By Frank Chmelik
With COVID-19 case counts beginning to subside, more businesses and governments are starting to operate as usual. This return to “normal” activity has inspired this month’s column on “interlocal cooperation agreements.” Washington law (chapter 39.34 RCW) allows governments to use this powerful tool to join to conduct joint activities. Here are some port examples.
- An agreement between a port and a city for a recreational sailing program
- An agreement between a port and a tribe to jointly develop real property
- An agreement between a port and local fire districts to provide emergency services
- An agreement between a port and a state agency to construct and operate a facility
- An agreement between a port and a community college to build a training center
- An agreement between a port and city for conducting SEPA reviews of a port project
- An agreement between ports to share the time of a senior executive
- An agreement between ports and other local governments to maintain a small works roster
- An agreement between ports to allow development by one port in the other port’s district
- An agreement between multiple ports to design and install fiber optic systems
Does each government have the statutory authority? The use of an interlocal agreement is premised on each government having a power to undertake the action that is contemplated in the interlocal agreement; an interlocal agreement cannot be used to expand the powers of the cooperating governments. For port districts, this is not a significant impediment, as port district powers in Title 53 are broadly worded. Port’s statutory powers like joint exercise of powers with other port districts (RCW 53.08.240), economic development programs (RCW 53.08.245), tourism promotion and tourism-related facilities (RCW 53.08.255), park and recreation facilities (RCW 53.08.260), creation of industrial development districts (chapter 53.25) and expenditures for industrial development, trade promotional and promotional hosting (RCW 53.36.140) demonstrate these broad powers. The first analysis for an interlocal agreement must include a link to a statutory power granted to ports. The other non-port district government(s) must also identify its statutory authority. The examples above aren’t meant to be exhaustive, the agreement subjects are endless. In fact, the Chelan Douglas Regional Port Authority is an example of how two port districts, using the Interlocal Cooperation Act, successfully combined their operations to better serve the residents of both port districts. Are you interested in availing yourself of this powerful tool to improve your own port operations? Here’s a step-by-step guide on how to put together an interlocal agreement.
Form of Organization. After the port and the other government(s) have determined their statutory power, the next step is to define the “form of the organization.” RCW 39.34.030 allows quite a bit of flexibility, ranging from a simple agreement where one government is the “lead agency,” to the formation of a Washington nonprofit corporation, partnership or limited liability company. In the interlocal agreement’s simplest form, there is no specific organization, rather, each government pledges to undertake certain actions. From that starting point, one of the governments is designated as the “lead agency” to manage a common undertaking. In the most complex form, the interlocal agreement creates a legal entity (nonprofit corporation, partnership or limited liability company) with a group of government or private-sector representatives as management.
Only governments can participate as the members of the interlocal agreement; although private parties can be “associate members” or have some other participatory role. Decisions on the “form of the organization” are made using the same factors that inform the decision of “form of organization” in the private sector: (i) the risk of the venture and need for liability protection, (ii) the management and control of the affairs of the organization and (iii) the allocation of profit and losses. The new organization will have to obtain a federal tax identification number to open a bank account, and a good business lawyer can help navigate this issue.
Drafting the agreement. After the “form of the organization” is decided, which includes the form of governance, and the main points are worked out, it is time to draft the agreement. RCW 39.34.030 requires that interlocal agreements provide for (i) a duration, (ii) the form of the organization and management, (iii) the purpose or purposes to be accomplished, (iv) the manner of funding and (v) how the agreement will be terminated and what happens to real or personal property owned by the interlocal organization.
Meet the true and full value test. If anything of value changes hands between governments, RCW 43.09.210 requires that the exchange must result in “true and full value” for each government. “True and full value” is a broader concept than fair market value. Washington’s attorney general has described it as a flexible concept that can consider a wide variety of factors. When considering those factors, however, you must ensure they are set forth in the record.
Filing the agreement. RCW 39.34.040 requires that interlocal agreements must either be (i) filed with the county auditor (recorded) or (ii) posted on an agency’s website.
Remember the Public Records Act and the Open Public Meetings Act. Keep in mind that the records of the interlocal organization will be “public records” under the Public Records Act and the Open Public Meetings Act if the governing board exercises “government functions” and spends public money. The best practice is to specify the compliance with the Public Records Act and the Open Public Meetings Act in the formation documents and treat all records and meetings; accordingly, the State Auditor will audit the interlocal organization so compliance with applicable rules is key.
As always, please contact your port counsel with any questions regarding this topic. And, if you have a particular question for a Knowing the Waters, please email me at email@example.com.
 The other governments may include any Washington government, any state agency, the federal government, any Indian tribe and any political subdivision of another state. Interestingly, there is no need that the governments be geographically connected.
 A common example is one fire district in a county agrees to be the “lead agency” to own, manage and operate the radio towers used by all the fire districts in the county pursuant to an interlocal agreement signed by all the fire districts.
 See, AGO 1997 No. 5.
 If there are old unrecorded interlocal agreements now is the time to either record them or post them on the port’s web page.