READ FIRST TIME 02/17/11.   

     AN ACT Relating to tax increment financing for landscape conservation and local infrastructure; amending RCW 36.70A.080; adding a new chapter to Title 39 RCW; and creating a new section.

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

NEW SECTION.  Sec. 101   FINDINGS. (1) Recognizing that uncoordinated and poorly planned growth poses a threat to the environment, sustainable economic development, and the health, safety, and high quality of life enjoyed by residents of this state, the legislature passed the growth management act, chapter 36.70A RCW. The planning goals adopted through the growth management act encourage development in urban areas where public facilities and services exist or can be provided efficiently, conservation of productive forest and agricultural lands, and a reduction of sprawl.
     (2) Under RCW 36.70A.090 and 43.362.005 the legislature has encouraged:
     (a) The use of innovative land use management techniques, including the transfer of development rights, to meet growth management goals; and
     (b) The creation of a regional transfer of development rights marketplace in the central Puget Sound to assist in conserving agricultural and forest land, as well as other lands of state or regional priority.
     (3) The legislature finds that:
     (a) Local governments are in need of additional resources to provide public infrastructure to meet the needs of a growing population, and that public infrastructure is fundamental to community health, safety, and economic vitality. Investment in public infrastructure in growing urban areas supports growth management goals, encourages the redevelopment of underutilized or blighted urban areas, stimulates business activity and helps create jobs, lowers the cost of housing, promotes efficient land use, and improves residents' quality of life;
     (b) Transferring development rights from agricultural and forest lands to urban areas where public facilities and services exist or can be provided efficiently and cost-effectively will ensure vibrant, economically viable communities. Directing growth to communities where people can live close to where they work or have access to transportation choices will also advance state goals regarding climate change by reducing vehicle miles traveled and by reducing fuel consumption and emissions that contribute to climate change. Directing growth to these communities will further help avoid the impacts of storm water runoff to Puget Sound by avoiding impervious surfaces associated with development in watershed uplands;
     (c) A transfer of development rights marketplace is particularly appropriate for conserving agricultural and forest land of long-term commercial significance. Transferring the development rights from these lands of statewide importance to cities will help achieve a specific goal of the growth management act by keeping them in farming and forestry, thereby helping ensure these remain viable industries in counties experiencing population growth. Transferring growth from agricultural and forest land of long-term commercial significance will also reduce costs to the counties that otherwise would be responsible for the provision of infrastructure and services for development on these lands, which are generally further from existing infrastructure and services; and
     (d) The state and its residents benefit from investment in public infrastructure that is associated with urban growth facilitated by the transfer of development from agricultural and forest lands of long-term commercial significance. These activities advance multiple state growth management goals and benefit the state and local economies. It is in the public interest to enable local governments to finance such infrastructure investments and to incentivize development right transfers in the central Puget Sound through this chapter.

NEW SECTION.  Sec. 201   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Assessed value" means the valuation of taxable real property as placed on the last completed assessment roll.
     (2) "Eligible county" means any county that borders Puget Sound, that has a population of six hundred thousand or more, and that has an established program for transfer of development rights.
     (3) "Employment" means total employment in a county or city, as applicable, estimated by the office of financial management.
     (4) "Exchange rate" means an increment of development beyond what base zoning allows that is assigned to a development right by a sponsoring city for use in a receiving area.
     (5) "Local infrastructure project area" means the geographic area identified by a sponsoring city under section 601 of this act.
     (6) "Local infrastructure project financing" means the use of local property tax allocation revenue distributed to the sponsoring city to pay or finance public improvement costs within the local infrastructure project area in accordance with section 701 of this act.
     (7) "Local property tax allocation revenue" means those tax revenues derived from the receipt of regular property taxes levied on the property tax allocation revenue value and used for local infrastructure project financing.
     (8) "Participating taxing district" means a taxing district that:
     (a) Has a local infrastructure project area wholly or partially within the taxing district's geographic boundaries; and
     (b) Levies, or has levied on behalf of the taxing district, regular property taxes as defined in this section.
     (9) "Population" means the population of a city or county, as applicable, estimated by the office of financial management.
     (10) "Property tax allocation revenue base value" means the assessed value of real property located within a local infrastructure project area, less the property tax allocation revenue value.
     (11)(a)(i) "Property tax allocation revenue value" means an amount equal to the sponsoring city ratio multiplied by seventy-five percent of any increase in the assessed value of real property in a local infrastructure project area resulting from:
     (A) The placement of new construction, improvements to property, or both, on the assessment roll, where the new construction and improvements are initiated after the local infrastructure project area is created by the sponsoring city;
     (B) The cost of new housing construction, conversion, and rehabilitation improvements, when the cost is treated as new construction for purposes of chapter 84.55 RCW as provided in RCW 84.14.020, and the new housing construction, conversion, and rehabilitation improvements are initiated after the local infrastructure project area is created by the sponsoring city;
     (C) The cost of rehabilitation of historic property, when the cost is treated as new construction for purposes of chapter 84.55 RCW as provided in RCW 84.26.070, and the rehabilitation is initiated after the local infrastructure project area is created by the sponsoring city.
     (ii) Increases in the assessed value of real property resulting from (a)(i)(A) through (C) of this subsection are included in the property tax allocation revenue value in the initial year. These same amounts are also included in the property tax allocation revenue value in subsequent years unless the property becomes exempt from property taxation.
     (b) "Property tax allocation revenue value" includes an amount equal to the sponsoring city ratio multiplied by seventy-five percent of any increase in the assessed value of new construction consisting of an entire building in the years following the initial year, unless the building becomes exempt from property taxation.
     (c) Except as provided in (b) of this subsection, "property tax allocation revenue value" does not include any increase in the assessed value of real property after the initial year.
     (d) There is no property tax allocation revenue value if the assessed value of real property in a local infrastructure project area has not increased as a result of any of the reasons specified in (a)(i)(A) through (C) of this subsection.
     (e) For purposes of this subsection, "initial year" means:
     (i) For new construction and improvements to property added to the assessment roll, the year during which the new construction and improvements are initially placed on the assessment roll;
     (ii) For the cost of new housing construction, conversion, and rehabilitation improvements, when the cost is treated as new construction for purposes of chapter 84.55 RCW, the year when the cost is treated as new construction for purposes of levying taxes for collection in the following year; and
     (iii) For the cost of rehabilitation of historic property, when the cost is treated as new construction for purposes of chapter 84.55 RCW, the year when such cost is treated as new construction for purposes of levying taxes for collection in the following year.
     (12)(a) "Public improvements" means:
     (i) Infrastructure improvements within the local infrastructure project area that include:
     (A) Street, road, bridge, and rail construction and maintenance;
     (B) Water and sewer system construction and improvements;
     (C) Sidewalks, streetlights, landscaping, and streetscaping;
     (D) Parking, terminal, and dock facilities;
     (E) Park and ride facilities of a transit authority and other facilities that support transit-oriented development;
     (F) Park facilities, recreational areas, bicycle paths, and environmental remediation;
     (G) Storm water and drainage management systems;
     (H) Electric, gas, fiber, and other utility infrastructures; and
     (ii) Expenditures for facilities and improvements that support affordable housing as defined in RCW 43.185A.010;
     (iii) Providing maintenance and security for common or public areas in the local infrastructure project area; or
     (iv) Historic preservation activities authorized under RCW 35.21.395.
     (b) Public improvements do not include the acquisition by a sponsoring city of transferable development rights.
     (13) "Real property" has the same meaning as in RCW 84.04.090 and also includes any privately owned improvements located on publicly owned land that are subject to property taxation.
     (14)(a) "Regular property taxes" means regular property taxes as defined in RCW 84.04.140, except: (i) Regular property taxes levied by public utility districts specifically for the purpose of making required payments of principal and interest on general indebtedness; (ii) regular property taxes levied by the state for the support of common schools under RCW 84.52.065; and (iii) regular property taxes authorized by RCW 84.55.050 that are limited to a specific purpose.
     (b) "Regular property taxes" do not include excess property tax levies that are exempt from the aggregate limits for junior and senior taxing districts as provided in RCW 84.52.043.
     (15) "Receiving areas," for purposes of this chapter, are those designated lands within local infrastructure project areas in which transferable development rights from sending areas may be used.
     (16) "Receiving city" means any incorporated city with population plus employment equal to twenty-two thousand five hundred or greater within an eligible county.
     (17) "Receiving city allocated share" means the total number of transferable development rights from agricultural and forest land of long-term commercial significance and rural zoned lands designated under section 303 of this act within the eligible counties allocated to a receiving city under section 305 (1) and (2) of this act.
     (18) "Sending areas" means those lands within an eligible county that meet conservation criteria as described in sections 301 and 303 of this act.
     (19) "Sponsoring city" means a receiving city that accepts all or a portion of its receiving city allocated share, adopts a plan for development of infrastructure within one or more proposed local infrastructure project areas in accordance with section 401 of this act, and creates one or more local infrastructure project areas, as specified in section 305(4) of this act.
     (20) "Sponsoring city allocated share" means the total number of transferable development rights a sponsoring city agrees to accept, under section 305(4) of this act, from agricultural and forest land of long-term commercial significance and rural zoned lands designated under section 303 of this act within the eligible counties, plus the total number of transferable development rights transferred to the sponsoring city from another receiving city under section 305(5) of this act.
     (21) "Sponsoring city ratio" means the ratio of the sponsoring city specified portion to the sponsoring city allocated share.
     (22) "Sponsoring city specified portion" means the portion of a sponsoring city allocated share which may be used within one or more local infrastructure project areas, as set forth in the sponsoring city's plan for development of infrastructure under section 401 of this act.
     (23) "Taxing district" means a city or county that levies, or has levied on behalf of the city or county, regular property taxes upon real property located within a local infrastructure project area.
     (24) "Transfer of development rights" includes methods for protecting land from development by voluntarily removing the development rights from a sending area and transferring them to one or more receiving areas for the purpose of increasing development density or intensity.
     (25) "Transferable development rights" means a right to develop one or more residential units in a sending area that can be sold and transferred.

NEW SECTION.  Sec. 301   DESIGNATION OF SENDING AREAS--INCLUSION OF AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE. An eligible county must designate all agricultural and forest land of long-term commercial significance within its jurisdiction as sending areas for conservation under the eligible county's program for transfer of development rights. The development rights from all such agricultural and forest land of long-term commercial significance within the eligible counties must be available for transfer to receiving cities under this chapter.

NEW SECTION.  Sec. 302   DEVELOPMENT RIGHTS FROM AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE. (1) An eligible county must calculate the number of development rights from agricultural and forest land of long-term commercial significance that are eligible for transfer to receiving areas. An eligible county must determine transferable development rights for allocation purposes in this program by:
     (a) Base zoning in effect as of January 1, 2011; or
     (b) An allocation other than base zoning as reflected by an eligible county's transfer of development rights program or an interlocal agreement with a receiving city in effect as of January 1, 2011.
     (2) The number of transferable development rights includes the development rights from agricultural and forest lands of long-term commercial significance that have been previously issued under the eligible county's program for transfer of development rights, but that have not as yet been utilized to increase density or intensity in a development as of January 1, 2011.
     (3) The number of transferable development rights does not include development rights from agricultural and forest lands of long-term commercial significance that have previously been removed or extinguished, such as through an existing conservation easement, except when consistent with subsection (2) of this section.

NEW SECTION.  Sec. 303   DESIGNATION OF SENDING AREAS--INCLUSION OF RURAL ZONED LANDS UNDER CERTAIN CIRCUMSTANCES. (1) Subject to the requirements of this section, an eligible county may designate a portion of its rural zoned lands as sending areas for conservation under the eligible county's program for transfer of development rights available for transfer to receiving cities under this chapter.
     (2) An eligible county may designate rural zoned lands as available for transfer to receiving cities under this chapter only if, and at such time as, fifty percent or more of the total acreage of land classified as agricultural and forest land of long-term commercial significance in the county, as of January 1, 2011, has been protected through either a permanent conservation easement, ownership in fee by the county for land protection or conservation purposes, or ownership in fee by a nongovernmental land conservation organization.
     (3) To be designated as available for transfer to receiving cities under this chapter, rural zoned lands must either:
     (a) Be identified by the county as top conservation priorities because they:
     (i) Provide ecological effectiveness in achieving water resource inventory area goals;
     (ii) Provide contiguous habitat protection, are adjacent to already protected habitat areas, or improve ecological function;
     (iii) Are of sufficient size and location in the landscape to yield strategic growth management benefits;
     (iv) Provide improved access for regional recreational opportunity;
     (v) Prevent forest fragmentation or are appropriate for forest management;
     (vi) Provide flood protection or reduce flood risk; or
     (vii) Have other attributes that meet natural resource preservation program priorities; or
     (b) Be identified by the state or in regional conservation plans as highly important to the water quality of Puget Sound.
     (4) The portion of rural zoned lands in an eligible county designated as sending areas for conservation under the eligible county's program for transfer of development rights available for transfer to receiving cities under this chapter must not exceed one thousand five hundred development rights.

NEW SECTION.  Sec. 304   DETERMINATION OF TOTAL NUMBER OF TRANSFERABLE DEVELOPMENT RIGHTS FOR AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE AND DESIGNATED RURAL ZONED LANDS. On or before September 1, 2011, each eligible county must report to the Puget Sound regional council the total number of transferable development rights from agricultural and forest land of long-term commercial significance and designated rural zoned lands within the eligible county that may be available for allocation to receiving cities under this chapter, as determined under sections 302 and 303 of this act.

NEW SECTION.  Sec. 305   ALLOCATION AMONG LOCAL GOVERNMENTS OF TRANSFERABLE DEVELOPMENT RIGHTS FROM AGRICULTURAL AND FOREST LAND OF LONG-TERM COMMERCIAL SIGNIFICANCE AND DESIGNATED RURAL ZONED LANDS. (1) The Puget Sound regional council must allocate among receiving cities the total number of development rights reported by eligible counties under section 304 of this act. Each receiving city allocated share must be determined by the Puget Sound regional council, in consultation with eligible counties and receiving cities, based on growth targets, determined by established growth management processes, and other relevant factors as determined by the Puget Sound regional council in conjunction with the counties and receiving cities.
     (2) The Puget Sound regional council must report to each receiving city its receiving city allocated share on or before March 1, 2012.
     (3) The Puget Sound regional council must report each receiving city allocated share to the department of commerce on or before March 1, 2012.
     (4) A receiving city may become a sponsoring city by accepting all or a portion of its receiving city allocated share, adopting a plan in accordance with section 401 of this act, and creating one or more local infrastructure project areas to pay or finance costs of public improvements.     
     (5) A receiving city may, by interlocal agreement, transfer all or a portion of its receiving city allocated share to another sponsoring city. The transferred portion of the receiving city allocated share must be included in the other sponsoring city allocated share.

NEW SECTION.  Sec. 401   DEVELOPMENT PLAN FOR INFRASTRUCTURE. (1) Before adopting an ordinance or resolution creating one or more local infrastructure project areas, a sponsoring city must adopt a plan for development of public infrastructure within one or more proposed local infrastructure project areas sufficient to utilize, on an aggregate basis, a sponsoring city specified portion that is equal to or greater than twenty percent of the sponsoring city allocated share.
     (2) The plan must be developed in consultation with the county where the local infrastructure project area to be created is located, be consistent with any transfer of development rights policies or development regulations adopted by the sponsoring city under section 402 of this act, specify the public improvements to be financed using local infrastructure project financing under section 601 of this act, estimate the number of any transferable development rights that will be used within the local infrastructure project area or areas and estimate the cost of the public improvements.
     (3) A plan adopted under this section may be revised from time to time by the sponsoring city, in consultation with the county where the local infrastructure project area or areas are located, to increase the sponsoring city specified portion.

NEW SECTION.  Sec. 402   PROGRAM FOR TRANSFER OF DEVELOPMENT RIGHTS INTO RECEIVING AREAS--REQUIREMENTS. (1) Before adopting an ordinance or resolution creating one or more local infrastructure project areas, a sponsoring city must:
     (a) Adopt transfer of development rights policies or implement development regulations as required by subsection (2) of this section; or
     (b) Make a finding that the sponsoring city will:
     (i) Receive its sponsoring city specified portion within one or more local infrastructure project areas; or
     (ii) Purchase its sponsoring city specified portion should the sponsoring city not be able to receive its sponsoring city specified portion within one or more local infrastructure project areas such that purchased development rights can be held in reserve by the sponsoring city and used in future development.
     (2) Any adoption of transfer of development rights policies or implementation of development regulations must:
     (a) Comply with chapter 36.70A RCW;
     (b) Designate a receiving area or areas;
     (c) Adopt incentives consistent with subsection (4) of this section for developers purchasing transferable development rights;
     (d) Establish an exchange rate consistent with subsection (5) of this section; and
     (e) Require that the sale of a transferable development right from agricultural or forest land of long-term commercial significance or designated rural zoned lands under section 303 of this act be evidenced by its permanent removal from the sending site, such as through a conservation easement on the sending site.
     (3) Any adoption of transfer of development rights policies or implementation of development regulations must not be based upon a downzone within one or more receiving areas solely to create a market for the transferable development rights.
     (4) Developer incentives should be designed to:
     (a) Achieve the densities or intensities reasonably likely to result from absorption of the sponsoring city specified portion identified in the plan under section 401 of this act;
     (b) Include streamlined permitting strategies such as by-right permitting; and
     (c) Include streamlined environmental review strategies such as development and substantial environmental review of a subarea plan for a receiving area that benefits projects that use transferable development rights, with adoption as appropriate under RCW 43.21C.420 of optional elements of their comprehensive plan and optional development regulations that apply within the receiving area, adoption as appropriate of a categorical exemption for infill under RCW 43.21C.229 for a receiving area, and adoption as appropriate of a planned action under RCW 43.21C.031 for the receiving area.
     (5) Each sponsoring city may determine, at its option, what developer incentives to adopt within its jurisdiction.
     (6) Exchange rates should be designed to:
     (a) Create a marketplace in which transferable development rights are priced at a level at which sending site landowners are willing to sell and developers are willing to buy transferable development rights;
     (b) Achieve the densities or intensities anticipated by the plan adopted under section 401 of this act;
     (c) Provide for translation to commodities in addition to residential density, such as building height, commercial floor area, parking ratio, impervious surface, parkland and open space, setbacks, and floor area ratio; and
     (d) Allow for appropriate exemptions from other land use or building requirements.
     (7) A sponsoring city must designate all agricultural and forest land of long-term commercial significance and designated rural zoned lands under section 303 of this act within the eligible counties as available sending areas.
     (8) A sponsoring city, in accordance with its existing comprehensive planning and development regulation authority under chapter 36.70A RCW, and in accordance with RCW 36.70A.080, may elect to adopt an optional comprehensive plan element and optional development regulations that apply within one or more local infrastructure project areas under this chapter.

NEW SECTION.  Sec. 403   DEVELOPMENT RIGHTS AVAILABLE FOR TRANSFER TO RECEIVING CITIES. Only development rights from agricultural and forest land of long-term commercial significance within the eligible counties as determined under section 302 of this act, and rural-zoned lands with the eligible counties designated under section 303 of this act, may be available for transfer to receiving cities in accordance with this chapter.

NEW SECTION.  Sec. 501   QUANTITATIVE AND QUALITATIVE PERFORMANCE MEASURES--REPORTING. The eligible counties, in collaboration with sponsoring cities, must provide a report to the department of commerce by March 1st of every other year. The report must contain the following information:
     (1) The number of sponsoring cities that have adopted transfer of development rights policies and regulations incorporating transfer of development rights under this chapter, and have an interlocal agreement or have adopted the department of commerce transfer of development rights interlocal terms and conditions rule;
     (2) The number of transfer of development rights transactions under this chapter using different types of transfer of development rights mechanisms;     
     (3) The number of acres under conservation easement under this chapter, broken out by agricultural land, forest land, and rural lands;
     (4) The number of transferable development rights transferred from sending areas under this chapter;
     (5) The number of transferable development rights transferred from a county into a sponsoring city under this chapter;     
     (6) Sponsoring city development under this chapter using transferable development rights, including:
     (a) The number of total new residential units;
     (b) The number of residential units created in receiving areas using transferable development rights transferred from sending areas;
     (c) The amount of additional commercial floor area;
     (d) The amount of additional building height;
     (e) The number of required structured parking spaces reduced, if transferable development rights are specifically converted into reduced structured parking space requirements;
     (f) The number of additional parking spaces allowed, if transferable development rights are specifically converted into additional receiving area parking spaces; and
     (g) The amount of additional impervious surface allowed, if transferable development rights are specifically converted into receiving area impervious surfaces;
     (7) The amount of the local property tax allocation revenues, if any, received in the preceding calendar year by the sponsoring city;
     (8) A list of public improvements paid or financed with local infrastructure project financing;
     (9) The names of any businesses locating within local infrastructure project areas as a result of the public improvements undertaken by the sponsoring local government and paid or financed in whole or in part with local infrastructure project financing;
     (10) The total number of permanent jobs created in the local infrastructure project area as a result of the public improvements undertaken by the sponsoring local government and paid or financed in whole or in part with local infrastructure project financing;
     (11) The average wages and benefits received by all employees of businesses locating within the local infrastructure project area as a result of the public improvements undertaken by the sponsoring local government and paid or financed in whole or in part with local infrastructure project financing; and
     (12) The date when any indebtedness issued for local infrastructure project financing is expected to be retired.

NEW SECTION.  Sec. 601   CREATING A LOCAL INFRASTRUCTURE PROJECT AREA. (1) Before adopting an ordinance or resolution creating one or more local infrastructure project areas, a sponsoring city must:
     (a) Provide notice to the county assessor, county treasurer, and county executive within the proposed local infrastructure project area of the sponsoring city's intent to create one or more local infrastructure project areas. This notice must be provided at least one hundred eighty days in advance of the public hearing as required by (b) of this subsection;
     (b) Hold a public hearing on the proposed formation of the local infrastructure project area.
     (2) A sponsoring city may create one or more local infrastructure project areas by ordinance or resolution that:
     (a) Describes the proposed public improvements, identified in the plan under section 401 of this act, to be financed in each local infrastructure project area;
     (b) Describes the boundaries of each local infrastructure project area, subject to the limitations in section 602 of this act; and
     (c) Provides the date when the use of local property tax allocation revenues will commence and a list of the participating taxing districts.
     (3) The sponsoring city must deliver a certified copy of the adopted ordinance or resolution to the county assessor, county treasurer, and each other participating taxing district within which the local infrastructure project area is located.

NEW SECTION.  Sec. 602   LIMITATIONS ON LOCAL INFRASTRUCTURE PROJECT AREAS. The designation of any local infrastructure project area is subject to the following limitations:
     (1) A local infrastructure project area is limited to contiguous tracts, lots, pieces, or parcels of land without the creation of islands of territory not included in the local infrastructure project area;
     (2) The public improvements to be financed with local infrastructure project financing must be located in the local infrastructure project area and must, in the determination of the sponsoring city, further the intent of this chapter;
     (3) Local infrastructure project areas created by a sponsoring city may not comprise an area containing more than twenty-five percent of the total assessed value of taxable property within the sponsoring city at the time the local infrastructure project areas are created;
     (4) The boundaries of each local infrastructure project area may not overlap and may not be changed during the time period that local infrastructure project financing is used within the local infrastructure project area, as provided under this chapter; and
     (5) All local infrastructure project areas created by the sponsoring city must comprise, in the aggregate, an area that the sponsoring city determines (a) is sufficient to use the sponsoring city specified portion, unless the sponsoring city satisfies its sponsoring city allocated share under section 402(1)(b)(ii) of this act, and (b) is no larger than reasonably necessary to use the sponsoring city specified portion in projected future developments.

NEW SECTION.  Sec. 701   ALLOCATION OF PROPERTY TAX REVENUES. (1) Commencing in the second calendar year following the creation of a local infrastructure project area by a sponsoring city, the county treasurer must distribute receipts from regular taxes imposed on real property located in the local infrastructure project area as follows:
     (a) Each participating taxing district and the sponsoring city must receive that portion of its regular property taxes produced by the rate of tax levied by or for the taxing district on the property tax allocation revenue base value for that local infrastructure project area in the taxing district; and
     (b) The sponsoring city must receive an additional portion of the regular property taxes levied by it and by or for each participating taxing district upon the property tax allocation revenue value within the local infrastructure project area. However, if there is no property tax allocation revenue value, the sponsoring city may not receive any additional regular property taxes under this subsection (1)(b). The sponsoring city may agree to receive less than the full amount of the additional portion of regular property taxes under this subsection (1)(b) as long as bond debt service, reserve, and other bond covenant requirements are satisfied, in which case the balance of these tax receipts must be allocated to the participating taxing districts that levied regular property taxes, or have regular property taxes levied for them, in the local infrastructure project area for collection that year in proportion to their regular tax levy rates for collection that year. The sponsoring city may request that the treasurer transfer this additional portion of the property taxes to its designated agent.
     (2)(a) The portion of the tax receipts distributed to the sponsoring city or its agent under subsection (1)(b) of this section may only be expended to pay or finance public improvement costs within the local infrastructure project area, except as provided in (b) of this subsection (2).
     (b) A city may also expend such receipts to pay or finance costs of affordable housing as defined in RCW 43.185A.010, or facilities and improvements that support affordable housing, and at least five percent of the tax receipts distributed to the sponsoring city or its agent under subsection (1)(b) of this section must be set aside and reserved or expended within the local infrastructure project area for such affordable housing purposes.
     (3) The county assessor must determine the property tax allocation revenue value and property tax allocation revenue base value. This section does not authorize revaluations of real property by the assessor for property taxation that are not made in accordance with the assessor's revaluation plan under chapter 84.41 RCW or under other authorized revaluation procedures.
     (4)(a) The distribution of local property tax allocation revenue to the sponsoring city must cease on the date that is the earlier of:
     (i) The date when local property tax allocation revenues are no longer used or obligated to pay the costs of the public improvements; or
     (ii) The final termination date as determined under (b) of this subsection (4).
     (b) The final termination date is determined as follows:
     (i) Except as provided otherwise in (b) of this subsection (4), if the sponsoring city certifies to the county treasurer that the local property tax threshold level 1 is met, the final termination date is ten years after the date of the first distribution of local property tax allocation revenues under subsection (1) of this section;
     (ii) If the sponsoring city certifies to the county treasurer that the local property tax threshold level 2 is met at least six months prior to the final termination date under (b)(i) of this subsection (4), the final termination date is fifteen years after the date of the first distribution of local property tax allocation revenues under subsection (1) of this section;
     (iii) If the sponsoring city certifies to the county treasurer that the local property tax threshold level 3 is met at least six months prior to the final termination date under (b)(ii) of this subsection (4), the final termination date is twenty years after the date of the first distribution of local property tax allocation revenues under subsection (1) of this section;
     (iv) If the sponsoring city certifies to the county treasurer that the local property tax threshold level 4 is met at least six months prior to the final termination date under (b)(iii) of this subsection (4), the final termination date is twenty-five years after the date of the first distribution of local property tax allocation revenues under subsection (1) of this section.
     (5) For purposes of this section:
     (a) The "local property tax threshold level 1" is met when the sponsoring city has either:
     (i) Issued building permits for development within the local infrastructure project area that, on an aggregate basis, uses at least twenty-five percent of the sponsoring city specified portion; or
     (ii) Acquired transferable development rights equal to at least twenty-five percent of the sponsoring city specified portion for use in the local infrastructure project area or for extinguishment.
     (b) The "local property tax threshold level 2" is met when the sponsoring city has either:
     (i) Issued building permits for development within the local infrastructure project area that, on an aggregate basis, uses at least fifty percent of the sponsoring city specified portion; or
     (ii) Acquired transferable development rights equal to at least fifty percent of the sponsoring city specified portion for use in the local infrastructure project area or for extinguishment.
     (c) The "local property tax threshold level 3" is met when the sponsoring city has either:
     (i) Issued building permits for development within the local infrastructure project area that, on an aggregate basis, uses at least seventy-five percent of the sponsoring city specified portion; or
     (ii) Acquired transferable development rights equal to at least seventy-five percent of the sponsoring city specified portion for use in the local infrastructure project area or for extinguishment.
     (d) The "local property tax threshold level 4" is met when the sponsoring city has either:
     (i) Issued building permits for development within the local infrastructure project area that, on an aggregate basis, uses at least one hundred percent of the sponsoring city specified portion; or
     (ii) Acquired transferable development rights equal to at least one hundred percent of the sponsoring city specified portion for use in the local infrastructure project area or for extinguishment.
     (6) Any excess local property tax allocation revenues, and earnings on the revenues, remaining at the time the distribution of local property tax allocation revenue terminates must be returned to the county treasurer and distributed to the participating taxing districts that imposed regular property taxes, or had regular property taxes imposed for it, in the local infrastructure project area for collection that year, in proportion to the rates of their regular property tax levies for collection that year.
     (7) The allocation and expenditure of local property tax allocation revenues as provided in this chapter of that portion of the sponsoring city's and each participating taxing district's regular property taxes levied upon the property tax allocation revenue value within that local infrastructure project area is declared to be a public purpose of and benefit to the sponsoring city and each participating taxing district.
     (8) The distribution of local property tax allocation revenues under this section may not affect or be deemed to affect the rate of taxes levied by or within any sponsoring city and participating taxing district or the consistency of any such levies with the uniformity requirement of Article VII, section 1 of the state Constitution.

Sec. 801   RCW 36.70A.080 and 1990 1st ex.s. c 17 s 8 are each amended to read as follows:
     (1) A comprehensive plan may include additional elements, items, or studies dealing with other subjects relating to the physical development within its jurisdiction, including, but not limited to:
     (a) Conservation;
     (b) Solar energy; and
     (c) Recreation.
     (2) A comprehensive plan may include, where appropriate, subarea plans, each of which is consistent with the comprehensive plan.
     (3)(a) Cities that qualify as a receiving city may adopt a comprehensive plan element and associated development regulations that apply within receiving areas under chapter 39.--- RCW (the new chapter created in section 903 of this act).
     (b) For purposes of this subsection, the terms "receiving city" and "receiving area" have the same meanings as provided in section 201 of this act.

NEW SECTION.  Sec. 901   ADMINISTRATION BY THE DEPARTMENT OF COMMERCE. The department of commerce may adopt any rules under chapter 34.05 RCW it considers necessary for the administration of this chapter.

NEW SECTION.  Sec. 902   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 903   Sections 101 through 701 of this act constitute a new chapter in Title 39 RCW.