BILL REQ. #:  S-3692.3 

Read first time 01/17/08.   Referred to Committee on Economic Development, Trade & Management.

     AN ACT Relating to creating incentives for economic development infrastructure projects; amending RCW 47.26.160, 43.160.060, and 39.102.040; reenacting and amending RCW 43.155.070; and adding a new chapter to Title 35 RCW.

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

NEW SECTION.  Sec. 1   The purpose of this act is to provide eligible cities additional incentives for economic development in order to: Assist with the costs of infrastructure necessary to create or retain jobs within an eligible city; reduce the deficit between job growth and population growth; reduce carbon footprints; increase density and reduce urban sprawl consistent with adopted plans; and reduce future transportation costs.

NEW SECTION.  Sec. 2   (1) A city that imposes a local tax on public and private utilities may impose an additional tax, at a rate of up to one percent, on all utility services within the city limits of the city, if that city has a population of twenty-five thousand persons or more, and is located in a county with a projected job growth rate that is ten percent lower than the projected population growth rate according to the adopted regional growth strategy of the Puget Sound regional council.
     (2) Revenue from the tax authorized under subsection (1) of this section may be used by an eligible city solely for the purpose of construction, reconstruction, financing, refinancing, design, operation, and maintenance of public infrastructure necessary for economic development projects, which create or retain businesses and family wage jobs in the eligible city.

NEW SECTION.  Sec. 3   (1) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (a) "Eligible city" means a city that has imposed the tax provided for in section 2 of this act.
     (b) "Department" means the department of revenue.
     (c) "Economic development infrastructure project" means a project within an eligible city that develops public infrastructure that facilitates the creation or retention of businesses and family wage jobs.
     (2)(a) If an eligible city applies for a competitive loan or grant for a project with the transportation improvement board, the community and economic revitalization board, the public works trust fund, or the local infrastructure financing tool, the city is entitled to receive additional points, worth a minimum of ten percent of the total score, which must be added to the project's score in the application review process as provided in RCW 47.26.160, 43.160.060, 43.155.070, and 39.102.040.
     (b)(i) An eligible city may apply for a refund of taxes on public economic development infrastructure projects for the amount of the state portion of sales and use taxes levied and collected under chapters 82.08 and 82.12 RCW. Application must be made to the department in a form and manner prescribed by the department. The application must contain information required by the department, necessary to determine whether the project for which the refund is sought is an economic development infrastructure project. The department must approve the application within sixty days if it meets the requirements of this chapter. No more than two million dollars in refunds shall be given to each eligible city in any calendar year.
     (ii) Applications and any other information received by the department under this section are not confidential and are subject to disclosure. Chapter 82.32 RCW applies to the administration of this section.
     (iii) An eligible city may retain the proceeds of the state sales and use tax refund provided for in this section and combine this revenue with (A) the proceeds of one or more additional economic development infrastructure projects for which the refund has been granted; (B) revenue from the tax authorized in section 2 of this act; and (C) other revenue sources available to the eligible city for the purposes of constructing economic development infrastructure projects.

Sec. 4   RCW 47.26.160 and 1995 c 269 s 2607 are each amended to read as follows:
     The transportation improvement board shall:
     (1) Adopt rules necessary to implement the provisions of chapter 47.66 RCW and this chapter relating to the allocation of funds;
     (2) Adopt reasonably uniform design standards for city and county arterials;
     (3) Use a scoring system in evaluating applications for the allocation of funds and the board shall assign additional points, worth ten percent of the total score, which must be added to the project's final score, for cities that are eligible cities under section 3 of this act.

Sec. 5   RCW 43.160.060 and 2007 c 231 s 3 are each amended to read as follows:
     The board is authorized to make direct loans to political subdivisions of the state and to federally recognized Indian tribes for the purposes of assisting the political subdivisions and federally recognized Indian tribes in financing the cost of public facilities, including development of land and improvements for public facilities, project-specific environmental, capital facilities, land use, permitting, feasibility, and marketing studies and plans; project design, site planning, and analysis; project debt and revenue impact analysis; as well as the construction, rehabilitation, alteration, expansion, or improvement of the facilities. A grant may also be authorized for purposes designated in this chapter, but only when, and to the extent that, a loan is not reasonably possible, given the limited resources of the political subdivision or the federally recognized Indian tribe and the finding by the board that financial circumstances require grant assistance to enable the project to move forward. However, at least ten percent of all financial assistance provided by the board in any biennium shall consist of grants to political subdivisions and federally recognized Indian tribes.
     Application for funds shall be made in the form and manner as the board may prescribe. In making grants or loans the board shall conform to the following requirements:
     (1) The board shall not provide financial assistance:
     (a) For a project the primary purpose of which is to facilitate or promote a retail shopping development or expansion.
     (b) For any project that evidence exists would result in a development or expansion that would displace existing jobs in any other community in the state.
     (c) For the acquisition of real property, including buildings and other fixtures which are a part of real property.
     (d) For a project the primary purpose of which is to facilitate or promote gambling.
     (2) The board shall only provide financial assistance:
     (a) For those projects which would result in specific private developments or expansions (i) in manufacturing, production, food processing, assembly, warehousing, advanced technology, research and development, and industrial distribution; (ii) for processing recyclable materials or for facilities that support recycling, including processes not currently provided in the state, including but not limited to, de-inking facilities, mixed waste paper, plastics, yard waste, and problem-waste processing; (iii) for manufacturing facilities that rely significantly on recyclable materials, including but not limited to waste tires and mixed waste paper; (iv) which support the relocation of businesses from nondistressed urban areas to rural counties or rural natural resources impact areas; or (v) which substantially support the trading of goods or services outside of the state's borders.
     (b) For projects which it finds will improve the opportunities for the successful maintenance, establishment, or expansion of industrial or commercial plants or will otherwise assist in the creation or retention of long-term economic opportunities.
     (c) When the application includes convincing evidence that a specific private development or expansion is ready to occur and will occur only if the public facility improvement is made.
     (3) The board shall prioritize each proposed project according to:
     (a) The relative benefits provided to the community by the jobs the project would create, not just the total number of jobs it would create after the project is completed and according to the unemployment rate in the area in which the jobs would be located;
     (b) The rate of return of the state's investment, that includes the expected increase in state and local tax revenues associated with the project; and
     (c) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007.
     (4) In assigning priority to a project as required under subsection (3) of this section, the board shall use a scoring system and, for cities that are eligible cities under section 3 of this act, assign additional points, worth ten percent of the total score, which must be added to the project's score in the application review process.
     (5) A responsible official of the political subdivision or the federally recognized Indian tribe shall be present during board deliberations and provide information that the board requests.
     Before any financial assistance application is approved, the political subdivision or the federally recognized Indian tribe seeking the assistance must demonstrate to the community economic revitalization board that no other timely source of funding is available to it at costs reasonably similar to financing available from the community economic revitalization board.

Sec. 6   RCW 43.155.070 and 2007 c 341 s 24 and 2007 c 231 s 2 are each reenacted and amended to read as follows:
     (1) To qualify for loans or pledges under this chapter the board must determine that a local government meets all of the following conditions:
     (a) The city or county must be imposing a tax under chapter 82.46 RCW at a rate of at least one-quarter of one percent;
     (b) The local government must have developed a capital facility plan; and
     (c) The local government must be using all local revenue sources which are reasonably available for funding public works, taking into consideration local employment and economic factors.
     (2) Except where necessary to address a public health need or substantial environmental degradation, a county, city, or town planning under RCW 36.70A.040 must have adopted a comprehensive plan, including a capital facilities plan element, and development regulations as required by RCW 36.70A.040. This subsection does not require any county, city, or town planning under RCW 36.70A.040 to adopt a comprehensive plan or development regulations before requesting or receiving a loan or loan guarantee under this chapter if such request is made before the expiration of the time periods specified in RCW 36.70A.040. A county, city, or town planning under RCW 36.70A.040 which has not adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040 is not prohibited from receiving a loan or loan guarantee under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before submitting a request for a loan or loan guarantee.
     (3) In considering awarding loans for public facilities to special districts requesting funding for a proposed facility located in a county, city, or town planning under RCW 36.70A.040, the board shall consider whether the county, city, or town planning under RCW 36.70A.040 in whose planning jurisdiction the proposed facility is located has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.
     (4) The board shall develop a priority process for public works projects as provided in this section. The intent of the priority process is to maximize the value of public works projects accomplished with assistance under this chapter. The board shall attempt to assure a geographical balance in assigning priorities to projects. The board shall consider at least the following factors in assigning a priority to a project:
     (a) Whether the local government receiving assistance has experienced severe fiscal distress resulting from natural disaster or emergency public works needs;
     (b) Except as otherwise conditioned by RCW 43.155.110, whether the entity receiving assistance is a Puget Sound partner, as defined in RCW 90.71.010;
     (c) Whether the project is referenced in the action agenda developed by the Puget Sound partnership under RCW 90.71.310;
     (d) Whether the project is critical in nature and would affect the health and safety of a great number of citizens;
     (e) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007;
     (f) The cost of the project compared to the size of the local government and amount of loan money available;
     (g) The number of communities served by or funding the project;
     (h) Whether the project is located in an area of high unemployment, compared to the average state unemployment;
     (i) Whether the project is the acquisition, expansion, improvement, or renovation by a local government of a public water system that is in violation of health and safety standards, including the cost of extending existing service to such a system;
     (j) The relative benefit of the project to the community, considering the present level of economic activity in the community and the existing local capacity to increase local economic activity in communities that have low economic growth; and
     (k) Other criteria that the board considers advisable.
     (5) In assigning priority to a project as required under subsection (4) of this section, the board shall use a scoring system and, for cities that are eligible cities under section 3 of this act, assign additional points, worth ten percent of the total score, which must be added to the project's score in the application review process.
     (6) Existing debt or financial obligations of local governments shall not be refinanced under this chapter. Each local government applicant shall provide documentation of attempts to secure additional local or other sources of funding for each public works project for which financial assistance is sought under this chapter.
     (((6))) (7) Before November 1st of each year, the board shall develop and submit to the appropriate fiscal committees of the senate and house of representatives a description of the loans made under RCW 43.155.065, 43.155.068, and subsection (((9))) (10) of this section during the preceding fiscal year and a prioritized list of projects which are recommended for funding by the legislature, including one copy to the staff of each of the committees. The list shall include, but not be limited to, a description of each project and recommended financing, the terms and conditions of the loan or financial guarantee, the local government jurisdiction and unemployment rate, demonstration of the jurisdiction's critical need for the project and documentation of local funds being used to finance the public works project. The list shall also include measures of fiscal capacity for each jurisdiction recommended for financial assistance, compared to authorized limits and state averages, including local government sales taxes; real estate excise taxes; property taxes; and charges for or taxes on sewerage, water, garbage, and other utilities.
     (((7))) (8) The board shall not sign contracts or otherwise financially obligate funds from the public works assistance account before the legislature has appropriated funds for a specific list of public works projects. The legislature may remove projects from the list recommended by the board. The legislature shall not change the order of the priorities recommended for funding by the board.
     (((8))) (9) Subsection (((7))) (8) of this section does not apply to loans made under RCW 43.155.065, 43.155.068, and subsection (((9))) (10) of this section.
     (((9))) (10) Loans made for the purpose of capital facilities plans shall be exempted from subsection (((7))) (8) of this section.
     (((10))) (11) To qualify for loans or pledges for solid waste or recycling facilities under this chapter, a city or county must demonstrate that the solid waste or recycling facility is consistent with and necessary to implement the comprehensive solid waste management plan adopted by the city or county under chapter 70.95 RCW.
     (((11))) (12) After January 1, 2010, any project designed to address the effects of storm water or wastewater on Puget Sound may be funded under this section only if the project is not in conflict with the action agenda developed by the Puget Sound partnership under RCW 90.71.310.

Sec. 7   RCW 39.102.040 and 2007 c 229 s 2 are each amended to read as follows:
     (1) Prior to applying to the board to use local infrastructure financing, a sponsoring local government shall:
     (a) Designate a revenue development area within the limitations in RCW 39.102.060;
     (b) Certify that the conditions in RCW 39.102.070 are met;
     (c) Complete the process in RCW 39.102.080;
     (d) Provide public notice as required in RCW 39.102.100; and
     (e) Pass an ordinance adopting the revenue development area as required in RCW 39.102.090.
     (2) Any local government that has created an increment area under chapter 39.89 RCW and has not issued bonds to finance any public improvement may apply to the board and have its increment area considered for approval as a revenue development area under this chapter without adopting a new revenue development area under RCW 39.102.090 and 39.102.100 if it amends its ordinance to comply with RCW 39.102.090(1) and otherwise meets the conditions and limitations under this chapter.
     (3) As a condition to imposing a sales and use tax under RCW 82.14.475, a sponsoring local government, including any cosponsoring local government seeking authority to impose a sales and use tax under RCW 82.14.475, must apply to the board and be approved for a project award amount. The application shall be in a form and manner prescribed by the board and include but not be limited to information establishing that the applicant is an eligible candidate to impose the local sales and use tax under RCW 82.14.475, the anticipated effective date for imposing the tax, the estimated number of years that the tax will be imposed, and the estimated amount of tax revenue to be received in each fiscal year that the tax will be imposed. The board shall make available forms to be used for this purpose. As part of the application, each applicant must provide to the board a copy of the ordinance or ordinances creating the revenue development area as required in RCW 39.102.090. A notice of approval to use local infrastructure financing shall contain a project award that represents the maximum amount of state contribution that the applicant, including any cosponsoring local governments, can earn each year that local infrastructure financing is used. The total of all project awards shall not exceed the annual state contribution limit. The determination of a project award shall be made based on information contained in the application and the remaining amount of annual state contribution limit to be awarded. Determination of a project award by the board is final.
     (4)(a) Sponsoring local governments, and any cosponsoring local governments, applying in calendar year 2007 for a competitive project award, must submit completed applications to the board no later than July 1, 2007. By September 15, 2007, in consultation with the department of revenue and the department of community, trade, and economic development, the board shall approve competitive project awards from competitive applications submitted by the 2007 deadline. No more than two million five hundred thousand dollars in competitive project awards shall be approved in 2007. For projects not approved by the board in 2007, sponsoring and cosponsoring local governments may apply again to the board in 2008 for approval of a project.
     (b) Sponsoring local governments, and any cosponsoring local governments, applying in calendar year 2008 for a competitive project award, must submit completed applications to the board no later than July 1, 2008. By September 18, 2008, in consultation with the department of revenue and the department of community, trade, and economic development, the board shall approve competitive project awards from competitive applications submitted by the 2008 deadline.
     (c) Except as provided in RCW 39.102.050(2), a total of no more than five million dollars in competitive project awards shall be approved for local infrastructure financing.
     (d) The project selection criteria and weighting developed prior to July 22, 2007, for the application evaluation and approval process shall apply to applications received prior to November 1, 2007. In evaluating applications for a competitive project award after November 1, 2007, the board shall, in consultation with the Washington state economic development commission, develop the relative weight to be assigned to the following criteria:
     (i) The project's potential to enhance the sponsoring local government's regional and/or international competitiveness;
     (ii) The project's ability to encourage mixed use and transit-oriented development and the redevelopment of a geographic area;
     (iii) Achieving an overall distribution of projects statewide that reflect geographic diversity;
     (iv) The estimated wages and benefits for the project is greater than the average labor market area;
     (v) The estimated state and local net employment change over the life of the project;
     (vi) The current economic health and vitality of the proposed revenue development area and the contiguous community and the estimated impact of the proposed project on the proposed revenue development area and contiguous community;
     (vii) The estimated state and local net property tax change over the life of the project;
     (viii) The estimated state and local sales and use tax increase over the life of the project;
     (ix) An analysis that shows that, over the life of the project, neither the local excise tax allocation revenues nor the local property tax allocation revenues will constitute more than eighty percent of the total local funds as described in RCW 39.102.020(29)(c); and
     (x) If a project is located within an urban growth area, evidence that the project utilizes existing urban infrastructure and that the transportation needs of the project will be adequately met through the use of local infrastructure financing or other sources.
     (e) In assigning weight to a project as required under (d) of this subsection, the board shall, for cities that are eligible cities under section 3 of this act, assign additional points, worth ten percent of the total score, which must be added to the project's score in the application review process.
     (f)(i) Except as provided in this subsection (4)(((e))) (f), the board may not approve the use of local infrastructure financing within more than one revenue development area per county.
     (ii) In a county in which the board has approved the use of local infrastructure financing, the use of such financing in additional revenue development areas may be approved, subject to the following conditions:
     (A) The sponsoring local government is located in more than one county; and
     (B) The sponsoring local government designates a revenue development area that comprises portions of a county within which the use of local infrastructure financing has not yet been approved.
     (iii) In a county where the local infrastructure financing tool is authorized under RCW 39.102.050, the board may approve additional use of the local infrastructure financing tool.
     (5) Once the board has approved the sponsoring local government, and any cosponsoring local governments, to use local infrastructure financing, notification must be sent by the board to the sponsoring local government, and any cosponsoring local governments, authorizing the sponsoring local government, and any cosponsoring local governments, to impose the local sales and use tax authorized under RCW 82.14.475, subject to the conditions in RCW 82.14.475.

NEW SECTION.  Sec. 8   Sections 1 through 3 of this act constitute a new chapter in Title 35 RCW.