BILL REQ. #: H-1415.3
State of Washington | 63rd Legislature | 2013 Regular Session |
READ FIRST TIME 02/18/13.
AN ACT Relating to extending the application of prevailing wage requirements; amending RCW 39.12.010, 39.12.030, 39.12.040, 39.12.042, 39.12.050, 39.12.065, 39.12.070, 82.60.025, 82.75.010, 82.82.010, 82.08.820, 82.08.900, 82.08.955, and 82.12.955; reenacting and amending RCW 82.63.010; and adding new sections to chapter 39.12 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 39.12.010 and 1989 c 12 s 6 are each amended to read
as follows:
(1) The "prevailing rate of wage," for the intents and purposes of
this chapter, shall be the rate of hourly wage, usual benefits, and
overtime paid in the locality, as hereinafter defined, to the majority
of workers, laborers, or mechanics, in the same trade or occupation.
In the event that there is not a majority in the same trade or
occupation paid at the same rate, then the average rate of hourly wage
and overtime paid to such laborers, workers, or mechanics in the same
trade or occupation shall be the prevailing rate. If the wage paid by
any contractor or subcontractor to laborers, workers, or mechanics on
any public work is based on some period of time other than an hour, the
hourly wage for the purposes of this chapter shall be mathematically
determined by the number of hours worked in such period of time.
(2) The "locality" for the purposes of this chapter shall be the
largest city in the county wherein the physical work is being
performed.
(3) The "usual benefits" for the purposes of this chapter shall
include the amount of:
(a) The rate of contribution irrevocably made by a contractor or
subcontractor to a trustee or to a third person pursuant to a fund,
plan, or program; and
(b) The rate of costs to the contractor or subcontractor which may
be reasonably anticipated in providing benefits to workers, laborers,
and mechanics pursuant to an enforceable commitment to carry out a
financially responsible plan or program which was communicated in
writing to the workers, laborers, and mechanics affected, for medical
or hospital care, pensions on retirement or death, compensation for
injuries or illness resulting from occupational activity, or insurance
to provide any of the foregoing, for unemployment benefits, life
insurance, disability and sickness insurance, or accident insurance,
for vacation and holiday pay, for defraying costs of apprenticeship or
other similar programs, or for other bona fide fringe benefits, but
only where the contractor or subcontractor is not required by other
federal, state, or local law to provide any of such benefits.
(4) An "interested party" for the purposes of this chapter shall
include a contractor, subcontractor, an employee of a contractor or
subcontractor, an organization whose members' wages, benefits, and
conditions of employment are affected by this chapter, and the director
of labor and industries or the director's designee.
(5)(a) "Subsidized public work" means all work, construction,
alterations, repairs, or improvements other than ordinary maintenance
where:
(i) One or more parties to the contract for the project received or
will receive a qualifying tax preference for the project; or
(ii) One or more parties to the contract for the project received
or will receive a loan for the project from the state or any county,
municipality, or political subdivision.
(b) "Subsidized public work" does not include:
(i) Work financed by a loan provided by a housing authority created
pursuant to chapter 35.82 RCW; or
(ii) Affordable housing projects that receive financing from the
Washington state housing finance commission and are not subject to
federal prevailing wage requirements.
(6) "Qualifying tax preference" means a tax preference under
chapter 82.60, 82.63, 82.75, or 82.82 RCW, or RCW 82.08.820, 82.08.900,
82.08.955, 82.12.900, or 82.12.955.
(7) "Subsidy recipient" means the private party to a contract for
subsidized public work who received a tax preference or received a
public loan as described in subsection (5)(a) of this section.
NEW SECTION. Sec. 2 A new section is added to chapter 39.12 RCW
to read as follows:
(1) The requirements of this chapter apply to subsidized public
works projects.
(2) Upon request from a party to a contract for subsidized public
work, as defined in RCW 39.12.010(5)(a)(i), the department of labor and
industries must provide written certification of the party's compliance
with this chapter.
Sec. 3 RCW 39.12.030 and 2009 c 62 s 1 are each amended to read
as follows:
(1) The specifications for every contract for the construction,
reconstruction, maintenance, or repair of any public work ((to which
the state or any county, municipality, or political subdivision created
by its laws is a party,)) shall contain a provision stating the hourly
minimum rate of wage, not less than the prevailing rate of wage, which
may be paid to laborers, workers, or mechanics in each trade or
occupation required for such public work employed in the performance of
the contract either by the contractor, subcontractor, or other person
doing or contracting to do the whole or any part of the work
contemplated by the contract, and the contract shall contain a
stipulation that such laborers, workers, or mechanics shall be paid not
less than such specified hourly minimum rate of wage. If the awarding
agency or subsidy recipient determines that the work contracted for
meets the definition of residential construction, the contract must
include that information.
(2) If the hourly minimum rate of wage stated in the contract
specifies residential construction rates and it is later determined
that the work performed is commercial and subject to commercial
construction rates, the state, county, municipality, ((or)) political
subdivision, or subsidy recipient that entered into the contract must
pay the difference between the residential rate stated and the actual
commercial rate to the contractor, subcontractor, or other person doing
or contracting to do the whole or any part of the work under the
contract.
Sec. 4 RCW 39.12.040 and 2012 c 129 s 1 are each amended to read
as follows:
(1) Except as provided in subsection (2) of this section, before
payment is made by or on behalf of the state, or any county,
municipality, or political subdivision created by its laws, or any
subsidy recipient of any sum or sums due on account of a public works
contract, it shall be the duty of the officer or person charged with
the custody and disbursement of ((public)) funds to require the
contractor and each and every subcontractor from the contractor or a
subcontractor to submit to such officer a "Statement of Intent to Pay
Prevailing Wages." For a contract in excess of ten thousand dollars,
the statement of intent to pay prevailing wages shall include:
(a) The contractor's registration certificate number; and
(b) The prevailing rate of wage for each classification of workers
entitled to prevailing wages under RCW 39.12.020 and the estimated
number of workers in each classification.
Each statement of intent to pay prevailing wages must be approved
by the industrial statistician of the department of labor and
industries before it is submitted to the disbursing officer or person.
Unless otherwise authorized by the department of labor and industries,
each voucher claim submitted by a contractor for payment on a project
estimate shall state that the prevailing wages have been paid in
accordance with the prefiled statement or statements of intent to pay
prevailing wages on file with the public agency or subsidy recipient.
Following the final acceptance of a public works project, it shall be
the duty of the officer charged with the disbursement of public
funds((,)) to require the contractor and each and every subcontractor
from the contractor or a subcontractor to submit to such officer an
"affidavit of wages paid" before the funds retained according to the
provisions of RCW 60.28.011 are released to the contractor. For
subsidized public works, following the contract completion date of the
project, it shall be the duty of the person employed by a subsidy
recipient who is charged with the disbursement of funds to require the
contractor and each and every subcontractor to submit to such person an
"affidavit of wages paid" before final payment is made to the
contractor. If a subcontractor performing work on a public works
project fails to submit an "affidavit of wages paid" form, the
contractor or subcontractor with whom the subcontractor had a
contractual relationship for the project may file the forms on behalf
of the nonresponsive subcontractor. Affidavit forms may only be filed
on behalf of a nonresponsive subcontractor who has ceased operations or
failed to file as required by this section. Filings made on behalf of
a subcontractor may not be accepted sooner than thirty-one days after
the acceptance date of the public works project ((and)) or contract
completion date of a subsidized public works project. The contractor
filing the affidavit must accept responsibility for payment of
prevailing wages unpaid by the subcontractor on the project pursuant to
RCW 39.12.020 and 39.12.065. Intentionally filing a false affidavit on
behalf of a subcontractor subjects the filer to the same penalties as
are provided in RCW 39.12.050. Each affidavit of wages paid must be
certified by the industrial statistician of the department of labor and
industries before it is submitted to the disbursing officer or person.
(2) As an alternate to the procedures provided for in subsection
(1) of this section, for public works projects of two thousand five
hundred dollars or less and for projects where the limited public works
process under RCW 39.04.155(3) is followed:
(a) An awarding agency or subsidy recipient may authorize the
contractor or subcontractor to submit the statement of intent to pay
prevailing wages directly to the officer or person charged with the
custody or disbursement of ((public)) funds in the awarding agency or
subsidy recipient without approval by the industrial statistician of
the department of labor and industries. The awarding agency or subsidy
recipient shall retain such statement of intent to pay prevailing wages
for a period of not less than three years.
(b) Upon final acceptance of the public works project, or upon the
contract completion date of a subsidized public works project, the
awarding agency or subsidy recipient shall require the contractor or
subcontractor to submit an affidavit of wages paid. Upon receipt of
the affidavit of wages paid, the awarding agency or subsidy recipient
may pay the contractor or subcontractor in full, including funds that
would otherwise be retained according to the provisions of RCW
60.28.011. Within thirty days of receipt of the affidavit of wages
paid, the awarding agency or subsidy recipient shall submit the
affidavit of wages paid to the industrial statistician of the
department of labor and industries for approval.
(c) A statement of intent to pay prevailing wages and an affidavit
of wages paid shall be on forms approved by the department of labor and
industries.
(d) In the event of a wage claim and a finding for the claimant by
the department of labor and industries where the awarding agency or
subsidy recipient has used the alternative process provided for in
subsection (2) of this section, the awarding agency or subsidy
recipient shall pay the wages due directly to the claimant. If the
contractor or subcontractor did not pay the wages stated in the
affidavit of wages paid, the awarding agency or subsidy recipient may
take action at law to seek reimbursement from the contractor or
subcontractor of wages paid to the claimant, and may prohibit the
contractor or subcontractor from bidding on any public works contract
of the awarding agency or subsidy recipient for up to one year.
(e) Nothing in this section shall be interpreted to allow an
awarding agency or subsidy recipient to subdivide any public works
project of more than two thousand five hundred dollars for the purpose
of circumventing the procedures required by subsection (1) of this
section.
Sec. 5 RCW 39.12.042 and 1993 c 404 s 3 are each amended to read
as follows:
If any agency of the state, or any county, municipality, or
political subdivision created by its laws, or any subsidy recipient
shall knowingly fail to comply with the provisions of RCW 39.12.040 as
now or hereafter amended, ((such agency of the state, or county,
municipality, or political subdivision created by its laws,)) it shall
be liable to all workers, laborers, or mechanics to the full extent and
for the full amount of wages due, pursuant to the prevailing wage
requirements of RCW 39.12.020.
Sec. 6 RCW 39.12.050 and 2009 c 219 s 3 are each amended to read
as follows:
(1) Any contractor or subcontractor who files a false statement or
fails to file any statement or record required to be filed under this
chapter and the rules adopted under this chapter((,)) shall, after a
determination to that effect has been issued by the director after
hearing under chapter 34.05 RCW, forfeit as a civil penalty the sum of
five hundred dollars for each false filing or failure to file, and
shall not be permitted to bid, or have a bid considered, on any public
works contract until the penalty has been paid in full to the director.
The civil penalty under this subsection shall not apply to a violation
determined by the director to be an inadvertent filing or reporting
error. Civil penalties shall be deposited in the public works
administration account.
To the extent that a contractor or subcontractor has not paid wages
at the rate due pursuant to RCW 39.12.020, and a finding to that effect
has been made as provided by this subsection, such unpaid wages shall
constitute a lien against the bonds and retainage as provided in RCW
18.27.040, 19.28.041, 39.08.010, section 9 of this act, and 60.28.011.
(2) If a contractor or subcontractor is found to have violated the
provisions of subsection (1) of this section for a second time within
a five-year period, the contractor or subcontractor shall be subject to
the sanctions prescribed in subsection (1) of this section and shall
not be allowed to bid on any public works contract for one year. The
one-year period shall run from the date of notice by the director of
the determination of noncompliance. When an appeal is taken from the
director's determination, the one-year period shall commence from the
date of the final determination of the appeal.
The director shall issue his or her findings that a contractor or
subcontractor has violated the provisions of this subsection after a
hearing held subject to the provisions of chapter 34.05 RCW.
Sec. 7 RCW 39.12.065 and 2009 c 219 s 4 are each amended to read
as follows:
(1) Upon complaint by an interested party, the director of labor
and industries shall cause an investigation to be made to determine
whether there has been compliance with this chapter and the rules
adopted hereunder, and, if the investigation indicates that a violation
may have occurred, a hearing shall be held in accordance with chapter
34.05 RCW. The director shall issue a written determination including
his or her findings after the hearing. A judicial appeal from the
director's determination may be taken in accordance with chapter 34.05
RCW, with the prevailing party entitled to recover reasonable costs and
attorneys' fees.
A complaint concerning nonpayment of the prevailing rate of wage
shall be filed with the department of labor and industries no later
than thirty days from the acceptance date of the public works project.
The failure to timely file such a complaint shall not prohibit a
claimant from pursuing a private right of action against a contractor
or subcontractor for unpaid prevailing wages. The remedy provided by
this section is not exclusive and is concurrent with any other remedy
provided by law.
(2) To the extent that a contractor or subcontractor has not paid
the prevailing rate of wage under a determination issued as provided in
subsection (1) of this section, the director shall notify the agency or
subsidy recipient awarding the public works contract of the amount of
the violation found, and the awarding agency shall withhold, or in the
case of a bond, the director shall proceed against the bond in
accordance with the applicable statute to recover, such amount from the
following sources in the following order of priority until the total of
such amount is withheld:
(a) The retainage or bond in lieu of retainage as provided in RCW
60.28.011;
(b) If the claimant was employed by the contractor or subcontractor
on the public works project, the bond filed by the contractor or
subcontractor with the department of labor and industries as provided
in RCW 18.27.040 and 19.28.041;
(c) A surety bond, or at the contractor's or subcontractor's option
an escrow account, running to the director in the amount of the
violation found; and
(d) That portion of the progress payments which is properly
allocable to the contractor or subcontractor who is found to be in
violation of this chapter. Under no circumstances shall any portion of
the progress payments be withheld that are properly allocable to a
contractor, subcontractor, or supplier, that is not found to be in
violation of this chapter.
The amount withheld shall be released to the director to distribute
in accordance with the director's determination.
(3)(a) A contractor or subcontractor that is found, in accordance
with subsection (1) of this section, to have violated the requirement
to pay the prevailing rate of wage shall be subject to a civil penalty
of not less than one thousand dollars or an amount equal to twenty
percent of the total prevailing wage violation found on the contract,
whichever is greater, and shall not be permitted to bid, or have a bid
considered, on any public works contract until such civil penalty has
been paid in full to the director. If the contractor or subcontractor
performs work on a subsidized public works project, the subsidy
recipient shall also be subject to a civil penalty in the amount of the
unpaid wages or the value of the qualifying tax preference, whichever
is greater. Civil penalties shall be deposited in the public works
administration account.
(b) If a contractor or subcontractor is found to have participated
in a violation of the requirement to pay the prevailing rate of wage
for a second time within a five-year period, the contractor or
subcontractor shall be subject to the sanctions prescribed in (a) of
this subsection and as an additional sanction shall not be allowed to
bid on any public works contract for two years. ((Civil penalties
shall be deposited in the public works administration account.)) If a
previous or subsequent violation of a requirement to pay a prevailing
rate of wage under federal or other state law is found against the
contractor or subcontractor within five years from a violation under
this section, the contractor or subcontractor shall not be allowed to
bid on any public works contract for two years. A contractor or
subcontractor shall not be barred from bidding on any public works
contract if the contractor or subcontractor relied upon written
information from the department to pay a prevailing rate of wage that
is later determined to be in violation of this chapter.
(c) The civil penalty and sanctions under this subsection (3) shall
not apply to a violation determined by the director to be an
inadvertent filing or reporting error.
(d) To the extent that a contractor or subcontractor has not paid
the prevailing wage rate under a determination issued as provided in
subsection (1) of this section, the unpaid wages shall constitute a
lien against the bonds and retainage as provided herein and in RCW
18.27.040, 19.28.041, 39.08.010, section 9 of this act, and 60.28.011.
Sec. 8 RCW 39.12.070 and 2008 c 285 s 2 are each amended to read
as follows:
The department of labor and industries may charge fees to awarding
agencies or subsidy recipients on public works for the approval of
statements of intent to pay prevailing wages and the certification of
affidavits of wages paid. The department may also charge fees to
persons or organizations requesting the arbitration of disputes under
RCW 39.12.060. The amount of the fees shall be established by rules
adopted by the department under the procedures in the administrative
procedure act, chapter 34.05 RCW. The fees shall apply to all
approvals, certifications, and arbitration requests made after the
effective date of the rules. All fees shall be deposited in the public
works administration account. The department may refuse to arbitrate
for contractors, subcontractors, persons, or organizations which have
not paid the proper fees. The department may, if necessary, request
the attorney general to take legal action to collect delinquent fees.
The department shall set the fees permitted by this section at a
level that generates revenue that is as near as practicable to the
amount of the appropriation to administer this chapter((,)) including,
but not limited to, the performance of adequate wage surveys, and to
investigate and enforce all alleged violations of this chapter((,))
including, but not limited to, incorrect statements of intent to pay
prevailing wage, incorrect certificates of affidavits of wages paid,
and wage claims, as provided for in this chapter and chapters 49.48 and
49.52 RCW. However, the fees charged for the approval of statements of
intent to pay prevailing wages and the certification of affidavits of
wages paid shall be forty dollars.
NEW SECTION. Sec. 9 A new section is added to chapter 39.12 RCW
to read as follows:
(1) Every contractor and subcontractor on a subsidized public works
project must file with the department of labor and industries a surety
bond issued by a surety insurer who meets the requirements of chapter
48.28 RCW in the sum of five percent of the amount due on the public
works contract. The bond must name the state of Washington as obligee
with good and sufficient surety in a form to be approved by the
department. The bond must be continuous and may be canceled by the
surety upon the surety giving written notice to the director of labor
and industries. The bond must be conditioned to recover against the
contractor and its officers, agents, and employees by reason of its
violation of this chapter. A change in the name of a business or a
change in the type of business entity does not impair a bond for the
purposes of this section so long as one of the original applicants for
the bond maintains partial ownership in the business covered by the
bond.
(2) In lieu of posting a bond, the contractor and subcontractor on
a subsidized public works project may deposit five percent of the
amount due on the subsidized public works contract in an interest-bearing account.
Sec. 10 RCW 82.60.025 and 2010 1st sp.s. c 16 s 4 are each
amended to read as follows:
The lessor or owner of a qualified building is not eligible for a
deferral unless:
(1) The lessor or owner complies with the requirements of chapter
39.12 RCW; and
(2) The underlying ownership of the buildings, machinery, and
equipment vests exclusively in the same person; or
(((2))) (3)(a) The lessor by written contract agrees to pass the
economic benefit of the deferral to the lessee;
(b) The lessee that receives the economic benefit of the deferral
agrees in writing with the department to complete the annual survey
required under RCW 82.60.070; and
(c) The economic benefit of the deferral passed to the lessee is no
less than the amount of tax deferred by the lessor and is evidenced by
written documentation of any type of payment, credit, or other
financial arrangement between the lessor or owner of the qualified
building and the lessee.
Sec. 11 RCW 82.63.010 and 2009 c 268 s 2 are each reenacted and
amended to read as follows:
Unless the context clearly requires otherwise, the definitions in
this section apply throughout this chapter.
(1) "Advanced computing" means technologies used in the designing
and developing of computing hardware and software, including
innovations in designing the full spectrum of hardware from hand-held
calculators to super computers, and peripheral equipment.
(2) "Advanced materials" means materials with engineered properties
created through the development of specialized processing and synthesis
technology, including ceramics, high value-added metals, electronic
materials, composites, polymers, and biomaterials.
(3) "Applicant" means a person applying for a tax deferral under
this chapter.
(4) "Biotechnology" means the application of technologies, such as
recombinant DNA techniques, biochemistry, molecular and cellular
biology, genetics and genetic engineering, cell fusion techniques, and
new bioprocesses, using living organisms, or parts of organisms, to
produce or modify products, to improve plants or animals, to develop
microorganisms for specific uses, to identify targets for small
molecule pharmaceutical development, or to transform biological systems
into useful processes and products or to develop microorganisms for
specific uses.
(5) "Department" means the department of revenue.
(6) "Electronic device technology" means technologies involving
microelectronics; semiconductors; electronic equipment and
instrumentation; radio frequency, microwave, and millimeter
electronics; optical and optic-electrical devices; and data and digital
communications and imaging devices.
(7) "Eligible investment project" means an investment project which
either initiates a new operation, or expands or diversifies a current
operation by expanding, renovating, or equipping an existing facility.
The lessor or owner of the qualified building is not eligible for a
deferral unless:
(a) The lessor or owner complies with the requirements of chapter
39.12 RCW; and
(b) The underlying ownership of the buildings, machinery, and
equipment vests exclusively in the same person; or
(((b))) (c)(i) The lessor by written contract agrees to pass the
economic benefit of the deferral to the lessee;
(ii) The lessee that receives the economic benefit of the deferral
agrees in writing with the department to complete the annual survey
required under RCW 82.63.020(2); and
(iii) The economic benefit of the deferral passed to the lessee is
no less than the amount of tax deferred by the lessor and is evidenced
by written documentation of any type of payment, credit, or other
financial arrangement between the lessor or owner of the qualified
building and the lessee.
(8) "Environmental technology" means assessment and prevention of
threats or damage to human health or the environment, environmental
cleanup, and the development of alternative energy sources.
(9)(a) "Initiation of construction" means the date that a building
permit is issued under the building code adopted under RCW 19.27.031
for:
(i) Construction of the qualified building, if the underlying
ownership of the building vests exclusively with the person receiving
the economic benefit of the deferral;
(ii) Construction of the qualified building, if the economic
benefits of the deferral are passed to a lessee as provided in
subsection (7) of this section; or
(iii) Tenant improvements for a qualified building, if the economic
benefits of the deferral are passed to a lessee as provided in
subsection (7) of this section.
(b) "Initiation of construction" does not include soil testing,
site clearing and grading, site preparation, or any other related
activities that are initiated before the issuance of a building permit
for the construction of the foundation of the building.
(c) If the investment project is a phased project, "initiation of
construction" shall apply separately to each phase.
(10) "Investment project" means an investment in qualified
buildings or qualified machinery and equipment, including labor and
services rendered in the planning, installation, and construction or
improvement of the project.
(11) "Multiple qualified buildings" means qualified buildings
leased to the same person when such structures: (a) Are located within
a five-mile radius; and (b) the initiation of construction of each
building begins within a sixty-month period.
(12) "Person" has the meaning given in RCW 82.04.030 and includes
state universities as defined in RCW 28B.10.016.
(13) "Pilot scale manufacturing" means design, construction, and
testing of preproduction prototypes and models in the fields of
biotechnology, advanced computing, electronic device technology,
advanced materials, and environmental technology other than for
commercial sale. As used in this subsection, "commercial sale"
excludes sales of prototypes or sales for market testing if the total
gross receipts from such sales of the product, service, or process do
not exceed one million dollars.
(14) "Qualified buildings" means construction of new structures,
and expansion or renovation of existing structures for the purpose of
increasing floor space or production capacity used for pilot scale
manufacturing or qualified research and development, including plant
offices and other facilities that are an essential or an integral part
of a structure used for pilot scale manufacturing or qualified research
and development. If a building or buildings are used partly for pilot
scale manufacturing or qualified research and development, and partly
for other purposes, the applicable tax deferral shall be determined by
apportionment of the costs of construction under rules adopted by the
department. Such rules may include provisions for determining the
amount of the deferral based on apportionment of costs of construction
of an investment project consisting of a building or multiple
buildings, where qualified research and development or pilot scale
manufacturing activities are shifted within a building or from one
building to another building.
(15) "Qualified machinery and equipment" means fixtures, equipment,
and support facilities that are an integral and necessary part of a
pilot scale manufacturing or qualified research and development
operation. "Qualified machinery and equipment" includes: Computers;
software; data processing equipment; laboratory equipment,
instrumentation, and other devices used in a process of experimentation
to develop a new or improved pilot model, plant process, product,
formula, invention, or similar property; manufacturing components such
as belts, pulleys, shafts, and moving parts; molds, tools, and dies;
vats, tanks, and fermenters; operating structures; and all other
equipment used to control, monitor, or operate the machinery. For
purposes of this chapter, qualified machinery and equipment must be
either new to the taxing jurisdiction of the state or new to the
certificate holder, except that used machinery and equipment may be
treated as qualified machinery and equipment if the certificate holder
either brings the machinery and equipment into Washington or makes a
retail purchase of the machinery and equipment in Washington or
elsewhere.
(16) "Qualified research and development" means research and
development performed within this state in the fields of advanced
computing, advanced materials, biotechnology, electronic device
technology, and environmental technology.
(17) "Recipient" means a person receiving a tax deferral under this
chapter.
(18) "Research and development" means activities performed to
discover technological information, and technical and nonroutine
activities concerned with translating technological information into
new or improved products, processes, techniques, formulas, inventions,
or software. The term includes exploration of a new use for an
existing drug, device, or biological product if the new use requires
separate licensing by the federal food and drug administration under
chapter 21, C.F.R., as amended. The term does not include adaptation
or duplication of existing products where the products are not
substantially improved by application of the technology, nor does the
term include surveys and studies, social science and humanities
research, market research or testing, quality control, sale promotion
and service, computer software developed for internal use, and research
in areas such as improved style, taste, and seasonal design.
Sec. 12 RCW 82.75.010 and 2010 c 114 s 145 are each amended to
read as follows:
Unless the context clearly requires otherwise, the definitions in
this section apply throughout this chapter.
(1) "Applicant" means a person applying for a tax deferral under
this chapter.
(2) "Biotechnology" means a technology based on the science of
biology, microbiology, molecular biology, cellular biology,
biochemistry, or biophysics, or any combination of these, and includes,
but is not limited to, recombinant DNA techniques, genetics and genetic
engineering, cell fusion techniques, and new bioprocesses, using living
organisms, or parts of organisms.
(3) "Biotechnology product" means any virus, therapeutic serum,
antibody, protein, toxin, antitoxin, vaccine, blood, blood component or
derivative, allergenic product, or analogous product produced through
the application of biotechnology that is used in the prevention,
treatment, or cure of diseases or injuries to humans.
(4) "Department" means the department of revenue.
(5)(a) "Eligible investment project" means an investment in
qualified buildings or qualified machinery and equipment, including
labor and services rendered in the planning, installation, and
construction of the project.
(b) The lessor or owner of a qualified building is not eligible for
a deferral unless:
(i) The lessor or owner complies with the requirements of chapter
39.12 RCW; and
(ii) The underlying ownership of the buildings, machinery, and
equipment vests exclusively in the same person; or
(((ii))) (iii)(A) The lessor by written contract agrees to pass the
economic benefit of the deferral to the lessee;
(B) The lessee that receives the economic benefit of the deferral
agrees in writing with the department to complete the annual survey
required under RCW 82.75.070; and
(C) The economic benefit of the deferral passed to the lessee is no
less than the amount of tax deferred by the lessor and is evidenced by
written documentation of any type of payment, credit, or other
financial arrangement between the lessor or owner of the qualified
building and the lessee.
(6)(a) "Initiation of construction" means the date that a building
permit is issued under the building code adopted under RCW 19.27.031
for:
(i) Construction of the qualified building, if the underlying
ownership of the building vests exclusively with the person receiving
the economic benefit of the deferral;
(ii) Construction of the qualified building, if the economic
benefits of the deferral are passed to a lessee as provided in
subsection (5)(b)(((ii))) (iii)(A) of this section; or
(iii) Tenant improvements for a qualified building, if the economic
benefits of the deferral are passed to a lessee as provided in
subsection (5)(b)(((ii))) (iii)(A) of this section.
(b) "Initiation of construction" does not include soil testing,
site clearing and grading, site preparation, or any other related
activities that are initiated before the issuance of a building permit
for the construction of the foundation of the building.
(c) If the investment project is a phased project, "initiation of
construction" applies separately to each phase.
(7) "Manufacturing" has the meaning provided in RCW 82.04.120.
(8) "Medical device" means an instrument, apparatus, implement,
machine, contrivance, implant, in vitro reagent, or other similar or
related article, including any component, part, or accessory, that is
designed or developed and:
(a) Recognized in the national formulary, or the United States
pharmacopeia, or any supplement to them;
(b) Intended for use in the diagnosis of disease, or in the cure,
mitigation, treatment, or prevention of disease or other conditions in
human beings or other animals; or
(c) Intended to affect the structure or any function of the body of
human beings or other animals, and which does not achieve any of its
primary intended purposes through chemical action within or on the body
of human beings or other animals and which is not dependent upon being
metabolized for the achievement of any of its principal intended
purposes.
(9) "Person" has the meaning provided in RCW 82.04.030.
(10) "Qualified buildings" means construction of new structures,
and expansion or renovation of existing structures for the purpose of
increasing floor space or production capacity used for biotechnology
product manufacturing or medical device manufacturing activities,
including plant offices, commercial laboratories for process
development, quality assurance and quality control, and warehouses or
other facilities for the storage of raw material or finished goods if
the facilities are an essential or an integral part of a factory,
plant, or laboratory used for biotechnology product manufacturing or
medical device manufacturing. If a building is used partly for
biotechnology product manufacturing or medical device manufacturing and
partly for other purposes, the applicable tax deferral must be
determined by apportionment of the costs of construction under rules
adopted by the department.
(11) "Qualified machinery and equipment" means all new industrial
and research fixtures, equipment, and support facilities that are an
integral and necessary part of a biotechnology product manufacturing or
medical device manufacturing operation. "Qualified machinery and
equipment" includes: Computers; software; data processing equipment;
laboratory equipment; manufacturing components such as belts, pulleys,
shafts, and moving parts; molds, tools, and dies; operating structures;
and all equipment used to control or operate the machinery.
(12) "Recipient" means a person receiving a tax deferral under this
chapter.
Sec. 13 RCW 82.82.010 and 2008 c 15 s 1 are each amended to read
as follows:
The definitions in this section apply throughout this chapter
unless the context clearly requires otherwise.
(1) "Applicant" means a person applying for a tax deferral under
this chapter.
(2) "Corporate headquarters" means a facility or facilities where
corporate staff employees are physically employed, and where the
majority of the company's management services are handled either on a
regional or a national basis. Company management services may include:
Accounts receivable and payable, accounting, data processing,
distribution management, employee benefit plan, financial and
securities accounting, information technology, insurance, legal,
merchandising, payroll, personnel, purchasing procurement, planning,
reporting and compliance, research and development, tax, treasury, or
other headquarters-related services. "Corporate headquarters" does not
include a facility or facilities used for manufacturing, wholesaling,
or warehousing.
(3) "Department" means the department of revenue.
(4) "Eligible area" means a designated community empowerment zone
approved under RCW 43.31C.020.
(5)(a) "Eligible investment project" means an investment project in
a qualified building or buildings in an eligible area, as defined in
subsection (4) of this section, which will have employment at the
qualified building or buildings of at least three hundred employees in
qualified employment positions, each of whom must earn for the year
reported at least the average annual wage for the state for that year
as determined by the employment security department.
(b) The lessor or owner of a qualified building or buildings is not
eligible for a deferral unless:
(i) The lessor or owner complies with the requirements of chapter
39.12 RCW; and
(ii) The underlying ownership of the building or buildings vests
exclusively in the same person; or
(((ii))) (iii)(A) The lessor by written contract agrees to pass the
economic benefit of the deferral to the lessee;
(B) The lessee that receives the economic benefit of the deferral
agrees in writing with the department to complete the annual survey
required under RCW 82.82.020; and
(C) The economic benefit of the deferral passed to the lessee is no
less than the amount of tax deferred by the lessor and is evidenced by
written documentation of any type of payment, credit, or other
financial arrangement between the lessor or owner of the qualified
building and the lessee.
(6) "Investment project" means a capital investment of at least
thirty million dollars in a qualified building or buildings including
tangible personal property and fixtures that will be incorporated as an
ingredient or component of such buildings during the course of their
construction, and including labor and services rendered in the
planning, installation, and construction of the project.
(7) "Manufacture" has the same meaning as provided in RCW
82.04.120.
(8) "Operationally complete" means a date no later than one year
from the date the project is issued an occupancy permit by the local
permit issuing authority.
(9) "Person" has the same meaning as provided in RCW 82.04.030.
(10) "Qualified building or buildings" means construction of a new
structure or structures or expansion of an existing structure or
structures to be used for corporate headquarters. If a building is
used partly for corporate headquarters and partly for other purposes,
the applicable tax deferral is determined by apportionment of the costs
of construction under rules adopted by the department.
(11) "Qualified employment position" means a permanent full-time
employee employed in the eligible investment project during the entire
tax year. The term "entire tax year" means a full-time position that
is filled for a period of twelve consecutive months. The term "full-time" means at least thirty-five hours a week, four hundred fifty-five
hours a quarter, or one thousand eight hundred twenty hours a year.
(12) "Recipient" means a person receiving a tax deferral under this
chapter.
(13) "Warehouse" means a building or structure, or any part
thereof, in which goods, wares, or merchandise are received for storage
for compensation.
(14) "Wholesale sale" has the same meaning as provided in RCW
82.04.060.
Sec. 14 RCW 82.08.820 and 2011 c 174 s 206 are each amended to
read as follows:
(1) Wholesalers or third-party warehousers who own or operate
warehouses or grain elevators and retailers who own or operate
distribution centers, and who have paid the tax levied by RCW 82.08.020
on:
(a) Material-handling and racking equipment, and labor and services
rendered in respect to installing, repairing, cleaning, altering, or
improving the equipment; or
(b) Construction of a warehouse or grain elevator, including
materials, and including service and labor costs,
are eligible for an exemption in the form of a remittance. The amount
of the remittance is computed under subsection (3) of this section and
is based on the state share of sales tax.
(2) For purposes of this section and RCW 82.12.820:
(a) "Agricultural products" has the meaning given in RCW 82.04.213;
(b) "Construction" means the actual construction of a warehouse or
grain elevator that did not exist before the construction began.
"Construction" includes expansion if the expansion adds at least two
hundred thousand square feet of additional space to an existing
warehouse or additional storage capacity of at least one million
bushels to an existing grain elevator. "Construction" does not include
renovation, remodeling, or repair;
(c) "Department" means the department of revenue;
(d) "Distribution center" means a warehouse that is used
exclusively by a retailer solely for the storage and distribution of
finished goods to retail outlets of the retailer. "Distribution
center" does not include a warehouse at which retail sales occur;
(e) "Finished goods" means tangible personal property intended for
sale by a retailer or wholesaler. "Finished goods" does not include
agricultural products stored by wholesalers, third-party warehouses, or
retailers if the storage takes place on the land of the person who
produced the agricultural product. "Finished goods" does not include
logs, minerals, petroleum, gas, or other extracted products stored as
raw materials or in bulk;
(f) "Grain elevator" means a structure used for storage and
handling of grain in bulk;
(g) "Material-handling equipment and racking equipment" means
equipment in a warehouse or grain elevator that is primarily used to
handle, store, organize, convey, package, or repackage finished goods.
The term includes tangible personal property with a useful life of one
year or more that becomes an ingredient or component of the equipment,
including repair and replacement parts. The term does not include
equipment in offices, lunchrooms, restrooms, and other like space,
within a warehouse or grain elevator, or equipment used for
nonwarehousing purposes. "Material-handling equipment" includes but is
not limited to: Conveyers, carousels, lifts, positioners, pick-up-and-place units, cranes, hoists, mechanical arms, and robots; mechanized
systems, including containers that are an integral part of the system,
whose purpose is to lift or move tangible personal property; and
automated handling, storage, and retrieval systems, including computers
that control them, whose purpose is to lift or move tangible personal
property; and forklifts and other off-the-road vehicles that are used
to lift or move tangible personal property and that cannot be operated
legally on roads and streets. "Racking equipment" includes, but is not
limited to, conveying systems, chutes, shelves, racks, bins, drawers,
pallets, and other containers and storage devices that form a necessary
part of the storage system;
(h) "Person" has the meaning given in RCW 82.04.030;
(i) "Retailer" means a person who makes "sales at retail" as
defined in chapter 82.04 RCW of tangible personal property;
(j) "Square footage" means the product of the two horizontal
dimensions of each floor of a specific warehouse. The entire footprint
of the warehouse shall be measured in calculating the square footage,
including space that juts out from the building profile such as loading
docks. "Square footage" does not mean the aggregate of the square
footage of more than one warehouse at a location or the aggregate of
the square footage of warehouses at more than one location;
(k) "Third-party warehouser" means a person taxable under RCW
82.04.280(1)(d);
(l) "Warehouse" means an enclosed building or structure in which
finished goods are stored. A warehouse building or structure may have
more than one storage room and more than one floor. Office space,
lunchrooms, restrooms, and other space within the warehouse and
necessary for the operation of the warehouse are considered part of the
warehouse as are loading docks and other such space attached to the
building and used for handling of finished goods. Landscaping and
parking lots are not considered part of the warehouse. A storage yard
is not a warehouse, nor is a building in which manufacturing takes
place; and
(m) "Wholesaler" means a person who makes "sales at wholesale" as
defined in chapter 82.04 RCW of tangible personal property, but
"wholesaler" does not include a person who makes sales exempt under RCW
82.04.330.
(3)(a) A person claiming an exemption from state tax in the form of
a remittance under this section must pay the tax imposed by RCW
82.08.020. The buyer may then apply to the department for remittance
of all or part of the tax paid under RCW 82.08.020. For grain
elevators with bushel capacity of one million but less than two
million, the remittance is equal to fifty percent of the amount of tax
paid. For warehouses with square footage of two hundred thousand or
more and for grain elevators with bushel capacity of two million or
more, the remittance is equal to one hundred percent of the amount of
tax paid for qualifying construction, materials, service, and labor,
and fifty percent of the amount of tax paid for qualifying material-handling equipment and racking equipment, and labor and services
rendered in respect to installing, repairing, cleaning, altering, or
improving the equipment.
(b) The department shall determine eligibility under this section
based on information provided by the buyer and through audit and other
administrative records. The buyer shall on a quarterly basis submit an
information sheet, in a form and manner as required by the department
by rule, specifying the amount of exempted tax claimed and the
qualifying purchases or acquisitions for which the exemption is
claimed. The buyer shall retain, in adequate detail to enable the
department to determine whether the equipment or construction meets the
criteria under this section: Invoices; proof of tax paid; documents
describing the material-handling equipment and racking equipment;
location and size of warehouses and grain elevators; and construction
invoices and documents.
(c) The department shall on a quarterly basis remit exempted
amounts to qualifying persons who submitted applications during the
previous quarter.
(4) Warehouses, grain elevators, and material-handling equipment
and racking equipment for which an exemption, credit, or deferral has
been or is being received under chapter 82.60, 82.62, or 82.63 RCW or
RCW 82.08.02565 or 82.12.02565 are not eligible for any remittance
under this section. Warehouses and grain elevators upon which
construction was initiated before May 20, 1997, are not eligible for a
remittance under this section.
(5) The lessor or owner of a warehouse or grain elevator is not
eligible for a remittance under this section unless:
(a) The lessor or owner complies with the requirements of chapter
39.12 RCW; and
(b) The underlying ownership of the warehouse or grain elevator and
the material-handling equipment and racking equipment vests exclusively
in the same person((,)); or ((unless))
(c) The lessor by written contract agrees to pass the economic
benefit of the remittance to the lessee in the form of reduced rent
payments.
Sec. 15 RCW 82.08.900 and 2006 c 151 s 4 are each amended to read
as follows:
(1) The tax levied by RCW 82.08.020 does not apply to sales to an
eligible person establishing or operating an anaerobic digester or to
services rendered in respect to installing, constructing, repairing,
cleaning, altering, or improving an anaerobic digester, or to sales of
tangible personal property that becomes an ingredient or component of
the anaerobic digester. The anaerobic digester must be used primarily
to treat livestock manure.
(2)(a) The department of revenue must provide an exemption
certificate to an eligible person upon application by that person. The
application must be in a form and manner prescribed by the department
and must contain information regarding the location of the facility and
other information as the department may require.
(b) A person claiming an exemption under this section must keep
records necessary for the department to verify eligibility under this
section. The exemption is available only when the buyer provides the
seller with an exemption certificate in a form and manner prescribed by
the department. The seller must retain a copy of the certificate for
the seller's files.
(3) The definitions in this subsection apply to this section and
RCW 82.12.900 unless the context clearly requires otherwise:
(a) "Anaerobic digester" means a facility that processes manure
from livestock into biogas and dried manure using microorganisms in a
decomposition process within a closed, oxygen-free container.
(b) "Eligible person" means any person establishing or operating an
anaerobic digester to treat primarily livestock manure who complies
with the requirements of chapter 39.12 RCW.
(c) "Primarily" means more than fifty percent measured by volume or
weight.
Sec. 16 RCW 82.08.955 and 2007 c 309 s 4 are each amended to read
as follows:
(1) The tax levied by RCW 82.08.020 does not apply to sales of
machinery and equipment, or to services rendered in respect to
constructing structures, installing, constructing, repairing, cleaning,
decorating, altering, or improving of structures or machinery and
equipment, or to sales of tangible personal property that becomes an
ingredient or component of structures or machinery and equipment, if
the machinery, equipment, or structure is used directly for the retail
sale of a biodiesel blend or E85 motor fuel. Structures and machinery
and equipment that are used for the retail sale of a biodiesel blend or
E85 motor fuel and for other purposes are exempt only on the portion
used directly for the retail sale of a biodiesel blend or E85 motor
fuel.
(2) The tax levied by RCW 82.08.020 does not apply to sales of fuel
delivery vehicles or to sales of or charges made for labor and services
rendered in respect to installing, repairing, cleaning, altering, or
improving the vehicles including repair parts and replacement parts if
at least seventy-five percent of the fuel distributed by the vehicles
is a biodiesel blend or E85 motor fuel.
(3) A person taking the exemption under this section must keep
records necessary for the department to verify eligibility under this
section and comply with the requirements of chapter 39.12 RCW. The
exemption is available only when the buyer provides the seller with an
exemption certificate in a form and manner prescribed by the
department. The seller shall retain a copy of the certificate for the
seller's files.
(4) For the purposes of this section, the definitions in RCW
82.04.4334 and this subsection apply.
(a) "Biodiesel blend" means fuel that contains at least twenty
percent biodiesel fuel by volume.
(b) "E85 motor fuel" means an alternative fuel that is a blend of
ethanol and hydrocarbon of which the ethanol portion is nominally
seventy-five to eighty-five percent denatured fuel ethanol by volume
that complies with the most recent version of American society of
testing and materials specification D 5798.
(c) "Machinery and equipment" means industrial fixtures, devices,
and support facilities and tangible personal property that becomes an
ingredient or component thereof, including repair parts and replacement
parts that are integral and necessary for the delivery of biodiesel
blends or E85 motor fuel into the fuel tank of a motor vehicle.
(5) This section expires July 1, 2015.
Sec. 17 RCW 82.12.955 and 2007 c 309 s 5 are each amended to read
as follows:
(1) The provisions of this chapter do not apply in respect to the
use of machinery and equipment, or to services rendered in respect to
installing, repairing, cleaning, altering, or improving of eligible
machinery and equipment, or tangible personal property that becomes an
ingredient or component of machinery and equipment used directly for
the retail sale of a biodiesel or E85 motor fuel.
(2) The provisions of this chapter do not apply in respect to the
use of fuel delivery vehicles including repair parts and replacement
parts and to services rendered in respect to installing, repairing,
cleaning, altering, or improving the vehicles if at least seventy-five
percent of the fuel distributed by the vehicles is a biodiesel or E85
motor fuel.
(3) A person taking the exemption under this section must comply
with the requirements of chapter 39.12 RCW.
(4) For the purposes of this section, the definitions in RCW
82.04.4334 and 82.08.955 apply.
(((4))) (5) This section expires July 1, 2015.