EXECUTIVE
ORDER EO 86-06
RESCINDED 86-04
STATE
ADMINISTRATION OF FEDERALLY MANDATED
PRIVATE
ACTIVITY BOND STATE CEILING VOLUME CAP
WHEREAS, on December 17, 1985,
the United State House of Representatives passed a bill entitled the "Tax
Reform Act of 1985" (the "House Bill") which, although not
enacted into law, created a category of tax-exempt obligations defined as
"nonessential function bonds" and imposed an annual state-by-state
ceiling (the "House Ceiling") on the issuance of such nonessential
function bonds and certain portions of essential function bonds (together,
"nonessential function bonds"), which House Ceiling initially was
equal to the greater of (a) $200 million or (b) an amount equal to $175
multiplied by a state's population and which was applicable to Nonessential
Function Bonds issued after December 31, 1985; and
WHEREAS, the House Bill would
have, if enacted, allocated the House Ceiling to governmental units within the
state having authority to issue Nonessential Function Bonds, and would have
further allocated the House Ceiling among the different types of Nonessential
Function Bonds unless the state provided a different formula of allocation by
law; and
WHEREAS, the House Bill
provided that a state may by law, which may be enacted before passage of the
House Bill, provide for a different formula for allocating the House Ceiling
among the Issuers of Nonessential Function Bonds; and
WHEREAS, in response to the
House Bill, the state enacted chapter 247, Laws of 1986 (the "Interim
Allocation Act") , authorizing the Governor to establish by executive
order a different formula for allocation of the House Ceiling; and
WHEREAS, pursuant to the
Interim Allocation Act, the Governor promulgated Executive Order EO 86-04 on
May 15, 1986, establishing a different formula for allocation of the House
Ceiling; and
WHEREAS, subsequent to the
promulgation of Executive Order EO 86-04, the United States Senate passed an
amendment to the House Bill (the "Senate Bills") in the nature of a
substitute, which, if enacted into law, would have retained the annual
state-by-state ceiling on the issuance of private activity bonds contained in
the Internal Revenue Code of 1954 (the 01954 Code"); and
WHEREAS, a Conference
Committee comprised of members of the United States House of Representatives
and the United States Senate reconciled the differences between the House Bill
and the Senate Bill and prepared a new bill entitled the "Tax Reform Act
of 1986" (the "1986 Code"), which has been enacted into law; and
WHEREAS, the 1986 Code imposes
an annual state-by-state ceiling (the "State Ceiling") on the
issuance of tax exempt private activity bonds, certain portions of governmental
bonds and other bonds described in section 1317(25) of the 1986 Code (together,
"Private Activity Bonds"), applicable to Private Activity Bonds
issued after August 15, 1986, which is different from either the House Ceiling
or the ceiling imposed by the 1954 Code and which initially is equal to the
greater of (a) $250 million or (b) an amount equal to $75 multiplied by a
state's population and drops in calendar years after 1987 to the greater of (a)
$150 million, or (b) an amount equal to $50 multiplied by a state's population;
and
WHEREAS, the 1986 Code
allocates the State Ceiling to governmental units within the state having
authority to issue Private Activity Bonds (the "Issuers") unless the
state provides by law a different formula of allocation; and
WHEREAS, the 1986 Code provides
that a state may by law, which may be enacted before passage of the 1986 Code,
provide for, a different formula for allocating the State Ceiling among
Issuers; and
WHEREAS, the Interim
Allocation Act also authorizes the Governor to establish by executive order a
formula for allocation of any volume limitation provided by other federal
legislation, such as the 1986 Code, which is different from that established
for the House Ceiling; and
WHEREAS, the State Ceiling for
Private Activity Bonds under the 1986 Code is smaller and more restrictive than
the House Ceiling and necessitates this Executive Order to provide an
allocation formula for the remainder of 1986; and
WHEREAS, the method of
allocation of the State Ceiling set forth in the 1986 Code may restrain the
issuance of Private Activity Bonds for qualified facilities and other eligible
uses; and
WHEREAS, the State has,
pursuant to chapter 446, Laws of 1985 (the "1985 Allocation Act"),
previously provided a formula for allocation of the volume limitations
contained in the 1954 Code; and
WHEREAS, pursuant to its
terms, the 1985 Allocation Act, applies only to those private activity bonds
which were defined in the 1954 Code on the effective date of such legislation,
as well as private activity bonds which were defined in any later amendments to
the 1954 Code. but only if such amendments are approved by the State Community
Economic Revitalization Board ("CERB"); and
WHEREAS, the change in 1954
Code's definition of private activity bonds effected by the 1986 Code have not
been approved by CERB, and therefore the formula for allocating any limitation
on private activity bond volumes contained in the 1985 Allocation Act is of no
application to the volume limitation provisions affecting Private Activity
Bonds as redefined in the 1986 Code; and
WHEREAS, the method of
allocation of the federal limitations contained in the 1985 Allocation Act, if
it were made applicable to Private Activity Bonds as redefined in the 1986
Code, might restrain the issuance of Private Activity Bonds for qualified
facilities and other eligible uses; and
WHEREAS, it is in the best
interests of the citizens of the state of Washington to have an orderly system
for the allocation of the State Ceiling that is flexible enough to meet the
diverse needs of the citizens of the state but at the same time is efficient enough
to meet the deadlines required by the 1986 Act; and
WHEREAS, it is in the best
interests of the citizens 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 governmental units to finance public
improvements, housing, student loans, and other facilities;
NOW, THEREFORE,
I, Booth Gardner, Governor of the State of Washington, do hereby order:
Section 1. From and after August 15, 1986, the State
Ceiling for calendar year 1986 is reserved to the state and shall be allocated
by the State Office of Financial Management to Issuers within the state as
follows:
A. $100,000,000 for qualified housing
related bonds is reserved for allocation in accordance with existing state
statute (RCW 43.180.200(5)) as amended;
B. $230,675,000 for qualified student loan
bonds, bonds issued by or on behalf of state agencies not otherwise receiving
an allocation under this order, and other Private Activity Bonds generally, of
which $60,000,000 is reserved for qualified student loan bonds, $43,800,000 is
reserved for Chelan County Public Utility District Number One, $43,100,000is
reserved for Grant County Public Utility District Number Two. $20,200,000 is
reserved for Douglas County Public Utility District Number One, and $63,575,000
is reserved for Community Economic Revitalization Board Umbrella Bonds and
other Issuers of Private Activity Bonds.
Section 2. From and after August 15, 1986, the
State Ceiling shall be allocated to each Issuer in the order of the date of
filing with the Office of Financial Management a document indicating firm and
convincing evidence that bonds will be issued by 12:00 noon on December 31,
1986; provided, that for purposes of determining the date of filing of such
evidence, filings with the Department of Community Development, the Department
of Trade and Economic Development and the Office of Financial Management, which
filings were made in accordance with Executive Order EO 86-04 prior to the date
of this Executive Order, shall be considered to have been made with the Office
of Financial Management pursuant to this Executive Order on the same date and
with the same priority as they had under Executive Order EO 86-04; provided
further, that such filings shall be reconfirmed by the timely filing by the
Issuer of a "notification form," in the manner described in the
following paragraph.
Each Issuer of such bonds shall accomplish such
application by submitting to the Office of Financial Management a
"notification form,' provided by the Office of Financial Management
indicating firm and convincing evidence that the bonds will be issued by 12:00
noon on December 31, 1986, as well as any other additional information as the
Office of Financial Management may require. The Issuer will receive
confirmation of an allocation under the State Ceiling within ten days of the
Office of Financial Management's receipt of a completed application. If a
closing certification form," as provided by the Office of Financial
Management, is not filed by 12:00 noon on December 31, 1986, the amount of the
State Ceiling reserved will automatically be reallocated in accordance with
Section 4 of this Executive Order
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 of bonds actually issued, as long as such amount is less
than the original allocation, and any unused portion of the State Ceiling shall
automatically be reallocated in accordance with Section 4 of this Executive
Order. If the amount of bonds actually issued is greater than the allocation,
the entire allocation shall be disallowed.
Section 3. Issuers shall promptly report to the
Office of Financial Management when such Issuers find that it is reasonably
likely that any portion of the State Ceiling reserved for them will not be
consumed by 12:00 noon on December 31, 1986.
Section 4. If all of the State Ceiling has not
been utilized by 12:00 noon on December 31, 1986, that portion which has not
been utilized shall automatically be reallocated as follows:
A. Any portion of the State Ceiling which
has not been utilized by 12:00 noon on December 31, 1986, up to and including
the first $15,000,000 shall automatically be reallocated to the Washington
Student Loan Guarantee Association for the purpose of issuing qualified student
loan bonds, and shall be considered a "carryforward" as described in
section 146(f) of the 1986 Code; and
B. Any portion of the State Ceiling which
has not been utilized by 12:00 noon on December 31, 1986, exceeding the first
$15,000,000, shall automatically be reallocated to the Washington Housing
Finance Commission for the purpose of issuing qualified mortgage bonds or
mortgage credit certificates, and shall be considered a
"carryforward" as described in section 146(f) of the 1986 Code.
Section 5. The Interim Allocation Act requires the
Department of Community Development to submit an interim study on December 1,
1986, to the Governor and the Legislature reviewing bond usage under previous and existing state volume caps, making projections for
future demand for state volume cap allocation, and making recommendations for
future allocation systems. The Department of Community Development is requested
to work closely with all potential Issuers, the Department of Trade and
Economic Development and the Office of Financial Management on this interim
study and to work closely with the appropriate legislative committees on the
development of this interim study to assist the Fiftieth Legislature to be
fully informed on this issue in order to allow them to address the issue of
future allocation systems as soon in the 1987 legislative session as possible.
Section 6. For the purposes of the 1986 Code, this
Executive Order shall be considered a gubernatorial proclamation.
Section 7. Executive Order EO 86-04 is hereby
rescinded.
Section 8. The means of allocating the State
Ceiling provided for in this Executive Order shall be effective until (a) this
Executive Order is rescinded or superseded by a new executive order, or (b)
January 1, 1987, whichever occurs first.
IN WITNESS WHEREOF, I have hereunto
set my hand and caused
the seal of the State
of Washington to be
affixed at Olympia
this 10th day of
November A.D., Nineteen hundred and eighty-six.
BOOTH GARDNER
Governor of Washington
BY THE GOVERNOR:
_________________________________
Secretary of State
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