Washington State House of Representatives Office of Program Research	BILL ANALYSIS
Trade & Economic Development Committee

HB 2425

Brief Description:  Funding the community economic revitalization board.

Sponsors:  Representatives Doumit, Dunn, Hatfield, Veloria, Conway, Ogden, Rockefeller, Linville, Lantz, Kagi, McIntire, Haigh, Wood, Kessler, Kenney, Simpson, Jackley and Fromhold; by request of Governor Locke.

Brief Summary of Bill

$Directs the interest earnings generated by the Public Worlds Trust Fund (PWTF) and Community Economic Revitalization Board (CERB) Program accounts to be sued to fund public facilities through the CERB Program.

$Transfers up to $1.9 million, on an annual basis, in interest earnings generated by the repayment of principal and interest of loans made to timber communities and rural natural resources impact areas under the PWTF Program into the CERB Program.  The transfers end June 30, 2013.

Hearing Date:  1/22/02

Staff:  Kenny Pittman (786‑7392).

Background:

The Community Economic Revitalization Board (CERB) Program was created in 1982 to provide direct loans and grants to counties, cities, and special purpose districts for economic development‑related infrastructure improvements.  The CERB financing is available for public improvements that include the acquisition, construction, or repair of: domestic and industrial water, sewer, and storm water infrastructure; bridge, railroad, electricity, telecommunication, and road improvements; buildings and structures; port facilities; and feasibility studies.  The CERB financing must be necessary to either bring a new business into the community, or expand or retain an existing business that is already located in the community.

The Public Works Trust Fund (PWTF) Program was created in 1985 to provide loans to counties, cities, and certain special purpose districts, which does not include school and port districts, to improve existing public infrastructure.  The PWTF loans are available for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, or storm and sanitary sewage systems, and solid waste facilities, including recycling facilities.  In order to qualify for financial assistance under PWTF, the county, city, and special purpose district must: (1) Impose an excise tax on the sale of real estate of at least one‑quarter of 1 percent; (2) have developed a long‑term plan for financing public works needs; and (3) be using all local revenue sources that are reasonably available for funding public works.

In 1991, the Legislature authorized the use of a limited amount of PWTF monies  to be used for new public infrastructure improvements in timber‑dependent communities.  In 1995, the Legislature re‑authorized the use of a limited amount of PWTF monies in timber‑dependent communities and expanded its focus to include rural natural resource impact areas.

Currently, the state treasurer retains the interest earnings on all accounts, unless they are specifically exempted from this requirement or the account is allowed to retain a specified percentage of interest earnings.  The repayments of loan principal and interest for both CERB and PWTF loans are placed into separate accounts in the state treasury (public facilities construction loan revolving account and the public works assistance account).  The interest earned on these accounts, along with the interest earned from various other accounts, is deposited into the state general fund.

Summary of Bill:

An ongoing source of funding is provided for the Community Economic Revitalization Board (CERB) Program by using the interest earnings generated by the public works assistance account and the public facilities construction loan revolving account.

Public Works Assistance Account

The PWTF program is authorized to retain 100 percent of its interest earnings on the repayment of principal and interest on loans made to counties, cities, and certain special districts for the purpose of public improvements.  The state treasurer is required to deposit 100 percent of the interest earnings on the repayments into the CERB account (public facilities construction loan revolving account).

The state treasurer is required to annually transfer an amount equal to one‑eleventh of the principal and interest payments on loans made by the PWTF program, under the timber and rural natural resources impact area programs, into the CERB account.  The transfer cannot exceed $1.9 million per year.  The transfers of funds from the PWTF account on loans, made under the timber communities and natural resources impact area programs, into the CERB account ends June 30, 2013.

Public Facilities Construction Loan Revolving Account

The CERB program is authorized to retain 100 percent of its interest earnings on the repayment of principal and interest on loans made to counties, cities, port district, and special purpose districts for the purpose of public facilities.

Appropriation:  None.

Fiscal Note:  Requested on 1/17/02.

Effective Date:  Ninety days after adjournment of session in which bill is passed.