H 1953

H‑1953.1 _____________________________________________

SUBSTITUTE HOUSE BILL 1518

_____________________________________________

State of Washington 57th Legislature 2001 Regular Session

By House Committee on Trade & Economic Development (originally sponsored by Representatives Fromhold, Van Luven, Veloria, Conway and Dunn; by request of Governor Locke)

READ FIRST TIME 02/22/01.

_1 AN ACT Relating to using state sales and use tax revenues

_2 generated within a benefited jurisdiction as a funding source for

_3 community development infrastructure improvements not to exceed

_4 one million dollars of funding per fiscal year; adding new

_5 sections to chapter 82.14 RCW; adding a new section to chapter

_6 82.32 RCW; and creating new sections.

_7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

_8 NEW SECTION. Sec. 1. The legislature finds that:

_9 It is in the best interest of the state of Washington to

10 promote private investment in many areas for the purpose of

11 stimulating economic vitality and promoting economic stability. In

12 many urban areas, urban decay, abandoned buildings, and

13 environmental contamination pose a barrier to redevelopment.

14 Public investment is needed to reclaim brownfields, update

15 infrastructure, and improve the condition of public areas. In the

16 absence of public investment, urban redevelopment projects often

17 cannot pay a return sufficient to attract private investment. These

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_1 urban areas need private investment to create employment

_2 opportunities and to generally improve the economic stability of

_3 many neighborhoods.

_4 In other areas, the public infrastructure necessary to attract

_5 new business or to facilitate the growth and expansion of existing

_6 industry is inadequate. Industry expects that basic infrastructure

_7 such as sewer, roads, power, natural gas, and telecommunications

_8 services will be available at potential industrial and commercial

_9 sites. Private investment is necessary to diversify and strengthen

10 many economies throughout the state; however the private sector is

11 unlikely to invest in areas in which public infrastructure is

12 lacking.

13 In 1999, the state of Washington local government

14 infrastructure study identified a gap in infrastructure financing

15 well over three billion dollars. The legislature finds that with

16 existing local resources, counties, cities, or Indian tribes

17 cannot finance needed public infrastructure projects. The

18 legislature further finds that a partnership between the state,

19 and counties, cities, or Indian tribes, and private industry can

20 make strategic investments in public infrastructure that will

21 stimulate the private investment needed to spur economic

22 development and create jobs.

23 NEW SECTION. Sec. 2. A new section is added to chapter 82.14

24 RCW to read as follows:

25 (1) A county, city, or Indian tribe that obtains approval under

26 section 3 of this act shall receive a monthly distribution from

27 the infrastructure improvement account, hereby created in the

28 state treasury, subject to the limitations in this section and

29 section 3 of this act. The distribution shall be equal to the

30 proceeds from the state share of the sales tax and use tax upon

31 taxable events under chapters 82.08 and 82.12 RCW, within the

32 boundaries of the county or city, or within Indian country of the

33 tribe, subject to the funding limitations in this section. The

34 proceeds shall be from the state share of the sales and use tax

35 from within the specific county, city, or Indian country of the

36 tribe, and shall be deposited as directed in section 4 of this

37 act. For the purposes of the distribution under this section,

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_1 proceeds distributed to a tribe shall be based on estimates of

_2 taxable events taking place in the tribal jurisdiction. The

_3 department shall, in consultation with the tribe, calculate the

_4 estimate and provide the information to the state treasurer. No

_5 more than five hundred thousand dollars are available for any one

_6 project in any fiscal year, and no one city, county, or tribe may

_7 receive more than one million dollars in any fiscal year.

_8 (2) The funding provided in this section shall expire when the

_9 debt obligation for the infrastructure improvement project, as

10 approved under section 3 of this act, is repaid, but in no event

11 may the funding be received for more than twenty years after the

12 first distribution under this section.

13 (3) The proceeds received under this section shall be used for

14 the purpose of payments on the infrastructure improvement project

15 debt obligations to cover infrastructure improvements and related

16 infrastructure expenses. This revenue is the state's share of the

17 debt obligation repayment, and it may not exceed thirty percent of

18 the total public sector project budget. At least seventy percent of

19 the funding must come from other public or private sources.

20 (4) The definitions in this subsection apply to this section

21 and sections 3 and 4 of this act.

22 (a) "Indian country" has the meaning given in RCW 82.24.010.

23 (b) "Indian tribe" means an Indian nation, tribe, band,

24 community, or other entity recognized as a federally recognized

25 Indian tribe by the United States department of the interior.

26 (c) "Infrastructure improvements" means the construction,

27 renovation, or expansion of publicly owned infrastructure

28 improvements such as dock facilities, park and recreation

29 facilities and areas, parking facilities, public transit

30 facilities, sewer systems, sidewalks, lighting, and pedestrian

31 improvements and amenities, telecommunications systems, water

32 systems, and wastewater systems, including demolition and clean-up

33 activities related to the improvements.

34 (d) "Private partner" does not include any government or any

35 government enterprise, corporation, or other similar entity.

36 (e) "Related infrastructure expenses" includes expenditures for

37 activities such as design, planning, environmental analysis, land

38 and materials acquisition, and site preparation, as well as

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_1 expenditures for the financing of the infrastructure improvement,

_2 such as legal fees, insurance fees, financing fees, principal and

_3 interest costs on general indebtedness including reserves, and

_4 administrative costs.

_5 NEW SECTION. Sec. 3. A new section is added to chapter 82.14

_6 RCW to read as follows:

_7 (1) The department of community, trade, and economic

_8 development shall review and approve or deny applications from

_9 counties, cities, or Indian tribes for infrastructure improvement

10 projects, consistent with the criteria in this section. Counties,

11 cities, and tribes may develop proposals with other government

12 entities such as port districts, special purpose districts,

13 municipal corporations, and public development authorities, but

14 the county, city, or tribe remains the only entity eligible under

15 this section and section 2 of this act. Applications shall be in a

16 form and manner as required by the department of community, trade,

17 and economic development. Funding is available on a first-come

18 basis, with priority based on the date and time an application is

19 received. In the event that a subsequent application is received

20 from a taxing jurisdiction that has overlapping jurisdiction with

21 a jurisdiction with a priority application, the subsequent

22 application shall be approved only if there are sufficient

23 revenues expected to be generated to cover the state's share of

24 the project. All qualifying projects shall be funded until the

25 fiscal funding cap is met. At the point the fiscal funding cap is

26 reached, no proposals may be evaluated until the following fiscal

27 year. Applications denied due to the program funding cap being met

28 must be resubmitted the following fiscal year in order to be

29 reconsidered. The department of community, trade, and economic

30 development shall provide a response to a proposal within sixty

31 days of receipt.

32 (a) During each fiscal year, the department of community,

33 trade, and economic development may approve no more than one

34 million dollars in new projects for each fiscal year.

35 (b) A county, city, or Indian tribe may have no more than two

36 ongoing infrastructure improvement projects at any one time and

37 may not be approved for more than one project in any one year.

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_1 (c) The funds received under section 3 of this act may not

_2 exceed five hundred thousand dollars for any one project per year.

_3 (2) A county, city, or Indian tribe may finance infrastructure

_4 improvements and related infrastructure expenses in part by using

_5 tax revenue dedicated under section 4 of this act, subject to

_6 providing the department of community, trade, and economic

_7 development with documentation regarding the following conditions

_8 and requirements:

_9 (a) The county, city, or Indian tribe must certify to the

10 department that an analysis has been made of the value to the

11 state of the private portion of the project, and that over a

12 thirty-year term the projected state revenue, such as sales and

13 use tax and business and occupation tax, from all state taxes

14 directly associated with the private portion of the project will

15 at least equal the dollar value of the state's funding of the

16 project;

17 (b) The county, city, or Indian tribe must identify the source

18 of funds through which it will fund its share of the

19 infrastructure improvement project;

20 (c) The county, city, or Indian tribe must have received an

21 agreement in writing from a private entity committing to a

22 privately funded private project that will directly benefit from

23 the infrastructure improvements and must provide a copy of such

24 agreement to the department; and

25 (d) A project proposed by a county or city must be consistent

26 with the comprehensive plan and development regulations it has

27 adopted in conformance with chapter 36.70A RCW.

28 (3) The department of community, trade, and economic

29 development may give an approval conditioned on the county, city,

30 or Indian tribe satisfying the conditions and requirements in this

31 section, but in no circumstances may funds be received under

32 section 2 of this act before the conditions in subsection (2) of

33 this section are satisfied, at which point final approval may be

34 given. Upon final approval under this section, the department of

35 community, trade, and economic development shall notify the

36 applicant and the department of revenue.

37 (4) No projects may be approved under this section after June

38 30, 2006.

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_2 NEW SECTION. Sec. 4. A new section is added to chapter 82.32

_3 RCW to read as follows:

_4 The department shall deposit into the infrastructure

_5 improvement account, created in section 2 of this act, all

_6 proceeds from the state share of the sales tax and use tax upon

_7 taxable events, for those counties, cities, or Indian tribes that

_8 have been approved under section 3 of this act. The proceeds shall

_9 be from the state share of the sales and use tax from within the

10 specific county, city, or Indian country of the tribe. Pursuant to

11 section 2 of this act, no more than five hundred thousand dollars

12 shall be for any one project in any fiscal year, and any one

13 jurisdiction may receive not more than one million dollars in any

14 fiscal year. If the department has received notice of final

15 approval from the department of community, trade, and economic

16 development under section 3(3) of this act and the sale of bonds

17 or other debt instruments is complete, the department shall notify

18 the state treasurer regarding the monthly distributions under

19 section 2(1) of this act.

20 NEW SECTION. Sec. 5. The state incurs no obligation or

21 liability regarding an infrastructure improvement project under

22 section 3 of this act, other than the funding provided through the

23 sales and use tax under section 2 of this act.

24 NEW SECTION. Sec. 6. If any provision of this act or its

25 application to any person or circumstance is held invalid, the

26 remainder of the act or the application of the provision to other

27 persons or circumstances is not affected.

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