HOUSE BILL REPORT

HB 1205

BYRepresentatives Grimm and P. King 

Providing for the distribution of funds from the water quality account for water pollution control facilities.

House Committe on Ways & Means/Appropriations

Majority Report:  Do pass.  (22)

      Signed by Representatives Locke, Chair; Allen, Belcher, Braddock, Brekke, Bristow, Ebersole, Fuhrman, Grant, Grimm, Hine, Holland, McLean, McMullen, Nealey, Niemi, Peery, Sayan, Silver, H. Sommers, Sprenkle and B. Williams.

House Staff:Nancy Stevenson (786-7137)

AS PASSED HOUSE MARCH 20, 1987

BACKGROUND:

The 1986 legislature established the Water Quality Account to provide financial assistance to state and to local governments for the planning, design, acquisition, construction, and improvement of water pollution control facilities and related activities.

As a part of the 1986 legislation, the Office of Financial Management was directed to prepare a state financial assistance plan including recommendations regarding a revolving loan, criteria for equitable fund distribution based on current and future household sewage rates, an assessment of the future capital funding ability of local governmental entities,and state and local debt service agreements.

One of the recommendations of the financial assistance plan was to provide annual grants where a local agency arranges financing for the project expenditures and the state pays its share over an extended period of time.  The advantage of this method is the reduced requirements for state cash initially, thereby allowing more projects be undertaken in the near term.  This concept is a generalized version of a debt service agreement where the annual grant payment can be used by the local agency in their bond prospectus when selling bonds.  This does not mean there is a direct linkage between the state and the local entities bondholders.

SUMMARY:

HB 1205 authorizes the Department of Ecology to enter into contracts with local jurisdictions which provide for extended grants payments.  The payments shall be in equal annual amounts not to exceed 50 percent of the eligible cost of the project.

The duration of such extended grant payments is not more than twice the length of time for the date of the grant award and the compliance deadline.

Any moneys appropriated by the legislature from the water quality account shall first be used to satisfy the conditions of the extended grant contracts.

EFFECT OF SENATE AMENDMENT(S):  The amendment (1) specifies extended grant annual payment be based on a net present value; (2) clarifies that the duration of an extended grant is not to exceed 20 years; and (3) specifies sole-source aquifers receive assistance in the form of 50 percent grants.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Carol Jolly, Department of Ecology; Ron Posthuma, METRO; Bill Nims, City of Lynnwood.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Extended grant payments help alleviate the cash flow demand on the Water Quality Account.  Specifying that the money appropriated by the legislature from the Water Quality Account first be used to satisfy extended grant payments, helps a local entity secure financing for project.

House Committee - Testimony Against:      None Presented.

VOTE ON FINAL PASSAGE:

      Yeas 97; Excused 1

Excused:    Representative Padden