Judges: ROB MCKENNA, Attorney General
Filed Date: 9/26/2005
Status: Precedential
Modified Date: 7/6/2016
Honorable Edward G. Holm Prosecuting Attorney Thurston County Courthouse 2000 Lakeridge Drive SW, Bldg. 2 Olympia, WA 98502
Dear Prosecutor Holm and Representative Alexander:Honorable Gary Alexander State Representative, 20th District P.O. Box 40600 Olympia, WA 98504-0600
By letter previously acknowledged, you have requested our opinion on the following questions:
1. If the governing body of a public facilities district (PFD) created before July 31, 2002, causes construction to be commenced on a regional center before January 1, 2004, thus meeting the requirements set forth in RCW
2. Would the interlocal agreements which contemplate the creation of more than one regional center that would commence construction after January 1, 2004, have an effect on the answer to this question?
[original page 2] BRIEF ANSWER
A PFD may allocate properly collected sales and use tax revenue to one or more qualified regional centers as it determines, provided that doing so is consistent with interlocal agreements governing the PFD.
BACKGROUND
In June 2002, Thurston County and the cities of Lacey, Olympia, and Tumwater entered into an interlocal agreement to create the Capitol Area Regional Public Facilities District for a regional center. This 2002 Agreement stated that the participating local governments would jointly identify a possible regional center for construction and operation.
In March 2003, the parties amended the 2002 Interlocal Agreement (Amended Interlocal Agreement Regarding Creation of a Public Facilities District for Regional Centers, dated March 10, 2003 ("2003 Amended Agreement")). The primary purposes of the amendment were to identify two regional centers to be constructed by the PFD and to allocate the PFD's funds between the two regional centers.
One of the regional centers identified in the 2003 Amended Agreement is the Lacey Area Athletic, Recreation, and Special Events Complex. The Lacey Complex was to be funded in part by PFD sales and use tax. In addition, Lacey and Thurston County were to contribute funds and land for the complex.
The other regional center identified in the 2003 Amended Agreement was the Capital Area Arts and Conference Center. The Arts and Conference Center was to be funded by PFD sales and use tax, plus funding provided by the city of Olympia.
The 2003 Amended Agreement stated that the PFD would impose a 0.033 percent sales and use tax and allocate that tax as follows: To help finance the Lacey Complex, the city of Lacey would receive 100 percent of the tax collected in its boundaries and 50 percent of the tax collected in the boundaries of Tumwater and unincorporated Thurston County. To help finance the Arts and Conference Center, the city of Olympia would receive 100 percent of the tax collected within the boundaries of Olympia and 50 percent of the taxes collected in the boundaries of Tumwater and unincorporated Thurston County. In addition, the PFD agreed to impose additional taxes and charges if directed by the cities or county. The PFD agreed to enter into two interlocal agreements, one with Lacey and one with Olympia, that would govern financing, construction, ownership, and operation of the two regional centers.
In response to the 2003 amendments to the interlocal agreement, litigation was commenced against the Capital Area PFD. At the time of the litigation, the Capital Area PFD planned to commence construction on the Lacey Complex prior to January 1, 2004, and planned to commence construction of the Capital Area Arts and Conference Center prior to January 1, 2005. One issue raised in the litigation was whether the Capital Area PFD was required by applicable statutes to commence construction of both regional centers prior to January 1, 2004, in [original page 3] order to contribute the 0.033 percent sales and use tax to partially fund both centers. The court held that the PFD need commence construction of only a single regional center prior to January 1, 2004, in order to use the sales and use tax to finance additional centers commenced after January 1, 2004. The pertinent section of the superior court order states:
[e]ach individual PFD need commence construction of only a single regional center to be eligible for full regional center financing, including financing of additional regional centers where construction did not commence until after January 1, 2004.
Order Granting PFD Defendants' Motion for Summary Judgment,Public Funds v. State, Thurston County Superior Court, No. 03-2-01922-1, filed November 26, 2003.
The information you provided states that construction on the Lacey Complex commenced prior to January 1, 2004. You also state that the PFD and city of Olympia decided to no longer pursue construction of the Arts and Conference Center. Currently, the governing board of the PFD is considering alternatives for allocating PFD funds given that there will be no Arts and Conference Center to which to allocate a portion of the PFD sales and use tax. You state that it is possible the PFD will decide to stop allocating sales tax to the Lacey Complex in the future and to allocate all sales and use tax revenue to one or two alternative projects.
ANALYSIS
1. If the governing body of a PFD created before July 31, 2002, causes construction to be commenced on a regional center before January 1, 2004, thus meeting the requirements set forth in RCW
There are two types of PFDs. Initially, the Legislature authorized counties to establish PFDs. See generally RCW
In general, PFDs governed by RCW
Under RCW
Of particular interest here is the 1999 law that authorized a PFD, without voter approval, to impose a sales and use tax that does not exceed 0.033 percent of a "taxable event." In reality, this is not an additional tax but rather a pre-existing tax imposed by the state. The 1999 law allows a PFD to retain this portion of the sales and use tax instead of transmitting that portion of the tax to the state. To qualify for this tax revenue, a PFD must meet certain deadlines for creating the PFD and commencing construction of a regional center.
RCW
[original page 5] (3) No tax may be collected under this section before August 1, 2000. The tax imposed in this section shall expire when the bonds issued for the construction of the regional center and related parking facilities are retired, but not more than twenty-five years after the tax is first collected.(1) Except as provided in subsection (6) of this section, the governing body of a public facilities district created before July 31, 2002, under chapter
35.57 or36.100 RCW that commences construction of a new regional center, or improvement or rehabilitation of an existing new regional center, before January 1, 2004, may impose a sales and use tax in accordance with the terms of this chapter. The tax is in addition to other taxes authorized by law and shall be collected from those persons who are taxable by the state under chapters82.08 and82.12 RCW upon the occurrence of any taxable event within the public facilities district. The rate of tax shall not exceed 0.033 percent of the selling price in the case of a sales tax or value of the article used in the case of a use tax.(2) The tax imposed under subsection (1) of this section shall be deducted from the amount of tax otherwise required to be collected or paid over to the department of revenue under chapter
82.08 or82.12 RCW. The department of revenue shall perform the collection of such taxes on behalf of the county at no cost to the public facilities district.
(4) Moneys collected under this section shall only be used forthe purposes set forth in RCW
RCW
Thus, a PFD that was created before July 31, 2002, and commenced construction of a new (or improvement of an existing) regional center prior to January 1, 2004, may retain a portion of the state sales and use tax and spend that tax revenue for the purposes set forth in RCW
Your question is whether the Capital Area PFD would comply with RCW
As we see it, this question has three parts, which we address separately. The first question is whether the PFD may construct more than one regional center if construction has commenced on only one regional center prior to January 1, 2004. RCW
The second question is whether the PFD may apply the 0.033 percent sales and use tax to an additional regional center if construction on that particular regional center had not commenced prior to January 1, 2004. RCW
On the other hand, subsection (3) of RCW
Your opinion request informs us, however, that this issue was raised and ruled upon by a superior court in litigation involving the Capital Area PFD. At the time of the litigation in 2003, the Capital Area PFD planned to commence construction on the Lacey Complex prior to January 1, 2004, and planned to commence construction of the Capital Area Arts and Conference Center prior to January 1, 2005. One issue raised in the litigation was whether the Capital Area PFD was required to commence construction of both regional centers prior to January 1, 2004, in order to contribute the sales and use tax to partially fund both centers. The court held that the PFD need commence construction of only a single regional center prior to January 1, 2004, in order to use the sales and use tax to finance additional centers commenced after January 1, 2004. As noted above, the pertinent section of the superior court order states:
[e]ach individual PFD need commence construction of only a single regional center to be eligible for full regional center financing, including financing of additional regional centers where construction did not commence until after January 1, 2004.
Order Granting PFD Defendants' Motion for Summary Judgment,Public Funds v. State, Thurston County Superior Court, No. 03-2-01922-1, filed November 26, 2003.
As we understand it, after reviewing the court's order and the arguments made in the litigation, the court resolved the ambiguity in the context of the Capital Area PFD by concluding that the sales and use tax authorized by RCW
That brings us to the third part of your question — whether the Capital Area PFD is authorized to shift the sales tax funding away from the original regional center (the Lacey [original page7] Complex) to an alternative regional center that has not yet been selected. We answer this question in the affirmative.
RCW
This answer assumes that all other requirements of RCW
2. Would the interlocal agreements which contemplate the creation of more than one regional center that would commence construction after January 1, 2004, have an effect on the answer to this question?
As we understand this question, you ask whether the interlocal agreements establishing the Capital Area PFD would affect the answer to question 1. We answer that question as follows.
Under RCW
However, interlocal agreements, like other types of agreements, may be amended. We find nothing in RCW
In conclusion, the PFD must act not only within the authority of RCW
We trust that the foregoing will be useful to you.
ROB MCKENNA Attorney General
JEAN M. WILKINSON Senior Counsel