BILL REQ. #:  H-0105.2 

Read first time 03/29/11.   Referred to Committee on Business & Financial Services.

     AN ACT Relating to reforming and streamlining access to capital and infrastructure building programs through the creation of the Washington economic prosperity bank; amending RCW 42.30.110, 42.56.270, 43.325.020, 43.325.050, 43.325.902, 43.350.005, 43.350.020, 43.350.030, 43.350.040, and 43.350.070; reenacting and amending RCW 43.79A.040 and 43.325.040; adding a new section to chapter 41.06 RCW; adding a new chapter to Title 43 RCW; making appropriations; and providing an expiration date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 101   (1) The Washington economic prosperity bank is established as an agency of state government. Within constitutional and statutory parameters, the bank's mission is to:
     (a) Finance Washington businesses and public infrastructure in order to promote economic growth, revitalize communities, encourage a healthy jobs climate, and enhance the quality of life for the state's residents; and
     (b) Increase the effective, efficient, and accountable use of state resources by decreasing the number of state agencies and programs authorized to finance businesses and public infrastructure.
     (2) The bank's objectives are to:
     (a) Act as a clearinghouse that provides a single point of decision making and accountability for allocating major economic development grant and loan funds;
     (b) Reduce state staff, operational costs, and inefficient processes by consolidating under one umbrella authority the autonomous public infrastructure and business programs that are currently dispersed under management of several agencies;
     (c) Achieve economies of scale, including potential decreases in interest rates attached to public and private projects;
     (d) Streamline access to financing information by standardizing application processes and evaluation criteria, and consolidating sources of information, including web sites; and
     (e) Increase access to capital for Washington businesses and public infrastructure.
     (3) The bank is authorized to:
     (a) Operate as the state's single financing authority for businesses and public infrastructure;
     (b) Issue taxable and tax-exempt revenue bonds, make loans or grants, and leverage state and federal funds; and
     (c) Provide a means for the state, for public benefit, to buy public debt and sell it to public entities, as well as to refinance the debt of the state and its political subdivisions.
     (4) In addition to other powers specified in this chapter, the bank may:
     (a) Sue and be sued in its own name;
     (b) Make and execute agreements, contracts, and other instruments, with any public or private person or entity, in accordance with this chapter and the state Constitution;
     (c) Solicit and accept gifts, grants, donations, or contributions from any federal, state, local governmental agency or program, or any private source, and expend the same for any purpose consistent with this chapter;
     (d) Adopt rules, in accordance with chapter 34.05 RCW; and
     (e) Exercise any other power reasonably required to implement the purposes of this chapter.

NEW SECTION.  Sec. 102   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Bank" means the Washington economic prosperity bank created in this chapter.
     (2) "Board" means the board of directors of the bank.

NEW SECTION.  Sec. 103   (1) The bank shall be governed by a five member board of directors: The governor; the lieutenant governor; the state auditor; the attorney general; and the state treasurer, who shall serve as board chair.
     (2) The board shall:
     (a) Establish an advisory council of financial experts and appoint its members;
     (b) Appoint the bank's officers and evaluate their performance;
     (c) Set objectives and common criteria for allocating the bank's resources based upon legislative direction, best practices, maximization of benefits to the state at a prudent level of risk, and creation of long-term value for the state;
     (d) Make final decisions on allocation of its resources among funding programs under its management; and
     (e) Communicate its decisions and rationale to the legislature and the public.
     (3)(a) The board shall appoint a five member advisory council. Each council candidate must have experience in finance, banking, or budget and demonstrate a statewide perspective regarding economic prosperity. At least four board members must vote affirmatively to confirm each candidate as an advisory councilmember. Advisory councilmembers serve at the pleasure of the board.
     (b) As authority to make funding decisions under an existing program is transferred to the bank pursuant to section 201 of this act, the board shall appoint the transferred program's current executive director or board chair to one of the five positions on the advisory council. The appointment must remain in effect until either one funding cycle has been completed under the bank's management, or the board determines that the transfer of the program to the bank has otherwise been completed, whichever occurs first.
     (c) The advisory council shall:
     (i) Develop and recommend to the board common criteria for evaluating applications for the funding programs under the bank's management;
     (ii) Make recommendations to the board on which applications to approve for funding; and
     (iii) Develop and recommend to the board contractual policies and procedures.
     (d) Members of the advisory council are entitled to reimbursement for expenses incurred in the discharge of their duties under this chapter, as provided in RCW 43.03.050 and 43.03.060.
     (4) The board may delegate some of its functions to the chair and to the bank president. However, board members may not delegate their final decision-making authority or their attendance at meetings. Members may participate in a meeting by conference telephone or similar electronic communications equipment so that all persons participating in the meeting can hear each other at the same time. Participation by that method constitutes presence in person at a meeting.
     (5) The board may adopt policies and procedures for its own governance.
     (6) The board may establish expert ad hoc technical advisory committees to assist in evaluating applications for bank funding. The board may, and is encouraged to, draw these experts from boards and agencies that previously managed the relevant funding programs. The board may also establish technical advisory committees or consult with public and private sector experts in substantive areas related to the bank's mission, objectives, and duties.
     (7)(a)(i) The board shall appoint a bank president and other officers, all of whom must have demonstrated experience in finance, banking, or budget. The officers are exempt from the provisions of chapter 41.06 RCW. The officers shall serve at the board's pleasure, on such terms and conditions as the board determines, but subject to chapter 42.52 RCW.
     (ii) The officers shall provide support to the board and the advisory council, carry out bank policies and programs, and exercise additional authority as may be delegated by the board.
     (b) Subject to available funding and consistent with board direction, the bank president:
     (i) May employ such additional personnel as are necessary to the bank's operations. This employment shall be in accordance with the state civil service law, chapter 41.06 RCW; and
     (ii) May contract with persons who have the technical expertise needed to carry out a specific, time-limited project.

NEW SECTION.  Sec. 104   A new section is added to chapter 41.06 RCW to read as follows:
     In addition to the exemptions under RCW 41.06.070, this chapter does not apply in the Washington economic prosperity bank to its officers, as provided in section 103(7)(a)(i) of this act.

NEW SECTION.  Sec. 201   (1) When the bank is provided with the relevant specific expenditure authority in the enacted operating or the capital appropriations act, the following business finance programs will be transitioned from their current agencies to the bank: The life sciences discovery fund established in chapter 43.350 RCW, and the energy freedom program established in chapter 43.325 RCW. The legislature expects that these programs will be fully transferred to the bank within one year of the bank receiving such expenditure authority. Until the board determines that the program is fully transferred to the bank, funding applications must continue to be evaluated and selected using agency personnel, criteria, policies, and procedures provided for under the applicable statute authorizing the program.
     (2)(a) Before the commencement of the legislative session immediately following the legislative session in which the bank is provided with specific expenditure authority, the board must submit to the legislature a six-year plan for transferring management authority for additional business finance programs and public infrastructure programs to the bank.
     (b) To determine which categories, funding sources, and programs to recommend for transfer, the board must use a quantitative and qualitative process, including considering whether each transfer will provide measurable public benefit through expanded investment opportunities, administrative efficiencies, or other criteria determined by the board.
     (c) The six-year plan must include recommendations for:
     (i) Program transfers that would take place within two, four, and six years of bank operations commencing;
     (ii) Management of matching funds, federal funds, legacy accounts, and any other sources of revenue that would be under the bank's management;
     (iii) Protection of existing bondholder's rights, covenants, and contracts;
     (iv) A timeline within which the bank will achieve fiscal self-sufficiency; and
     (v) Statutory or budgetary changes that will increase the bank's capacity to achieve its mission, objectives, and duties.
     (3) To prepare its six-year plan, the board must evaluate, at a minimum, the following business and public infrastructure fund sources for transfer to the bank:
     (a) The rural Washington loan fund under chapter 43.168 RCW;
     (b) The forest products revolving loan fund, managed by the department of commerce;
     (c) The coastal revolving loan fund, managed by the department of commerce;
     (d) HUD section 108 guaranteed loans, managed by the department of commerce;
     (e) Community development block grant float loans, managed by the department of commerce;
     (f) The child care facility revolving fund under RCW 43.31.502;
     (g) Industrial revenue bonds, managed by the Washington economic development finance authority;
     (h) The public works trust fund under chapter 43.155 RCW;
     (i) Community economic revitalization board loans and grants under chapter 43.160 RCW;
     (j) The centennial clean water program, managed by the department of ecology;
     (k) The freight mobility strategic investment program under chapter 47.06A RCW;
     (l) The housing trust fund under RCW 43.185.030;
     (m) Housing finance commission programs under chapter 43.180 RCW; and
     (n) Washington wildlife and recreation program grants under chapter 79A.15 RCW.
     (4) The legislature may modify the six-year plan submitted by the bank and direct any program and fund source transfers through legislation and the operating and capital appropriations budgets.

NEW SECTION.  Sec. 202   (1) Beginning December 1, of the year in which this section takes effect, the bank must report annually to the legislature on its most recently completed fiscal year's activities and outcomes and its proposed plans for the upcoming fiscal year. The report must include: The bank's objectives; the common criteria and prudent risk definition that it uses to evaluate and select projects; projects submitted, evaluated, and selected for funding; the size, scope, and fund sources included in the bank's outstanding portfolio; outcomes that the bank has achieved including return on investment, creation of long-term value, and self-funding of bank operations; any significant staff changes; and any policy or fiscal recommendations for legislative consideration.
     (2) By July 1 ten years after the year in which this section takes effect, and every ten years thereafter, the joint legislative audit and review committee must conduct a performance audit to assess the extent to which implementation and operation of the bank has met the objectives provided in section 101(2) of this act and to recommend additional actions to improve the bank's performance and accountability.
     (3) If circumstances require that the bank terminate its activities, its functions must be transferred to the office of the state treasurer or to another agency as directed by the legislature.

NEW SECTION.  Sec. 301   (1) The Washington economic prosperity bank account is created in the custody of the state treasurer. All receipts from legislative appropriations, program transfers, gifts, grants, donations, sponsorships, contributions, fees, loan repayments, and interest earnings must be deposited in the account or in such subaccounts as may be needed to properly manage the bank's various funds, obligations, and investments; except that, the board shall determine, in consultation with the office of the state treasurer, whether maintaining segregated accounts for any of the existing fund sources transferred to the bank would be beneficial to the state. Except as provided in subsection (2) of this section, moneys in the account may be spent only after appropriation. Expenditures from the account may be used by the bank only for purposes consistent with the bank's mission, objectives, and duties.
     (2) The bank's operational budget is subject to legislative appropriation until such time as the director of financial management determines that the bank demonstrates fiscal self-sufficiency.
     (3) Whenever any money, from the federal government or other sources, that was not anticipated in the budget approved by the legislature has actually been received and is designated to be spent for a specific purpose, the bank shall use the unanticipated receipts process as provided in RCW 43.79.270 to request authority to spend the money.

Sec. 401   RCW 42.30.110 and 2010 1st sp.s. c 33 s 5 are each amended to read as follows:
     (1) Nothing contained in this chapter may be construed to prevent a governing body from holding an executive session during a regular or special meeting:
     (a) To consider matters affecting national security;
     (b) To consider the selection of a site or the acquisition of real estate by lease or purchase when public knowledge regarding such consideration would cause a likelihood of increased price;
     (c) To consider the minimum price at which real estate will be offered for sale or lease when public knowledge regarding such consideration would cause a likelihood of decreased price. However, final action selling or leasing public property shall be taken in a meeting open to the public;
     (d) To review negotiations on the performance of publicly bid contracts when public knowledge regarding such consideration would cause a likelihood of increased costs;
     (e) To consider, in the case of an export trading company, financial and commercial information supplied by private persons to the export trading company;
     (f) To receive and evaluate complaints or charges brought against a public officer or employee. However, upon the request of such officer or employee, a public hearing or a meeting open to the public shall be conducted upon such complaint or charge;
     (g) To evaluate the qualifications of an applicant for public employment or to review the performance of a public employee. However, subject to RCW 42.30.140(4), discussion by a governing body of salaries, wages, and other conditions of employment to be generally applied within the agency shall occur in a meeting open to the public, and when a governing body elects to take final action hiring, setting the salary of an individual employee or class of employees, or discharging or disciplining an employee, that action shall be taken in a meeting open to the public;
     (h) To evaluate the qualifications of a candidate for appointment to elective office. However, any interview of such candidate and final action appointing a candidate to elective office shall be in a meeting open to the public;
     (i) To discuss with legal counsel representing the agency matters relating to agency enforcement actions, or to discuss with legal counsel representing the agency litigation or potential litigation to which the agency, the governing body, or a member acting in an official capacity is, or is likely to become, a party, when public knowledge regarding the discussion is likely to result in an adverse legal or financial consequence to the agency.
     This subsection (1)(i) does not permit a governing body to hold an executive session solely because an attorney representing the agency is present. For purposes of this subsection (1)(i), "potential litigation" means matters protected by RPC 1.6 or RCW 5.60.060(2)(a) concerning:
     (i) Litigation that has been specifically threatened to which the agency, the governing body, or a member acting in an official capacity is, or is likely to become, a party;
     (ii) Litigation that the agency reasonably believes may be commenced by or against the agency, the governing body, or a member acting in an official capacity; or
     (iii) Litigation or legal risks of a proposed action or current practice that the agency has identified when public discussion of the litigation or legal risks is likely to result in an adverse legal or financial consequence to the agency;
     (j) To consider, in the case of the state library commission or its advisory bodies, western library network prices, products, equipment, and services, when such discussion would be likely to adversely affect the network's ability to conduct business in a competitive economic climate. However, final action on these matters shall be taken in a meeting open to the public;
     (k) To consider, in the case of the state investment board, financial and commercial information when the information relates to the investment of public trust or retirement funds and when public knowledge regarding the discussion would result in loss to such funds or in private loss to the providers of this information;
     (l) To consider proprietary or confidential nonpublished information related to the development, acquisition, or implementation of state purchased health care services as provided in RCW 41.05.026;
     (m) To consider in the case of the life sciences discovery fund authority, the substance of grant applications and grant awards when public knowledge regarding the discussion would reasonably be expected to result in private loss to the providers of this information;
     (n) To consider in the case of a health sciences and services authority, the substance of grant applications and grant awards when public knowledge regarding the discussion would reasonably be expected to result in private loss to the providers of this information; or
     (o) To consider in the case of the Washington economic prosperity bank, the substance of loan or grant applications and awards when public knowledge regarding the discussion would reasonably be expected to result in private loss to the providers of this information.
     (2) Before convening in executive session, the presiding officer of a governing body shall publicly announce the purpose for excluding the public from the meeting place, and the time when the executive session will be concluded. The executive session may be extended to a stated later time by announcement of the presiding officer.

Sec. 402   RCW 42.56.270 and 2009 c 394 s 3 are each amended to read as follows:
     The following financial, commercial, and proprietary information is exempt from disclosure under this chapter:
     (1) Valuable formulae, designs, drawings, computer source code or object code, and research data obtained by any agency within five years of the request for disclosure when disclosure would produce private gain and public loss;
     (2) Financial information supplied by or on behalf of a person, firm, or corporation for the purpose of qualifying to submit a bid or proposal for (a) a ferry system construction or repair contract as required by RCW 47.60.680 through 47.60.750 or (b) highway construction or improvement as required by RCW 47.28.070;
     (3) Financial and commercial information and records supplied by private persons pertaining to export services provided under chapters 43.163 and 53.31 RCW, and by persons pertaining to export projects under RCW 43.23.035;
     (4) Financial and commercial information and records supplied by businesses or individuals during application for loans or program services provided by chapters 43.325, 43.163, 43.160, 43.330, and 43.168 RCW, or during application for economic development loans or program services provided by any local agency;
     (5) Financial information, business plans, examination reports, and any information produced or obtained in evaluating or examining a business and industrial development corporation organized or seeking certification under chapter 31.24 RCW;
     (6) Financial and commercial information supplied to the state investment board by any person when the information relates to the investment of public trust or retirement funds and when disclosure would result in loss to such funds or in private loss to the providers of this information;
     (7) Financial and valuable trade information under RCW 51.36.120;
     (8) Financial, commercial, operations, and technical and research information and data submitted to or obtained by the clean Washington center in applications for, or delivery of, program services under chapter 70.95H RCW;
     (9) Financial and commercial information requested by the public stadium authority from any person or organization that leases or uses the stadium and exhibition center as defined in RCW 36.102.010;
     (10)(a) Financial information, including but not limited to account numbers and values, and other identification numbers supplied by or on behalf of a person, firm, corporation, limited liability company, partnership, or other entity related to an application for a horse racing license submitted pursuant to RCW 67.16.260(1)(b), liquor license, gambling license, or lottery retail license;
     (b) Internal control documents, independent auditors' reports and financial statements, and supporting documents: (i) Of house-banked social card game licensees required by the gambling commission pursuant to rules adopted under chapter 9.46 RCW; or (ii) submitted by tribes with an approved tribal/state compact for class III gaming;
     (11) Proprietary data, trade secrets, or other information that relates to: (a) A vendor's unique methods of conducting business; (b) data unique to the product or services of the vendor; or (c) determining prices or rates to be charged for services, submitted by any vendor to the department of social and health services for purposes of the development, acquisition, or implementation of state purchased health care as defined in RCW 41.05.011;
     (12)(a) When supplied to and in the records of the department of ((community, trade, and economic development)) commerce:
     (i) Financial and proprietary information collected from any person and provided to the department of ((community, trade, and economic development)) commerce pursuant to RCW 43.330.050(8); and
     (ii) Financial or proprietary information collected from any person and provided to the department of ((community, trade, and economic development)) commerce or the office of the governor in connection with the siting, recruitment, expansion, retention, or relocation of that person's business and until a siting decision is made, identifying information of any person supplying information under this subsection and the locations being considered for siting, relocation, or expansion of a business;
     (b) When developed by the department of ((community, trade, and economic development)) commerce based on information as described in (a)(i) of this subsection, any work product is not exempt from disclosure;
     (c) For the purposes of this subsection, "siting decision" means the decision to acquire or not to acquire a site;
     (d) If there is no written contact for a period of sixty days to the department of ((community, trade, and economic development)) commerce from a person connected with siting, recruitment, expansion, retention, or relocation of that person's business, information described in (a)(ii) of this subsection will be available to the public under this chapter;
     (13) Financial and proprietary information submitted to or obtained by the department of ecology or the authority created under chapter 70.95N RCW to implement chapter 70.95N RCW;
     (14) Financial, commercial, operations, and technical and research information and data submitted to or obtained by the life sciences discovery fund authority in applications for, or delivery of, grants under chapter 43.350 RCW, to the extent that such information, if revealed, would reasonably be expected to result in private loss to the providers of this information;
     (15) Financial and commercial information provided as evidence to the department of licensing as required by RCW 19.112.110 or 19.112.120, except information disclosed in aggregate form that does not permit the identification of information related to individual fuel licensees;
     (16) Any production records, mineral assessments, and trade secrets submitted by a permit holder, mine operator, or landowner to the department of natural resources under RCW 78.44.085;
     (17)(a) Farm plans developed by conservation districts, unless permission to release the farm plan is granted by the landowner or operator who requested the plan, or the farm plan is used for the application or issuance of a permit;
     (b) Farm plans developed under chapter 90.48 RCW and not under the federal clean water act, 33 U.S.C. Sec. 1251 et seq., are subject to RCW 42.56.610 and 90.64.190;
     (18) Financial, commercial, operations, and technical and research information and data submitted to or obtained by a health sciences and services authority in applications for, or delivery of, grants under RCW 35.104.010 through 35.104.060, to the extent that such information, if revealed, would reasonably be expected to result in private loss to providers of this information;
     (19) Information gathered under chapter 19.85 RCW or RCW 34.05.328 that can be identified to a particular business; ((and))
     (20) Financial and commercial information submitted to or obtained by the University of Washington, other than information the university is required to disclose under RCW 28B.20.150, when the information relates to investments in private funds, to the extent that such information, if revealed, would reasonably be expected to result in loss to the University of Washington consolidated endowment fund or to result in private loss to the providers of this information; and
     (21) Financial, commercial, operations, and technical and research information and data submitted to or obtained by the Washington economic prosperity bank in applications for loans or grants under chapter 43.--- RCW (the new chapter created in section 502 of this act), to the extent that such information, if revealed, would reasonably be expected to result in private loss to the providers of this information.

Sec. 403   RCW 43.79A.040 and 2010 sp.s. c 19 s 22, 2010 sp.s. c 13 s 4, 2010 sp.s. c 9 s 6, 2010 c 222 s 4, and 2010 c 215 s 7 are each reenacted and amended to read as follows:
     (1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury, and may be commingled with moneys in the state treasury for cash management and cash balance purposes.
     (2) All income received from investment of the treasurer's trust fund must be set aside in an account in the treasury trust fund to be known as the investment income account.
     (3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments must occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4)(a) Monthly, the state treasurer must distribute the earnings credited to the investment income account to the state general fund except under (b), (c), and (d) of this subsection.
     (b) The following accounts and funds must receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington promise scholarship account, the college savings program account, the Washington advanced college tuition payment program account, the accessible communities account, the agricultural local fund, the American Indian scholarship endowment fund, the foster care scholarship endowment fund, the foster care endowed scholarship trust fund, the students with dependents grant account, the basic health plan self-insurance reserve account, the contract harvesting revolving account, the Washington state combined fund drive account, the commemorative works account, the county enhanced 911 excise tax account, the Washington international exchange scholarship endowment fund, the toll collection account, the developmental disabilities endowment trust fund, the energy account, the fair fund, the family leave insurance account, the food animal veterinarian conditional scholarship account, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the GET ready for math and science scholarship account, the Washington global health technologies and product development account, the grain inspection revolving fund, the juvenile accountability incentive account, the law enforcement officers' and firefighters' plan 2 expense fund, the local tourism promotion account, the pilotage account, the produce railcar pool account, the regional transportation investment district account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the sulfur dioxide abatement account, the children's trust fund, the Washington economic prosperity bank account, the Washington horse racing commission Washington bred owners' bonus fund and breeder awards account, the Washington horse racing commission class C purse fund account, the individual development account program account, the Washington horse racing commission operating account (earnings from the Washington horse racing commission operating account must be credited to the Washington horse racing commission class C purse fund account), the life sciences discovery fund, the Washington state heritage center account, the reduced cigarette ignition propensity account, and the reading achievement account.
     (c) The following accounts and funds must receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right-of-way revolving fund, the advanced environmental mitigation revolving account, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.
     (d) Any state agency that has independent authority over accounts or funds not statutorily required to be held in the custody of the state treasurer that deposits funds into a fund or account in the custody of the state treasurer pursuant to an agreement with the office of the state treasurer shall receive its proportionate share of earnings based upon each account's or fund's average daily balance for the period.
     (5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

Sec. 404   RCW 43.325.020 and 2009 c 451 s 3 are each amended to read as follows:
     (1) This section applies except as provided in section 201(1) of this act.
     (2) The energy freedom program is established within the department. The director may establish policies and procedures necessary for processing, reviewing, and approving applications made under this chapter.
     (((2))) (3) When reviewing applications submitted under this program, the director shall consult with those agencies and other public entities having expertise and knowledge to assess the technical and business feasibility of the project and probability of success. These agencies may include, but are not limited to, Washington State University, the University of Washington, the department of ecology, the department of natural resources, the department of agriculture, the department of general administration, local clean air authorities, the Washington state conservation commission, and the clean energy leadership council created in section 2, chapter 318, Laws of 2009.
     (((3))) (4) Except as provided in subsections (((4))) (5) and (((5))) (6) of this section, the director, in cooperation with the department of agriculture, may approve an application only if the director finds:
     (a) The project will convert farm products, wastes, cellulose, or biogas directly into electricity or biofuel or other coproducts associated with such conversion;
     (b) The project demonstrates technical feasibility and directly assists in moving a commercially viable project into the marketplace for use by Washington state citizens;
     (c) The facility will produce long-term economic benefits to the state, a region of the state, or a particular community in the state;
     (d) The project does not require continuing state support;
     (e) The assistance will result in new jobs, job retention, or higher incomes for citizens of the state;
     (f) The state is provided an option under the assistance agreement to purchase a portion of the fuel or feedstock to be produced by the project, exercisable by the department of general administration;
     (g) The project will increase energy independence or diversity for the state;
     (h) The project will use feedstocks produced in the state, if feasible, except this criterion does not apply to the construction of facilities used to distribute and store fuels that are produced from farm products or wastes;
     (i) Any product produced by the project will be suitable for its intended use, will meet accepted national or state standards, and will be stored and distributed in a safe and environmentally sound manner;
     (j) The application provides for adequate reporting or disclosure of financial and employment data to the director, and permits the director to require an annual or other periodic audit of the project books; and
     (k) For research and development projects, the application has been independently reviewed by a peer review committee as defined in RCW 43.325.010 and the findings delivered to the director.
     (((4))) (5) When reviewing an application for a refueling project, the coordinator may award a grant or a loan to an applicant if the director finds:
     (a) The project will offer alternative fuels to the motoring public;
     (b) The project does not require continued state support;
     (c) The project is located within a green highway zone as defined in RCW 43.325.010;
     (d) The project will contribute towards an efficient and adequately spaced alternative fuel refueling network along the green highways designated in RCW 47.17.020, 47.17.135, and 47.17.140; and
     (e) The project will result in increased access to alternative fueling infrastructure for the motoring public along the green highways designated in RCW 47.17.020, 47.17.135, and 47.17.140.
     (((5))) (6) When reviewing an application for energy efficiency improvements, renewable energy improvements, or innovative energy technology, the director may award a grant or a loan to an applicant if the director finds:
     (a) The project or program will result in increased access for the public, state and local governments, and businesses to energy efficiency improvements, renewable energy improvements, or innovative energy technologies;
     (b) The project or program demonstrates technical feasibility and directly assists in moving a commercially viable project into the marketplace for use by Washington state citizens;
     (c) The project or program does not require continued state support; or
     (d) The federal government has provided funds with a limited time frame for use for energy independence and security, energy efficiency, renewable energy, innovative energy technologies, or conservation.
     (((6))) (7)(a) The director may approve a project application for assistance under subsection (((3))) (4) of this section up to five million dollars. In no circumstances shall this assistance constitute more than fifty percent of the total project cost.
     (b) The director may approve a refueling project application for a grant or a loan under subsection (((4))) (5) of this section up to fifty thousand dollars. In no circumstances shall a grant or a loan award constitute more than fifty percent of the total project cost.
     (((7))) (8) The director shall enter into agreements with approved applicants to fix the terms and rates of the assistance to minimize the costs to the applicants, and to encourage establishment of a viable bioenergy or biofuel industry, or a viable energy efficiency, renewable energy, or innovative energy technology industry. The agreement shall include provisions to protect the state's investment, including a requirement that a successful applicant enter into contracts with any partners that may be involved in the use of any assistance provided under this program, including services, facilities, infrastructure, or equipment. Contracts with any partners shall become part of the application record.
     (((8))) (9) The director may defer any payments for up to twenty-four months or until the project starts to receive revenue from operations, whichever is sooner.

Sec. 405   RCW 43.325.040 and 2009 c 564 s 942 and 2009 c 451 s 5 are each reenacted and amended to read as follows:
     (1) This section applies except as provided in section 201(1) of this act.
     (2) The energy freedom account is created in the state treasury. All receipts from appropriations made to the account and any loan payments of principal and interest derived from loans made under the energy freedom account must be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for financial assistance for further funding for projects consistent with this chapter or otherwise authorized by the legislature.
     (((2))) (3) The green energy incentive account is created in the state treasury as a subaccount of the energy freedom account. All receipts from appropriations made to the green energy incentive account shall be deposited into the account, and may be spent only after appropriation. Expenditures from the account may be used only for:
     (a) Refueling projects awarded under this chapter;
     (b) Pilot projects for plug-in hybrids, including grants provided for the electrification program set forth in RCW 43.325.110; and
     (c) Demonstration projects developed with state universities as defined in RCW 28B.10.016 and local governments that result in the design and building of a hydrogen vehicle fueling station.
     (((3))) (4)(a) The energy recovery act account is created in the state treasury. State and federal funds may be deposited into the account and any loan payments of principal and interest derived from loans made from the energy recovery act account must be deposited into the account. Moneys in the account may be spent only after appropriation.
     (b) Expenditures from the account may be used only for loans, loan guarantees, and grants that encourage the establishment of innovative and sustainable industries for renewable energy and energy efficiency technology, including but not limited to:
     (i) Renewable energy projects or programs that require interim financing to complete project development and implementation;
     (ii) Companies with innovative, near-commercial or commercial, clean energy technology; and
     (iii) Energy efficiency technologies that have a viable repayment stream from reduced utility costs.
     (c) The director shall establish policies and procedures for processing, reviewing, and approving applications for funding under this section. When developing these policies and procedures, the department must consider the clean energy leadership strategy developed under section 2, chapter 318, Laws of 2009.
     (d) The director shall enter into agreements with approved applicants to fix the term and rates of funding provided from this account.
     (e) The policies and procedures of this subsection (((3))) (4) do not apply to assistance awarded for projects under RCW 43.325.020(((3))) (4).
     (((4))) (5) Any state agency receiving funding from the energy freedom account is prohibited from retaining greater than three percent of any funding provided from the energy freedom account for administrative overhead or other deductions not directly associated with conducting the research, projects, or other end products that the funding is designed to produce unless this provision is waived in writing by the director.
     (((5))) (6) Any university, institute, or other entity that is not a state agency receiving funding from the energy freedom account is prohibited from retaining greater than fifteen percent of any funding provided from the energy freedom account for administrative overhead or other deductions not directly associated with conducting the research, projects, or other end products that the funding is designed to produce.
     (((6))) (7) Subsections (((2), (4) and (5))) (3), (5), and (6) of this section do not apply to assistance awarded for projects under RCW 43.325.020(((3))) (4).
     (((7))) (8) During the 2009-2011 fiscal biennium, the legislature may transfer from the energy freedom account to the state general fund such amounts as reflect the excess fund balance of the account.

Sec. 406   RCW 43.325.050 and 2009 c 518 s 20 are each amended to read as follows:
     Except as provided in section 201(1) of this act, the director shall report to the legislature and governor on the status of the energy freedom program created under this chapter, on or before December 1, 2006, and biennially thereafter. This report must include information on the projects that have been funded, the status of these projects, and their environmental, energy savings, and job creation benefits.

Sec. 407   RCW 43.325.902 and 2007 c 348 s 307 are each amended to read as follows:
     (1) This section applies except as provided in section 201(1) of this act.
     (2) Energy freedom program projects funded pursuant to RCW 43.325.040 or by the legislature pursuant to sections 191 and 192, chapter 371, Laws of 2006 for which the department of agriculture has signed loan agreements and disbursed funds prior to June 30, 2007, shall continue to be serviced by the department of agriculture.
     (((2))) (3) Energy freedom program projects funded pursuant to RCW 43.325.040 or by the legislature pursuant to sections 191 and 192, chapter 371, Laws of 2006 for which moneys have been appropriated but loan agreements or disbursements have not been completed must be transferred to the department for project management on July 1, 2007, subject to the ongoing requirements of the energy freedom program.

Sec. 408   RCW 43.350.005 and 2005 c 424 s 1 are each amended to read as follows:
     (1) The legislature declares that promoting the health of state residents is a fundamental purpose of state government. The legislature declares it to be a clear public purpose and governmental function to promote life sciences research to foster a preventive and predictive vision of the next generation of health-related innovations, to enhance the competitive position of Washington state in this vital sector of the economy, and to improve the quality and delivery of health care for the people of Washington. The legislature finds that public support for and promotion of life sciences research will benefit the state and its residents through improved health status and health outcomes, economic development, and contributions to scientific knowledge, and such research will lead to breakthroughs and improvements that might not otherwise be discovered due to lack of existing market incentives, especially in the area of regenerative medicine. The legislature finds that public support for and promotion of life sciences research has the potential to provide cures or new treatments for many debilitating diseases that cost the state millions of dollars each year. It is appropriate and consistent with the intent of the master settlement agreement between the state and tobacco product manufacturers to invest a portion of the revenues derived therefrom by the state in life sciences research, to leverage the revenues with other funds, and to encourage cooperation and innovation among public and private institutions involved in life sciences research.
     (2) Except as provided in section 201(1) of this act, the purpose of this chapter is to establish a life sciences discovery fund authority, to grant that authority the power to contract with the state to receive revenues under the master settlement agreement, and to contract with other entities to receive other funds, and to disburse those funds consistent with the purpose of this chapter. The life sciences discovery fund is intended to promote the best available research in life sciences disciplines through diverse Washington institutions and to build upon existing strengths in the area of biosciences and biomanufacturing in order to spread the economic benefits across the state. The life sciences discovery fund is also intended to foster improved health care outcomes and improved agricultural production research across this state and the world. The research investments of the life sciences discovery fund are intended to further the goals of the "Bio 21" report and to support future statewide, comprehensive strategies to lead the nation in life sciences-related research and employment.

Sec. 409   RCW 43.350.020 and 2005 c 424 s 3 are each amended to read as follows:
     (1) This section applies except as provided in section 201(1) of this act.
     (2) The life sciences discovery fund authority is created and constitutes a public instrumentality and agency of the state, separate and distinct from the state, exercising public and essential governmental functions.
     (((2))) (3) The powers of the authority are vested in and shall be exercised by a board of trustees consisting of: Two members of either the house appropriations committee or the house committee dealing with technology issues, one from each caucus, to be appointed by the speaker of the house of representatives; two members of either the senate committee on ways and means or the senate committee dealing with technology issues, one from each caucus, to be appointed by the president of the senate; and seven members appointed by the governor with the consent of the senate, one of whom shall be appointed by the governor as chair of the authority and who shall serve on the board and as chair of the authority at the pleasure of the governor. The respective officials shall make the initial appointments no later than thirty days after May 12, 2005. The term of the trustees, other than the chair, is four years from the date of their appointment, except that the terms of three of the initial gubernatorial appointees, as determined by the governor, are for two years from the date of their appointment. A trustee appointed by the governor may be removed by the governor for cause under RCW 43.06.070 and 43.06.080. The appropriate official shall fill any vacancy on the board by appointment for the remainder of the unexpired term. The trustees appointed by the governor shall be compensated in accordance with RCW 43.03.240 and may be reimbursed, solely from the funds of the authority, for expenses incurred in the discharge of their duties under this chapter, subject to RCW 43.03.050 and 43.03.060. The trustees who are legislators shall be reimbursed for travel expenses in accordance with RCW 44.04.120.
     (((3))) (4) Seven members of the board constitute a quorum.
     (((4))) (5) The trustees shall elect a treasurer and secretary annually, and other officers as the trustees determine necessary, and may adopt bylaws or rules for their own government.
     (((5))) (6) Meetings of the board shall be held in accordance with the open public meetings act, chapter 42.30 RCW, and at the call of the chair or when a majority of the trustees so requests. Meetings of the board may be held at any location within or out of the state, and trustees may participate in a meeting of the board by means of a conference telephone or similar communication equipment under RCW 23B.08.200.
     (((6))) (7) The authority is subject to audit by the state auditor.
     (((7))) (8) The attorney general must advise the authority and represent it in all legal proceedings.

Sec. 410   RCW 43.350.030 and 2005 c 424 s 4 are each amended to read as follows:
     Except as provided in section 201(1) of this act, in addition to other powers and duties prescribed in this chapter, the authority is empowered to:
     (1) Use public moneys in the life sciences discovery fund, leveraging those moneys with amounts received from other public and private sources in accordance with contribution agreements, to promote life sciences research;
     (2) Solicit and receive gifts, grants, and bequests, and enter into contribution agreements with private entities and public entities other than the state to receive moneys in consideration of the authority's promise to leverage those moneys with amounts received through appropriations from the legislature and contributions from other public entities and private entities, in order to use those moneys to promote life sciences research. Nonstate moneys received by the authority for this purpose shall be deposited in the life sciences discovery fund created in RCW 43.350.070;
     (3) Hold funds received by the authority in trust for their use pursuant to this chapter to promote life sciences research;
     (4) Manage its funds, obligations, and investments as necessary and as consistent with its purpose including the segregation of revenues into separate funds and accounts;
     (5) Make grants to entities pursuant to contract for the promotion of life sciences research to be conducted in the state. Grant agreements shall specify deliverables to be provided by the recipient pursuant to the grant. The authority shall solicit requests for funding and evaluate the requests by reference to factors such as: (a) The quality of the proposed research; (b) its potential to improve health outcomes, with particular attention to the likelihood that it will also lower health care costs, substitute for a more costly diagnostic or treatment modality, or offer a breakthrough treatment for a particular disease or condition; (c) its potential for leveraging additional funding; (d) its potential to provide health care benefits or benefit human learning and development; (e) its potential to stimulate the health care delivery, biomedical manufacturing, and life sciences related employment in the state; (f) the geographic diversity of the grantees within Washington; (g) evidence of potential royalty income and contractual means to recapture such income for purposes of this chapter; and (h) evidence of public and private collaboration;
     (6) Create one or more advisory boards composed of scientists, industrialists, and others familiar with life sciences research; and
     (7) Adopt policies and procedures to facilitate the orderly process of grant application, review, and reward.

Sec. 411   RCW 43.350.040 and 2005 c 424 s 5 are each amended to read as follows:
     Except as provided in section 201(1) of this act, the authority has all the general powers necessary to carry out its purposes and duties and to exercise its specific powers. In addition to other powers specified in this chapter, the authority may: (1) Sue and be sued in its own name; (2) make and execute agreements, contracts, and other instruments, with any public or private person or entity, in accordance with this chapter; (3) employ, contract with, or engage independent counsel, financial advisors, auditors, other technical or professional assistants, and such other personnel as are necessary or desirable to implement this chapter; (4) establish such special funds, and controls on deposits to and disbursements from them, as it finds convenient for the implementation of this chapter; (5) enter into contracts with public and private entities for life sciences research to be conducted in the state; (6) adopt rules, consistent with this chapter; (7) delegate any of its powers and duties if consistent with the purposes of this chapter; (8) exercise any other power reasonably required to implement the purposes of this chapter; and (9) hire staff and pay administrative costs.

Sec. 412   RCW 43.350.070 and 2005 c 424 s 8 are each amended to read as follows:
     The life sciences discovery fund is created in the custody of the state treasurer. Except as provided in section 201(1) of this act, only the board or the board's designee may authorize expenditures from the fund. Expenditures from the fund may be made only for purposes of this chapter. Administrative expenses of the authority, including staff support, may be paid only from the fund. Revenues to the fund consist of transfers made by the legislature from strategic contribution payments deposited in the tobacco settlement account under RCW 43.79.480, moneys received pursuant to contribution agreements entered into pursuant to RCW 43.350.030, moneys received from gifts, grants, and bequests, and interest earned on the fund.

NEW SECTION.  Sec. 501   (1) The sum of . . . . . ., or as much thereof as may be necessary, is appropriated for the fiscal year ending June 30, 2012, from the general fund to the Washington economic prosperity bank for its operations.
     (2) The sum of . . . . . ., or as much thereof as may be necessary, is appropriated for the fiscal year ending June 30, 2013, from the general fund to the Washington economic prosperity bank for its operations.

NEW SECTION.  Sec. 502   Sections 101 through 103, 201, 202, and 301 of this act constitute a new chapter in Title 43 RCW.

NEW SECTION.  Sec. 503   Sections 404 through 406 of this act expire June 30, 2016.