AN ACT Relating to industrial incentive zones; adding a new chapter to Title 43 RCW; and providing an effective date.

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

NEW SECTION. Sec. 1. This chapter may be cited as the industrial incentive zone act.

NEW SECTION. Sec. 2. This legislature finds and declares that the health, safety, and welfare of the people of this state are dependent upon the continual encouragement, development, growth, and expansion of the private sector within the state and that there are certain depressed areas in this state that need the particular attention of government to help attract private sector investment into these areas. Therefore, it is the purpose of this chapter to stimulate business and industrial growth in the depressed areas of this state by economic incentives for job creation and retention in those areas.

NEW SECTION. Sec. 3. As used in this chapter:

(1) "Board" means the industrial incentive zone board;

(2) "Industrial incentive zone" means an area declared by the board to be eligible for the benefits of this chapter; and

(3) "Unit of local government" means counties, cities, and towns.

NEW SECTION. Sec. 4. There is created the industrial incentive zone board. The board shall consist of the director of commerce and economic development, the director of community development, one member of the house of representatives from each major political party, appointed by the speaker of the house of representatives, one member of the senate from each major political party, appointed by the president of the senate, and nine additional members appointed by the governor with the consent of the senate. Of the members appointed by the governor, one member shall be a representative of a local economic development organization, one member shall be a representative of small business, and one member shall be a representative of labor. Of the initial members appointed by the governor, three shall serve for one year, three for two years, and three for three years. Subsequent terms shall be for three years. The terms of the legislative members shall be at the pleasure of the appointing authority but shall be contingent on continuous membership in the legislature. Vacancies shall be filled in the same manner as original appointments.

The board shall meet at the call of the chairman who shall be designated by the governor.

Members of the board shall receive no compensation but shall be reimbursed for travel expenses under RCW 43.03.050 and 43.03.060 for nonlegislative members and under RCW 44.04.120 for legislative members.

Staff support shall be provided by the department of commerce and economic development.

NEW SECTION. Sec. 5. The board shall administer this chapter and shall have the following powers and duties:

(1) To establish criteria for determining which areas qualify as industrial development zones, provided that the board shall give paramount consideration to the following:

(a) Unemployment;

(b) Per capita income;

(d) Migration;

(2) To establish minimum guidelines regarding zoning, health and structural safety, and pollution for industrial incentive zones;

(3) To monitor the implementation and operation of this chapter;

(4) To conduct a continuing evaluation program of industrial incentive zones;

(5) To assist units of local government in obtaining demonstration project status and assistance from the federal government, including the suspension of federal legislation within the industrial incentive zones;

(6) To submit reports evaluating the effectiveness of the program and any suggestions for legislation to the governor and the legislature by March 1 of each year; and

(7) To adopt rules to implement this chapter.

NEW SECTION. Sec. 6. In addition to any criteria required by the board under section 4 of this act, no area may be declared an industrial incentive zone unless the following criteria are met:

(1) At least twenty-five percent of the households in the area are below the poverty level as established by the most recent United States census or the average rate of unemployment in the area for the most recent eighteen-month period for which data is available is at least one and one-half times the average state-wide rate;

(2) The area is more than three-fourths of one square mile but less than six square miles with a continuous boundary, using natural, street, or highway barriers.

NEW SECTION. Sec. 7. A unit of local government may designate an area or areas within its jurisdiction as a depressed area. The unit of local government may then apply in writing to the board to have the area or areas declared to be an industrial incentive zone. The application shall include a description of the area's location and such other information as the board may require.

NEW SECTION. Sec. 8. (1) Upon receipt of an application from a unit of local government, the board shall review the application and secure any additional information it deems necessary for the purpose of determining whether the area or areas described in the application qualify to be declared an industrial incentive zone.

(2) The board shall complete its review within one hundred twenty days of receipt of the application, but it may extend this time period an additional thirty days if necessary. If the board denies the application, it shall inform the unit of local government of that fact along with the reasons for the denial. If the decision is not rendered within this time period, the application shall automatically be approved.

NEW SECTION. Sec. 9. In addition to any industrial incentive zones in this state which are designated by the federal government, the board may declare no more than six areas in the state to be industrial incentive zones. If more than six areas apply to the board, the board shall select the six most distressed areas based on the criteria outlined in section 5 of this act. The board may declare no more than three additional areas to be industrial incentive zones for every twelve-month period after July 1, 1986.

NEW SECTION. Sec. 10. No business enterprise locating in an industrial incentive zone is eligible for any subsidy, grant, or other form of government assistance whatever at that location, except as provided in this chapter.

NEW SECTION. Sec. 11. It shall be the option of local government petitioners to comply either with state and local laws controlling pollution, building codes, and zoning or the minimum guidelines established in section 5(2) of this act.

NEW SECTION. Sec. 12. The rules dealing with industrial incentive zones adopted by the board under this chapter supersede all state and local laws or regulations dealing with the same areas, if the unit of local government so chooses, as provided in section 11 of this act.

NEW SECTION. Sec. 13. (1) Property taxes in industrial incentive zones shall be levied and exempted under the following special program:

(a) In the first year, no property taxes may be levied whatever;

(b) In the second year, twenty percent of the total property taxes levied shall be due and payable;

(d) In the fourth year, sixty percent of the total property taxes levied shall be due and payable;

(e) In the fifth year, eighty percent of the total property taxes levied shall be due and payable; and

(f) In all subsequent years, one hundred percent of the total property taxes levied shall be due and payable.

(2) For the purposes of this section, a year begins from the date of acquisition of the property in the industrial incentive zone or the date the area is declared to be an industrial incentive zone, whichever is later, but not later than ten years after the date the area is declared to be an industrial incentive zone unless the area is subsequently declared to be an industrial incentive zone under this chapter.

(3) This section only applies to property used for business purposes.

(4) If the industrial incentive zone is renewed, property taxes shall be levied at sixty percent for five more years.

NEW SECTION. Sec. 14. (1) A business in an industrial incentive zone shall receive a tax exemption against business and occupation taxes imposed under chapter 82.04 RCW equal to fifty percent of the taxes which would otherwise be payable.

(2) The credit under subsection (1) of this section shall expire at the end of the fifth year after commencement of the business in the industrial incentive zone or the date the area is declared to be an industrial incentive zone, whichever is later, but not later than ten years after the date the area is declared to be an industrial incentive zone unless the area is subsequently declared to be an industrial incentive zone under this chapter.

(3) To qualify for a tax exemption under this section, a business shall apply for prior approval to the department of revenue on such forms as the department of revenue may prescribe.

NEW SECTION. Sec. 15. No business may qualify for any of the exemptions or incentives set out in this chapter unless the following criteria are met:

(1) The business and its contractors give preference and priority to Washington manufacturers and, in the absence of Washington manufacturers, to Washington suppliers, contractors, and labor, except where not reasonably possible to do so without added expense, substantial inconvenience, or sacrifice in operational efficiency.

(2) The request for such exemption is accompanied by an endorsement resolution approved by the governing body of the appropriate unit of local government in whose jurisdiction the establishment is to be located.

(3) The business is or shall be located within the boundaries of an industrial incentive zone.

(4) The business located in an industrial incentive zone and receiving the benefits of this chapter certifies that at least fifty percent of its employees:

(a) Are residents of the same or a contiguous industrial incentive zone as the location of the business;

(b) Were receiving some form of public assistance prior to employment;

(d) Any combination of the factors in this subsection.

Such certification shall be updated annually if the business is to continue receiving the benefits under this chapter, if ten percent of the total employees resided in the industrial incentive zone before the zone's creation.

NEW SECTION. Sec. 16. The duration of industrial incentive is limited to five years, but businesses already receiving benefits shall continue to receive benefits for a total of five years as described in sections 13 and 14 of this act. If at the end of five years, the industrial incentive zone is still distressed, the board may renew the zone and the benefits to businesses located in the zone.

NEW SECTION. Sec. 17. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 18. Sections 1 through 16 of this act constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 19. This act shall take effect January 1, 1986.