AN ACT Relating to financing essential public infrastructure; amending RCW 39.94.030, 43.155.020, 43.155.040, and 43.155.050; reenacting and amending RCW 39.94.040; adding a new section to chapter 43.155 RCW; adding a new chapter to Title 39 RCW; creating a new section; and providing a contingent effective date.

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

PART I

FINDINGS AND INTENT

PART II

STATE FINANCE COMMITTEE PROVISIONS

(1) "Bond" means any voted general obligation bond or revenue bond issued by a local jurisdiction, holding a certificate issued pursuant to this chapter for such a bond.

(2) "Credit enhancement program" means the essential public works bond guaranty established by this chapter.

(3) "Essential public infrastructure project" or "project" means a project approved by the public works board under the provisions of section 304 of this act by a local jurisdiction determined eligible by the state treasurer under the provisions of section 203 of this act.

(4) "General obligation bond" means any bond, note, warrant, certificate of indebtedness, or other obligation of a local jurisdiction that constitutes an indebtedness within the meaning of any applicable constitutional or statutory debt limitations.

(5) "Local jurisdiction" or "jurisdiction" means any political subdivision existing now or later under the laws of the state.

(6) "Paying agent" means the paying agent selected, from time to time, for a bond issue pursuant to state law.

(7) "Pooled bond" means a financing contract approved and issued under the provisions of section 208 of this act.

(8) "Public works board" or "board" means the public works board or its successor organization established in RCW 43.155.030.

(9) "Refunding bond" means any general obligation or revenue bond issued by a district for the purpose of refunding its outstanding general obligation or revenue bonds.

(b) This guaranty does not extend to the payment of any redemption premium.

(c) Reference to this chapter by its title on the face of any bond or pooled bond conclusively establishes the guaranty provided to that bond under the provisions of this chapter.

(2)(a) The state pledges to and agrees with the owners of any bonds or pooled bonds that the state will not alter, impair, or limit the rights vested by the credit enhancement program with respect to the bonds or pooled bonds until the bonds or pooled bonds, together with applicable interest, are fully paid and discharged. However, this chapter does not preclude an alteration, impairment, or limitation if full provision is made by law for the payment of the bonds or pooled bonds.

(b) Each jurisdiction may refer to this pledge and undertaking by the state in its bonds.

(3) Only validly issued bonds or pooled bonds issued after the effective date of this section may be guaranteed under this chapter.

(b) After reviewing the request, if the state treasurer determines that the local jurisdiction is eligible under rules adopted by the state finance committee, and the project has been approved by the public works board under provisions of section 304 of this act, the state treasurer shall promptly issue the certificate as to specific bonds of the local jurisdiction and provide it to the requesting jurisdiction.

(c)(i) The local jurisdiction receiving the certificate and all other persons may rely on the certificate as evidencing the guaranty for bonds issued within one year from and after the date of the certificate, without making further inquiry during that year.

(ii) The certificate of eligibility is valid for one year even if the state treasurer later determines that the jurisdiction is ineligible.

(2) Any jurisdiction that has bonds or that has received proceeds from pooled bonds, the principal of or interest on which has been paid, in whole or in part, by the state under this chapter, may not issue any additional bonds guaranteed by this chapter until:

(a) All payment obligations of the jurisdiction to the state under the credit enhancement program are satisfied; and

(b) The state treasurer and the public works board each certify in writing, to be kept on file by the state treasurer and the public works board, that the jurisdiction is fiscally solvent.

(3) The state finance committee may establish by rule fees sufficient to cover the costs of administering this chapter.

NEW SECTION.  Sec. 204.  (1)(a) The treasurer for each local jurisdiction with outstanding, unpaid bonds or share of pooled bonds shall transfer money sufficient for each scheduled debt service payment to its paying agent or to the state treasurer on or before any principal or interest payment date for the bonds or pooled bonds.

(b) A treasurer who is unable to transfer a scheduled debt service payment to the paying agent or state treasurer on the transfer date shall immediately notify the paying agent and the state treasurer by:

(i) Telephone;

(ii) A writing sent by facsimile or electronic transmission; and

(iii) A writing sent by first-class United States mail.

(2) If sufficient funds are not transferred to the paying agent as required by subsection (1) of this section, the paying agent shall immediately notify the state treasurer of that failure by:

(a) Telephone;

(b) A writing sent by facsimile or electronic transmission; and

(c) A writing sent by first-class United States mail.

(3)(a) If sufficient money to pay the scheduled debt service payment has not been so transferred to the paying agent or state treasurer, the state treasurer shall, forthwith, transfer sufficient money to the paying agent to make the scheduled debt service payment.

(b) The payment by the state treasurer:

(i) Discharges the obligation of the issuing local jurisdiction to its bond owners for the payment, but does not retire any bond that has matured. The terms of that bond remain in effect until the state is repaid; and

(ii) Transfers the rights represented by the general obligation of the local jurisdiction from the bond owners to the state.

(c) The local jurisdiction shall repay to the state the money so transferred as provided in this chapter.

(a) Reimburse all money drawn by the state treasurer on its behalf;

(b) Pay interest to the state on all money paid by the state from the date that money was drawn to the date the state is repaid at a rate to be prescribed by rule by the state finance committee; and

(c) Pay all penalties required by this chapter.

(2)(a) The state treasurer shall establish the reimbursement interest rate after considering the circumstances of any prior draws by the district on the state, market interest and penalty rates, and the cost of funds or opportunity cost of investments, if any, that were required to be borrowed or liquidated by the state to make payment on the bonds.

(b) The state treasurer may, after considering the circumstances giving rise to the failure of the local jurisdiction to make payment on its bonds in a timely manner, impose on the jurisdiction a penalty of not more than five percent of the amount paid by the state pursuant to its guaranty for each instance in which a payment by the state is made.

(3)(a)(i) If the state treasurer determines that amounts obtained under this chapter will not reimburse the state in full within one year from the state's payment of a local jurisdiction's scheduled debt service payment, the state treasurer may pursue any legal action, including mandamus, against the jurisdiction to compel it to meet its repayment obligations to the state.

(ii) In pursuing its rights under (a)(i) of this subsection, the state shall have the same substantive and procedural rights as would a holder of the bonds of a jurisdiction. If and to the extent that the state has made payments to the holders of bonds or pooled bonds of a jurisdiction under section 204 of this act and has not been reimbursed by the district, the state shall be subrogated to the rights of those bond holders.

(iii) The state treasurer may also direct the local jurisdiction and the appropriate county officials to restructure and revise the collection of taxes for the payment of bonds on which the state treasurer has made payments under this chapter and, to the extent permitted by law, may require that the proceeds of such taxes be applied to the jurisdiction's obligations to the state if all outstanding obligations of the jurisdiction payable from such taxes are fully paid or their payment is fully provided for.

(b) The jurisdiction shall pay the fees, expenses, and costs incurred by the state in recovering amounts paid under the guaranty authorized by this chapter.

Sec. 208.  RCW 39.94.030 and 2010 c 115 s 2 are each amended to read as follows:

(1) The state may enter into financing contracts for itself or on behalf of an other agency for the use and acquisition for public purposes of real and personal property. Payments under financing contracts of the state shall be made by the state from currently appropriated funds or funds not constituting "general state revenues" as defined in Article VIII, section 1 of the state Constitution. Except as provided in subsection (4)(b) of this section, payments under financing contracts of the state on behalf of any other agency shall be made solely from the sources identified in the financing contract, which may not obligate general state revenues as defined in Article VII, section 1 of the state Constitution. The treasurer of an other agency shall remit payments under financing contracts to the office of the state treasurer or to the state treasurer's designee. In the event of any deficiency of payments by an other agency under a financing contract, the treasurer of the other agency shall transfer any legally available funds of the other agency in satisfaction of the other agency's obligations under the financing contract if such funds have been obligated by the other agency under the financing contract and, if such deficiency is not thereby cured, the office of the state treasurer is directed to withdraw from that agency's share of state revenues for distribution or other money an amount sufficient to fulfill the terms and conditions of the financing contract. The term of any financing contract shall not exceed thirty years or the remaining useful life of the property, whichever is shorter. Financing contracts may include other terms and conditions agreed upon by the parties.

(2) The state for itself or on behalf of an other agency may enter into contracts for credit enhancement, which limits the recourse of the provider of credit enhancement solely to the security provided under the financing contract secured by the credit enhancement.

(3) The state or an other agency may grant a security interest in real or personal property acquired under financing contracts. The security interest may be perfected as provided by the uniform commercial code - secured transactions, or otherwise as provided by law for perfecting liens on real estate. Other terms and conditions may be included as agreed upon by the parties. An other agency that is authorized by applicable law to enter into a financing contract may make payments due under such a contract from the proceeds of annual tax levies approved by the voters under RCW 84.52.056, among other sources.

(4)(a) Financing contracts and contracts for credit enhancement entered into under the limitations set forth in this chapter do not constitute a debt or the contracting of indebtedness under any law limiting debt of the state. It is the intent of the legislature that such contracts also do not constitute a debt or the contracting of indebtedness under Article VIII, section 1 of the state Constitution. Certificates of participation in payments to be made under financing contracts also do not constitute a debt or the contracting of an indebtedness under any law limiting debt of the state if payment is conditioned upon payment by the state under the financing contract with respect to which the same relates. It is the intent of the legislature that such certificates also do not constitute a debt or the contracting of indebtedness under Article VIII, section 1 of the state Constitution if payment of the certificates is conditioned upon payment by the state under the financing contract with respect to which those certificates relate.

(b) An other agency authorized by law to issue bonds, notes, or other evidences of indebtedness or to enter into conditional sales contracts or lease obligations, may participate in a program under this chapter in which the state enters into a financing contract on behalf of that other agency, and the other agency's obligations to the state under the program may be evidenced by an agreement, lease, bond, note, or other appropriate instrument. A financing contract made by the state on behalf of an other agency may be secured by the pledge of revenues of the other agency or other agency's full faith and credit or may, at the option of the state finance committee, include a contingent obligation by the state for payment under such financing contract.

Sec. 209.  RCW 39.94.040 and 2011 1st sp.s. c 43 s 726 and 2011 c 151 s 7 are each reenacted and amended to read as follows:

(1) Except as provided in RCW 28B.10.022, the state may not enter into any financing contract for itself if the aggregate principal amount payable thereunder is greater than an amount to be established from time to time by the state finance committee or participate in a program providing for the issuance of certificates of participation, including any contract for credit enhancement, without the prior approval of the state finance committee. Except as provided in RCW 28B.10.022, the state finance committee shall approve the form of all financing contracts or a standard format for all financing contracts. The state finance committee also may:

(a) Consolidate existing or potential financing contracts into master financing contracts with respect to property acquired by one or more agencies, departments, instrumentalities of the state, the state board for community and technical colleges, or a state institution of higher learning; or to be acquired by another agency;

(b) Approve programs providing for the issuance of certificates of participation in master financing contracts for the state or for other agencies;

(c) Enter into agreements with trustees relating to master financing contracts; and

(d) Make appropriate rules for the performance of its duties under this chapter.

(2) In the performance of its duties under this chapter, the state finance committee may consult with representatives from the department of general administration, the office of financial management, and the office of the chief information officer.

(3) With the approval of the state finance committee, the state also may enter into agreements with trustees relating to financing contracts and the issuance of certificates of participation.

(4) Except for financing contracts for real property used for the purposes described under chapter 28B.140 RCW, or for essential public infrastructure projects under chapter 39.--- RCW (the new chapter created in section 402 of this act), the state may not enter into any financing contract for real property of the state without prior approval of the legislature. For the purposes of this requirement, a financing contract must be treated as used for real property if it is being entered into by the state for the acquisition of land; the acquisition of an existing building; the construction of a new building; or a major remodeling, renovation, rehabilitation, or rebuilding of an existing building. Prior approval of the legislature is not required under this chapter for a financing contract entered into by the state under this chapter for energy conservation improvements to existing buildings where such improvements include: (a) Fixtures and equipment that are not part of a major remodeling, renovation, rehabilitation, or rebuilding of the building, or (b) other improvements to the building that are being performed for the primary purpose of energy conservation. Such energy conservation improvements must be determined eligible for financing under this chapter by the office of financial management in accordance with financing guidelines established by the state treasurer, and are to be treated as personal property for the purposes of this chapter.

(5) The state may not enter into any financing contract on behalf of another agency without the approval of such a financing contract by the governing body of the other agency.

PART III

PUBLIC WORKS BOARD PROVISIONS

Sec. 301.  RCW 43.155.020 and 2009 c 565 s 33 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.

(1) "Board" means the public works board created in RCW 43.155.030.

(2) "Capital facility plan" means a capital facility plan required by the growth management act under chapter 36.70A RCW or, for local governments not fully planning under the growth management act, a plan required by the public works board.

(3) "Department" means the department of commerce.

(4) "Essential public infrastructure projects" has the same meaning as in section 201 of this act.

(5) "Financing guarantees" means the pledge of money in the public works assistance account, or money to be received by the public works assistance account, to the repayment of all or a portion of the principal of or interest on obligations issued by local governments to finance public works projects.

(((5)))(6) "Local governments" means cities, towns, counties, special purpose districts, and any other municipal corporations or quasi-municipal corporations in the state excluding school districts and port districts.

(((6)))(7) "Public works project" means a project of a local government for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of streets and roads, bridges, water systems, or storm and sanitary sewage systems and solid waste facilities, including recycling facilities. A planning project may include the compilation of biological, hydrological, or other data on a county, drainage basin, or region necessary to develop a base of information for a capital facility plan.

(((7)))(8) "Solid waste or recycling project" means remedial actions necessary to bring abandoned or closed landfills into compliance with regulatory requirements and the repair, restoration, and replacement of existing solid waste transfer, recycling facilities, and landfill projects limited to the opening of landfill cells that are in existing and permitted landfills.

(((8)))(9) "Technical assistance" means training and other services provided to local governments to: (a) Help such local governments plan, apply, and qualify for loans and financing guarantees from the board, and (b) help local governments improve their ability to plan for, finance, acquire, construct, repair, replace, rehabilitate, and maintain public facilities.

Sec. 302.  RCW 43.155.040 and 1985 c 446 s 10 are each amended to read as follows:

The board may:

(1) Accept from any state or federal agency, loans or grants for the planning or financing of any public works project and enter into agreements with any such agency concerning the loans or grants;

(2) Provide technical assistance to local governments;

(3) Accept any gifts, grants, or loans of funds, property, or financial or other aid in any form from any other source on any terms and conditions which are not in conflict with this chapter;

(4) Adopt rules under chapter 34.05 RCW as necessary to carry out the purposes of this chapter;

(5) Do all acts and things necessary or convenient to carry out the powers expressly granted or implied under this chapter;

(6) Review and approve essential public infrastructure projects under the provisions of section 304 of this act.

Sec. 303.  RCW 43.155.050 and 2013 2nd sp.s. c 4 s 983 are each amended to read as follows:

The public works assistance account is hereby established in the state treasury. ((Money may be placed in the public works assistance account from the proceeds of bonds when authorized by the legislature or from any other lawful source.)) Money in the public works assistance account shall be used to make loans and to give financial guarantees to local governments for public works projects. Moneys in the account may also be appropriated or transferred to the water pollution control revolving account and the drinking water assistance account to provide for state match requirements under federal law ((for projects and activities conducted and financed by the board under the drinking water assistance account. Not more than fifteen percent of the biennial capital budget appropriation to the public works board from this account may be expended or obligated)). Money in the account may also be appropriated for the administration of the essential public infrastructure project program established in section 304 of this act and to offset or reduce fees charged by the state treasurer to administer the program and issue bonds under the program. Money in the account may also be appropriated for preconstruction loans((,))and emergency loans((, or loans for capital facility planning under this chapter; of this amount, not more than ten percent of the biennial capital budget appropriation may be expended for emergency loans and not more than one percent of the biennial capital budget appropriation may be expended for capital facility planning loans. During the 2011-2013 and 2013-2015 fiscal biennium, the legislature may transfer from the public works assistance account to the general fund, the water pollution control revolving account, and the drinking water assistance account such amounts as reflect the excess fund balance of the account. During the 2011-2013 fiscal biennium, the legislature may appropriate moneys from the account for economic development, innovation, and export grants, including brownfields; main street improvement grants; and the loan program consolidation board. During the 2013-2015 fiscal biennium, the legislature may transfer from the public works assistance account to the education legacy trust account such amounts as specified by the legislature)).

NEW SECTION.  Sec. 304.  A new section is added to chapter 43.155 RCW to read as follows:

(1) An essential public infrastructure project, as defined in section 201 of this act, is a capital project by an eligible local jurisdiction that is necessary to:

(a) Provide safe and adequate drinking water;

(b) Manage and treat wastewater and storm water;

(c) Provide safe and efficient transportation, including public parking facilities, public transit facilities, and nonmotorized transportation; and

(d) Provide safe and readily accessible recreation.

(2) An eligible local jurisdiction is any political subdivision that can significantly benefit from the financing assistance under chapter 39.--- RCW (the new chapter created in section 402 of this act) and demonstrate its ability to repay its obligations.

(3) The board must adopt specific criteria to determine which jurisdictions are eligible and what projects are necessary. The board must work with the state treasurer's office to determine the estimated amount and timing of financing assistance that can be provided annually. The board must prioritize and approve essential public works projects within the estimated amounts in order to assist jurisdictions that can most benefit from the assistance for projects that achieve the greatest community benefit. The board's approved projects must be submitted to the state treasurer's office for review of eligibility under the provisions of section 203 of this act. The board may also approve amounts from within appropriations of the public works assistance account to offset fees charged by the state treasurer's office under section 203 of this act.

PART IV

MISCELLANEOUS PROVISIONS

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