Infrastructure, Transportation, & Economic Development

Session Overview

The 2007 session was largely successful in the areas of infrastructure, transportation and economic development.

All 281 cities can access Alternative Public Works authorities (2SHB 1506) for the first time since its inception twelve years ago. 2SHB 1506 is the result of numerous stakeholders re-writing this authority over the past 18 months. AWC would like to thank Representative Haigh and Senator Rockefeller for their leadership on this legislation. In addition, the legislature is hearing our message that grant and loan programs are insufficient to finance or supplement local infrastructure. This is reflected in the capital budget proviso that creates a study committee on public infrastructure needs.

This session also resulted in meeting our long term transportation strategy of direct state funding (gas tax distribution in 2005), permanent grant funding for the Transportation Improvement Board and Freight Mobility Improvement Board (codified in 2006) and local transportation options: SHB 1858, or providing councilmanic authority for Transportation Benefit Districts (TBDs). TBDs are the first meaningful tool since the repeal of the $15 license fee due to Initiative 776. AWC would like to thank Representative Fromhold, Representative Clibborn, Representative Jarrett, and Senator Jacobsen for their support of this legislation.

Economic development legislation primarily consisted with a modest expansion of the local infrastructure finance tool (SHB 1277). This authority continues to be controversial within the legislature. Barring significant technical flaws in the legislation, the newly modified authority will not be revisited before the 2009 session. AWC would like to thank the Governor, Representative Kenney and Senator Kilmer for their leadership on this economic development tool for cities.

A second AWC proposal (SHB 1790/SSB 5762), did not gain traction in the house and senate fiscal committees. This proposal would have redirected a small portion of the state REET to permanently fund the Community Economic Revitalization Board (CERB), the Job Development Fund and broaden the eligibility of CERB to be more inclusive of urban cities. The Governor’s veto that will enable the JDF program to continue in 2009-2011 and potentially redirect another $50 million from the Public Works Trust Fund puts a renewed emphasis on finding new economic development revenue sources.

Major Bills

AWC Priority - Transportation Benefit Districts (TBDs) (ESHB 1858)

The bill will modify the current Transportation Benefit District Authority to:

• Allow cities or counties to impose the first $20 of the vehicle fee (the balance remains voter approved);
• Allow cities or counties to impose limited transportation impact fees, but prohibits “double dipping” of existing impact fees or impact fees on any residential property; and
• Counties have six months to take action on this authority and must enter an interlocal agreement with cities when imposing the authority. After six months, cities are eligible to use this authority (January 22, 2008). The exception is King, Pierce, and Snohomish county. These three counties are ineligible for this authority until December 1, 2008 and the cities within are not eligible until May 1, 2008.

In addition, the bill provides for accountability:

• Public Hearings are required
• Funds must be used according to transportation criteria in current law.
• Projects must be identified in a local transportation plan and a regional transportation planning organization plan.

[C 329 L 07; Effective Date: July 22, 2007]

AWC Priority - Local Infrastructure Finance Tool (LIFT) (2SHB 1277)

2SHB 1277 passed both houses. As passed, 2SHB 1277 will:

• Increase the limit of the annual state contribution to LIFT projects in the state from $5 million per year to $7.5 million per year;
• Allows one per county with two exceptions: 1) A county with an identified pilot project may have an additional project, and 2) a city that is in more than one county does not preclude either county from receiving an additional project.
• Retain an assessed value of $70 per square foot requirement; and
• Provide several technical changes that will make the authority more flexible.

[C 229 L 07; Effective Date: July 22, 2007]

AWC Priority - Transportation Budget (ESHB 1094) – Partial Veto

The Transportation Budget totaled $7.5 billion with $5.9 billion appropriated to the Department of Transportation (WSDOT). As noted in previous bulletins, the Governor and legislature were challenged with relatively fixed revenue streams, yet were experiencing soaring project cost escalations. Consequently, there were few new initiatives in the budget. Of note:

• Most projects retained their original schedule;
• Increased funding is provided for the SR 520 bridge;
• Provided $15M in bond authority to the Transportation Improvement Board to help cover inflationary construction costs;
• Provided an additional $2.6M for van pool grants and $1M for the trip reduction performance program;
• Provided $29M in continued passenger rail service. Also included a proviso to require a midrange plan for WSDOT/Amtrak Cascades to achieve additional service beyond current service levels;
• The creation of a Freight Congestion Relief Account—when freight revenue becomes available, identified projects will be funded; and
• Addressed a $35M shortfall in the Washington State Patrol budget.

New City Requirement: The budget requires WSDOT to inventory and confirm that cities have adopted standards for access permitting (management) on state highways that meets or exceeds current state law. Although the law has been in effect since 1993, there are cities that have not adopted the required standards. The report is due to the legislature January 1, 2009. Cities excluded from this proviso are: 1) cities not planning under GMA, or 2) not receiving state transportation funding in the budget.

[C 518 L 07 Partial Veto; Effective Date May 15, 2007]

Partial Veto: The Governor vetoed section 712 because it was identical to section 3(a) of SSB 5412 which was enacted by the Legislature. In addition, the Governor vetoed several sections of this legislation since numerous projects funded by 2005-07 appropriations have progressed more quickly than was previously expected.

AWC Priority - Capital Budget (ESHB 1092) – Partial Veto

This biennium’s capital budget will be almost $4.3 billion. Highlights include:

• Section 1028: Community Economic Revitalization Board (CERB) funding for $20M. A maximum of 25% can be used for grants;
• Section 1032: $49.93M for Job Development Fund Grants;
• Section 1034: $327M for the Public Works Board. Of note, problematic proviso language relating to interest rate minimums and project subsidies was removed in the final budget;
• Sections 3041/3042: Puget Sound Stormwater Projects/Stormwater Projects- $20.9M for these programs. Addressing stormwater run-off is rapidly becoming one or our most costly infrastructure investments; we appreciate the state’s commitment to partnering with local governments on cleaning up Puget Sound;
• Section 3146: Washington Wildlife Recreation Grants- $100M; and
• Section 6026: Study Committee on Public Infrastructure Programs-We support the legislators commitment to making recommendations regarding a comprehensive funding structure and systematic approach to support the integration, consolidation, and standardization of processes, procedures, and infrastructure programs.

More information about the capital budget and its impacts on cities can be found on AWC’s website www.awcnet.org.

[C 520 L 07 Partial Veto; Effective Date May 15, 2007]

Partial Veto: The Governor vetoed subsection (2) in Section 1032 that would have prohibited a 2007-2009 call for Job Development Fund grants.

AWC Priority - Authorization for Projects by the Public Works Board (HB 1025)

HB 1025, the 2007 Public Works Board construction loan list, became effective on March 12. We appreciate the Legislature and the Governor taking prompt action on this bill; it supports our request to have the 19 projects, totaling $71M, ready for contract execution much sooner than in past 105-day sessions.

[C 4 L 07; Effective Date: March 12, 2007]

AWC Priority - Changing Alternative Works Provisions (2SHB 1506)

This legislation extends and expands the use of the design-build and general contractor/construction manager contracting procedures. In addition, it establishes a project review committee to approve and certify the use of design-build and general contractor/construction manager contracting procedures. A summary of the specifics are found in the table below.

Alternative Public Works Legislation Proposal (HB 1506)

	Current Law	Substitute Bill Proposal
Eligibility	Cities over 70,000 population Counties over 450,000 population University of Washington, Washington State University, Washington State Department of General Administration, PUDs, ports, schools, hospitals, subject to certain restrictions	Public owners that have performed 1 or more GC-CM projects may go before a review committee seeking a 3 year certification to use either GC-CM or DB, or All public owners can seek project specific authority from the review committee
General Contractor-Construction Manager	Projects over $10 million	No threshold
Design Build	Projects over $10 million	Projects over $10 million, except for parking garages
Design Build Operate Maintain	No provisions	Except for utility projects, no projects involving operations and maintenance services longer than 3 years.
Collective Bargaining	No provisions	No public body can disqualify/rate a proposal for GC-CM services on the basis of terms of a collective bargaining agreement.
Maximum Allowable Construction Cost	70%	90%

[C 494 L 07 Partial Veto; Effective Date July 1, 2007]

Minor Bills

Concerning Small Works Roster Contracting Procedures (SHB 1328)

This is an optional authority for a state agency or authorized local government to adopt procedures to award small works roster contracts to small businesses with gross revenues under $1 million annually. It also includes HB 1782 (which died with the first cut-off). Under current law, there are reporting requirements for notification of contract completion, performance/ payment bond requirements, and retainage release requirements. All three of these are at a different dollar amount and have not been updated since 1982. SHB 1328 simply replaces the existing notification and retainage requirements with a uniform $35,000 instead of the current $20,000, $25,000, and $35,000 requirements.

[C 210 L 07; Effective Date: July 22, 2007]

City Hardship Assistance Funds for Street Maintenance (SSB 5483)

This measure will move any remaining City Hardship Assistance Program funding to the Small City Pavement Preservation and Sidewalk Account.

[C 148 L 07; Effective Date: March 12, 2007]

Encouraging the Use of Cleaner Energy (E2SHB 1303)

New City Requirement: E2SHB 1303 proposes a variety of incentives and mandates to use clean energy in vehicles. Effective June 1, 2015, all state agencies and local government subdivisions of the state, to the extent determined practicable by the rules adopted by the department of community, trade, and economic development (DCTED), are required to satisfy 100% of their fuel usage for operating publicly owned vessels, vehicles, and construction equipment from electricity or bio-fuel. Previous bill versions vested this authority with an Energy Freedom Coordinator within CTED and had definitions of bio-fuel that were inconsistent with current bio-fuel use.

[C 148 L 07; Effective Date: March 12, 2007]

Responsible Bidder Criteria for Public Works Contracts (HB 2010)

This bill requires that a public works contract cannot be awarded until a bidder meets defined responsibility criteria. The Capital Projects Advisory Review Board (CPARB) developed this criteria and it is consistent with state law. CPARB is also required to develop suggested guidelines to assist the state and municipalities in developing supplemental bidder responsibility criteria.

[C 133 L 07; Effective Date: March 12, 2007]

Clarifying Goals, Objectives, and Responsibilities of Certain Transportation Agencies (SSB 5412)

This bill streamlines antiquated transportation commission statutes and requires the transportation commission to consider the input gathered at regional forums as it establishes the statewide transportation plan. In addition, it requires the Office of Financial Management to propose a comprehensive ten-year investment program for preservation and improvement programs.

[C 516 L 07; Effective Date: March 12, 2007]

Creating the Washington Tourism Commission (SHB 1276)

This bill abolishes the current Tourism Development Advisory Committee and creates the Washington Tourism Commission (Commission). The bill creates a competitive grant program to enhance local efforts that support tourism-related activities. The grant criteria will include: the return on investment of state funding; the availability of other financial resources to the applicant; and the level of community support. Eligible applicants include local governments, nonprofit organizations and federally recognized Indian tribes.

[C 228 L07; Effective Date: July 22, 2007]

Participation in the Federal New Markets Tax Credit Program (HB 1430)

Cities, towns, counties, public corporations, and port districts are now authorized to create partnerships and limited liability companies, and enter into public or private agreements, to implement the federal New Markets Tax Credit Program (NMTC). This will allow local governments increased control over Washington State access to the federal tax credits for private businesses offered by the NMTC program.

[C 230 L 07; Effective Date: July 22, 2007]

Modifying the Rural County Business and Occupation Tax Credit (SHB 1566)

SHB 1566 modifies the state’s rural county tax credit given to businesses that engage in manufacturing or research and development activities in specific rural counties or community empowerment zones. Currently, community empowerment zones exist in Bremerton, Seattle/King County, Spokane, Tacoma and Yakima.
A business and occupation tax credit will be given to businesses adding 15% or more qualified employment positions. The credit will equal $4,000 for each qualified employment position with wages and benefits greater than $40,000 annually and $2,000 for each qualified employment position with wages and benefits less than or equal to $40,000.

[C 485 L 07; Effective Date: January 1, 2008]

Rural County Sales Tax for Economic Development Officers (HB 1543)

This bill allows funds collected through the rural county 0.08% sales and use tax to be used to finance economic development officers in addition to public facilities used for economic development purposes. An economic development officer is defined as a person employed by a county or an associate development organization who promotes economic development purposes within the county. Please see write-up on ESSB 5557, which also modifies the rural county sales tax.

[C 250 L 07; Effective Date: July 22, 2007]

Rural County Sales Tax Credit Increase (ESSB 5557)

This bill increases the 0.08% rural county sales and use tax used for economic development to 0.09%. Counties collecting the tax are required to provide yearly reports to the State Auditor that include information on expenditures made on projects begun in prior years. Monies from the credit may not be used to fund judicial system facilities. Please see write-up on HB 1543, which also modifies the rural county sales tax.

[C 478 L 07; Effective Date: August 1, 2007]

Executive Board Membership of Regional Transportation Planning Organizations (HB 2004)

This bill clarifies and expands the definition of city voting membership on the Puget Sound Regional Council’s executive board. Under current populations, this now includes Bellevue, Renton, Kent, Bremerton, and Federal Way. This codifies existing language enacted in prior transportation budgets.

[C 511 L 07; Effective Date: July 22, 2007]

Providing a Single Ballot Proposition for Regional Transportation Investment Districts and Regional Transit Authorities (SHB 1396)

When the Legislature concluded in 2006, it required that a regional vote in King, Pierce, and Snohomish County to include and pass both a roads element (Regional Transportation Investment District or RTID) and a transit element (Sound Transit Phase II). However, because RTID and Sound Transit do not share the same boundaries, it appeared that two votes would need to be taken at the polls. This bill will allow a single ballot provision and will eliminate voter confusion.

[C 509 L 07; Effective Date: May 15, 2007]

Creating and Funding the Freight Congestion Relief Account (SSB 5207)

The intent section of the bill is eliminated and the Freight Congestion Relief Account is created in the State Treasury. The Joint Transportation Committee (JTC) is directed to study funding mechanisms as a means to fund freight infrastructure improvements. The study received a $500,000 appropriation and is due to the Legislative Transportation Committees prior to the start of the 2008 Legislative Session.

[C 514 L 07; Effective Date: July 22, 2007]

Modifying the Administration of Fuel Taxes (SB 5272)

This bill adds new sections to the motor fuel and special fuel tax chapters authorizing the Governor (or the Department of Licensing as their designee) to enter into fuel tax compact agreements with federally recognized tribes operating or licensing retail stations on reservation or trust lands. Existing state/tribal fuel tax agreements are unaffected by the legislation. Any future compact agreement requires the tribal entity to:

1. Acquire fuel only from lawful entities;
2. Spend fuel tax proceeds, or equivalent amounts, only on transportation planning, construction, and maintenance of roads, bridges, boat ramps, transit services and facilities, police services, and other highway-related purposes; and
3. Allow for audits or other means of ensuring compliance to certify the number of gallons of fuel purchased for resale by the tribe and the use of fuel tax proceeds.

The Department of Licensing is required to prepare and submit an annual report to the Legislature on the status of existing compact agreements and ongoing negotiations with the tribes. New sections are also added to the motor fuel and special fuel tax chapters requiring tribal licensees and retailers pass the tax through to end users as part of the selling price.

[C 515 L 07; Effective Date: May 15, 2007]

Promoting Innovation Partnership Zones (SHB 1091)

This bill requires the director of the Department of Community, Trade and Economic Development (CTED) to designate innovation partnership zones. Development of innovation partnership zones is a strategy to promote research-based firms and industries in specific areas of Washington State that become globally-recognized as hubs of innovation and expertise. Their creation would be based on specific criteria. Additional sales and use tax would be imposed to finance public facilities serving innovation partnership zones.

[C 227 L07; Effective Date: July 22, 2007]

Bills That Failed

Joint Legislative Community Development Fund Committee (SHB 1441)

SHB 1441 would have created the Community Development Fund in the state treasury to make competitive grant awards to local governments and nonprofits for qualifying capacity-building, technical assistance and capital projects.

Addressing Transportation Concurrency and Impact Fees Under the Growth Management Act (GMA) (HB 1753)

This bill would have prohibited local jurisdictions that impose transportation impact fees from denying development approvals based on failure to achieve applicable level of service standards adopted in the transportation element of the comprehensive plan.

Funding State and Municipal Parks (HB 1770)

This bill would have provided $125M in bonds for state parks and $125M in bonds for municipal parks.

AWC Priority - Funding for Jobs, Economic Development, and Local Capital Projects (SHB 1790/SSB 5762)

Both bills passed their respective policy committees, but died in the fiscal committees.

Effective, July 1, 2009, these substitute bills will accomplish the following:

• Eliminate the 2009-2011 $50M Public Works Trust Fund diversion to the Job Development Fund;
• Provide ongoing funding for the Community Economic Revitalization Board (CERB) at $66M a biennium;
• Replace the current laundry list of private investment (industries) eligible for CERB assistance with recommendations by the State Economic Development Commission;
• Add as part of the CERB prioritization process that jobs must pay at least the average countywide hourly wage or offer health insurance to employees and identify if investments accomplish projected population and employment growth or other GMA requirements;
• Eliminate the Job Development Fund program; and
• Harmonize the 1st and 2nd quarter REET (House bill only).

The funding source is 3.3% of the state Real Estate Excise Tax (REET), beginning July 1, 2009.

Changing Provisions Concerning Limitation of Claims Under a Construction Contract (SHB 1765)

This bill reflected another proposal to change contracting law in a post Michael M. Johnson v. Spokane County environment.

In short, this bill would have allowed enforcement of a contractor's claim right under certain circumstances when the contractor has not complied with time or form requirements for submitting the claim.

Transportation Project Contingency Account (HB 1812)

This bill would have directed the locally-imposed sales tax on materials, labor, equipment, contracts, and components of transportation projects over $1 billion into a contingency account.

Creating Community Preservation and Development Authorities (HB 1992)

This bill would have created Community Preservation and Development Authorities. The purpose would be to restore or enhance the health, safety, and well-being of communities adversely impacted by the construction of, or ongoing operation of, multiple major public facilities, public works, and capital projects with significant public funding.

Regional Transportation Commission Findings and Recommendations (HB 2101)

This proposal, in response to the Puget Sound Regional Transportation Commission recommendations, would have authorized the joint transportation commission to create a regional governance task force to consider the impacts of a new governance structure on other aspects of state and local laws and affected organizations and programs. In addition, the task force was to develop a statutory framework and draft legislation for implementing recommendations to the commission. The bill passed the House Transportation Committee with an “intent” section. Several proposed striking amendments were floated during the final days of session, but ultimately, no bill passed. The legislature did include $400,000 for an analysis of implementation options regarding governance in central Puget Sound in the Transportation Budget.

Funding Projects Through the Urban Corridor Program of the TIB (HB 2331)

This bill would have established a new Transportation Improvement Board (TIB) program entitled the City Planning and Growth Program. Additional criteria would have been established for the TIB to consider when evaluating grant proposals for this new program.

Preserving Rail Corridors (SHB 2344)

If passed, this bill would have:

• required the incorporation of rail lines in the (transportation) planning element of a city plan; and
• required notice when rail lines are proposed for sale or change in use.

Creating a Surcharge on Vehicle Liability Insurance Policies (SB 5147)

This bill would have placed a $2 surcharge per insured motor vehicle to pay for emphasis patrols in high-accident county road corridors.

Addressing Transportation Concurrency Under the Growth Management Act (GMA) (SB 5210)

This bill requires jurisdictions planning under GMA to prohibit approval of new development if it causes the level of service on state-owned transportation facilities to fall below congestion standards adopted by the state or by a regional transportation planning organization, unless transportation improvements or strategies to accommodate the impacts are made concurrent with the development.

Although the bill did not pass, the transportation budget included a proviso requiring the Washington State Department of Transportation to review current highway access management practices.

Transportation Concurrency and Impact Fees Under the Growth Management Act (SB 5683/HB 1753)

This bill would have prohibited local jurisdictions that impose transportation impact fees from denying development approvals based on failure to achieve applicable level of service standards adopted in the transportation element of the comprehensive plan. AWC testified in opposition of the bill.

Excluding Common Rodent Traps from the Definition of "Body Gripping Trap" (SSB 5722, HB 1400 and HB 1606)

SB 5722 and HB 1400 would have allowed moles and gophers to be trapped. Cities that manage golf courses and other recreational facilities have been pursuing this legislation for several sessions. HB 1606 would have allowed moles, gophers, eastern grey squirrels, and California ground squirrels to be trapped. SHB 1128, the operating budget, also included similar provisions. However, the Governor vetoed this section in the operating budget.

Creating Regional Transportation Commissions (ESSB 5803)

This bill would have made findings related to the need to establish a single regional transportation governance entity in the central Puget Sound area that has authority over the planning, funding, and prioritization of roads and transit systems. Although the bill passed the Senate, significant concerns were raised among members of the legislature and stakeholders on the sweeping approach of this legislation.

Increasing State Indebtedness Limits for Transportation Projects (SJR 8211)

This bill would have allowed the state to issue bonds for up to 40 years on transportation structures instead of the current restriction of 30 years, thereby providing more flexibility in funding bridges and, consequently, free up revenue for other transportation projects.

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