EXECUTIVE
ORDER EO 86-04
STATE
ADMINISTRATION OF NONESSENTIAL FUNCTION
BOND
STATE CEILING VOLUME CAP
WHEREAS, the United States
House of Representatives has passed H.R. 3838, entitled the "Tax Reform
Act of 1985" (the "Proposed Act") which, although not enacted into
law, imposes an annual state-by state ceiling (the "State Ceiling")
on the issuance of nonessential function bonds and certain portions of
essential function bonds (together, "Nonessential Function Bonds")
which State Ceiling initially is equal to the greater of (a) $200 million or
(b) an amount equal to $175 multiplied by a state's population and which is
applicable to Nonessential Function Bonds issued after December 31, 1985; and
WHEREAS, Section 701(b) of the
Proposed Act would, if enacted, add a new Section 145 to the United States
Internal Revenue Code (the "Code") which allocates the State Ceiling
to governmental units within the state having authority to issue Nonessential
Function Bonds (the "Issuers") and allocates the State Ceiling among
the different types of Nonessential Function Bonds unless the state provides by
law a different formula of allocation; and
WHEREAS, the method of
allocation of the State Ceiling set forth in the Proposed Act may restrain the
issuance of Nonessential Function Bonds for qualified facilities and other
eligible uses; and
WHEREAS, the Proposed Act
provides that a state may by law, which may be enacted before passage of the
Proposed Act, provide for a different formula for allocating the State Ceiling
among Issuers; and
WHEREAS, the State has enacted
Chapter 247, Laws of 1986, authorizing the governor to establish by executive
order a different formula for allocation of the State Ceiling; and
WHEREAS, it is in the best
interest of the residents of the State of Washington to promote industrial and
economic development and encourage private investment in our state's economy,
while preserving the ability of local governmental units to finance public
improvements, housing, health care facilities, student loans, higher education
facilities and other facilities provided by private nonprofit corporations;
NOW THEREFORE, I, Booth
Gardner, Governor of the State of Washington, do hereby order:
Section 1. From and after December 31,1985, or
any other date from which Section 701(b) of the Proposed Act becomes effective
with respect to allocation of the State Ceiling, the State Ceiling for calendar
year 1986 is reserved to the state and shall be reserved for Nonessential
Function Bonds allocated to Issuers within the state as follows:
A. $185,900,000 for qualified 501(c)(3) bonds (as defined in the Proposed Act), of
which $158,400,000 is reserved for Statewide Issuers of qualified 501(c)(3)
bonds and $27,500,000 is reserved for Local Issuers of qualified 501(c)(3) bonds;
B. $261,000,000 for qualified housing related bonds (as defined in
Section 3 of this Executive Order), is reserved for allocation in accordance
with existing state statute (RCW 43.180.200(5)) as amended; and
C. $247,600,000
for qualified student loan bonds, bonds issued by or on behalf of state
agencies not otherwise receiving an allocation under this order, and other
Nonessential Function Bonds generally, of which $82,900,000 is reserved for
qualified student loan bonds and state agencies, and $164,700,000 is reserved
for Community Economic Revitalization Board umbrella bonds and other
Nonessential Function Bond Issuers generally.
D. $77,162,500
is held in reserve for further allocation on or after October 1, 1986. If these
funds are not allocated by October 15, 1986, they will be automatically
allocated among the categories and subcategories in subsections A, B, and C of
this section proportional to their original allocation.
Any Issuers that have used allocations under the
Proposed Act before the effective date of this Executive Order shall report
such usage to the Office of Financial Management on or before June 1, 1986. To
the extent that allocations have been taken before the effective date of this
Executive Order under the formula set forth in the Proposed Act, such
allocations are confirmed and will be applied against the appropriate
allocation.
Section 2. From and after December 31, 1985, or
any other date from which Section 701(b) of the Proposed Act becomes effective
with respect to allocation of the State Ceiling, that portion of the State
Ceiling to be used for qualified 501 (c)(3) bonds is reserved to the state and
shall be allocated by the Department of Community Development to the Issuers
within the state pursuant to this order in accordance with rules promulgated by
the Department of Community Development.
Section 3. From and after December 31, 1985, or
any other date from which Section 701(b) of the Proposed Act becomes effective
with respect to allocation of the State Ceiling, that portion of the State
Ceiling to be used for exempt facility bonds for qualified residential rental
projects, qualified mortgage bonds and qualified veteran's mortgage bonds (all
as defined in the Proposed Act) and for other housing projects (collectively,
"housing related bonds") issued by the Washington Housing Finance
Commission or Local Issuers of qualified housing bonds is reserved to the state
and shall be allocated to Issuers within the state pursuant to this order in
accordance with rules promulgated by the Department of Community Development in
the same manner and in the same percentages as allocations are made under RCW
43.180.200(5) as amended and shall be so allocated without regard as to whether
such bonds are issued for the purpose of financing qualified residential rental
projects, qualified mortgage bonds, qualified veteran's mortgage bonds or for
other housing related projects.
Section 4. From and after December 31, 1985, or
any other date from which Section 701(b) of the Proposed Act becomes effective
with respect to allocation of the State Ceiling, that portion of the State
Ceiling to be used for Nonessential Function Bonds generally, is reserved to
the state and shall be allocated by the Department of Trade and Economic
Development to Issuers within the state pursuant to this order in accordance
with rules promulgated by the Department of Trade and Economic Development that
are as consistent as practicable with the provisions of Chapter 39-86 RCW. The
portion of the State Ceiling allocation reserved for qualified student loan bonds and the portion of the State Ceiling
allocation reserved for Nonessential Function Bonds issued by or on behalf of
state agencies is reserved to the state and shall be further allocated by the
Office of Financial Management to Issuers within the state pursuant to this
order in accordance with rules promulgated by the Office of Financial
Management.
Section 5. From and after December 31, 1985,
when the Proposed Act relating to the State Ceiling may take effect retroactively
and, except for bonds allocated under Section 3, the State Ceiling for the
State of Washington shall be allocated to each Issuer in the order of the date
of filing with the appropriate agency (Department of Community Development, the
Department of Trade and Economic Development, or the Office of Financial
Management referred to hereafter as the "Allocating Agencies") a
document indicating firm and convincing evidence that bonds will be issued
within 90 days of application.
Each Issuer of such Bonds shall accomplish such
application by submitting to the appropriate Allocating Agency a photocopy of
the required documentation, along with a Notification Form as provided by the
Allocating Agencies. The Issuer will receive confirmation of an allocation under
the State Ceiling within 15 days of an Allocating Agency's receipt of an
application. If a Closing Certification Form, as provided by the Allocating
Agencies, is not filed within 90 days of confirmation, the amount of the State
Ceiling reserved will revert back to the Allocating Agency, unless a waiver for
exceptional circumstances is granted by the Allocating Agency. The appropriate
documentation and notification form must then be refiled, and the effective
date of the filing for the purpose of allocation of the State Ceiling will be
the date a complete application is refiled.
In the event that the amount of Bonds issued at
the time of closing is different than the amount contemplated by the original
application or reapplication, the allocation received by the issuer shall be
adjusted to the amount actually sold at closing as long as it is less than the
original allocation. If it is greater, the allocation will be disallowed.
Section 6. In order for the state to property
anticipate the need for a reallocation of unused bond authority under the State
Ceiling, Issuers who anticipate the need for an allocation of the State Ceiling
during any time of the allocation year, shall notify the Office of Financial
Management, the Department of Trade and Economic Development, or the Department
of Trade and Economic Development, whichever is the appropriate agency, on the
first day of each month as to the timing and size of their anticipated
allocation needs. All 501(c)(3) issuers will report to the Department of Community
Development. Agencies that issue housing related bonds will report to the
Department of Community Development. The Student Loan Finance Association and
state agencies will report to the Office of Financial Management. All other
Nonessential Function Bond Issuers will report to the Department of Trade and
Economic Development.
The Department of Community Development and the
Department of Trade and Economic Development shall report to the Office of
Financial Management on the 15th of each month and the Office of Financial
Management shall report to the Governor on June 1, September 1, December 1, and
February 1, or as needed, concerning the actual and anticipated consumption of
State Ceiling allocations.
Issuers shall promptly report to the Office of Financial
Management, the Department of Community Development, and the Department of
Trade and Economic Development respectively, when such Issuers find that it is
reasonably likely that a portion of the State Ceiling reserved for them will
not be consumed within the allocation year. When an allocation surplus is
identified, it shall be reported to the Office of Financial Management
immediately by the respective reporting agencies listed above.
Section 7. Any Issuer of tax exempt bonds may,
upon exhaustion or anticipated exhaustion of the portion of the State Ceiling
allocated to an Allocating Agency, make application to the Governor through its
Allocating Agency for an additional allocation of the State Ceiling. No
reallocation of the State Ceiling as defined by Section 1 will take place
before October 1. 1986. Any executive order reallocating unused portions of the
State Ceiling will be preceded by a 30-day notice.
Section 8. The allocation formulas provided by
this Executive Order shall be effective until (a) the effective date of
legislation enacted by the state which provides for a different method of
allocating the State Ceiling among Issuers within the state, (b) Federal law or
Federal regulations require the use of a different formula, (c) the Executive
Order is rescinded, or (d) July 1, 1987.
IN WITNESS WHEREOF, I have hereunto
set my hand and caused
the seal of the State
of Washington to be
affixed at Olympia
this 15th day of May
A.D., Nineteen hundred and eighty-six.
BOOTH GARDNER
Governor of Washington
BY THE GOVERNOR:
_________________________________
Acting Deputy,
Secretary of State
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