H-0347.1
HOUSE BILL 1243
State of Washington 67th Legislature 2021 Regular Session
By Representatives Wicks, Springer, Dolan, Ryu, Fitzgibbon, Simmons,
Fey, Ramel, Bateman, Senn, Sells, Davis, Peterson, Wylie, Slatter,
Berg, and Tharinger
Read first time 01/18/21. Referred to Committee on Finance.
1 AN ACT Relating to local infrastructure project areas; and
2 amending RCW 39.108.120, 84.55.010, 84.55.015, 84.55.020, 84.55.030,
3 84.55.120, and 39.108.010.
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
5 Sec. 1. RCW 39.108.120 and 2011 c 318 s 601 are each amended to
6 read as follows:
7 (1) Before adopting an ordinance or resolution creating one or
8 more local infrastructure project areas, a sponsoring city must:
9 (a) Provide notice to the county assessor, county treasurer, and
10 county within the proposed local infrastructure project area of the
11 sponsoring city's intent to create one or more local infrastructure
12 project areas. This notice must be provided at least one hundred
13 eighty days in advance of the public hearing as required by (b) of
14 this subsection;
15 (b) Hold a public hearing on the proposed formation of the local
16 infrastructure project area.
17 (2) A sponsoring city may create one or more local infrastructure
18 project areas by ordinance or resolution that:
19 (a) Describes the proposed public improvements, identified in the
20 plan under RCW 39.108.080, to be financed in each local
21 infrastructure project area;
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 1 (b) Describes the boundaries of each local infrastructure project
2 area, subject to the limitations in RCW 39.108.130; and
3 (c) Provides the date when the use of local property tax
4 allocation revenues will commence and a list of the participating
5 taxing districts.
6 (3) The sponsoring city must deliver a certified copy of the
7 adopted ordinance or resolution to the county assessor, county
8 treasurer, and each other participating taxing district within which
9 the local infrastructure project area is located.
10 (4) The sponsoring city must adopt the department of commerce
11 transfer of development rights interlocal terms and conditions in WAC
12 365-198-040 and 365-198-060, or its successors, and, if required by
13 an eligible county, enter into a superseding interlocal agreement
14 prior to the date when the use of local property tax allocation
15 revenues will commence for any local infrastructure project area
16 formed after the effective date of this section. An interlocal
17 agreement under this subsection shall define the roles and
18 responsibilities of the parties with respect to the transfer of
19 development rights as determined by the parties.
20 Sec. 2. 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 plus an additional
28 dollar amount calculated by multiplying the regular property tax levy
29 rate of that district for the preceding year by the increase in
30 assessed value in that district resulting from:
31 (a) New construction;
32 (b) Increases in assessed value due to construction of wind
33 turbine, solar, biomass, and geothermal facilities, if such
34 facilities generate electricity and the property is not included
35 elsewhere under this section for purposes of providing an additional
36 dollar amount. The property may be classified as real or personal
37 property;
38 (c) Improvements to property; ((and))
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 1 (d) Any increase in the assessed value of state-assessed
2 property; and
3 (e) For taxing districts defined in RCW 39.108.010(23) in any
4 year in which distributions may be made under RCW 39.108.150, any
5 increase in the assessed value within any local infrastructure
6 project area, as defined in RCW 39.108.010(5), to the extent that
7 such increase in assessed value is not included under (a) through (d)
8 of this subsection.
9 (2) The requirements of this section do not apply to:
10 (a) State property taxes levied under RCW 84.52.065(1) for
11 collection in calendar years 2019 through 2021; and
12 (b) State property taxes levied under RCW 84.52.065(2) for
13 collection in calendar years 2018 through 2021.
14 Sec. 3. RCW 84.55.015 and 2014 c 4 s 2 are each amended to read
15 as follows:
16 If a taxing district has not levied since 1985 and elects to
17 restore a regular property tax levy subject to applicable statutory
18 limitations then such first restored levy must be set so that the
19 regular property tax payable does not exceed the amount which was
20 last levied, plus an additional dollar amount calculated by
21 multiplying the property tax rate which is proposed to be restored,
22 or the maximum amount which could be lawfully levied in the year such
23 a restored levy is proposed, by the increase in assessed value in the
24 district since the last levy resulting from:
25 (1) New construction;
26 (2) Increases in assessed value due to construction of wind
27 turbine, solar, biomass, and geothermal facilities, if such
28 facilities generate electricity and the property is not included
29 elsewhere under this section for purposes of providing an additional
30 dollar amount. The property may be classified as real or personal
31 property;
32 (3) Improvements to property; ((and))
33 (4) Any increase in the assessed value of state-assessed
34 property; and
35 (5) For taxing districts defined in RCW 39.108.010(23) in any
36 year in which distributions may be made under RCW 39.108.150, any
37 increase in the assessed value within any local infrastructure
38 project area, as defined in RCW 39.108.010(5), to the extent that
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1 such increase in assessed value is not included under subsections (1)
2 through (4) of this section.
3 Sec. 4. RCW 84.55.020 and 2014 c 4 s 3 are each amended to read
4 as follows:
5 Notwithstanding the limitation set forth in RCW 84.55.010, the
6 first levy for a taxing district created from consolidation of
7 similar taxing districts must be set so that the regular property
8 taxes payable in the following year do not exceed the limit factor
9 multiplied by the sum of the amount of regular property taxes
10 lawfully levied for each component taxing district in the highest of
11 the three most recent years in which such taxes were levied for such
12 district plus the additional dollar amount calculated by multiplying
13 the regular property tax rate of each component district for the
14 preceding year by the increase in assessed value in each component
15 district resulting from:
16 (1) New construction;
17 (2) Increases in assessed value due to construction of wind
18 turbine, solar, biomass, and geothermal facilities, if such
19 facilities generate electricity and the property is not included
20 elsewhere under this section for purposes of providing an additional
21 dollar amount. The property may be classified as real or personal
22 property;
23 (3) Improvements to property; ((and))
24 (4) Any increase in the assessed value of state-assessed
25 property; and
26 (5) For taxing districts defined in RCW 39.108.010(23) in any
27 year in which distributions may be made under RCW 39.108.150, any
28 increase in the assessed value within any local infrastructure
29 project area, as defined in RCW 39.108.010(5), to the extent that
30 such increase in assessed value is not included under subsections (1)
31 through (4) of this section.
32 Sec. 5. RCW 84.55.030 and 2014 c 4 s 4 are each amended to read
33 as follows:
34 For the first levy for a taxing district following annexation of
35 additional property, the limitation set forth in RCW 84.55.010 must
36 be increased by an amount equal to the aggregate assessed valuation
37 of the newly annexed property as shown by the current completed and
38 balanced tax rolls of the county or counties within which such
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 1 property lies, multiplied by the dollar rate that would have been
2 used by the annexing unit in the absence of such annexation, plus the
3 additional dollar amount calculated by multiplying the regular
4 property tax levy rate of that annexing taxing district for the
5 preceding year by the increase in assessed value in the annexing
6 district resulting from:
7 (1) New construction;
8 (2) 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 (3) Improvements to property; ((and))
15 (4) Any increase in the assessed value of state-assessed
16 property; and
17 (5) For taxing districts defined in RCW 39.108.010(23) in any
18 year in which distributions may be made under RCW 39.108.150, any
19 increase in the assessed value within any local infrastructure
20 project area, as defined in RCW 39.108.010(5), to the extent that
21 such increase in assessed value is not included under subsections (1)
22 through (4) of this section.
23 Sec. 6. RCW 84.55.120 and 2014 c 4 s 5 are each amended to read
24 as follows:
25 (1) A taxing district, other than the state, that collects
26 regular levies must hold a public hearing on revenue sources for the
27 district's following year's current expense budget. The hearing must
28 include consideration of possible increases in property tax revenues
29 and must be held prior to the time the taxing district levies the
30 taxes or makes the request to have the taxes levied. The county
31 legislative authority, or the taxing district's governing body if the
32 district is a city, town, or other type of district, must hold the
33 hearing. For purposes of this section, "current expense budget" means
34 that budget which is primarily funded by taxes and charges and
35 reflects the provision of ongoing services. It does not mean the
36 capital, enterprise, or special assessment budgets of cities, towns,
37 counties, or special purpose districts.
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 1 (2) If the taxing district is otherwise required to hold a public
2 hearing on its proposed regular tax levy, a single public hearing may
3 be held on this matter.
4 (3)(a) Except as provided in (b) of this subsection (3), no
5 increase in property tax revenue may be authorized by a taxing
6 district, other than the state, except by adoption of a separate
7 ordinance or resolution, pursuant to notice, specifically authorizing
8 the increase in terms of both dollars and percentage. The ordinance
9 or resolution may cover a period of up to two years, but the
10 ordinance must specifically state for each year the dollar increase
11 and percentage change in the levy from the previous year.
12 (b) Exempt from the requirements of (a) of this subsection are
13 increases in revenue resulting from the addition of:
14 (i) New construction;
15 (ii) Increases in assessed value due to construction of wind
16 turbine, solar, biomass, and geothermal facilities, if such
17 facilities generate electricity and the property is not included
18 elsewhere under this section for purposes of providing an additional
19 dollar amount. The property may be classified as real or personal
20 property;
21 (iii) Improvements to property; ((and))
22 (iv) Any increase in the value of state-assessed property; and
23 (v) For taxing districts defined in RCW 39.108.010(23) in any
24 year in which distributions may be made under RCW 39.108.150, any
25 increase in the assessed value within any local infrastructure
26 project area, as defined in RCW 39.108.010(5), to the extent that
27 such increase in assessed value is not included under (b)(i) through
28 (iv) of this subsection.
29 Sec. 7. RCW 39.108.010 and 2011 c 318 s 201 are each amended to
30 read as follows:
31 The definitions in this section apply throughout this chapter
32 unless the context clearly requires otherwise.
33 (1) "Assessed value" means the valuation of taxable real property
34 as placed on the last completed assessment roll.
35 (2) "Eligible county" means any county that borders Puget Sound,
36 that has a population of six hundred thousand or more, and that has
37 an established program for transfer of development rights.
38 (3) "Employment" means total employment in a county or city, as
39 applicable, estimated by the office of financial management.
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 1 (4) "Exchange rate" means an increment of development beyond what
2 base zoning allows that is assigned to a development right by a
3 sponsoring city for use in a receiving area.
4 (5) "Local infrastructure project area" means the geographic area
5 identified by a sponsoring city under RCW 39.108.120.
6 (6) "Local infrastructure project financing" means the use of
7 local property tax allocation revenue distributed to the sponsoring
8 city to pay or finance public improvement costs within the local
9 infrastructure project area in accordance with RCW 39.108.150.
10 (7) "Local property tax allocation revenue" means those tax
11 revenues derived from the receipt of regular property taxes levied on
12 the property tax allocation revenue value and used for local
13 infrastructure project financing.
14 (8) "Participating taxing district" means a taxing district that:
15 (a) Has a local infrastructure project area wholly or partially
16 within the taxing district's geographic boundaries; and
17 (b) Levies, or has levied on behalf of the taxing district,
18 regular property taxes as defined in this section.
19 (9) "Population" means the population of a city or county, as
20 applicable, estimated by the office of financial management.
21 (10) "Property tax allocation revenue base value" means the
22 assessed value of real property located within a local infrastructure
23 project area, less the property tax allocation revenue value.
24 (11)(a)(i) "Property tax allocation revenue value" means an
25 amount equal to the sponsoring city ratio multiplied by seventy-five
26 percent of any increase in the assessed value of real property in a
27 local infrastructure project area resulting from:
28 (A) The placement of new construction, improvements to property,
29 or both, on the assessment roll, where the new construction and
30 improvements are initiated after the local infrastructure project
31 area is created by the sponsoring city;
32 (B) The cost of new housing construction, conversion, and
33 rehabilitation improvements, when the cost is treated as new
34 construction for purposes of chapter 84.55 RCW as provided in RCW
35 84.14.020, and the new housing construction, conversion, and
36 rehabilitation improvements are initiated after the local
37 infrastructure project area is created by the sponsoring city;
38 (C) The cost of rehabilitation of historic property, when the
39 cost is treated as new construction for purposes of chapter 84.55 RCW
40 as provided in RCW 84.26.070, and the rehabilitation is initiated
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 1 after the local infrastructure project area is created by the
2 sponsoring city.
3 (ii) Increases in the assessed value of real property resulting
4 from (a)(i)(A) through (C) of this subsection are included in the
5 property tax allocation revenue value in the initial year. These same
6 amounts are also included in the property tax allocation revenue
7 value in subsequent years unless the property becomes exempt from
8 property taxation.
9 (b) "Property tax allocation revenue value" includes an amount
10 equal to the sponsoring city ratio multiplied by seventy-five percent
11 of any increase in the assessed value of new construction consisting
12 of an entire building in the years following the initial year, unless
13 the building becomes exempt from property taxation.
14 (c) Except as provided in (b) of this subsection, "property tax
15 allocation revenue value" does not include any increase in the
16 assessed value of real property after the initial year.
17 (d) There is no property tax allocation revenue value if the
18 assessed value of real property in a local infrastructure project
19 area has not increased as a result of any of the reasons specified in
20 (a)(i)(A) through (C) of this subsection.
21 (e) For purposes of this subsection, "initial year" means:
22 (i) For new construction and improvements to property added to
23 the assessment roll, the year during which the new construction and
24 improvements are initially p