S0239.1 by Senator Mullet — ESHB 1189 - S COMM AMD, Business, Financial Services & Trade
Summary
S COMM AMD S-0239.1 to ESHB 1189, by Senator Mullet and by the Committee on Business, Financial Services & Trade. The amendment strikes everything after the enacting clause and inserts new text, beginning with definitions in Section 1, including that increment value means 100 percent of any increase in the true and fair value of real property in an increment area and that local government means any city, town, county, port district, or any combination thereof. It amends the title to read amending RCW 84.55.010 and 84.55.120 and adding a new chapter to Title 39 RCW. Its EFFECT statement reads that it makes technical corrections to fix a grammatical error and properly cite a subsection reference.
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“S0239.1 by Senator Mullet — ESHB 1189 - S COMM AMD, Business, Financial Services & Trade.”
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1189-S.E AMS BFST S0239.1
By Senator Mullet
ESHB 1189 - S COMM AMD
By Committee on Business, Financial Services & Trade
1 Strike everything after the enacting clause and insert the
2 following:
3 "NEW SECTION. Sec. 1. The definitions in this section apply
4 throughout this chapter unless the context clearly requires
5 otherwise.
6 (1) "Assessed value of real property" means the valuation of
7 taxable real property as placed on the last completed assessment roll
8 prepared pursuant to Title 84 RCW.
9 (2) "Increment area" means the geographic area within which
10 regular property tax revenues are to be apportioned to pay public
11 improvement costs, as authorized under this chapter.
12 (3) "Increment value" means 100 percent of any increase in the
13 true and fair value of real property in an increment area that is
14 placed on the tax rolls after the increment area is created.
15 (4) "Local government" means any city, town, county, port
16 district, or any combination thereof.
17 (5) "Ordinance" means any appropriate method of taking
18 legislative action by a local government.
19 (6) "Public improvement costs" means the costs of:
20 (a) Design, planning, acquisition, required permitting, required
21 environmental studies and mitigation, seismic studies or surveys,
22 archaeological studies or surveys, land surveying, site preparation,
23 construction, reconstruction, rehabilitation, improvement, and
24 installation of public improvements and other directly related costs;
25 (b) Relocating, maintaining, and operating property pending
26 construction of public improvements;
27 (c) Relocating utilities as a result of public improvements;
28 (d) Financing public improvements, including capitalized interest
29 for up to six months following completion of construction, legal and
30 other professional services, taxes, insurance, principal and interest
Code Rev/JO:lel 1 S-0239.1/21
1 costs on general indebtedness issued to finance public improvements,
2 and any necessary debt service reserves;
3 (e) Expenses incurred in revaluing real property for the purpose
4 of determining the tax allocation base value by a county assessor
5 under chapter 84.41 RCW and expenses incurred by a county treasurer
6 under chapter 84.56 RCW in apportioning the taxes and complying with
7 this chapter and other applicable law. For purposes of this
8 subsection (6)(e), "expenses incurred" means actual staff and
9 software costs directly related to the implementation and ongoing
10 administration of increment areas under this chapter; and
11 (f) Administrative expenses and feasibility studies reasonably
12 necessary and related to these costs, including related costs that
13 may have been incurred before adoption of the ordinance authorizing
14 the public improvements and the use of tax increment financing to
15 fund the costs of the public improvements.
16 (7) "Public improvements" means:
17 (a) Infrastructure improvements owned by a local government
18 within or outside of and serving the increment area that include:
19 (i) Street and road construction and maintenance;
20 (ii) Water and sewer system construction and improvements;
21 (iii) Sidewalks and other nonmotorized transportation
22 improvements and streetlights;
23 (iv) Parking, terminal, and dock facilities;
24 (v) Park and ride facilities supportive of transit facilities;
25 (vi) Park and community facilities and recreational areas;
26 (vii) Stormwater and drainage management systems;
27 (viii) Electric, broadband, or rail service;
28 (ix) Mitigation of brownfields; or
29 (b) Expenditures for any of the following purposes:
30 (i) Purchasing, rehabilitating, retrofitting for energy
31 efficiency, and constructing housing for the purpose of creating or
32 preserving long-term affordable housing;
33 (ii) Purchasing, rehabilitating, retrofitting for energy
34 efficiency, and constructing child care facilities serving children
35 and youth that are low-income, homeless, or in foster care;
36 (iii) Providing maintenance and security for the public
37 improvements; or
38 (iv) Historic preservation activities authorized under RCW
39 35.21.395.
Code Rev/JO:lel 2 S-0239.1/21
1 (8) "Regular property taxes" means regular property taxes as
2 defined in RCW 84.04.140, except: (a) Regular property taxes levied
3 by port districts or public utility districts specifically for the
4 purpose of making required payments of principal and interest on
5 general indebtedness; and (b) regular property taxes levied by the
6 state for the support of the common schools under RCW 84.52.065.
7 Regular property taxes do not include excess property tax levies that
8 are exempt from the aggregate limits for junior and senior taxing
9 districts as provided in RCW 84.52.043. "Regular property taxes" does
10 not include excess property taxes levied by local school districts.
11 (9) "Tax allocation base value" means the assessed value of real
12 property located within an increment area for taxes imposed in the
13 year in which the increment area is first designated.
14 (10) "Tax allocation revenues" means those revenues derived from
15 the imposition of regular property taxes on the increment value.
16 (11) "Taxing district" means a governmental entity that levies or
17 has levied for it regular property taxes upon real property located
18 within a proposed or approved increment area.
19 NEW SECTION. Sec. 2. (1) A local government may designate an
20 increment area under this chapter and use the tax allocation revenues
21 to pay public improvement costs, subject to the following conditions:
22 (a) The local government must adopt an ordinance designating an
23 increment area within its boundaries and describing the public
24 improvements proposed to be paid for, or financed with, tax
25 allocation revenues;
26 (b) The local government may not designate increment area
27 boundaries such that the entirety of its territory falls within an
28 increment area;
29 (c) A local government can create no more than three active
30 increment areas at any given time and they may not physically overlap
31 by including the same land in more than one increment area at any
32 time;
33 (d) The ordinance must set a sunset date for the increment area,
34 which may be no more than 25 years after the adoption of the
35 ordinance designating the increment area;
36 (e) The ordinance must indicate whether the local government
37 intends to issue bonds or other obligations, payable in whole or in
38 part, from tax allocation revenues to finance the public improvement
Code Rev/JO:lel 3 S-0239.1/21
1 costs, and must estimate the maximum amount of obligations
2 contemplated;
3 (f) The ordinance must provide that the increment takes effect on
4 June 1st following the adoption of the ordinance in (a) of this
5 subsection; and
6 (g) The local government must make a finding that:
7 (i) The public improvements proposed to be paid or financed with
8 tax allocation revenues are expected to encourage private development
9 within the increment area and to increase the assessed value of real
10 property within the increment area;
11 (ii) Private development that is anticipated to occur within the
12 increment area as a result of the proposed public improvements will
13 be permitted consistent with the permitting jurisdiction's applicable
14 zoning and development standards;
15 (iii) The private development would not reasonably be expected to
16 occur solely through private investment within the reasonably
17 foreseeable future without the proposed public improvements; and
18 (iv) The increased assessed value within the increment area that
19 could reasonably be expected to occur without the proposed public
20 improvements would be less than the increase in the assessed value
21 estimated to result from the proposed development with the proposed
22 public improvements.
23 (2) In considering whether to designate an increment area, the
24 legislative body of the local government must prepare a project
25 analysis that shall include, but need not be limited to, the
26 following:
27 (a) A statement of objectives of the local government for the
28 designated increment area;
29 (b) A statement as to the property within the increment area, if
30 any, that the local government may intend to acquire;
31 (c) The duration of the increment area;
32 (d) Identification of all parcels to be included in the area;
33 (e) A description of the expected private development within the
34 increment area, including a comparison of scenarios with the proposed
35 public improvements and without the proposed public improvements;
36 (f) A description of the public improvements, estimated public
37 improvement costs, and the estimated amount of bonds or other
38 obligations expected to be issued to finance the public improvement
39 costs and repaid with tax allocation revenues;
Code Rev/JO:lel 4 S-0239.1/21
1 (g) The assessed value of real property listed on the tax roll as
2 certified by the county assessor under RCW 84.52.080 from within the
3 increment area and an estimate of the increment value and tax
4 allocation revenues expected to be generated;
5 (h) An estimate of the job creation reasonably expected to result
6 from the public improvements and the private development expected to
7 occur in the increment area; and
8 (i) An assessment of any impacts and any necessary mitigation to
9 address the impacts identified on the following:
10 (i) Affordable and low-income housing;
11 (ii) The local business community;
12 (iii) The local school districts; and
13 (iv) The local fire service.
14 (3) The local government may charge a private developer a fee
15 sufficient to cover the cost of the project analysis and establishing
16 the increment area, including staff time, professionals and
17 consultants, and other administrative costs related to establishing
18 the increment area.
19 (4) Nothing in this section prohibits a local government from
20 entering into an agreement under chapter 39.34 RCW with another local
21 government for the administration or other activities related to tax
22 increment financing authorized under this section.
23 (5) If the project analysis indicates that an increment area will
24 impact at least 20 percent of the assessed value in a fire district,
25 the local government must negotiate a mitigation plan with the fire
26 district prior to implementing the increment area.
27 (6) The local government may reimburse the assessor and treasurer
28 for their costs as provided in section 1(6)(e) of this act.
29 (7) Prior to the adoption of an ordinance authorizing creation of
30 an increment area, the local government must:
31 (a) Hold at least two public briefings for the community solely
32 on the tax increment project that include the description of the
33 increment area, the public improvements proposed to be financed with
34 the tax allocation revenues, and a detailed estimate of tax revenues
35 for the participating local governments and taxing districts,
36 including the amounts allocated to the increment public improvements.
37 The briefings must be announced at least two weeks prior to the date
38 being held, including publishing in a legal newspaper of general
39 circulation and posting information on the local government website
40 and all local government social media sites; and
Code Rev/JO:lel 5 S-0239.1/21
1 (b) Submit the project analysis to the office of the treasurer
2 for review and consider any comments that the treasurer may provide
3 upon completion of their review of the project analysis as provided
4 under this subsection. The treasurer must complete the review within
5 90 days of receipt of the project analysis and may consult with other
6 agencies and outside experts as necessary. Upon completing their
7 review, the treasurer must promptly provide to the local government
8 any comments regarding suggested revisions or enhancements to the
9 project analysis that the treasurer deems appropriate based on the
10 requirements in subsection (2) of this section.
11 NEW SECTION. Sec. 3. (1) Public improvements that are financed
12 under this chapter may be undertaken and coordinated with other
13 programs or efforts undertaken by the local government and other
14 taxing districts and may be funded in part from revenue sources other
15 than tax allocation revenues.
16 (2) Public improvements that are constructed by a private
17 developer must meet all applicable state and local laws.
18 NEW SECTION. Sec. 4. The local government designating the
19 increment area must:
20 (1) Publish notice in a legal newspaper of general circulation
21 within the jurisdiction of the local government that describes the
22 public improvements, describes the boundaries of the increment area,
23 and identifies the location and times where the ordinance and other
24 public information concerning the public improvement may be
25 inspected; and
26 (2) Deliver a certified copy of the ordinance to the county
27 treasurer, the county assessor, and the governing body of each taxing
28 district within which the increment area is located.
29 NEW SECTION. Sec. 5. Apportionment of taxes shall be as
30 follows:
31 (1) Commencing in the calendar year following the passage of the
32 ordinance, the county treasurer shall distribute receipts from
33 regular property taxes imposed on real property located in the
34 increment area as follows:
35 (a) Each taxing district shall receive that portion of its
36 regular property taxes produced by the rate of tax levied by or for
Code Rev/JO:lel 6 S-0239.1/21
1 the taxing district on the tax allocation base value for that
2 increment area;
3 (b) The local government that designated the increment area shall
4 be entitled to receive an additional amount equal to the amount
5 derived from the regular property taxes levied by or for each taxing
6 district upon the increment value within the increment area. The
7 local government that designated the increment area may agree to
8 receive less than the full amount of this portion, as long as bond
9 debt service, reserve, and other bond covenant requirements are
10 satisfied, in which case the balance of these tax receipts shall be
11 allocated to the taxing districts that imposed regular property
12 taxes, or have regular property taxes imposed for them, in the
13 increment area for collection that year in proportion to their
14 regular tax levy rates for collection that year. The local government
15 may request that the treasurer transfer this additional portion of
16 the property taxes to its designated agent. The portion of the tax
17 receipts distributed to the local government or its agent under this
18 subsection (1)(b) may only be expended to finance public improvement
19 costs associated with the public improvements financed in whole or in
20 part by tax increment financing; and
21 (c) This section shall not apply to any receipts from the regular
22 property taxes levied by:
23 (i) The state for the support of the common schools under RCW
24 84.52.065;
25 (ii) Local school district excess levies; and
26 (iii) Port districts or public utility districts specifically for
27 the purpose of making required payments of principal and interest or
28 general indebtedness.
29 (2) The apportionment of tax allocation revenues must cease when
30 the taxing district certifies to the county assessor in writing that
31 tax allocation revenues are no longer necessary or obligated to pay
32 public improvement costs, but in no event shall the apportionment of
33 tax allocation revenues continue beyond the sunset date established
34 pursuant to section 2(1)(d) of this act. Any excess tax allocation
35 revenues and earnings on the tax allocation revenues remaining at the
36 time the apportionment of tax receipts terminates must be returned to
37 the county treasurer and distributed to the taxing districts that
38 imposed regular property taxes, or had regular property taxes imposed
39 for it, in the increment area for collection that year, in proportion
Code Rev/JO:lel 7 S-0239.1/21
1 to the rates of their regular property tax levies for collection that
2 year.
3 (3) The apportionment and distribution of portions of the regular
4 property taxes levied by or for each taxing district upon the
5 increment value within the increment area pursuant to and subject to
6 the requirements of this chapter is declared to be a public purpose
7 of and benefit each such taxing district.
8 (4) The apportionment and distribution of portions of the regular
9 property taxes levied by or for each taxing district upon the
10 increment value within the increment area pursuant to this section
11 shall not affect or be deemed to affect the rate of taxes levied by
12 or within any such taxing district or the consistency of any such
13 levies with the uniformity requirement of Article VII, section 1 of
14 the state Constitution.
15 NEW SECTION. Sec. 6. (1) A local government designating an
16 increment area may incur general indebtedness, and issue general
17 obligation bonds or notes to finance the public improvements and
18 retire the indebtedness, in whole or in part, from tax allocation
19 revenues it receives.
20 (2) The general indebtedness incurred under subsection (1) of
21 this section may be payable from tax allocation revenues and any
22 other sources available to the local government for payment of the
23 public improvement costs, including without limitation: Other tax
24 revenues; the full faith and credit of the local government; nontax
25 income, revenues, fees, and rents from the public improvements; and
26 contributions, grants, and nontax resources.
27 (3) In addition to the requirements in subsection (1) of this
28 section, a local government designating an increment area and
29 authorizing the use of tax increment financing may require the
30 nonpublic participant to provide adequate security to protect the
31 public investment in the public improvement within the increment
32 area.
33 NEW SECTION. Sec. 7. A direct or collateral attack on the
34 designation of the increment area or the allocation of regular
35 property tax revenues in conformance with applicable legal
36 requirements, including this chapter, may not be commenced more than
37 30 days after publication of notice as required by section 4 of this
38 act.
Code Rev/JO:lel 8 S-0239.1/21
1 NEW SECTION. Sec. 8. (1) A local government may issue revenue
2 bonds to fund revenue-generating public improvements, or portions of
3 public improvements, that are located within an increment area and
4 that it is authorized to provide or operate. Whenever revenue bonds
5 are to be issued, the legislative authority of the local government
6 shall create or have created a special fund or funds from which,
7 along with any reserves created pursuant to RCW 39.44.140, the
8 principal and interest on these revenue bonds shall exclusively be
9 payable. The legislative authority of the local government may
10 obligate the local government to set aside and pay into the special
11 fund or funds a fixed proportion or a fixed amount of the revenues
12 from the public improvements that are funded by the revenue bonds.
13 This amount or proportion is a lien and charge against these
14 revenues, subject only to operating and maintenance expenses. The
15 local government shall have due regard for the cost of operation and
16 maintenance of the public improvements that are funded by the revenue
17 bonds, and shall not set aside into the special fund or funds a
18 greater amount or proportion of the revenues that in its judgment
19 will be available over and above the cost of maintenance and
20 operation and the amount or proportion, if any, of the revenue
21 previously pledged. The local government may also provide that
22 revenue bonds payable out of the same source or sources of revenue
23 may later be issued on a parity with any revenue bonds being issued
24 and sold.
25 (2) Revenue bonds issued under this section are not an
26 indebtedness of the local government issuing the bonds, and the
27 interest and principal on the bonds shall only be payable from the
28 revenues lawfully pledged to meet the principal and interest
29 requirements and any reserves created pursuant to RCW 39.44.140. The
30 owner or bearer of a revenue bond or any interest coupon issued under
31 this section shall not have any claim against the local government
32 arising from the bond or coupon except for payment from the revenues
33 lawfully pledged to meet the principal and interest requirements and
34 any reserves created pursuant to RCW 39.44.140. The substance of the
35 limitations included in this subsection shall be plainly printed,
36 written, or engraved on each bond issued under this section.
37 (3) Revenue bonds with a maturity in excess of 25 years shall not
38 be issued under this section.
39 (4) The legislative authority of the local government shall by
40 resolution determine for each revenue bond issue the amount, date,
Code Rev/JO:lel 9 S-0239.1/21
1 form, terms, conditions, denominations, maximum fixed or variable
2 interest rate or rates, maturity or maturities, redemption rights,
3 registration privileges, manner of execution, manner of sale,
4 callable provisions, if any, and covenants including the refunding of
5 existing revenue bonds. Facsimile signatures may be used on the bonds
6 and any coupons. Refunding revenue bonds may be issued in the same
7 manner as revenue bonds are issued.
8 (5) The authority to issue revenue bonds under this section is
9 supplementary and in addition to any authority otherwise existing.
10 Nothing in this section limits a local government in the issuance of
11 revenue bonds that are otherwise authorized by law for the
12 construction of additions, betterments, or extensions of utilities
13 within the increment area.
14 (6) Notwithstanding anything to the contrary in this section,
15 revenue bonds issued to finance public improvements may be issued in
16 accordance with chapter 39.46 RCW.
17 NEW SECTION. Sec. 9. This chapter supplements and neither
18 restricts nor limits any powers that the state or any local
19 government might otherwise have under any laws of this state.
20 Sec. 10. RCW 84.55.010 and 2017 3rd sp.s. c 13 s 302 are each
21 amended to read as follows:
22 (1) Except as provided in this chapter, the levy for a taxing
23 district in any year must be set so that the regular property taxes
24 payable in the following year do not exceed the limit factor
25 multiplied by the amount of regular property taxes lawfully levied
26 for such district in the highest of the three most recent years in
27 which such taxes were levied for such district, excluding any
28 increase due to (e) of this subsection, unless the highest levy was
29 the statutory maximum rate amount, plus an additional dollar amount
30 calculated by multiplying the regular property tax levy rate of that
31 district for the preceding year by the increase in assessed value in
32 that district resulting from:
33 (a) New construction;
34 (b) Increases in assessed value due to construction of wind
35 turbine, solar, biomass, and geothermal facilities, if such
36 facilities generate electricity and the property is not included
37 elsewhere under this section for purposes of providing an additional
Code Rev/JO:lel 10 S-0239.1/21
1 dollar amount. The property may be classified as real or personal
2 property;
3 (c) Improvements to property; ((and))
4 (d) Any increase in the assessed value of state-assessed
5 property; and
6 (e) Any increase in the assessed value of real property, as that
7 term is defined in section 1 of this act, within an increment area as
8 designated by any local government in section 2 of this act provided
9 that such increase is not included elsewhere under this section. This
10 subsection (1)(e) does not apply to levies by the state or by port
11 districts and public utility districts for the purpose of making
12 required payments of principal and interest on general indebtedness.
13 (2) The requirements of this section do not apply to:
14 (a) State property taxes levied under RCW 84.52.065(1) for
15 collection in calendar years 2019 through 2021; and
16 (b) State property taxes levied under RCW 84.52.065(2) for
17 collection in calendar years 2018 through 2021.
18 Sec. 11. RCW 84.55.120 and 2014 c 4 s 5 are each amended to read
19 as follows:
20 (1) A taxing district, other than the state, that collects
21 regular levies must hold a public hearing on revenue sources for the
22 district's following year's current expense budget. The hearing must
23 include consideration of possible increases in property tax revenues
24 and must be held prior to the time the taxing district levies the
25 taxes or makes the request to have the taxes levied. The county
26 legislative authority, or the taxing district's governing body if the
27 district is a city, town, or other type of district, must hold the
28 hearing. For purposes of this section, "current expense budget" means
29 that budget which is primarily funded by taxes and charges and
30 reflects the provision of ongoing services. It does not mean the
31 capital, enterprise, or special assessment budgets of cities, towns,
32 counties, or special purpose districts.
33 (2) If the taxing district is otherwise required to hold a public
34 hearing on its proposed regular tax levy, a single public hearing may
35 be held on this matter.
36 (3)(a) Except as provided in (b) of this subsection (3), no
37 increase in property tax revenue may be authorized by a taxing
38 district, other than the state, except by adoption of a separate
39 ordinance or resolution, pursuant to notice, specifically authorizing
Code Rev/JO:lel 11 S-0239.1/21
1 the increase in terms of both dollars and percentage. The ordinance
2 or resolution may cover a period of up to two years, but the
3 ordinance must specifically state for each year the dollar increase
4 and percentage change in the levy from the previous year.
5 (b) Exempt from the requirements of (a) of this subsection are
6 increases in revenue resulting from the addition of:
7 (i) New construction;
8 (ii) Increases in assessed value due to construction of wind
9 turbine, solar, biomass, and geothermal facilities, if such
10 facilities generate electricity and the property is not included
11 elsewhere under this section for purposes of providing an additional
12 dollar amount. The property may be classified as real or personal
13 property;
14 (iii) Improvements to property; ((and))
15 (iv) Any increase in the value of state-assessed property; and
16 (v) Any increase in the assessed value of real property, as that
17 term is defined in section 1 of this act, within an increment area as
18 designated by any local government in section 2 of this act provided
19 that such increase is not included elsewhere under this section. This
20 subsection (3)(b)(v) does not apply to levies by the state or by port
21 districts and public utility districts for the purpose of making
22 required payments of principal and interest on general indebtedness.
23 NEW SECTION. Sec. 12. Sections 1 through 9 of this act
24 constitute a new chapter in Title 39 RCW.
25 NEW SECTION. Sec. 13. If any provision of this act or its
26 application to any person or circumstance is held invalid, the
27 remainder of the act or the application of the provision to other
28 persons or circumstances is not affected."
ESHB 1189 - S COMM AMD
By Committee on Business, Financial Services & Trade
29 On page 1, line 1 of the title, after "financing;" strike the
30 remainder of the title and insert "amending RCW 84.55.010 and
31 84.55.120; and adding a new chapter to Title 39 RCW."
Code Rev/JO:lel 12 S-0239.1/21
EFFECT: Makes technical corrections to fix a grammatical error
and properly cite a subsection reference.
--- END ---
Code Rev/JO:lel 13 S-0239.1/21
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