(1) A single owner development must be managed by a public entity, a wastewater company regulated by the Washington utilities and transportation commission, or a private management entity.

(2) A development where lots or units served by the LOSS are individually owned must be managed by:

(a) A public entity; or

(b) A private management entity with a public entity or a wastewater company regulated by the Washington utilities and transportation commission contracted as a third-party guarantor.