannes Haugen, born September 12, 2003, and Lincoln George Badley, born May 6, 2003, are the new grandchildren of Senator Haugen;

    NOW, THEREFORE, BE IT RESOLVED, That the Washington State Senate hereby welcome the 2004 Session Babies born to the children of members of the Senate and wish all the blessings of life for Luke, Jaidyn, William, Lindsay, Nils, and Lincoln; and

    BE IT FURTHER RESOLVED, That copies of this resolution be immediately transmitted by the Secretary of the Senate to Lieutenant Governor Brad Owen, Senator Hale, Senator Roach, and Senator Haugen, to be placed in the baby book of each 2004 Session Baby.

    Senator Esser spoke in favor of adoption of the resolution.

    The President declared the question before the Senate to be the adoption of Senate Resolution No. 8739.

    The motion by Senator Esser carried and the resolution was adopted by voice vote.

MOTION

    On motion of Senator Esser, the Senate reverted to the fourth order of business.

MESSAGES FROM THE HOUSE

March 4, 2004

MR. PRESIDENT:

The House has passed the following bills:

    SUBSTITUTE SENATE BILL NO. 6146,

    SENATE BILL NO. 6237,

    SENATE BILL NO. 6457,

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

March 5, 2005

MR. PRESIDENT:

The House has passed the following bills:

    SENATE BILL NO. 5376,

    SENATE BILL NO. 6141,

    SENATE BILL NO. 6337,

    SUBSTITUTE SENATE BILL NO. 6367,

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

March 5, 2004

MR. PRESIDENT:

The House has passed the following bills:

    SUBSTITUTE SENATE BILL NO. 6115,

    SENATE BILL NO. 6372,

    SENATE BILL NO. 6439,

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

SIGNED BY THE PRESIDENT

The President signed:

    SUBSTITUTE SENATE BILL NO. 6115,

    SENATE BILL NO. 6372,

    SENATE BILL NO. 6439,

SIGNED BY THE PRESIDENT

The President signed:

    SUBSTITUTE SENATE BILL NO. 6146,

    SENATE BILL NO. 6237,

    SENATE BILL NO. 6357,

SIGNED BY THE PRESIDENT

The President signed:

    SENATE BILL NO. 5376,

    SENATE BILL NO. 6141,

    SENATE BILL NO. 6337,

    SUBSTITUTE SENATE BILL NO. 6367,

SIGNED BY THE PRESIDENT

The President signed:

    SUBSTITUTE SENATE BILL NO. 5797,

    ENGROSSED SUBSTITUTE SENATE BILL NO. 5861,

    SENATE BILL NO. 6164,

    SENATE BILL NO. 6466,

MOTION

    At 12:16 p.m., on motion of Senator Esser, the Senate was declared to be at ease, subject to the Call of the President.

    The Senate was called to order at 2:21 p.m. by President Owen.

MESSAGE FROM THE HOUSE

March 5, 2004

MR. PRESIDENT:

    The House has passed SECOND SUBSTITUTE SENATE BILL NO. 6304, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "NEW SECTION. Sec. 1. The legislature recognizes that the loss of domestic manufacturing jobs has become a national concern. Washington state has lost one out of every six manufacturing jobs since July 2000. The aluminum industry has long been an important component of Washington state's manufacturing base, providing family-wage jobs often in rural communities where unemployment rates are very high. The aluminum industry is electricity intensive and was greatly affected by the dramatic increase in electricity prices which began in 2000 and which continues to affect the Washington economy. Before the energy crisis, aluminum smelters provided about 5,000 direct jobs. Today they provide fewer than 1,000 direct jobs. For every job lost in that industry, almost three additional jobs are estimated to be lost elsewhere in the state's economy. It is the legislature's intent to preserve and restore family wage jobs by providing tax relief to the state's aluminum industry.

    The electric loads of aluminum smelters provide a unique benefit to the infrastructure of the electric power system. Under the transmission tariff of the Bonneville Power Administration, aluminum smelter loads, whether served with federal or nonfederal power, are subject to short-term interruptions that allow a higher import capability on the transmission interconnection between the northwest and California. These stability reserves allow more power to be imported in winter months, reducing the need for additional generation in the northwest, and would be used to prevent a widespread transmission collapse and blackout if there were a failure in the transmission interconnection between California and the northwest. It is the legislature's intent to retain these benefits for the people of the state.

    NEW SECTION. Sec. 2. A new section is added to chapter 82.04 RCW, to be codified between RCW 82.04.020 and 82.04.220, to read as follows:

    (1) "Direct service industrial customer" means the same as in RCW 82.16.0495.

    (2) "Aluminum smelter" means the manufacturing facility of any direct service industrial customer that processes alumina into aluminum.

    NEW SECTION. Sec. 3. A new section is added to chapter 82.04 RCW to read as follows:

    (1) Upon every person who is an aluminum smelter engaging within this state in the business of manufacturing aluminum; as to such persons the amount of tax with respect to such business shall, in the case of manufacturers, be equal to the value of the product manufactured, or in the case of processors for hire, be equal to the gross income of the business, multiplied by the rate of .2904 percent.

    (2) Upon every person who is an aluminum smelter engaging within this state in the business of making sales at wholesale of aluminum manufactured by that person, as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the aluminum multiplied by the rate of .2904 percent.

    (3) This section expires January 1, 2007.

    Sec. 4. RCW 82.04.240 and 1998 c 312 s 3 are each amended to read as follows:

    Upon every person ((except persons taxable under RCW 82.04.260 (1), (2), (4), (5), or (6))) engaging within this state in business as a manufacturer, except persons taxable as manufacturers under other provisions of this chapter; as to such persons the amount of the tax with respect to such business shall be equal to the value of the products, including byproducts, manufactured, multiplied by the rate of 0.484 percent.

    The measure of the tax is the value of the products, including byproducts, so manufactured regardless of the place of sale or the fact that deliveries may be made to points outside the state.

    Sec. 5. RCW 82.04.270 and 2003 2nd sp.s. c 1 s 5 are each amended to read as follows:

    Upon every person ((except persons taxable under RCW 82.04.260 (5) or (13), 82.04.298, or 82.04.272)) engaging within this state in the business of making sales at wholesale, except persons taxable as wholesalers under other provisions of this chapter; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of such business multiplied by the rate of 0.484 percent.

    Sec. 6. RCW 82.04.280 and 1998 c 343 s 3 are each amended to read as follows:

    Upon every person engaging within this state in the business of: (1) Printing, and of publishing newspapers, periodicals, or magazines; (2) building, repairing or improving any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used, primarily for foot or vehicular traffic including mass transportation vehicles of any kind and including any readjustment, reconstruction or relocation of the facilities of any public, private or cooperatively owned utility or railroad in the course of such building, repairing or improving, the cost of which readjustment, reconstruction, or relocation, is the responsibility of the public authority whose street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle is being built, repaired or improved; (3) extracting for hire or processing for hire, except persons taxable as processors for hire under another section of this chapter; (4) operating a cold storage warehouse or storage warehouse, but not including the rental of cold storage lockers; (5) representing and performing services for fire or casualty insurance companies as an independent resident managing general agent licensed under the provisions of RCW 48.05.310; (6) radio and television broadcasting, excluding network, national and regional advertising computed as a standard deduction based on the national average thereof as annually reported by the Federal Communications Commission, or in lieu thereof by itemization by the individual broadcasting station, and excluding that portion of revenue represented by the out-of-state audience computed as a ratio to the station's total audience as measured by the 100 micro-volt signal strength and delivery by wire, if any; (7) engaging in activities which bring a person within the definition of consumer contained in RCW 82.04.190(6); as to such persons, the amount of tax on such business shall be equal to the gross income of the business multiplied by the rate of 0.484 percent.

    As used in this section, "cold storage warehouse" means a storage warehouse used to store fresh and/or frozen perishable fruits or vegetables, meat, seafood, dairy products, or fowl, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.

    As used in this section, "storage warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation, except field warehouses, fruit warehouses, fruit packing plants, warehouses licensed under chapter 22.09 RCW, public garages storing automobiles, railroad freight sheds, docks and wharves, and "self-storage" or "mini storage" facilities whereby customers have direct access to individual storage areas by separate entrance. "Storage warehouse" does not include a building or structure, or that part of such building or structure, in which an activity taxable under RCW 82.04.272 is conducted.

    As used in this section, "periodical or magazine" means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

    Sec. 7. RCW 82.04.440 and 2003 2nd sp.s. c 1 s 6 are each amended to read as follows:

    (1) Every person engaged in activities which are within the purview of the provisions of two or more of sections RCW 82.04.230 to 82.04.290, inclusive, shall be taxable under each paragraph applicable to the activities engaged in.

    (2) Persons taxable under section 3(2) of this act, RCW 82.04.250, 82.04.270, or 82.04.260 (4) or (13) with respect to selling products in this state shall be allowed a credit against those taxes for any (a) manufacturing taxes paid with respect to the manufacturing of products so sold in this state, and/or (b) extracting taxes paid with respect to the extracting of products so sold in this state or ingredients of products so sold in this state. Extracting taxes taken as credit under subsection (3) of this section may also be taken under this subsection, if otherwise allowable under this subsection. The amount of the credit shall not exceed the tax liability arising under this chapter with respect to the sale of those products.

    (3) Persons taxable under RCW 82.04.240 or 82.04.260(1)(b) shall be allowed a credit against those taxes for any extracting taxes paid with respect to extracting the ingredients of the products so manufactured in this state. The amount of the credit shall not exceed the tax liability arising under this chapter with respect to the manufacturing of those products.

    (4) Persons taxable under RCW 82.04.230, 82.04.240, section 3(1) of this act, or 82.04.260 (1), (2), (4), (6), or (13) with respect to extracting or manufacturing products in this state shall be allowed a credit against those taxes for any (i) gross receipts taxes paid to another state with respect to the sales of the products so extracted or manufactured in this state, (ii) manufacturing taxes paid with respect to the manufacturing of products using ingredients so extracted in this state, or (iii) manufacturing taxes paid with respect to manufacturing activities completed in another state for products so manufactured in this state. The amount of the credit shall not exceed the tax liability arising under this chapter with respect to the extraction or manufacturing of those products.

    (5) For the purpose of this section:

    (a) "Gross receipts tax" means a tax:

    (i) Which is imposed on or measured by the gross volume of business, in terms of gross receipts or in other terms, and in the determination of which the deductions allowed would not constitute the tax an income tax or value added tax; and

    (ii) Which is also not, pursuant to law or custom, separately stated from the sales price.

    (b) "State" means (i) the state of Washington, (ii) a state of the United States other than Washington, or any political subdivision of such other state, (iii) the District of Columbia, and (iv) any foreign country or political subdivision thereof.

    (c) "Manufacturing tax" means a gross receipts tax imposed on the act or privilege of engaging in business as a manufacturer, and includes (i) the taxes imposed in RCW 82.04.240, section 3(1) of this act, and 82.04.260 (1), (2), (4), and (13), and (ii) similar gross receipts taxes paid to other states.

    (d) "Extracting tax" means a gross receipts tax imposed on the act or privilege of engaging in business as an extractor, and includes the tax imposed in RCW 82.04.230 and similar gross receipts taxes paid to other states.

    (e) "Business", "manufacturer", "extractor", and other terms used in this section have the meanings given in RCW 82.04.020 through 82.04.212, notwithstanding the use of those terms in the context of describing taxes imposed by other states.

    NEW SECTION. Sec. 8. A new section is added to chapter 82.04 RCW to read as follows:

    (1) In computing the tax imposed under this chapter, a credit is allowed for all property taxes paid during the calendar year on property owned by a direct service industrial customer and reasonably necessary for the purposes of an aluminum smelter.

    (2) A person taking the credit under this section is subject to all the requirements of chapter 82.32 RCW. A credit earned during one calendar year may be carried over to be credited against taxes incurred in the subsequent calendar year, but may not be carried over a second year. Credits carried over must be applied to tax liability before new credits. No refunds may be granted for credits under this section.

    (3) Credits may not be claimed under this section for property taxes levied for collection in 2007 and thereafter.

    NEW SECTION. Sec. 9. A new section is added to chapter 82.04 RCW to read as follows:

    (1) A person who is subject to tax under this chapter on gross income from sales of electricity, natural gas, or manufactured gas made to an aluminum smelter is eligible for an exemption from the tax in the form of a credit, if the contract for sale of electricity or gas to the aluminum smelter specifies that the price charged for the electricity or gas will be reduced by an amount equal to the credit.

    (2) The credit is equal to the gross income from the sale of the electricity or gas to an aluminum smelter multiplied by the corresponding rate in effect at the time of the sale under this chapter.

    (3) The exemption provided for in this section does not apply to amounts received from the remarketing or resale of electricity originally obtained by contract for the smelting process.

    NEW SECTION. Sec. 10. A new section is added to chapter 82.08 RCW to read as follows:

    (1) A person who has paid tax under RCW 82.08.020 for tangible personal property used at an aluminum smelter, tangible personal property that will be incorporated as an ingredient or component of buildings or other structures at an aluminum smelter, or for labor and services rendered with respect to such buildings, structures, or tangible personal property, is eligible for an exemption from the state share of the tax in the form of a credit, as provided in this section. A person claiming an exemption must pay the tax and may then take a credit equal to the state share of retail sales tax paid under RCW 82.08.020. The person shall submit information, in a form and manner prescribed by the department, specifying the amount of qualifying purchases or acquisitions for which the exemption is claimed and the amount of exempted tax.

    (2) For the purposes of this section, "aluminum smelter" has the same meaning as provided in section 2 of this act.

    (3) Credits may not be claimed under this section for taxable events occurring on or after January 1, 2007.

    NEW SECTION. Sec. 11. A new section is added to chapter 82.12 RCW to read as follows:

    (1) A person who is subject to tax under RCW 82.12.020 for tangible personal property used at an aluminum smelter, or for tangible personal property that will be incorporated as an ingredient or component of buildings or other structures at an aluminum smelter, or for labor and services rendered with respect to such buildings, structures, or tangible personal property, is eligible for an exemption from the state share of the tax in the form of a credit, as provided in this section. The amount of the credit shall be equal to the state share of use tax computed to be due under RCW 82.12.020. The person shall submit information, in a form and manner prescribed by the department, specifying the amount of qualifying purchases or acquisitions for which the exemption is claimed and the amount of exempted tax.

    (2) For the purposes of this section, "aluminum smelter" has the same meaning as provided in section 2 of this act.

    (3) Credits may not be claimed under this section for taxable events occurring on or after January 1, 2007.

    Sec. 12. RCW 82.12.022 and 1994 c 124 s 9 are each amended to read as follows:

    (1) There is hereby levied and there shall be collected from every person in this state a use tax for the privilege of using natural gas or manufactured gas within this state as a consumer.

    (2) The tax shall be levied and collected in an amount equal to the value of the article used by the taxpayer multiplied by the rate in effect for the public utility tax on gas distribution businesses under RCW 82.16.020. The "value of the article used" does not include any amounts that are paid for the hire or use of a gas distribution business as defined in RCW 82.16.010(7) in transporting the gas subject to tax under this subsection if those amounts are subject to tax under that chapter.

    (3) The tax levied in this section shall not apply to the use of natural or manufactured gas delivered to the consumer by other means than through a pipeline.

    (4) The tax levied in this section shall not apply to the use of natural or manufactured gas if the person who sold the gas to the consumer has paid a tax under RCW 82.16.020 with respect to the gas for which exemption is sought under this subsection.

    (5) The tax levied in this section shall not apply to the use of natural or manufactured gas by an aluminum smelter as that term is defined in section 2 of this act before January 1, 2007.

    (6) There shall be a credit against the tax levied under this section in an amount equal to any tax paid by:

    (a) The person who sold the gas to the consumer when that tax is a gross receipts tax similar to that imposed pursuant to RCW 82.16.020 by another state with respect to the gas for which a credit is sought under this subsection; or

    (b) The person consuming the gas upon which a use tax similar to the tax imposed by this section was paid to another state with respect to the gas for which a credit is sought under this subsection.

    (((6))) (7) The use tax hereby imposed shall be paid by the consumer to the department.

    (((7))) (8) There is imposed a reporting requirement on the person who delivered the gas to the consumer to make a quarterly report to the department. Such report shall contain the volume of gas delivered, name of the consumer to whom delivered, and such other information as the department shall require by rule.

    (((8))) (9) The department may adopt rules under chapter 34.05 RCW for the administration and enforcement of sections 1 through 6, chapter 384, Laws of 1989.

    NEW SECTION. Sec. 13. A new section is added to chapter 82.16 RCW to read as follows:

    (1) A person who is subject to tax under this chapter on gross income from sales of electricity, natural gas, or manufactured gas made to an aluminum smelter is eligible for an exemption from the tax in the form of a credit, if the contract for sale of electricity or gas to the aluminum smelter specifies that the price charged for the electricity or gas will be reduced by an amount equal to the credit.

    (2) The credit is equal to the gross income from the sale of the electricity or gas to an aluminum smelter multiplied by the corresponding rate in effect at the time of the sale for the public utility tax under RCW 82.16.020.

    (3) The exemption provided for in this section does not apply to amounts received from the remarketing or resale of electricity originally obtained by contract for the smelting process.

    (4) For the purposes of this section, "aluminum smelter" has the same meaning as provided in section 2 of this act.

    NEW SECTION. Sec. 14. A new section is added to chapter 82.32 RCW to read as follows:

    (1) For the purposes of this section, "smelter tax incentive" means the preferential tax rate under section 3 of this act, or an exemption or credit under section 8, 10, or 11 of this act or RCW 82.12.022(5).

    (2) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information to evaluate whether the stated goals of legislation were achieved.

    (3) The goals of the smelter tax incentives are to retain family wage jobs in rural areas by:

    (a) Enabling the aluminum industry to maintain production of aluminum at a level that will preserve at least 75 percent of the jobs that were on the payroll effective January 1, 2004, as adjusted for employment reductions publicly announced before November 30, 2003; and

    (b) Allowing the aluminum industry to continue producing aluminum in this state through 2006 so that the industry will be positioned to preserve and create new jobs when the anticipated reduction of energy costs occurs.

    (4)(a) An aluminum smelter receiving the benefit of a smelter tax incentive shall make an annual report to the department detailing employment, wages, and employer-provided health and retirement benefits per job at the manufacturing site. The report is due by March 31st following any year in which a tax incentive is claimed or used. The report shall not include names of employees. The report shall detail employment by the total number of full-time, part-time, and temporary positions. The report shall indicate the quantity of aluminum smelted at the plant during the time period covered by the report. The first report filed under this subsection shall include employment, wage, and benefit information for the twelve-month period immediately before first use of a tax incentive. Employment reports shall include data for actual levels of employment and identification of the number of jobs affected by any employment reductions that have been publicly announced at the time of the report. Information in a report under this section is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.

    (b) If a person fails to submit an annual report under (a) of this subsection by the due date of the report, the department shall declare the amount of taxes exempted or credited, or reduced in the case of the preferential business and occupation tax rate, for that year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest but not penalties, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.

    (5) By December 1, 2005, and by December 1, 2006, the fiscal committees of the house of representatives and the senate, in consultation with the department, shall report to the legislature on the effectiveness of the smelter tax incentives and, by December 1, 2010, on the effectiveness of the incentives under sections 9 and 13 of this act. The reports shall measure the effect of the tax incentives on job retention for Washington residents and any other factors the committees may select.

    NEW SECTION. Sec. 15. This act takes effect July 1, 2004."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Zarelli moved that the Senate concur in the House amendment(s) to Second Substitute Senate Bill No. 6304.

    Senator Brandland spoke in favor of the motion.

MOTION

    On motion of Senator Eide, Senator Hargrove was excused.

    The President declared the question before the Senate to be the motion by Senator Zarelli that the Senate concur in the House amendment(s) to Second Substitute Senate Bill No. 6304.

MOTION

    On motion of Senator Murray, Senators Benton and Hale were excused.

    The motion by Senator Zarelli carried and the Senate concurred in the House amendment(s) to Second Substitute Senate Bill No. 6304.

    The President declared the question before the Senate to be the final passage of Second Substitute Senate Bill No. 6304, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Second Substitute Senate Bill No. 6304, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 47.

     Excused: Senators Hale and Hargrove - 2.

     SECOND SUBSTITUTE SENATE BILL NO. 6304, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 3, 2004

MR. PRESIDENT:

    The House has passed SUBSTITUTE SENATE BILL NO. 6329, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "Sec. 1. RCW 77.120.005 and 2000 c 108 s 1 are each amended to read as follows:

    The legislature finds that some nonindigenous species have the potential to cause economic and environmental damage to the state and that current efforts to stop the introduction of nonindigenous species from shipping vessels do not adequately reduce the risk of new introductions into Washington waters.

    The legislature recognizes the international ramifications and the rapidly changing dimensions of this issue, the lack of currently available treatment technologies, and the difficulty that any one state has in either legally or practically managing this issue. Recognizing the possible limits of state jurisdiction over international issues, the state declares its support for the international maritime organization and United States coast guard efforts, and the state intends to complement, to the extent its powers allow it, the United States coast guard's ballast water management program.

    Sec. 2. 2002 c 282 s 1 (uncodified) is amended to read as follows:

    (1) The director of the department of fish and wildlife must establish the ballast water work group.

    (2) The ballast water work group consists of the following individuals:

    (a) One staff person from the governor's executive policy office. This person must act as chair of the ballast water work group;

    (b) Two representatives from the Puget Sound steamship operators;

    (c) Two representatives from the Columbia river steamship operators;

    (d) Three representatives from the Washington public ports, one of whom must be a marine engineer;

    (e) Two representatives from the petroleum transportation industry;

    (f) One representative from the Puget Sound water quality action team; ((and))

    (g) Two representatives from the environmental community;

    (h) One representative of the shellfish industry;

    (i) One representative of the tribes;

    (j) One representative of maritime labor; and

    (k) One representative from the department of fish and wildlife.

    (3) The ballast water work group must study, and provide a report to the legislature by December 15, ((2003)) 2006, the following issues:

    (a) All issues relating to ballast water technology, including exchange and treatment methods ((and)), management plans, the associated costs, and the availability of feasible and proven ballast water treatment technologies that could be cost-effectively installed on vessels that typically call on Washington ports;

    (b) The services needed by the industry and the state to protect the marine environment, including penalties and enforcement; ((and))

    (c) The costs associated with, and possible funding methods for, implementing the ballast water program;

    (d) Consistency with federal and international standards, and identification of gaps between those standards, and the need for additional measures, if any, to meet the goals of this chapter;

    (e) Describe how the costs of treatment required as of July 1, 2007, will be substantially equivalent among ports where treatment is required;

    (f) Describe how the states of Washington and Oregon are coordinating their efforts for ballast water management in the Columbia river system; and

    (g) Describe how the states of Washington, Oregon, and California and the province of British Columbia are coordinating their efforts for ballast water management on the west coast.

    (4) The ballast water work group must begin operation immediately upon the effective date of this section. The ((department of fish and wildlife)) Puget Sound water quality action team must provide staff for the ballast water work group. The staff must come from existing personnel within the ((department of fish and wildlife)) team.

    (5) The director must also monitor the activities of the task force created by the state of Oregon in 2001 Or. Laws 722, concerning ballast water management. The director shall provide the ballast water work group with periodic updates of the Oregon task force's efforts at developing a ballast water management system.

    (6)(a) The ballast water work group expires June 30, ((2004)) 2007.

    (b) This section expires June 30, ((2004)) 2007.

    Sec. 3. RCW 77.120.030 and 2002 c 282 s 2 are each amended to read as follows:

    The owner or operator in charge of any vessel covered by this chapter is required to ensure that the vessel under their ownership or control does not discharge ballast water into the waters of the state except as authorized by this section.

    (1) Discharge into waters of the state is authorized if the vessel has conducted an open sea exchange of ballast water. A vessel is exempt from this requirement if the vessel's master reasonably determines that such a ballast water exchange operation will threaten the safety of the vessel or the vessel's crew, or is not feasible due to vessel design limitations or equipment failure. If a vessel relies on this exemption, then it may discharge ballast water into waters of the state, subject to any requirements of treatment under subsection (2) of this section and subject to RCW 77.120.040.

    (2) After July 1, ((2004)) 2007, discharge of ballast water into waters of the state is authorized only if there has been an open sea exchange or if the vessel has treated its ballast water to meet standards set by the department consistent with applicable state and federal laws. When weather or extraordinary circumstances make access to treatment unsafe to the vessel or crew, the master of a vessel may delay compliance with any treatment required under this subsection until it is safe to complete the treatment.

    (3) Masters, owners, operators, or persons-in-charge shall submit to the department an interim ballast water management report by July 1, 2006, in the form and manner prescribed by the department. The report shall describe actions needed to implement the ballast water requirements in subsection (2) of this section, including treatment methods applicable to the class of the vessel. Reports may include a statement that there are no treatment methods applicable to the vessel for which the report is being submitted.

    (4) The ballast water work group created in section 1, chapter 282, Laws of 2002 shall develop recommendations for the interim ballast water management report. The recommendations must include, but are not limited to:

    (a) Actions that the vessel owner or operator will take to implement the ballast water requirements in subsection (2) of this section, including treatment methods applicable to the class of the vessel;

    (b) Necessary plan elements when there are not treatment methods applicable to the vessel for which the report is being submitted, or which would meet the requirements of this chapter; and

    (c) The method, form, and content of reporting to be used for such reports.

    (5) For treatment technologies requiring shipyard modification that cannot reasonably be performed prior to July 1, 2007, the department shall provide the vessel owner or operator with an extension to the first scheduled drydock or shipyard period following July 1, 2007.

    (6) The department shall make every effort to align ballast water standards with adopted international and federal standards while ensuring that the goals of this chapter are met.

    (7) The requirements of this section do not apply to a vessel discharging ballast water or sediments that originated solely within the waters of Washington state, the Columbia river system, or the internal waters of British Columbia south of latitude fifty degrees north, including the waters of the Straits of Georgia and Juan de Fuca.

    (((4))) (8) Open sea exchange is an exchange that occurs fifty or more nautical miles offshore. If the United States coast guard requires a vessel to conduct an exchange further offshore, then that distance is the required distance for purposes of compliance with this chapter."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Oke moved that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6329.

    Senators Oke and Spanel spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Oke that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6329.

    The motion by Senator Oke carried and the Senate concurred in the House amendment(s) to Substitute Senate Bill No. 6329.

    The President declared the question before the Senate to be the final passage of Substitute Senate Bill No. 6329, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Substitute Senate Bill No. 6329, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 47.

     Excused: Senators Hale and Hargrove - 2.

     SUBSTITUTE SENATE BILL NO. 6329, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 3, 2004

MR. PRESIDENT:

    The House has passed SUBSTITUTE SENATE BILL NO. 6245, with the following amendments{s}.

    On page 7, after line 6, insert the following:

    "Sec. 5. RCW 28A.660.050 and 2003 c 410 s 3 are each amended to read as follows:

    The alternative route conditional scholarship program is created under the following guidelines:

     (1) The program shall be administered by the higher education coordinating board. In administering the program, the higher education coordinating board has the following powers and duties:

     (a) To adopt necessary rules and develop guidelines to administer the program;

     (b) To collect and manage repayments from participants who do not meet their service obligations; and

     ©) To accept grants and donations from public and private sources for the program.

     (2) Participation in the alternative route conditional scholarship program is limited to interns of the partnership grant programs under RCW 28A.660.040. The Washington professional educator standards board shall select interns to receive conditional scholarships.

     (3) In order to receive conditional scholarship awards, recipients shall be accepted and maintain enrollment in alternative certification routes through the partnership grant program, as provided in RCW 28A.660.040. Recipients must continue to make satisfactory progress towards completion of the alternative route certification program and receipt of a residency teaching certificate.

     (4) For the purpose of this chapter, a conditional scholarship is a loan that is forgiven in whole or in part in exchange for service as a certificated teacher employed in a Washington state K-12 public school. The state shall forgive one year of loan obligation for every two years a recipient teaches in a public school. Recipients that fail to continue a course of study leading to residency teacher certification or cease to teach in a public school in the state of Washington in their endorsement area are required to repay the remaining loan principal with interest.

     (5) Recipients who fail to fulfill the required teaching obligation are required to repay the remaining loan principal with interest and any other applicable fees. The higher education coordinating board shall adopt rules to define the terms for repayment, including applicable interest rates, fees, and deferments.

     (6) To the extent funds are appropriated for this specific purpose, the annual amount of the scholarship is the annual cost of tuition; fees; and educational expenses, including books, supplies, and transportation for the alternative route certification program in which the recipient is enrolled, not to exceed eight thousand dollars. The board may adjust the annual award by the average rate of resident undergraduate tuition and fee increases at the state universities as defined in RCW 28B.10.016.

     (7) The higher education coordinating board may deposit all appropriations, collections, and any other funds received for the program in this chapter in *the student loan account authorized in RCW 28B.102.060."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Johnson moved that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6245.

    Senator Johnson spoke in favor of the motion.

MOTION

    On motion of Senator Keiser, Senator Fairley was excused.

    The President declared the question before the Senate to be the motion by Senator Johnson that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6245.

    The motion by Senator Johnson carried and the Senate concurred in the House amendment(s) to Substitute Senate Bill No. 6245.

    The President declared the question before the Senate to be the final passage of Substitute Senate Bill No. 6245, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Substitute Senate Bill No. 6245, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 46; Nays, 0; Absent, 0; Excused, 3.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Finkbeiner, Franklin, Fraser, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 46.

     Excused: Senators Fairley, Hale and Hargrove - 3.

     SUBSTITUTE SENATE BILL NO. 6245, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 3, 2004

MR. PRESIDENT:

    The House has passed ENGROSSED SECOND SUBSTITUTE SENATE BILL NO. 6274, with the following amendments{s}.

    On page 6, beginning on line 21, strike all material through "acts." on line 38

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Regala moved that the Senate concur in the House amendment(s) to Engrossed Second Substitute Senate Bill No. 6274.

    Senator Regala spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Regala that the Senate concur in the House amendment(s) to Engrossed Second Substitute Senate Bill No. 6274.

    The motion by Senator Regala carried and the Senate concurred in the House amendment(s) to Engrossed Second Substitute Senate Bill No. 6274.

    The President declared the question before the Senate to be the final passage of Engrossed Second Substitute Senate Bill No. 6274, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Engrossed Second Substitute Senate Bill No. 6274, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Finkbeiner, Franklin, Fraser, Hale, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 47.

     Excused: Senators Fairley and Hargrove - 2.

    ENGROSSED SECOND SUBSTITUTE SENATE BILL NO. 6274, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 4, 2004

MR. PRESIDENT:

    The House has passed SUBSTITUTE SENATE BILL NO. 6171, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "Sec. 1. RCW 28A.410.095 and 1992 c 159 s 5 are each amended to read as follows:

    (1) The superintendent of public instruction may initiate and conduct investigations as may be reasonably necessary to establish the existence of any alleged violations of or noncompliance with this chapter or any rules adopted under it. For the purpose of any investigation or proceeding under this chapter, the superintendent or any officer designated by the superintendent may administer oaths and affirmations, subpoena witnesses and compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records that the superintendent deems relevant and material to the inquiry.

    (2) Investigations conducted by the superintendent of public instruction concerning alleged sexual misconduct towards a child shall be completed within one year of the initiation of the investigation or within thirty days of the completion of all proceedings, including court proceedings, resulting from an investigation conducted by law enforcement or child protective services if there is such an investigation. The superintendent of public instruction may take, for reasonable cause, additional time for completion of the investigation after informing the victim, the individual being investigated, and the school district that employs the individual being investigated of the reasons additional time is needed and the amount of additional time needed. Written notification must be provided to each of the parties who must be informed. The sole remedy for a failure to complete an investigation of sexual misconduct within the time allowed by this subsection is a civil penalty of fifty dollars per day for each day beyond the allowed time.

    (3) If any person fails to obey a subpoena or obeys a subpoena but refuses to give evidence, any court of competent jurisdiction, upon application by the superintendent, may issue to that person an order requiring him or her to appear before the court and to show cause why he or she should not be compelled to obey the subpoena, and give evidence material to the matter under investigation. The failure to obey an order of the court may be punishable as contempt.

    (4) Once an investigation has been initiated by the superintendent of public instruction, the investigation shall be completed regardless of whether the individual being investigated has resigned his or her position or allowed his or her teaching certificate to lapse. The superintendent shall make a written finding regarding each investigation indicating the actions taken, including a statement of the reasons why a complaint was dismissed or did not warrant further investigation or action by the superintendent, and shall provide such notice to each person who filed the complaint. Written findings under this section are subject to public disclosure under chapter 42.17 RCW.

    (5) An investigation into sexual or physical abuse of a student by a school employee shall only be initiated by the superintendent of public instruction after the superintendent of public instruction verifies that the incident has been reported to the proper law enforcement agency or the department of social and health services as required under RCW 26.44.030.

    Sec. 2. RCW 28A.410.090 and 1996 c 126 s 2 are each amended to read as follows:

    (1) Any certificate or permit authorized under the provisions of this chapter, chapter 28A.405 RCW, or rules promulgated thereunder may be revoked or suspended by the authority authorized to grant the same based upon a criminal records report authorized by law, or upon the complaint of any school district superintendent, educational service district superintendent, or private school administrator for immorality, violation of written contract, unprofessional conduct, intemperance, or crime against the law of the state.

    If the superintendent of public instruction has reasonable cause to believe that an alleged violation of this chapter or rules adopted under it has occurred based on a written complaint alleging physical abuse or sexual misconduct by a certificated school employee filed by a parent or another person, but no complaint has been ((filed pursuant to this chapter)) forwarded to the superintendent by a school district superintendent, educational service district superintendent, or private school administrator, and that a school district superintendent, educational service district superintendent, or private school administrator has sufficient notice of the alleged violation and opportunity to file a complaint, the superintendent of public instruction may cause an investigation to be made of the alleged violation, together with such other matters that may be disclosed in the course of the investigation related to certificated personnel.

    (2) A parent or another person may file a written complaint with the superintendent of public instruction alleging physical abuse or sexual misconduct by a certificated school employee if:

    (a) The parent or other person has already filed a written complaint with the educational service district superintendent concerning that employee;

    (b) The educational service district superintendent has not caused an investigation of the allegations and has not forwarded the complaint to the superintendent of public instruction for investigation; and

    (c) The written complaint states the grounds and factual basis upon which the parent or other person believes an investigation should be conducted.

    (3) Any such certificate or permit authorized under this chapter or chapter 28A.405 RCW shall be revoked by the authority authorized to grant the certificate upon a guilty plea or the conviction of any felony crime involving the physical neglect of a child under chapter 9A.42 RCW, the physical injury or death of a child under chapter 9A.32 or 9A.36 RCW (excepting motor vehicle violations under chapter 46.61 RCW), sexual exploitation of a child under chapter 9.68A RCW, sexual offenses under chapter 9A.44 RCW where a minor is the victim, promoting prostitution of a minor under chapter 9A.88 RCW, the sale or purchase of a minor child under RCW 9A.64.030, or violation of similar laws of another jurisdiction. The person whose certificate is in question shall be given an opportunity to be heard. Mandatory permanent revocation upon a guilty plea or the conviction of felony crimes specified under this subsection shall apply to such convictions or guilty pleas which occur after July 23, 1989. Revocation of any certificate or permit authorized under this chapter or chapter 28A.405 RCW for a guilty plea or criminal conviction occurring prior to July 23, 1989, shall be subject to the provisions of subsection (1) of this section."

    On page 1, line 2 of the title, after "instruction;" strike the remainder of the title and insert "amending RCW 28A.410.095 and 28A.410.090; and prescribing penalties."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Johnson moved that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6171.

    Senators Benton and Kohl-Welles spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Johnson that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6171.

    The motion by Senator Johnson carried and the Senate concurred in the House amendment(s) to Substitute Senate Bill No. 6171.

    The President declared the question before the Senate to be the final passage of Substitute Senate Bill No. 6171, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Substitute Senate Bill No. 6171, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 48; Nays, 0; Absent, 0; Excused, 1.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Hale, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 48.

     Excused: Senator Hargrove - 1.

     SUBSTITUTE SENATE BILL NO. 6171, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 4, 2004

MR. PRESIDENT:

    The House has passed ENGROSSED SECOND SUBSTITUTE SENATE BILL NO. 5533, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "NEW SECTION. Sec. 1. The legislature recognizes that state law requires criminal background checks of applicants for school district employment. However, the legislature finds that, because they generally are limited to criminal conviction histories, results of background checks are more complete when supplemented by an applicant's history of past sexual misconduct. Therefore, the legislature finds that additional safeguards are necessary in the hiring of school district employees to ensure the safety of Washington's school children. In order to provide the safest educational environment for children, school districts must provide known information regarding employees' sexual misconduct when those employees attempt to transfer to different school districts.

    NEW SECTION. Sec. 2. A new section is added to chapter 28A.400 RCW to read as follows:

    (1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

    (a) "Applicant" means an applicant for employment in a certificated or classified position who is currently or was previously employed by a school district.

    (b) "Employer" means a school district employer.

    (2) Before hiring an applicant, a school district shall request the applicant to sign a statement:

    (a) Authorizing the applicant's current and past employers to disclose to the hiring school district sexual misconduct, if any, by the applicant and making available to the hiring school district copies of all documents in the previous employer's personnel, investigative, or other files relating to sexual misconduct by the applicant; and

    (b) Releasing the applicant's current and past employers, and employees acting on behalf of that employer, from any liability for providing information described in (a) of this subsection, as provided in subsection (4) of this section.

    (3) Before hiring an applicant, a school district shall request in writing, electronic or otherwise, the applicant's current and past employers to provide the information described in subsection (2)(a) of this section, if any. The request shall include a copy of the statement signed by the applicant under subsection (2) of this section.

    (4) Not later than twenty business days after receiving a request under subsection (3) of this section, a school district shall provide the information requested and make available to the requesting school district copies of all documents in the applicant's personnel record relating to the sexual misconduct. The school district, or an employee acting on behalf of the school district, who in good faith discloses information under this section is immune from civil liability for the disclosure.

    (5) A hiring district shall request from the office of the superintendent of public instruction verification of certification status, including information relating to sexual misconduct as established by the provisions of subsection (11) of this section, if any, for applicants for certificated employment.

    (6) A school district shall not hire an applicant who does not sign the statement described in subsection (2) of this section.

    (7) School districts may employ applicants on a conditional basis pending the district's review of information obtained under this section.

    (8) Information received under this section shall be used by a school district only for the purpose of evaluating an applicant's qualifications for employment in the position for which he or she has applied. Except as otherwise provided by law, a board member or employee of a school district shall not disclose the information to any person, other than the applicant, who is not directly involved in the process of evaluating the applicant's qualifications for employment. A person who violates this subsection is guilty of a misdemeanor.

    (9) Beginning September 1, 2004, the board or an official of a school district shall not enter into a collective bargaining agreement, individual employment contract, resignation agreement, severance agreement, or any other contract or agreement that has the effect of suppressing information about verbal or physical abuse or sexual misconduct by a present or former employee or of expunging information about that abuse or sexual misconduct from any documents in the previous employer's personnel, investigative, or other files relating to verbal or physical abuse or sexual misconduct by the applicant. Any provision of a contract or agreement that is contrary to this subsection is void and unenforceable, and may not be withheld from disclosure by the entry of any administrative or court order. This subsection does not restrict the expungement from a personnel file of information about alleged verbal or physical abuse or sexual misconduct that has not been substantiated.

    (10) This section does not prevent a school district from requesting or requiring an applicant to provide information other than that described in this section.

    (11) By September 1, 2004, the state board of education has the authority to and shall adopt rules defining "verbal abuse," "physical abuse," and "sexual misconduct" as used in this section for application to all classified and certificated employees. The definitions of verbal and physical abuse and sexual misconduct adopted by the state board of education must include the requirement that the school district has made a determination that there is sufficient information to conclude that the abuse or misconduct occurred and that the abuse or misconduct resulted in the employee's leaving his or her position at the school district.

    (12) Except as limited by chapter 49.12 RCW, at the conclusion of a school district's investigation, a school employee has the right to review his or her entire personnel file, investigative file, or other file maintained by the school district relating to sexual misconduct as addressed in this section and to attach rebuttals to any documents as the employee deems necessary. Rebuttal documents shall be disclosed in the same manner as the documents to which they are attached. The provisions of this subsection do not supercede the protections provided individuals under the state whistleblower laws in chapter 42.41 RCW.

    NEW SECTION. Sec. 3. A new section is added to chapter 28A.320 RCW to read as follows:

    School districts must, at the first opportunity but in all cases within forty-eight hours of receiving a report alleging sexual misconduct by a school employee, notify the parents of a student alleged to be the victim, target, or recipient of the misconduct. School districts shall provide parents with information regarding their rights under the Washington public disclosure act, chapter 42.17 RCW, to request the public records regarding school employee discipline. This information shall be provided to all parents on an annual basis.

    NEW SECTION. Sec. 4. A new section is added to chapter 28A.410 RCW to read as follows:

    For the purposes of reporting disciplinary actions taken against certificated staff to other states via a national data base used by the office of the superintendent of public instruction, the following actions shall be reported: Suspension, surrender, revocation, denial, stayed suspension, reinstatement, and any written reprimand related to abuse and sexual misconduct. These actions will only be reported to the extent that they are accepted by the national clearinghouse, but if there are categories not included, the office of the superintendent of public instruction shall seek modification to the national clearinghouse format."

    On page 1, line 2 of the title, after "employees;" strike the remainder of the title and insert "adding a new section to chapter 28A.400 RCW; adding a new section to chapter 28A.320 RCW; adding a new section to chapter 28A.410 RCW; creating a new section; and prescribing penalties."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Johnson moved that the Senate concur in the House amendment(s) to Engrossed Second Substitute Senate Bill No. 5533.

    Senator Kohl-Welles spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Johnson that the Senate concur in the House amendment(s) to Engrossed Second Substitute Senate Bill No. 5533.

    The motion by Senator Johnson carried and the Senate concurred in the House amendment(s) to Engrossed Second Substitute Senate Bill No. 5533.

    The President declared the question before the Senate to be the final passage of Engrossed Second Substitute Senate Bill No. 5533, as amended by the House.

    Senator Kohl-Welles spoke in favor of passage of the bill.

ROLL CALL

    The Secretary called the roll on the final passage of Engrossed Second Substitute Senate Bill No. 5533, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 48; Nays, 0; Absent, 0; Excused, 1.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Hale, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 48.

     Excused: Senator Hargrove - 1.

     ENGROSSED SECOND SUBSTITUTE SENATE BILL NO. 5533, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 5, 2004

MR. PRESIDENT:

    The House has passed SECOND SUBSTITUTE SENATE BILL NO. 6220, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "NEW SECTION.     Sec. 1. A new section is added to chapter 28A.400 RCW to read as follows:

    (1) A certificated or classified school employee who has knowledge or reasonable cause to believe that a student has been a victim of physical abuse or sexual misconduct by another school employee, shall report such abuse or misconduct to the appropriate school administrator. The school administrator shall cause a report to be made to the proper law enforcement agency if he or she has reasonable cause to believe that the misconduct or abuse has occurred as required under RCW 26.44.030. During the process of making a reasonable cause determination, the school administrator shall contact all parties involved in the complaint.

    (2) Certificated and classified school employees shall receive training regarding their reporting obligations under state law in their orientation training when hired and then every three years thereafter. The training required under this subsection shall take place within existing training programs and related resources.

    (3) Nothing in this section changes any of the duties established under RCW 26.44.030."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Johnson moved that the Senate concur in the House amendment(s) to Second Substitute Senate Bill No. 6220.

    Senators Kohl-Welles, Jacobsen and Roach spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Johnson that the Senate concur in the House amendment(s) to Second Substitute Senate Bill No. 6220.

    The motion by Senator Johnson carried and the Senate concurred in the House amendment(s) to Second Substitute Senate Bill No. 6220.

    The President declared the question before the Senate to be the final passage of Second Substitute Senate Bill No. 6220, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Second Substitute Senate Bill No. 6220, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 48; Nays, 0; Absent, 0; Excused, 1.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Hale, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 48.

     Excused: Senator Hargrove - 1.

     SECOND SUBSTITUTE SENATE BILL NO. 6220, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 4, 2004

MR. PRESIDENT:

    The House has passed SUBSTITUTE SENATE BILL NO. 5139, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "NEW SECTION. Sec. 1. The legislature recognizes that state education and higher education agencies are working on initiatives to communicate with parents and students about how high school graduates should gain and maintain the reading, writing, and mathematics skills they need to start immediately in college-level work. However, the legislature finds that insufficient progress has been made in reducing the proportion of recent high school graduates who must enroll in remedial or precollege classes at Washington's public colleges and universities. More than seventeen million dollars in state and tuition resources is being spent each year to provide these students with skills they should have gained before graduating from high school. It is the intent of the legislature that state education and higher education agencies place a higher priority on their work to address the issue of remediation and take concrete steps to make measurable improvements.

    NEW SECTION. Sec. 2. (1) Within current budgets, the higher education coordinating board, the office of the superintendent of public instruction, and the state board for community and technical colleges shall convene a work group that includes representatives of the two and four-year institutions of higher education and school districts to address remediation issues. The work group shall:

    (a) Discuss standards and expectations for the knowledge and skills high school graduates need for college-level work and strategies for communicating those standards to all Washington high schools;

    (b) Identify the causes of current gaps in knowledge and skills of recent high school graduates;

    (c) Identify innovative strategies currently used by school districts and other initiatives or programs designed to provide graduates with the knowledge and skills for college-level work; and

    (d) Develop and initiate actions to address the gaps in knowledge and skills so that the need for remediation of recent high school graduates in public higher education institutions is significantly reduced.

    (2) The state education and higher education agencies shall jointly submit a report to the education and higher education committees of the legislature by December 15, 2004. The report shall summarize the findings of the work group and describe actions taken by the agencies, higher education institutions, and school districts to enhance the knowledge and skills of high school graduates. The report shall also recommend additional strategies, timelines, and measurable benchmarks for reducing remediation of recent high school graduates over the next three years."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Carlson moved that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 5139.

    Senators Carlson and Kohl-Welles spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Carlson that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 5139.

    The motion by Senator Carlson carried and the Senate concurred in the House amendment(s) to Substitute Senate Bill No. 5139.

    The President declared the question before the Senate to be the final passage of Substitute Senate Bill No. 5139, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Substitute Senate Bill No. 5139, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 48; Nays, 0; Absent, 0; Excused, 1.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Hale, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 48.

     Excused: Senator Hargrove - 1.

     SUBSTITUTE SENATE BILL NO. 5139, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 3, 2004

MR. PRESIDENT:

    The House has passed ENGROSSED SUBSTITUTE SENATE BILL NO. 5665, with the following amendments{s}.

    On page 1, line 11, after "involving" strike "the exercise ((of)) or failure to exercise judgment and discretion" and insert "((the exercise of judgment and discretion)) any discretionary decision or failure to make a discretionary decision"

    On page 1, line 13, after "facilities," insert "potable water facilities,"

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Swecker moved that the Senate concur in the House amendment(s) to Engrossed Substitute Senate Bill No. 5665.

    Senators Swecker and Rasmussen spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Swecker that the Senate concur in the House amendment(s) to Engrossed Substitute Senate Bill No. 5665.

    The motion by Senator Swecker carried and the Senate concurred in the House amendment(s) to Engrossed Substitute Senate Bill No. 5665.

    The President declared the question before the Senate to be the final passage of Engrossed Substitute Senate Bill No. 5665, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Engrossed Substitute Senate Bill No. 5665, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 48; Nays, 0; Absent, 0; Excused, 1.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Hale, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 48.

     Excused: Senator Hargrove - 1.

     ENGROSSED SUBSTITUTE SENATE BILL NO. 5665, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 2, 2004

MR. PRESIDENT:

    The House has passed SUBSTITUTE SENATE BILL NO. 6160, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "NEW SECTION. Sec. 1. The legislature finds that quality assurance efforts will promote compliance with regulations by providers and achieve the goal of providing high quality of care to citizens residing in licensed boarding homes, and may reduce property and liability insurance premium costs for such facilities.

    NEW SECTION. Sec. 2. A new section is added to chapter 18.20 RCW to read as follows:

    (1) To ensure the proper delivery of services and the maintenance and improvement in quality of care through self-review, any boarding home licensed under this chapter may maintain a quality assurance committee that, at a minimum, includes:

    (a) A licensed registered nurse under chapter 18.79 RCW;

    (b) The administrator; and

    (c) Three other members from the staff of the boarding home.

    (2) When established, the quality assurance committee shall meet at least quarterly to identify issues that may adversely affect quality of care and services to residents and to develop and implement plans of action to correct identified quality concerns or deficiencies in the quality of care provided to residents.

    (3) To promote quality of care through self-review without the fear of reprisal, and to enhance the objectivity of the review process, the department shall not require, and the long-term care ombudsman program shall not request, disclosure of any quality assurance committee records or reports, unless the disclosure is related to the committee's compliance with this section, if:

    (a) The records or reports are not maintained pursuant to statutory or regulatory mandate; and

    (b) The records or reports are created for and collected and maintained by the committee.

    (4) If the boarding home refuses to release records or reports that would otherwise be protected under this section, the department may then request only that information that is necessary to determine whether the boarding home has a quality assurance committee and to determine that it is operating in compliance with this section. However, if the boarding home offers the department documents generated by, or for, the quality assurance committee as evidence of compliance with boarding home requirements, the documents are not protected as quality assurance committee documents when in the possession of the department.

    (5) Good faith attempts by the committee to identify and correct quality deficiencies shall not be used as a basis for sanctions.

    (6) Any records that are created for and collected and maintained by the quality assurance committee shall not be discoverable or admitted into evidence in a civil action brought against a boarding home.

    (7) Notwithstanding any records created for the quality assurance committee, the facility shall fully set forth in the resident's records, available to the resident, the department, and others as permitted by law, the facts concerning any incident of injury or loss to the resident, the steps taken by the facility to address the resident's needs, and the resident outcome.

    Sec. 3. RCW 18.20.110 and 2003 c 280 s 1 are each amended to read as follows:

    The department shall make or cause to be made, at least every eighteen months with an annual average of fifteen months, an inspection and investigation of all boarding homes. However, the department may delay an inspection to twenty-four months if the boarding home has had three consecutive inspections with no written notice of violations and has received no written notice of violations resulting from complaint investigation during that same time period. The department may at anytime make an unannounced inspection of a licensed home to assure that the licensee is in compliance with this chapter and the rules adopted under this chapter. Every inspection shall focus primarily on actual or potential resident outcomes, and may include an inspection of every part of the premises and an examination of all records (((other than financial records))), methods of administration, the general and special dietary, and the stores and methods of supply; however, the department shall not have access to financial records or to other records or reports described in section 2 of this act. Financial records of the boarding home may be examined when the department has reasonable cause to believe that a financial obligation related to resident care or services will not be met, such as a complaint that staff wages or utility costs have not been paid, or when necessary for the department to investigate alleged financial exploitation of a resident. Following such an inspection or inspections, written notice of any violation of this law or the rules adopted hereunder shall be given to the applicant or licensee and the department. The department may prescribe by rule that any licensee or applicant desiring to make specified types of alterations or additions to its facilities or to construct new facilities shall, before commencing such alteration, addition, or new construction, submit plans and specifications therefor to the agencies responsible for plan reviews for preliminary inspection and approval or recommendations with respect to compliance with the rules and standards herein authorized.

    NEW SECTION. Sec. 4. A new section is added to chapter 18.20 RCW to read as follows:

    If during an inspection, reinspection, or complaint investigation by the department, a boarding home corrects a violation or deficiency that the department discovers, the department shall record and consider such violation or deficiency for purposes of the facility's compliance history, however the licensor or complaint investigator shall not include in the facility report the violation or deficiency if the violation or deficiency:

    (1) Is corrected to the satisfaction of the department prior to the exit conference;

    (2) Is not recurring; and

    (3) Did not pose a significant risk of harm or actual harm to a resident.

    For the purposes of this section, "recurring" means that the violation or deficiency was found under the same regulation or statute in one of the two most recent preceding inspections, reinspections, or complaint investigations.

    NEW SECTION. Sec. 5. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately."

and the same are herewith transmitted.

RICHARD NAFZIGER, Chief Clerk

MOTION

    Senator Parlette moved that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6160.

    Senators Parlette and Thibaudeau spoke in favor of the motion.

    The President declared the question before the Senate to be the motion by Senator Parlette that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6160.

    The motion by Senator Parlette carried and the Senate concurred in the House amendment(s) to Substitute Senate Bill No. 6160.

    The President declared the question before the Senate to be the final passage of Substitute Senate Bill No. 6160, as amended by the House.

ROLL CALL

    The Secretary called the roll on the final passage of Substitute Senate Bill No. 6160, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 48; Nays, 0; Absent, 0; Excused, 1.

     Voting yea: Senators Benton, Berkey, Brandland, Brown, Carlson, Deccio, Doumit, Eide, Esser, Fairley, Finkbeiner, Franklin, Fraser, Hale, Haugen, Hewitt, Honeyford, Horn, Jacobsen, Johnson, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McCaslin, Morton, Mulliken, Murray, Oke, Parlette, Pflug, Poulsen, Prentice, Rasmussen, Regala, Roach, Schmidt, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, Winsley and Zarelli - 48.

     Excused: Senator Hargrove - 1.

     SUBSTITUTE SENATE BILL NO. 6160, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MESSAGE FROM THE HOUSE

March 5, 2004

MR. PRESIDENT:

    The House has passed SECOND ENGROSSED SUBSTITUTE SENATE BILL NO. 5536, with the following amendments{s}.

    Strike everything after the enacting clause and insert the following:

    "NEW SECTION. Sec. 1. A new section is added to chapter 64.34 RCW to read as follows:

    (1) The legislature finds, declares, and determines that:

    (a) Washington's cities and counties under the growth management act are required to encourage urban growth in urban growth areas at densities that accommodate twenty-year growth projections;

    (b) The growth management act's planning goals include encouraging the availability of affordable housing for all residents of the state and promoting a variety of housing types;

    (c) Quality condominium construction needs to be encouraged to achieve growth management act mandated urban densities and to ensure that residents of the state, particularly in urban growth areas, have a broad range of ownership choices.

    (2) It is the intent of the legislature that limited changes be made to the condominium act to ensure that a broad range of affordable homeownership opportunities continue to be available to the residents of the state, and to assist cities' and counties' efforts to achieve the density mandates of the growth management act.

    Sec. 2. RCW 64.34.100 and 1989 c 43 s 1-113 are each amended to read as follows:

    (1) The remedies provided by this chapter shall be liberally administered to the end that the aggrieved party is put in as good a position as if the other party had fully performed. However, consequential, special, or punitive damages may not be awarded except as specifically provided in this chapter or by other rule of law.

    (2) Except as otherwise provided in chapter 64.-- RCW (sections 101 through 2002 of this act) or in this subsection, any right or obligation declared by this chapter is enforceable by judicial proceeding or, if provided for in the declaration or by other agreement between the parties, by arbitration.

    (3) If arbitration is provided for in the declaration with respect to claims arising under RCW 64.34.443, 64.34.445, or 64.34.450, such provision shall be binding on the association and all unit owners and may not be amended without the consent of the declarant. In any arbitration of claims arising under RCW 64.34.443, 64.34.445, or 64.34.450, the arbitrator may award reasonable attorneys' fees and costs, and arbitration fees and costs of arbitration, to the substantially prevailing party. Arbitration for claims arising under RCW 64.34.443, 64.34.445, or 64.34.450 shall be in accordance with chapter 7.06 RCW, and the mandatory arbitration rules adopted by the supreme court, to the extent consistent with this section, and except as follows:

    (a) Chapter 7.06 RCW shall apply regardless of whether a county has authorized mandatory arbitration under RCW 7.06.010. No suit need be commenced in order to commence the arbitration.

    (b) The monetary limitations and limitations on type of relief in RCW 7.06.020 shall not apply.

    (c) Notwithstanding RCW 7.06.040, the compensation of the arbitrator shall be at the normal rate for such arbitrator in similar matters.

    (d) All filings under RCW 7.06.050 shall be on the parties, not with the clerk of the court.

    (e) Unless otherwise agreed by the parties, the arbitration hearing shall be conducted in the county in which the condominium is located.

    (f) For purposes of RCW 64.34.452, the commencement of an arbitration proceeding under this section shall be deemed to be the equivalent of the commencement of a judicial proceeding.

    Sec. 3. RCW 64.34.324 and 1992 c 220 s 16 are each amended to read as follows:

    (1) Unless provided for in the declaration, the bylaws of the association shall provide for:

    (a) The number, qualifications, powers and duties, terms of office, and manner of electing and removing the board of directors and officers and filling vacancies;

    (b) Election by the board of directors of such officers of the association as the bylaws specify;

    (c) Which, if any, of its powers the board of directors or officers may delegate to other persons or to a managing agent;

    (d) Which of its officers may prepare, execute, certify, and record amendments to the declaration on behalf of the association; ((and))

    (e) The method of amending the bylaws; and

    (f) A statement of the standard of care for officers and members of the board of directors imposed by RCW 64.34.308(1).

    (2) Subject to the provisions of the declaration, the bylaws may provide for any other matters the association deems necessary and appropriate.

    (3) In determining the qualifications of any officer or director of the association, notwithstanding the provision of RCW 64.34.020(32) the term "unit owner" in such context shall, unless the declaration or bylaws otherwise provide, be deemed to include any director, officer, partner in, or trustee of any person, who is, either alone or in conjunction with another person or persons, a unit owner. Any officer or director of the association who would not be eligible to serve as such if he or she were not a director, officer, partner in, or trustee of such a person shall be disqualified from continuing in office if he or she ceases to have any such affiliation with that person, or if that person would have been disqualified from continuing in such office as a natural person.

    Sec. 4. RCW 64.34.425 and 1992 c 220 s 23 are each amended to read as follows:

    (1) Except in the case of a sale where delivery of a public offering statement is required, or unless exempt under RCW 64.34.400(2), a unit owner shall furnish to a purchaser before execution of any contract for sale of a unit, or otherwise before conveyance, a resale certificate, signed by an officer or authorized agent of the association and based on the books and records of the association and the actual knowledge of the person signing the certificate, containing:

    (a) A statement disclosing any right of first refusal or other restraint on the free alienability of the unit contained in the declaration;

    (b) A statement setting forth the amount of the monthly common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling unit owner and a statement of any special assessments that have been levied against the unit which have not been paid even though not yet due;

    (c) A statement, which shall be current to within forty-five days, of any common expenses or special assessments against any unit in the condominium that are past due over thirty days;

    (d) A statement, which shall be current to within forty-five days, of any obligation of the association which is past due over thirty days;

    (e) A statement of any other fees payable by unit owners;

    (f) A statement of any anticipated repair or replacement cost in excess of five percent of the annual budget of the association that has been approved by the board of directors;

    (g) A statement of the amount of any reserves for repair or replacement and of any portions of those reserves currently designated by the association for any specified projects;

    (h) The annual financial statement of the association, including the audit report if it has been prepared, for the year immediately preceding the current year.

    (i) A balance sheet and a revenue and expense statement of the association prepared on an accrual basis, which shall be current to within one hundred twenty days;

    (j) The current operating budget of the association;

    (k) A statement of any unsatisfied judgments against the association and the status of any pending suits or legal proceedings in which the association is a plaintiff or defendant;

    (l) A statement describing any insurance coverage provided for the benefit of unit owners;

    (m) A statement as to whether there are any alterations or improvements to the unit or to the limited common elements assigned thereto that violate any provision of the declaration;

    (n) A statement of the number of units, if any, still owned by the declarant, whether the declarant has transferred control of the association to the unit owners, and the date of such transfer;

    (o) A statement as to whether there are any violations of the health or building codes with respect to the unit, the limited common elements assigned thereto, or any other portion of the condominium;

    (p) A statement of the remaining term of any leasehold estate affecting the condominium and the provisions governing any extension or renewal thereof; ((and))

    (q) A copy of the declaration, the bylaws, the rules or regulations of the association, and any other information reasonably requested by mortgagees of prospective purchasers of units. Information requested generally by the federal national mortgage association, the federal home loan bank board, the government national mortgage association, the veterans administration and the department of housing and urban development shall be deemed reasonable, provided such information is reasonably available to the association; and

    (r) A statement, as required by section 301 of this act, as to whether the units or common elements of the condominium are covered by a qualified warranty, and a history of claims under any such warranty.

    (2) The association, within ten days after a request by a unit owner, and subject to payment of any fee imposed pursuant to RCW 64.34.304(1)(l), shall furnish a resale certificate signed by an officer or authorized agent of the association and containing the information necessary to enable the unit owner to comply with this section. For the purposes of this chapter, a reasonable charge for the preparation of a resale certificate may not exceed one hundred fifty dollars. The association may charge a unit owner a nominal fee for updating a resale certificate within six months of the unit owner's request. The unit owner shall also sign the certificate but the unit owner is not liable to the purchaser for any erroneous information provided by the association and included in the certificate unless and to the extent the unit owner had actual knowledge thereof.

    (3) A purchaser is not liable for any unpaid assessment or fee against the unit as of the date of the certificate greater than the amount set forth in the certificate prepared by the association unless and to the extent such purchaser had actual knowledge thereof. A unit owner is not liable to a purchaser for the failure or delay of the association to provide the certificate in a timely manner, but the purchaser's contract is voidable by the purchaser until the certificate has been provided and for five days thereafter or until conveyance, whichever occurs first.

    Sec. 5. RCW 64.34.445 and 1992 c 220 s 26 are each amended to read as follows:

    (1) A declarant and any dealer warrants that a unit will be in at least as good condition at the earlier of the time of the conveyance or delivery of possession as it was at the time of contracting, reasonable wear and tear and damage by casualty or condemnation excepted.

    (2) A declarant and any dealer impliedly warrants that a unit and the common elements in the condominium are suitable for the ordinary uses of real estate of its type and that any improvements made or contracted for by such declarant or dealer will be:

    (a) Free from defective materials; ((and))

    (b) Constructed in accordance with sound engineering and construction standards((, and));

    (c) Constructed in a workmanlike manner; and

    (d) Constructed in compliance with all laws then applicable to such improvements.

    (3) A declarant and any dealer warrants to a purchaser of a unit that may be used for residential use that an existing use, continuation of which is contemplated by the parties, does not violate applicable law at the earlier of the time of conveyance or delivery of possession.

    (4) Warranties imposed by this section may be excluded or modified as specified in RCW 64.34.450.

    (5) For purposes of this section, improvements made or contracted for by an affiliate of a declarant, as defined in RCW 64.34.020(1), are made or contracted for by the declarant.

    (6) Any conveyance of a unit transfers to the purchaser all of the declarant's implied warranties of quality.

    (7) In a judicial proceeding or arbitration for breach of any of the obligations arising under this section, the plaintiff must show that the alleged breach has adversely affected or will adversely affect the performance of that portion of the unit or common elements alleged to be in breach. As used in this subsection, an "adverse effect" must be more than technical and must be significant to a reasonable person. To establish an adverse effect, the person alleging the breach is not required to prove that the breach renders the unit or common element uninhabitable or unfit for its intended purpose.

    (8) Proof of breach of any obligation arising under this section is not proof of damages. Damages awarded for a breach of an obligation arising under this section are the cost of repairs. However, if it is established that the cost of such repairs is clearly disproportionate to the loss in market value caused by the breach, then damages shall be limited to the loss in market value.

    Sec. 6. RCW 64.34.450 and 1989 c 43 s 4-113 are each amended to read as follows:

    (1) ((Except as limited by subsection (2) of this section)) For units intended for nonresidential use, implied warranties of quality:

    (a) May be excluded or modified by written agreement of the parties; and

    (b) Are excluded by written expression of disclaimer, such as "as is," "with all faults," or other language which in common understanding calls the buyer's attention to the exclusion of warranties.

    (2) ((With respect to a purchaser of a unit that may be occupied)) For units intended for residential use, no ((general)) disclaimer of implied warranties of quality is effective, ((but)) except that a declarant ((and any)) or dealer may disclaim liability in ((an instrument)) writing, in type that is bold faced, capitalized, underlined, or otherwise set out from surrounding material so as to be conspicuous, and separately signed by the purchaser, for a specified defect or specified failure to comply with applicable law, if: (a) The declarant or dealer knows or has reason to know that the specific defect or failure ((entered into and became a part of the basis of the bargain)) exists at the time of disclosure; (b) the disclaimer specifically describes the defect or failure; and ©) the disclaimer includes a statement as to the effect of the defect or failure.

    (3) A declarant or dealer may offer an express written warranty of quality only if the express written warranty does not reduce protections provided to the purchaser by the implied warranty set forth in RCW 64.34.445.

    Sec. 7. RCW 64.34.452 and 2002 c 323 s 11 are each amended to read as follows:

    (1) A judicial proceeding or arbitration for breach of any obligations arising under RCW 64.34.443 ((and)), 64.34.445, and 64.34.450 must be commenced within four years after the cause of action accrues: PROVIDED, That the period for commencing ((an action)) a judicial proceeding or arbitration for a breach accruing pursuant to subsection (2)(b) of this section shall not expire prior to one year after termination of the period of declarant control, if any, under RCW 64.34.308(4). Such periods may not be reduced by either oral or written agreement, or through the use of contractual claims or notice procedures that require the filing or service of any claim or notice prior to the expiration of the period specified in this section. An arbitration is deemed commenced on delivery of a demand for arbitration. Any demand for arbitration shall be delivered by certified mail, return receipt requested, and by ordinary first class mail, or, in the case of persons not resident in the United States of America, by such other comparable form of mailed notice as is reasonably available. The party initiating the arbitration shall address such a notice to the address last known to the initiating party in the exercise of reasonable diligence, and also, in the case of any entity that is required to have a registered agent in the state of Washington, to the address of such a registered agent. Demand for arbitration shall be deemed delivered three days after the postmark date. "Judicial proceeding" as used in this section does not refer to a trial de novo appeal of an arbitration decision and award.

    (2) Subject to subsection (3) of this section, a cause of action or breach of warranty of quality, regardless of the purchaser's lack of knowledge of the breach, accrues:

    (a) As to a unit, the date the purchaser to whom the warranty is first made enters into possession if a possessory interest was conveyed or the date of acceptance of the instrument of conveyance if a nonpossessory interest was conveyed; and

    (b) As to each common element, at the latest of (i) the date the first unit in the condominium was conveyed to a bona fide purchaser, (ii) the date the common element was completed, or (iii) the date the common element was added to the condominium.

    (3) If a warranty of quality explicitly extends to future performance or duration of any improvement or component of the condominium, the cause of action accrues at the time the breach is discovered or at the end of the period for which the warranty explicitly extends, whichever is earlier.

    (4) If a written notice of claim is served under RCW 64.50.020 within the time prescribed for the filing of an action under this chapter, the statutes of limitation in this chapter and any applicable statutes of repose for construction-related claims are tolled until sixty days after the period of time during which the filing of an action is barred under RCW 64.50.020.

    (5) Nothing in this section affects the time for filing a claim under chapter 64.-- RCW (sections 101 through 2002 of this act).

    NEW SECTION. Sec. 8. (1) A committee is established to study the required use of independent third-party inspections of residential condominiums as a way to reduce the problem of water penetration in residential condominiums.

    (2) The committee consists of the following members who shall be persons with experience and expertise in condominium law and condominium construction:

    (a) A member, who shall be the chair of the committee, to be appointed by the governor;

    (b) Two members to be appointed by the majority leader of the senate; and

    (c) Two members to be appointed by the speaker of the house of representatives.

    (3) The committee shall:

    (a) Examine the problem of water penetration of condominiums and the efficacy of requiring independent third-party inspections of condominiums, including plan inspection and inspection during construction, as a way to reduce the problem of water penetration;

    (b) Deliver to the judiciary committees of the senate and house of representatives, not later than December 31, 2004, a report of the findings and conclusions of the committee, and any proposed legislation implementing third-party water penetration inspections.

    Sec. 9. RCW 64.34.020 and 1992 c 220 s 2 are each amended to read as follows:

    In the declaration and bylaws, unless specifically provided otherwise or the context requires otherwise, and in this chapter:

    (1) "Affiliate ((of a declarant))" means any person who controls, is controlled by, or is under common control with ((a declarant)) the referenced person. A person "controls" ((a declarant)) another person if the person: (a) Is a general partner, officer, director, or employer of the ((declarant)) referenced person; (b) directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than twenty percent of the voting interest in the ((declarant)) referenced person; (c) controls in any manner the election of a majority of the directors of the ((declarant)) referenced person; or (d) has contributed more than twenty percent of the capital of the ((declarant)) referenced person. A person "is controlled by" ((a declarant)) another person if the ((declarant)) other person: (i) Is a general partner, officer, director, or employer of the person; (ii) directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than twenty percent of the voting interest in the person; (iii) controls in any manner the election of a majority of the directors of the person; or (iv) has contributed more than twenty percent of the capital of the person. Control does not exist if the powers described in this subsection are held solely as security for an obligation and are not exercised.

    (2) "Allocated interests" means the undivided interest in the common elements, the common expense liability, and votes in the association allocated to each unit.

    (3) "Assessment" means all sums chargeable by the association against a unit including, without limitation: (a) Regular and special assessments for common expenses, charges, and fines imposed by the association; (b) interest and late charges on any delinquent account; and (c) costs of collection, including reasonable attorneys' fees, incurred by the association in connection with the collection of a delinquent owner's account.

    (4) "Association" or "unit owners' association" means the unit owners' association organized under RCW 64.34.300.

    (5) "Board of directors" means the body, regardless of name, with primary authority to manage the affairs of the association.

    (6) "Common elements" means all portions of a condominium other than the units.

    (7) "Common expenses" means expenditures made by or financial liabilities of the association, together with any allocations to reserves.

    (8) "Common expense liability" means the liability for common expenses allocated to each unit pursuant to RCW 64.34.224.

    (9) "Condominium" means real property, portions of which are designated for separate ownership and the remainder of which is designated for common ownership solely by the owners of those portions. Real property is not a condominium unless the undivided interests in the common elements are vested in the unit owners, and unless a declaration and a survey map and plans have been recorded pursuant to this chapter.

    (10) "Conversion condominium" means a condominium (a) that at any time before creation of the condominium was lawfully occupied wholly or partially by a tenant or subtenant for residential purposes pursuant to a rental agreement, oral or written, express or implied, for which the tenant or subtenant had not received the notice described in (b) of this subsection; or (b) that, at any time within twelve months before the conveyance of, or acceptance of an agreement to convey, any unit therein other than to a declarant or any affiliate of a declarant, was lawfully occupied wholly or partially by a residential tenant of a declarant or an affiliate of a declarant and such tenant was not notified in writing, prior to lawfully occupying a unit or executing a rental agreement, whichever event first occurs, that the unit was part of a condominium and subject to sale. "Conversion condominium" shall not include a condominium in which, before July 1, 1990, any unit therein had been conveyed or been made subject to an agreement to convey to any transferee other than a declarant or an affiliate of a declarant.

    (11) "Conveyance" means any transfer of the ownership of a unit, including a transfer by deed or by real estate contract and, with respect to a unit in a leasehold condominium, a transfer by lease or assignment thereof, but shall not include a transfer solely for security.

    (12) "Dealer" means a person who, together with such person's affiliates, owns or has a right to acquire either six or more units in a condominium or fifty percent or more of the units in a condominium containing more than two units.

    (13) "Declarant" means ((any person or group of persons acting in concert who)):

    (a) Any person who executes as declarant a declaration as defined in subsection (15) of this section((,)); or

    (b) ((reserves or succeeds to any special declarant right under)) Any person who reserves any special declarant right in the declaration; or

    (c) Any person who exercises special declarant rights or to whom special declarant rights are transferred; or

    (d) Any person who is the owner of a fee interest in the real property which is subjected to the declaration at the time of the recording of an instrument pursuant to RCW 64.34.316 and who directly or through one or more affiliates is materially involved in the construction, marketing, or sale of units in the condominium created by the recording of the instrument.

    (14) "Declarant control" means the right of the declarant or persons designated by the declarant to appoint and remove officers and members of the board of directors, or to veto or approve a proposed action of the board or association, pursuant to RCW 64.34.308 (4) or (5).

    (15) "Declaration" means the document, however denominated, that creates a condominium by setting forth the information required by RCW 64.34.216 and any amendments to that document.

    (16) "Development rights" means any right or combination of rights reserved by a declarant in the declaration to: (a) Add real property or improvements to a condominium; (b) create units, common elements, or limited common elements within real property included or added to a condominium; (c) subdivide units or convert units into common elements; (d) withdraw real property from a condominium; or (e) reallocate limited common elements with respect to units that have not been conveyed by the declarant.

    (17) "Dispose" or "disposition" means a voluntary transfer or conveyance to a purchaser or lessee of any legal or equitable interest in a unit, but does not include the transfer or release of a security interest.

    (18) "Eligible mortgagee" means the holder of a mortgage on a unit that has filed with the secretary of the association a written request that it be given copies of notices of any action by the association that requires the consent of mortgagees.

    (19) "Foreclosure" means a forfeiture or judicial or nonjudicial foreclosure of a mortgage or a deed in lieu thereof.

    (20) "Identifying number" means the designation of each unit in a condominium.

    (21) "Leasehold condominium" means a condominium in which all or a portion of the real property is subject to a lease, the expiration or termination of which will terminate the condominium or reduce its size.

    (22) "Limited common element" means a portion of the common elements allocated by the declaration or by operation of RCW 64.34.204 (2) or (4) for the exclusive use of one or more but fewer than all of the units.

    (23) "Master association" means an organization described in RCW 64.34.276, whether or not it is also an association described in RCW 64.34.300.

    (24) "Mortgage" means a mortgage, deed of trust or real estate contract.

    (25) "Person" means a natural person, corporation, partnership, limited partnership, trust, governmental subdivision or agency, or other legal entity.

    (26) "Purchaser" means any person, other than a declarant or a dealer, who by means of a disposition acquires a legal or equitable interest in a unit other than (a) a leasehold interest, including renewal options, of less than twenty years at the time of creation of the unit, or (b) as security for an obligation.

    (27) "Real property" means any fee, leasehold or other estate or interest in, over, or under land, including structures, fixtures, and other improvements thereon and easements, rights and interests appurtenant thereto which by custom, usage, or law pass with a conveyance of land although not described in the contract of sale or instrument of conveyance. "Real property" includes parcels, with or without upper or lower boundaries, and spaces that may be filled with air or water.

    (28) "Residential purposes" means use for dwelling or recreational purposes, or both.

    (29) "Special declarant rights" means rights reserved for the benefit of a declarant to: (a) Complete improvements indicated on survey maps and plans filed with the declaration under RCW 64.34.232; (b) exercise any development right under RCW 64.34.236; ©) maintain sales offices, management offices, signs advertising the condominium, and models under RCW 64.34.256; (d) use easements through the common elements for the purpose of making improvements within the condominium or within real property which may be added to the condominium under RCW 64.34.260; (e) make the condominium part of a larger condominium or a development under RCW 64.34.280; (f) make the condominium subject to a master association under RCW 64.34.276; or (g) appoint or remove any officer of the association or any master association or any member of the board of directors, or to veto or approve a proposed action of the board or association, during any period of declarant control under RCW 64.34.308(4).

    (30) "Timeshare" shall have the meaning specified in the timeshare act, RCW 64.36.010(11).

    (31) "Unit" means a physical portion of the condominium designated for separate ownership, the boundaries of which are described pursuant to RCW 64.34.216(1)(d). "Separate ownership" includes leasing a unit in a leasehold condominium under a lease that expires contemporaneously with any lease, the expiration or termination of which will remove the unit from the condominium.

    (32) "Unit owner" means a declarant or other person who owns a unit or leases a unit in a leasehold condominium under a lease that expires simultaneously with any lease, the expiration or termination of which will remove the unit from the condominium, but does not include a person who has an interest in a unit solely as security for an obligation. "Unit owner" means the vendee, not the vendor, of a unit under a real estate contract.

    Sec. 10. RCW 64.34.312 and 1989 c 43 s 3-104 are each amended to read as follows:

    (1) Within sixty days after the termination of the period of declarant control provided in RCW 64.34.308(4) or, in the absence of such period, within sixty days after the first conveyance of a unit in the condominium, the declarant shall deliver to the association all property of the unit owners and of the association held or controlled by the declarant including, but not limited to:

    (a) The original or a photocopy of the recorded declaration and each amendment to the declaration;

    (b) The certificate of incorporation and a copy or duplicate original of the articles of incorporation of the association as filed with the secretary of state;

    (c) The bylaws of the association;

    (d) The minute books, including all minutes, and other books and records of the association;

    (e) Any rules and regulations that have been adopted;

    (f) Resignations of officers and members of the board who are required to resign because the declarant is required to relinquish control of the association;

    (g) The financial records, including canceled checks, bank statements, and financial statements of the association, and source documents from the time of incorporation of the association through the date of transfer of control to the unit owners;

    (h) Association funds or the control of the funds of the association;

    (i) All tangible personal property of the association, represented by the declarant to be the property of the association or ostensibly the property of the association, and an inventory of the property;

    (j) Except for alterations to a unit done by a unit owner other than the declarant, a copy of the declarant's plans and specifications utilized in the construction or remodeling of the condominium, with a certificate of the declarant or a licensed architect or engineer that the plans and specifications represent, to the best of their knowledge and belief, the actual plans and specifications utilized by the declarant in the construction or remodeling of the condominium;

    (k) Insurance policies or copies thereof for the condominium and association;

    (l) Copies of any certificates of occupancy that may have been issued for the condominium;

    (m) Any other permits issued by governmental bodies applicable to the condominium in force or issued within one year before the date of transfer of control to the unit owners;

    (n) All written warranties that are still in effect for the common elements, or any other areas or facilities which the association has the responsibility to maintain and repair, from the contractor, subcontractors, suppliers, and manufacturers and all owners' manuals or instructions furnished to the declarant with respect to installed equipment or building systems;

    (o) A roster of unit owners and eligible mortgagees and their addresses and telephone numbers, if known, as shown on the declarant's records and the date of closing of the first sale of each unit sold by the declarant;

    (p) Any leases of the common elements or areas and other leases to which the association is a party;

    (q) Any employment contracts or service contracts in which the association is one of the contracting parties or service contracts in which the association or the unit owners have an obligation or a responsibility, directly or indirectly, to pay some or all of the fee or charge of the person performing the service; ((and))

    (r) A copy of any qualified warranty issued to the association as provided for in section 1001 of this act; and

    (s) All other contracts to which the association is a party.

    (2) Upon the transfer of control to the unit owners, the records of the association shall be audited as of the date of transfer by an independent certified public accountant in accordance with generally accepted auditing standards unless the unit owners, other than the declarant, by two-thirds vote elect to waive the audit. The cost of the audit shall be a common expense unless otherwise provided in the declaration. The accountant performing the audit shall examine supporting documents and records, including the cash disbursements and related paid invoices, to determine if expenditures were for association purposes and the billings, cash receipts, and related records to determine if the declarant was charged for and paid the proper amount of assessments.

    Sec. 11. RCW 64.34.410 and 2002 c 323 s 10 are each amended to read as follows:

    (1) A public offering statement shall contain the following information:

    (a) The name and address of the condominium;

    (b) The name and address of the declarant;

    (c) The name and address of the management company, if any;

    (d) The relationship of the management company to the declarant, if any;

    (e) A list of up to the five most recent condominium projects completed by the declarant or an affiliate of the declarant within the past five years, including the names of the condominiums, their addresses, and the number of existing units in each. For the purpose of this section, a condominium is "completed" when any one unit therein has been rented or sold;

    (f) The nature of the interest being offered for sale;

    (g) A brief description of the permitted uses and use restrictions pertaining to the units and the common elements;

    (h) A brief description of the restrictions, if any, on the renting or leasing of units by the declarant or other unit owners, together with the rights, if any, of the declarant to rent or lease at least a majority of units;

    (i) The number of existing units in the condominium and the maximum number of units that may be added to the condominium;

    (j) A list of the principal common amenities in the condominium which materially affect the value of the condominium and those that will or may be added to the condominium;

    (k) A list of the limited common elements assigned to the units being offered for sale;

    (l) The identification of any real property not in the condominium, the owner of which has access to any of the common elements, and a description of the terms of such access;

    (m) The identification of any real property not in the condominium to which unit owners have access and a description of the terms of such access;

    (n) The status of construction of the units and common elements, including estimated dates of completion if not completed;

    (o) The estimated current common expense liability for the units being offered;

    (p) An estimate of any payment with respect to the common expense liability for the units being offered which will be due at closing;

    (q) The estimated current amount and purpose of any fees not included in the common expenses and charged by the declarant or the association for the use of any of the common elements;

    (r) Any assessments which have been agreed to or are known to the declarant and which, if not paid, may constitute a lien against any units or common elements in favor of any governmental agency;

    (s) The identification of any parts of the condominium, other than the units, which any individual owner will have the responsibility for maintaining;

    (t) If the condominium involves a conversion condominium, the information required by RCW 64.34.415;

    (u) Whether timesharing is restricted or prohibited, and if restricted, a general description of such restrictions;

    (v) A list of all development rights reserved to the declarant and all special declarant rights reserved to the declarant, together with the dates such rights must terminate, and a copy of or reference by recording number to any recorded transfer of a special declarant right;

    (w) A description of any material differences in terms of furnishings, fixtures, finishes, and equipment between any model unit available to the purchaser at the time the agreement for sale is executed and the unit being offered;

    (x) Any liens on real property to be conveyed to the association required to be disclosed pursuant to RCW 64.34.435(2)(b);

    (y) A list of any physical hazards known to the declarant which particularly affect the condominium or the immediate vicinity in which the condominium is located and which are not readily ascertainable by the purchaser;

    (z) A brief description of any construction warranties to be provided to the purchaser;

    (aa) Any building code violation citations received by the declarant in connection with the condominium which have not been corrected;

    (bb) A statement of any unsatisfied judgments or pending suits against the association, a statement of the status of any pending suits material to the condominium of which the declarant has actual knowledge, and a statement of any litigation brought by an owners' association, unit owner, or governmental entity in which the declarant or any affiliate of the declarant has been a defendant, arising out of the construction, sale, or administration of any condominium within the previous five years, together with the results thereof, if known;

    (cc) Any rights of first refusal to lease or purchase any unit or any of the common elements;

    (dd) The extent to which the insurance provided by the association covers furnishings, fixtures, and equipment located in the unit;

    (ee) A notice which describes a purchaser's right to cancel the purchase agreement or extend the closing under RCW 64.34.420, including applicable time frames and procedures;

    (ff) Any reports or statements required by RCW 64.34.415 or 64.34.440(6)(a). RCW 64.34.415 shall apply to the public offering statement of a condominium in connection with which a final certificate of occupancy was issued more than sixty calendar months prior to the preparation of the public offering statement whether or not the condominium is a conversion condominium as defined in RCW 64.34.020(10);

    (gg) A list of the documents which the prospective purchaser is entitled to receive from the declarant before the rescission period commences;

    (hh) A notice which states: A purchaser may not rely on any representation or express warranty unless it is contained in the public offering statement or made in writing signed by the declarant or by any person identified in the public offering statement as the declarant's agent;

    (ii) A notice which states: This public offering statement is only a summary of some of the significant aspects of purchasing a unit in this condominium and the condominium documents are complex, contain other important information, and create binding legal obligations. You should consider seeking the assistance of legal counsel;

    (jj) Any other information and cross-references which the declarant believes will be helpful in describing the condominium to the recipients of the public offering statement, all of which may be included or not included at the option of the declarant;

    (kk) A notice that addresses compliance or noncompliance with the housing for older persons act of 1995, P.L. 104-76, as enacted on December 28, 1995; ((and))

    (ll) A notice that is substantially in the form required by RCW 64.50.050; and

    (mm) A statement, as required by section 301 of this act, as to whether the units or common elements of the condominium are covered by a qualified warranty, and a history of claims under any such warranty.

    (2) The public offering statement shall include copies of each of the following documents: The declaration, the survey map and plans, the articles of incorporation of the association, bylaws of the association, rules and regulations, if any, current or proposed budget for the association, and the balance sheet of the association current within ninety days if assessments have been collected for ninety days or more.

    If any of the foregoing documents listed in this subsection are not available because they have not been executed, adopted, or recorded, drafts of such documents shall be provided with the public offering statement, and, before closing the sale of a unit, the purchaser shall be given copies of any material changes between the draft of the proposed documents and the final documents.

    (3) The disclosures required by subsection (1)(g), (k), (s), (u), (v), and (cc) of this section shall also contain a reference to specific sections in the condominium documents which further explain the information disclosed.

    (4) The disclosures required by subsection (1)(ee), (hh), (ii), and (ll) of this section shall be located at the top of the first page of the public offering statement and be typed or printed in ten-point bold face type size.

    (5) A declarant shall promptly amend the public offering statement to reflect any material change in the information required by this section.

    Sec. 12. RCW 64.50.010 and 2002 c 323 s 2 are each amended to read as follows:

    Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

    (1) "Action" means any arbitration, civil lawsuit, or action in contract or tort for damages or indemnity brought against a construction professional to assert a claim, whether by complaint, counterclaim, or cross-claim, for damage or the loss of use of real or personal property caused by a defect in the construction of a residence or in the substantial remodel of a residence. "Action" does not include any civil action in tort alleging personal injury or wrongful death to a person or persons resulting from a construction defect. Commencing an action means commencing an arbitration, lawsuit, or action.

    (2) "Association" means an association, master association, or subassociation as defined and provided for in RCW 64.34.020(4), 64.34.276, 64.34.278, and 64.38.010(1).

    (3) "Claimant" means a homeowner or association who asserts a claim against a construction professional concerning a defect in the construction of a residence or in the substantial remodel of a residence.

    (4) "Construction professional" means an architect, builder, builder vendor, contractor, subcontractor, engineer, or inspector, including, but not limited to, a dealer as defined in RCW 64.34.020(12) and a declarant as defined in RCW 64.34.020(13), performing or furnishing the design, supervision, inspection, construction, or observation of the construction of any improvement to real property, whether operating as a sole proprietor, partnership, corporation, or other business entity.

    (5) "Homeowner" means: (a) Any person, company, firm, partnership, corporation, or association who contracts with a construction professional for the construction, sale, or construction and sale of a residence; and (b) an "association" as defined in this section. "Homeowner" includes, but is not limited to, a subsequent purchaser of a residence from any homeowner.

    (6) "Residence" means a single-family house, duplex, triplex, quadraplex, or a unit in a multiunit residential structure in which title to each individual unit is transferred to the owner under a condominium or cooperative system, and shall include common elements as defined in RCW 64.34.020(6) and common areas as defined in RCW 64.38.010(4).

    (7) "Serve" or "service" means personal service or delivery by certified mail to the last known address of the addressee.

    (8) "Substantial remodel" means a remodel of a residence, for which the total cost exceeds one-half of the assessed value of the residence for property tax purposes at the time the contract for the remodel work was made.

    Sec. 13. RCW 64.50.020 and 2002 c 323 s 3 are each amended to read as follows:

    (1) In every construction defect action brought against a construction professional, the claimant shall, no later than forty-five days before ((filing)) commencing an action, serve written notice of claim on the construction professional. The notice of claim shall state that the claimant asserts a construction defect claim against the construction professional and shall describe the claim in reasonable detail sufficient to determine the general nature of the defect.

    (2) Within twenty-one days after service of the notice of claim, the construction professional shall serve a written response on the claimant by registered mail or personal service. The written response shall:

    (a) Propose to inspect the residence that is the subject of the claim and to complete the inspection within a specified time frame. The proposal shall include the statement that the construction professional shall, based on the inspection, offer to remedy the defect, compromise by payment, or dispute the claim;

    (b) Offer to compromise and settle the claim by monetary payment without inspection. A construction professional's offer under this subsection (2)(b) to compromise and settle a homeowner's claim may include, but is not limited to, an express offer to purchase the claimant's residence that is the subject of the claim, and to pay the claimant's reasonable relocation costs; or

    (c) State that the construction professional disputes the claim and will neither remedy the construction defect nor compromise and settle the claim.

    (3)(a) If the construction professional disputes the claim or does not respond to the claimant's notice of claim within the time stated in subsection (2) of this section, the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.

    (b) If the claimant rejects the inspection proposal or the settlement offer made by the construction professional pursuant to subsection (2) of this section, the claimant shall serve written notice of the claimant's rejection on the construction professional. After service of the rejection, the claimant may bring an action against the construction professional for the construction defect claim described in the notice of claim. If the construction professional has not received from the claimant, within thirty days after the claimant's receipt of the construction professional's response, either an acceptance or rejection of the inspection proposal or settlement offer, then at anytime thereafter the construction professional may terminate the proposal or offer by serving written notice to the claimant, and the claimant may thereafter bring an action against the construction professional for the construction defect claim described in the notice of claim.

    (4)(a) If the claimant elects to allow the construction professional to inspect in accordance with the construction professional's proposal pursuant to subsection (2)(a) of this section, the claimant shall provide the construction professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to inspect the premises and the claimed defect.

    (b) Within fourteen days following completion of the inspection, the construction professional shall serve on the claimant:

    (i) A written offer to remedy the construction defect at no cost to the claimant, including a report of the scope of the inspection, the findings and results of the inspection, a description of the additional construction necessary to remedy the defect described in the claim, and a timetable for the completion of such construction;

    (ii) A written offer to compromise and settle the claim by monetary payment pursuant to subsection (2)(b) of this section; or

    (iii) A written statement that the construction professional will not proceed further to remedy the defect.

    (c) If the construction professional does not proceed further to remedy the construction defect within the agreed timetable, or if the construction professional fails to comply with the provisions of (b) of this subsection, the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.

    (d) If the claimant rejects the offer made by the construction professional pursuant to (b)(i) or (ii) of this subsection to either remedy the construction defect or to compromise and settle the claim by monetary payment, the claimant shall serve written notice of the claimant's rejection on the construction professional. After service of the rejection notice, the claimant may bring an action against the construction professional for the construction defect claim described in the notice of claim. If the construction professional has not received from the claimant, within thirty days after the claimant's receipt of the construction professional's response, either an acceptance or rejection of the offer made pursuant to (b)(i) or (ii) of this subsection, then at anytime thereafter the construction professional may terminate the offer by serving written notice to the claimant.

    (5)(a) Any claimant accepting the offer of a construction professional to remedy the construction defect pursuant to subsection (4)(b)(i) of this section shall do so by serving the construction professional with a written notice of acceptance within a reasonable time period after receipt of the offer, and no later than thirty days after receipt of the offer. The claimant shall provide the construction professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to perform and complete the construction by the timetable stated in the offer.

    (b) The claimant and construction professional may, by written mutual agreement, alter the extent of construction or the timetable for completion of construction stated in the offer, including, but not limited to, repair of additional defects.

    (6) Any action commenced by a claimant prior to compliance with the requirements of this section shall be subject to dismissal without prejudice, and may not be recommenced until the claimant has complied with the requirements of this section.

    (7) Nothing in this section may be construed to prevent a claimant from commencing an action on the construction defect claim described in the notice of claim if the construction professional fails to perform the construction agreed upon, fails to remedy the defect, or fails to perform by the timetable agreed upon pursuant to subsection (2)(a) or (5) of this section.

    (8) Prior to commencing any action alleging a construction defect, or after the dismissal of any action without prejudice pursuant to subsection (6) of this section, the claimant may amend the notice of claim to include construction defects discovered after the service of the original notice of claim, and must otherwise comply with the requirements of this section for the additional claims. The service of an amended notice of claim shall relate back to the original notice of claim for purposes of tolling statutes of limitations and repose. Claims for defects discovered after the commencement or recommencement of an action may be added to such action only after providing notice to the construction professional of the defect and allowing for response under subsection (2) of this section.

    NEW SECTION. Sec. 14. Sections 2, 5, and 6 of this act apply only to condominiums created by declarations recorded on or after July 1, 2004.

    NEW SECTION. Sec. 15. 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. 16. Sections 1 through 15 of this act take effect July 1, 2004.

ARTICLE 1

GENERAL PROVISIONS

    NEW SECTION. Sec. 101. DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

    (1) "Affiliate" has the meaning in RCW 64.34.020.

    (2) "Association" has the meaning in RCW 64.34.020.

    (3) "Building envelope" means the assemblies, components, and materials of a building that are intended to separate and protect the interior space of the building from the adverse effects of exterior climatic conditions.

    (4) "Common element" has the meaning in RCW 64.34.020.

    (5) "Condominium" has the meaning in RCW 64.34.020.

    (6) "Construction professional" has the meaning in RCW 64.50.010.

    (7) "Conversion condominium" has the meaning in RCW 64.34.020.

    (8) "Declarant" has the meaning in RCW 64.34.020.

    (9) "Declarant control" has the meaning in RCW 64.34.020.

    (10) "Defect" means any aspect of a condominium unit or common element which constitutes a breach of the implied warranties set forth in RCW 64.34.445.

    (11) "Limited common element" has the meaning in RCW 64.34.020.

    (12) "Material" means substantive, not simply formal; significant to a reasonable person; not trivial or insignificant. When used with respect to a particular construction defect, "material" does not require that the construction defect render the unit or common element unfit for its intended purpose or uninhabitable.

    (13) "Mediation" means a collaborative process in which two or more parties meet and attempt, with the assistance of a mediator, to resolve issues in dispute between them.

    (14) "Mediation session" means a meeting between two or more parties to a dispute during which they are engaged in mediation.

    (15) "Mediator" means a neutral and impartial facilitator with no decision-making power who assists parties in negotiating a mutually acceptable settlement of issues in dispute between them.

    (16) "Person" has the meaning in RCW 64.34.020.

    (17) "Public offering statement" has the meaning in RCW 64.34.410.

    (18) "Qualified insurer" means an entity that holds a certificate of authority under RCW 48.05.030, or an eligible insurer under chapter 48.15 RCW.

    (19) "Qualified warranty" means an insurance policy issued by a qualified insurer that complies with the requirements of this chapter. A qualified warranty includes coverage for repair of physical damage caused by the defects covered by the qualified warranty, except to the extent of any exclusions and limitations under this chapter.

    (20) "Resale certificate" means the statement to be delivered by the association under RCW 64.34.425.

    (21) "Transition date" means the date on which the declarant is required to deliver to the association the property of the association under RCW 64.34.312.

    (22) "Unit" has the meaning in RCW 64.34.020.

    (23) "Unit owner" has the meaning in RCW 64.34.020.

ARTICLE 2

EXCLUSIVE REMEDY AND PROCEDURE

IN CASES WHERE A QUALIFIED WARRANTY IS PROVIDED

    NEW SECTION. Sec. 201. No declarant, affiliate of a declarant, or construction professional is liable to a unit owner or an association for damages awarded for repair of construction defects and resulting physical damage, and chapter 64.50 RCW shall not apply if: (1) Every unit is the subject of a qualified warranty; and (2) the association has been issued a qualified warranty with respect to the common elements. If a construction professional agrees on terms satisfactory to the qualified insurer to partially or fully indemnify the qualified insurer with respect to a defect caused by the construction professional, the liability of the construction professional for the defect and resulting physical damage caused by him or her shall not exceed damages recoverable under the terms of the qualified warranty for the defect. Any indemnity claim by the qualified insurer shall be by separate action or arbitration, and no unit owner or association shall be joined therein. A qualified warranty may also be provided in the case of improvements made or contracted for by a declarant as part of a conversion condominium, and in such case, declarant's liability with respect to such improvements shall be limited as set forth in this section.

ARTICLE 3

DISCLOSURE

    NEW SECTION. Sec. 301. (1) Every public offering statement and resale certificate shall affirmatively state whether or not the unit and/or the common elements are covered by a qualified warranty, and shall provide to the best knowledge of the person preparing the public offering statement or resale certificate a history of claims under the warranty.

    (2) The history of claims must include, for each claim, not less than the following information for the unit and/or the common elements, as applicable, to the best knowledge of the person providing the information:

    (a) The type of claim that was made;

    (b) The resolution of the claim;

    (c) The type of repair performed;

    (d) The date of the repair;

    (e) The cost of the repair; and

    (f) The name of the person or entity who performed the repair.

ARTICLE 4

MINIMUM COVERAGE STANDARDS FOR QUALIFIED WARRANTIES

    NEW SECTION. Sec. 401. TWO-YEAR MATERIALS AND LABOR WARRANTY. (1) The minimum coverage for the two-year materials and labor warranty is:

    (a) In the first twelve months, for other than the common elements, (i) coverage for any defect in materials and labor; and (ii) subject to subsection (2) of this section, coverage for a violation of the building code;

    (b) In the first fifteen months, for the common elements, (i) coverage for any defect in materials and labor; and (ii) subject to subsection (2) of this section, coverage for a violation of the building code;

    (c) In the first twenty-four months, (i) coverage for any defect in materials and labor supplied for the electrical, plumbing, heating, ventilation, and air conditioning delivery and distribution systems; (ii) coverage for any defect in materials and labor supplied for the exterior cladding, caulking, windows, and doors that may lead to detachment or material damage to the unit or common elements; (iii) coverage for any defect in materials and labor which renders the unit unfit to live in; and (iv) subject to subsection (2) of this section, coverage for a violation of the building code.

    (2) Noncompliance with the building code is considered a defect covered by a qualified warranty if the noncompliance:

    (a) Constitutes an unreasonable health or safety risk; or

    (b) Has resulted in, or is likely to result in, material damage to the unit or common elements.

    NEW SECTION. Sec. 402. FIVE-YEAR BUILDING ENVELOPE WARRANTY. The minimum coverage for the building envelope warranty is five years for defects in the building envelope of a condominium, including a defect which permits unintended water penetration so that it causes, or is likely to cause, material damage to the unit or common elements.

    NEW SECTION. Sec. 403. TEN-YEAR STRUCTURAL DEFECTS WARRANTY. The minimum coverage for the structural defects warranty is ten years for:

    (1) Any defect in materials and labor that results in the failure of a load-bearing part of the condominium; and

    (2) Any defect which causes structural damage that materially and adversely affects the use of the condominium for residential occupancy.

    NEW SECTION. Sec. 404. BEGINNING DATES FOR WARRANTY COVERAGE. (1) For the unit, the beginning date of the qualified warranty coverage is the earlier of:

    (a) Actual occupancy of the unit; or

    (b) Transfer of legal title to the unit.

    (2) For the common elements, the beginning date of a qualified warranty is the date a temporary or final certificate of occupancy is issued for the common elements in each separate multiunit building, comprised by the condominium.

    NEW SECTION. Sec. 405. BEGINNING DATES FOR SPECIAL CASES; DECLARANT CONTROL. (1) If an unsold unit is occupied as a rental unit, the qualified warranty beginning date for such unit is the date the unit is first occupied.

    (2) If the declarant subsequently offers to sell a unit which is rented, the declarant must disclose, in writing, to each prospective purchaser, the date on which the qualified warranty expires.

    (3) If the declarant retains any declarant control over the association on the date that is fourteen full calendar months following the month in which the beginning date for common element warranty coverage commences, the declarant shall within thirty days thereafter cause an election to be held in which the declarant may not vote, for the purpose of electing one or more board members who are empowered to make warranty claims. If at such time, one or more independent board members hold office, no additional election need be held, and such independent board members are empowered to make warranty claims. The declarant shall inform all independent board members of their right to make warranty claims at no later than sixteen full calendar months following the beginning date of the common element warranty.

    NEW SECTION. Sec. 406. LIVING EXPENSE ALLOWANCE. (1) If repairs are required under the qualified warranty and damage to the unit, or the extent of the repairs renders the unit uninhabitable, the qualified warranty must cover reasonable living expenses incurred by the owner to live elsewhere in an amount commensurate with the nature of the unit.

    (2) If a qualified insurer establishes a maximum amount per day for claims for living expenses, the limit must be the greater of one hundred dollars per day or a reasonable amount commensurate with the nature of the unit for the complete reimbursement of the actual accommodation expenses incurred by the owner at a hotel, motel, or other rental accommodation up to the day the unit is ready for occupancy, subject to the owner receiving twenty-four hours' advance notice.

    NEW SECTION. Sec. 407. WARRANTY ON REPAIRS AND REPLACEMENTS. (1) All repairs and replacements made under a qualified warranty must be warranted by the qualified warranty against defects in materials and labor until the later of:

    (a) The first anniversary of the date of completion of the repair or replacement; or

    (b) The expiration of the applicable qualified warranty coverage.

    (2) All repairs and replacements made under a qualified warranty must be completed in a reasonable manner using materials and labor conforming to the building code and industry standards.

ARTICLE 5

PERMITTED TERMS FOR QUALIFIED WARRANTIES

    NEW SECTION. Sec. 501. A qualified insurer may include any of the following provisions in a qualified warranty:

    (1) If the qualified insurer makes a payment or assumes liability for any payment or repair under a qualified warranty, the owner and association must fully support and assist the qualified insurer in pursuing any rights that the qualified insurer may have against the declarant, and any construction professional that has contractual or common law obligations to the declarant, whether such rights arose by contract, subrogation, or otherwise.

    (2) Warranties or representations made by a declarant which are in addition to the warranties set forth in this chapter are not binding on the qualified insurer unless and to the extent specifically provided in the text of the warranty; and disclaimers of specific defects made by agreement between the declarant and the unit purchaser under RCW 64.34.450 act as an exclusion of the specified defect from the warranty coverage.

    (3) An owner and the association must permit the qualified insurer or declarant, or both, to enter the unit at reasonable times, after reasonable notice to the owner and the association:

    (a) To monitor the unit or its components;

    (b) To inspect for required maintenance;

    (c) To investigate complaints or claims; or

    (d) To undertake repairs under the qualified warranty.

    If any reports are produced as a result of any of the activities referred to in (a) through (d) of this subsection, the reports must be provided to the owner and the association.

    (4) An owner and the association must provide to the qualified insurer all information and documentation that the owner and the association have available, as reasonably required by the qualified insurer to investigate a claim or maintenance requirement, or to undertake repairs under the qualified warranty.

    (5) To the extent any damage to a unit is caused or made worse by the unreasonable refusal of the association, or an owner or occupant to permit the qualified insurer or declarant access to the unit for the reasons in subsection (3) of this section, or to provide the information required by subsection (4) of this section, that damage is excluded from the qualified warranty.

    (6) In any claim under a qualified warranty issued to the association, the association shall have the sole right to prosecute and settle any claim with respect to the common elements.