(1) As an alternative to the procedures provided in RCW 35.91.020 for financing the construction or improvement of water or sewer facilities, a municipality may create an assessment reimbursement area on its own initiative, without the participation of a private property owner, finance all of the costs associated with the construction or improvement, and become the sole beneficiary of reimbursements.

(a) A municipality may only establish an assessment reimbursement area in locations where a municipality's ordinances require water or sewer facilities to be improved or constructed as a prerequisite to further property development or redevelopment.

(b) The boundaries of an assessment reimbursement area must be formulated by the municipality based upon a determination of which parcels in the proposed area would require construction or improvement of water or sewer facilities upon development or redevelopment, or would be allowed connection to or usage of constructed or improved water or sewer facilities.

(c) A preliminary determination of the assessment reimbursement area boundaries and assessments, along with a description of property owners' rights and options, must be sent by certified mail to each owner of record of real property within the proposed assessment reimbursement area. Owners of property within the proposed area may request a public hearing by submitting a written request to the municipality within twenty days of the preliminary determination's mailing. If a written request is submitted, the legislative authority of the municipality must hold a public hearing on the assessment reimbursement area. Notice of the hearing must be provided to all affected property owners. Any rulings of the legislative authority of the municipality are determinative and final, subject to judicial review.

(d) The final determination of the assessment reimbursement area boundaries and assessments must be recorded in the county auditor's office of the county in which the area is situated.

(2) A municipality may be reimbursed in accordance with this section only for the costs associated with construction or improvements that benefit property that will be connected to, and property owners who will use, the water or sewer facilities within the assessment reimbursement area. Reimbursement may only occur when a property is developed or redeveloped in a manner requiring connection to or use of the water or sewer facilities, or when a property is requesting connection to or use of the water or sewer facilities. The reimbursement assessment may be no greater than a property's pro rata share of costs associated with construction of the water or sewer facilities required to meet utility service and fire suppression standards. The municipality must determine the reimbursement share of each property owner by using a method of cost apportionment that is based on the benefit to the property owner from the project and that is consistent with the method used to determine the cost and reimbursement share under RCW 35.91.020(1) (a) and (b). However, the municipality's administrative and legal costs are not subject to reimbursement. A municipality may not receive reimbursement of costs for the portion of construction or improvements that benefit the general public, which means that portion of the water or sewer facilities that only benefit property outside of the assessment reimbursement area.

(3) For the purposes of this section, administrative costs do not include engineering and construction management costs.