AN ACT Relating to industrial finance; and adding a new chapter to Title 43 RCW.

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

NEW SECTION. Sec. 1. The high cost as well as the lack of availability of industrial loans for small and medium-size businesses makes it difficult for the thousands of these industrial enterprises in this state to hold their present employment levels or to expand employment.

As a result of the continuing increase in the costs of construction or rehabilitation, heating and electricity expenses, maintenance and repair expenses, and the cost of land, the state's economy suffers from structural economic weaknesses which contribute to chronic unemployment and underemployment.

The lack of gainful employment puts additional pressure on the state's welfare programs and increases the cost of unemployment compensation to the existing enterprises in the state.

The cost of facilities to abate pollution and protect the safety of workers has been close to prohibitive for existing enterprises and has added to the disincentives for capital expansion and employment growth within the state.

It is an important function of government to increase opportunities for gainful employment and improve living conditions, assist in promoting a balanced and productive economy consistent with modern environmental standards, to obtain, analyze, and disseminate meaningful economic data and encourage the flow of private capital for investment in productive enterprises and otherwise to improve the prosperity, health, and general welfare of the inhabitants of the state.

The availability of financial assistance and suitable facilities including housing, are important inducements to industrial and commercial enterprises to remain and locate in the state.

Therefore, it is in the best public interest of the state to promote the prosperity and general welfare of all citizens by stimulating industrial growth and expansion by encouraging a larger flow of private investment funds from banks, investment houses, insurance companies, and other financial institutions, including pension retirement funds, to help satisfy the need for industrial expansion, and the need for mixed-use buildings for combined housing and commercial use in the revitalization of the commercial centers of the state's cities and towns. The establishment of the Washington industrial finance authority for the purpose of carrying out the powers granted in this chapter is necessary to encourage and promote the provisions of productive and environmentally sound economic facilities in areas of the state, including areas of high unemployment, where such facilities are needed to meet the aforesaid needs. The authority is especially necessary to provide financing and other assistance to small businesses that have the potential to expand and increase employment.

The advantages of this program to the general public include an increase in the gainful employment of the citizens; a decrease in public assistance and unemployment compensation costs; an increase in the state's tax base; an increase in the inventory of industrial sites and modern industrial buildings suitable to house new or expanding industrial enterprises; the expansion, reclamation, or renovation of existing buildings to house new or expanding industrial and recreational enterprises and lower cost capital for the abatement of industrial air and water pollution and general improvement for the disposal of industrial waste.

It is therefore expressly declared that the provisions of this chapter constitute a needed program in the public interest and serve a necessary and valid public purpose for which public money may be expended or invested.

NEW SECTION. Sec. 2. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Authority" means the Washington industrial finance authority.

(2) "Board" means the board of directors of the Washington industrial finance authority.

(3) "Bonds" means any bonds, notes, debentures, interim certificates, or other evidences of financial indebtedness issued by the authority under section 7 of this act.

(4) "Industrial park" means acquisition and development of land as the site for an industrial park. For the purposes of this chapter, "development of land" includes the provision of water, sewage, drainage, or similar facilities, or of transportation, energy, or communication facilities, which are incidental to the use of the site as an industrial park, but does not include the provision of structures or buildings.

(5) "Industrial mortgage insurance fund" means the fund established pursuant to section 5 of this act.

(6) "Loan" includes, but is not limited to, industrial mortgage loans, and may include bonds issued under section 7 of this act and under chapter 39.84 RCW.

(7) "Person" means any individual, firm, association, partnership, including limited partnerships, trust, corporation, and other legal entities, including public bodies as well as natural persons.

(8) "Primary employment" means work which pays at least one and one-half times the minimum wage, as defined in chapter 49.46 RCW or as established by federal law, whichever is higher, offers adequate fringe benefits including health insurance, and is not seasonal or part time.

(9) "Revenues" means any receipts, fees, rentals, or other payments or income received or to be received on account of the leasing, mortgaging, sale, or other disposition of a project or proceeds of a loan made by the agency in connection with any project and amounts in reserves or held in other funds or accounts established in connection with the issuance of bonds and the proceeds of any investments thereof, proceeds of foreclosure and any other fees, charges, or other income received or receivable by the authority other than the industrial mortgage insurance fund with respect to a project or the financing thereof.

(10) "User" means one or more persons acting as lessee, purchaser, mortgagor, or borrower under a financing document and may include a party who transfers the right of use and occupancy to another party by lease, sublease, or otherwise.

NEW SECTION. Sec. 3. (1) There is created the Washington industrial finance authority. The authority is a public instrumentality and its exercise of the powers conferred by this chapter shall be deemed to be the performance of an essential governmental function.

(2) The authority shall be governed and its powers exercised by a board of directors, which shall consist of nine directors: The director of labor and industries, the director of general administration, and the director of commerce and economic development, provided that any of the foregoing persons may designate another person from time to time to act in his or her place in performing duties created under this chapter, including the right to attend and vote at a specific meeting of the board, and six other members appointed by the governor, one of whom shall be experienced in real estate development, one shall be experienced in industrial mortgage credit or in commercial credit, one shall be experienced in banking or investment banking, and one shall be experienced in business management. Each member appointed by the governor shall serve for a term of three years. Any person appointed to fill a vacancy in the office of a member of the board shall be appointed in a like manner and shall serve for only the unexpired term of such member. A member is eligible for reappointment. A member may be removed from appointment by the governor for cause. The governor shall from time to time designate a member of the board as its chairman.

(3) Five of the directors of the authority constitute a quorum and the affirmative vote of five directors is necessary for any action to be taken by the board. The members of the board shall serve without compensation. Each member except for the directors of the departments of labor and industries, commerce and economic development, and general administration shall be entitled to reimbursement for actual and necessary expenses incurred in the performance of official duties as provided by RCW 43.03.050 and 43.03.060.

(4) Chapter 42.22 RCW applies to all directors, officers, and employees of the authority, except that the authority may purchase from, sell to, borrow from, loan to, contract with, or otherwise deal with any person in which any director of the authority is in any way interested or involved if such interest or involvement is disclosed in advance to the members of the board and recorded in the minutes of the board. No director having such an interest or involvement may participate in any decision of the board relating to such person. Employment by the state or service in any agency of the state thereof shall not be deemed to be such an interest or involvement. Residence of a member of the board in the city or town where the project is or is to be located shall be deemed to be such an interest or involvement.

(5) The executive director of the authority shall be appointed and his or her salary established by the board. The executive director shall be the chief executive, administrative, and operational officer of the authority and shall direct and supervise administrative affairs and the general management. The executive director may, subject to the general supervision of the board, employ other employees, consultants, agents, including legal counsel, and advisors, and shall attend meetings of the board.

(6) The board annually may elect one of its members as vice-chairman, shall elect a secretary and a treasurer, and may elect or appoint other officers as it may deem necessary, none of whom, other than the vice-chairman, are required to be members of the board. The secretary shall keep a record of the proceedings of the board and shall be custodian of all books, documents, and papers filed by the board and of its minute book and seal. The secretary shall cause copies to be made of all minutes and other records and documents of the authority and shall certify that such copies are true copies, and all persons dealing with the agency may rely upon such certification. The treasurer shall be the chief financial and accounting officer of the authority and shall be in charge of its funds, books of account, and accounting records.

(7) All officers and employees of the authority having access to its cash or negotiable securities shall give bond to the authority at its expense in such amounts and with such surety as the board may prescribe. The persons required to give bond may be included in one or more blanket or scheduled bonds.

(8) Board members and officers who are not compensated employees of the authority shall not be liable to the state, to the authority, or to any other person as a result of their activities, whether ministerial or discretionary, as such board members or officers except for wilful dishonesty or intentional violations of law. Neither members of the authority nor any person executing bonds or policies of insurance are liable personally thereon or subject to any personal liability or accountability by reason of the issuance thereof. The board of directors may purchase liability insurance for board members, officers, and employees and may indemnify said persons against claims of others.

(9) The authority shall continue as long as it has bonds or insurance commitments outstanding and until its existence is terminated by law. Upon the termination of the existence of the authority all its rights and properties shall pass to and be vested in the state.

(10) Any documentary materials or data whatsoever made or received by any member or employee of the authority and consisting of, or to the extent that such materials or data consist of, trade secrets or commercial or financial information regarding the operation of any business conducted by an applicant for any form of assistance which the authority is empowered to render or regarding the competitive position of such applicant in a particular field of endeavor, shall not be deemed public records of the authority and specifically shall not be deemed public records within the meaning of RCW 42.17.020. Any discussion or consideration of such trade secrets or commercial or financial information may be held by the board in executive sessions closed to the public. Such executive sessions closed to the public under the provisions of this section are not subject to RCW 42.30.030. The purpose of any such executive session shall be set forth in the official minutes of the authority and only business directly related to such purpose may be transacted during such executive session. The board shall not vote during executive sessions closed to the public. Any votes made during such executive sessions closed to the public are conclusively presumed to be without effect.

NEW SECTION. Sec. 4. The authority has the power to:

(1) Make, amend, and repeal bylaws and rules for the management of its affairs;

(2) Adopt an official seal;

(3) Sue and be sued, in its own name;

(4) Make contracts and execute all instruments necessary or convenient for the carrying on of its business;

(5) Enter into agreements or other transactions with any federal, state, or municipal agency;

(6) Acquire real or personal property, or any interest therein, on either a temporary or long-term basis in the name of the authority by gift, purchase, transfer, foreclosure, lease, or otherwise including rights or easements; hold, sell, assign, lease, encumber, mortgage, or otherwise dispose of any real or personal property, or any interest therein, or mortgage interest owned by it or under its control, custody, or in its possession; and release or relinquish any right, title, claim, lien, interest, easement, or demand however acquired, including any equity or right of redemption in property foreclosed by it;

(7) Invest any funds held in reserves or sinking funds, or in the industrial mortgage insurance fund, or any funds not required for immediate disbursement, in such investments as may be lawful for fiduciaries in the state;

(8) Appoint officers, employees, consultants, agents, and advisors and prescribe their duties and fix compensation within the limitations provided by law;

(9) Appear in its own behalf before boards, commissions, departments, or other agencies of municipal, state, or federal government;

(10) Procure insurance against any losses in connection with its property and other assets in such amounts, and from such insurers, as may be necessary or desirable;

(11) Consent, subject to the provisions of any contract with noteholders or bondholders, whenever it deems it necessary or desirable in the fulfillment of the purposes of this chapter to the modification, with respect to rate of interest, time of payment of any installment of principal or interest, or any other terms, of any mortgage, mortgage loan, mortgage loan commitment, contract, or agreement of any kind to which the authority is a party;

(12) Apply for and accept grants, loans, advances, and contributions from any source of money, property, labor, or other things of value, to be held, used, and applied for the purposes of this chapter;

(13) Lease or rent any lands, buildings, structures, facilities, or equipment from private parties to effectuate the purposes of this chapter;

(14) Enter into agreements or other transactions with any person, the purpose of which is to effectuate the accomplishment of the purposes of this chapter, including construction agreements, purchase or acquisition agreements, loan or lease agreements including agreements conditioned upon the subleasing of the demised premises, partnership agreements including limited partnership agreements, joint ventures, participation agreements or loan agreements with leasing corporations or other financial intermediaries;

(15) Borrow money and issue bonds as provided in this chapter;

(16) Issue insurance with respect to the financing of any eligible facility as provided in this chapter;

(17) Make loans to any person for the acquisition, construction, alteration, or any combination thereof, of eligible facilities;

(18) Manage or operate real and personal property, take assignments of leases and rentals, proceed with foreclosure actions, or take any other actions necessary or incidental to the performance of its corporate duties;

(19) Plan, acquire, lease, and operate facilities and provide for the construction, reconstruction, improvement, alteration, or repair of any facility or part thereof;

(20) Give assistance to local authorities through the providing of guidelines and suggested forms and procedures for implementing their financing programs;

(21) Provide and pay for such advisory services and technical assistance as may be necessary or desirable to carry out the purposes of this chapter;

(22) Establish and collect such fees and charges as the authority determines to be reasonable;

(23) Exercise any other powers of a corporation organized under Title 23A RCW; and

(24) Do any and all things necessary or convenient to carry out its purposes and exercise the powers expressly granted in this chapter.

NEW SECTION. Sec. 5. There is established an industrial mortgage insurance fund to which shall be credited all premiums received by the authority any other sums realized by the authority pursuant to its industrial mortgage loan insurance agreements, whether by way of subrogation or otherwise, and any state appropriations or other moneys made available to the fund. The fund shall be held in the custody of one or more banks or trust companies having a principal place of business in the state. The fund shall be held for the security of the holders of industrial mortgage loans insured under section 6 of this act. It shall be governed by a trust agreement entered into by the authority with the trustees. The trust agreement may contain provisions and limitations as to the investment and disbursal of moneys in the fund, the payment of expenses of the fund, the appointment, resignation, and discharge of trustees, the delegation of enforcement and collection powers under the insurance agreements to the trustee, the duties of the trustees, amendments of the trust agreement, and such other lawful provisions and limitations as may be deemed appropriate. Income earned by the fund may be used for the purposes of the authority. The trust agreement may pledge premiums and other moneys which are to be deposited in the fund. The pledge shall be valid and binding from the time when the pledge is made. The premiums and other moneys so pledged and thereafter received by the fund or by the trustees in its behalf shall immediately be subject to the lien of such pledge and shall be valid and binding as against all parties having claims of any kind against the fund, irrespective of whether such parties have notice thereof.

NEW SECTION. Sec. 6. (1) The authority may:

(a) Provide insurance of loans, or their debt service, made to finance the acquisition, construction, or alteration, or any combination thereof, of industrial development facilities, pollution control facilities, and solid waste disposal facilities;

(b) Enter into agreements for such insurance;

(d) Exercise such other powers as are necessary or incidental to the foregoing.

(2) The insurance provided by the authority shall be payable solely from the industrial mortgage insurance fund and does not constitute a debt or pledge of the faith and credit of the state or of any subdivision thereof.

(3) The board shall not approve the insurance of a loan unless it makes the following findings:

(a) That the loan is to be secured by a first mortgage of real or personal property or both satisfactory to the board; or by the assignment of the interest of the lessee under a real estate lease for not less than ninety-nine years, having a period of not less than seventy-five years to run from the date of the loan;

(b) That the mortgagor and mortgagee are responsible parties;

(d) That the provisions of the mortgage loan are reasonable and proper, and in making such determination the board may take into account such factors as it deems relevant including, without limitation, the provisions for maintaining, insuring, and repairing the project by the mortgagor and the remedies of the board in the event of default by the mortgagor;

(e) That the project will provide or retain employment having a reasonable relationship to the principal amount of loans to be insured thereof, taking into account, among other things, the investment per employee of comparable industrial facilities;

(f) That adequate provision is being or will be made to meet any increased demand upon community public facilities that might result from the project;

(g) That the size and scope of the project is such that a definite benefit to the economy of the state may reasonably be expected to result from the construction or improvement thereof; and the employment created shall be substantially primary employment;

(h) That the principal amount of the loan does not exceed ninety percent of the value of the industrial development facility and eighty percent of the cost of the machinery and equipment;

(i) That the duration of the loan shall not exceed thirty years on an industrial development facility exclusive of machinery and equipment and fifteen years on machinery and equipment; and that the authorization provisions are satisfactory to the board;

(j) That the insurance or loan agreement provides for subrogation on terms satisfactory to the board upon payment of insured debt service from the fund;

(k) That the public interest is adequately protected by the terms of the loan and of the insurance agreement;

(l) That the insurance of the loan will not cause the insured debt service coming due in any one calendar year on account of an insured loan or loans for any one mortgagor to exceed twenty percent of the amount in the fund when the finding is made; and

(m) That the insurance of the loan will not cause the balance of all insured loans to exceed nine times the amount in the mortgage insurance trust fund when the finding is made.

The board shall consult with the appropriate local and regional planning agencies to ascertain the relationship of a proposed project to any existing local or regional comprehensive plan; that, so far as feasible, the project is to be located in an area of generally high unemployment; and that employment opportunities will become available to the residents of the area.

As used in this section, the terms "industrial development facilities" and "facilities," unless the context requires otherwise, mean industrial enterprises, recreation or research and development enterprises or parts thereof, including any or all buildings, docks, wharves, improvements, additions, extensions, replacements, appurtenances, lands, rights in land, riparian rights, water rights, franchises, machinery, equipment, furnishings, landscaping, utilities, approaches, roadways, pollution control facilities and other facilities necessary or desirable in connection therewith or incidental thereto, such as, but not limited to, office, warehouse, terminal, transportation and backup power generating facilities, and solid waste disposal facilities.

NEW SECTION. Sec. 7. (1) The authority may exercise all the powers of a public corporation under chapter 39.84 RCW, including but not limited to the issuance of bonds for industrial development facilities.

(2) Bonds of the authority shall be issued in the manner provided under RCW 39.84.100 and 39.84.110. For the purposes of this subsection, the authority shall be deemed a public corporation.

(3) The authority may combine for the purposes of a single offering the bonds of more than one project.

(4) The authority may insure the bonds which it issues pursuant to section 7 of this act, whether such bonds are those of a single project or more than one project combined in a single offering.

(5) The authority shall inform sponsors of projects in appropriate cases of available federal programs to guarantee or otherwise assist in financing certain types of activities and shall assist sponsors in those cases in implementing such programs through commercial and investment bankers.

(6) Whenever the authority receives an inquiry for a potential project, it shall inform the municipality as defined in RCW 39.84.020(8) in which the project would be located. Notice to the municipality means the mayor or legislative authority of such city, town, county, or port district. If such municipality rejects participation by the authority within thirty days of the notification, the authority shall not undertake the proposed project in that municipality.

NEW SECTION. Sec. 8. No part of the proceeds received from the sale of any bonds issued under this chapter, or any revenues derived from any industrial development facility acquired or held under this chapter, or any interest realized on moneys received under this chapter may be commingled by the public corporation with funds of the state.

NEW SECTION. Sec. 9. The authority shall annually submit to the governor, the president of the senate, and the speaker of the house of representatives, within ninety days after the end of its fiscal year, a complete and detailed report setting forth its fiscal year, a complete and detailed report setting forth its operation and accomplishments; its receipts and expenditures during such fiscal year in accordance with the categories and classifications established by the authority for its operating and capital outlay purposes; and its assets and liabilities at the end of the fiscal year, including a schedule of its loans insured and commitments and the status of the funds.

NEW SECTION. Sec. 10. The books and records of the authority are subject to an annual audit by the state auditor.

NEW SECTION. Sec. 11. Sections 1 through 10 of this act shall constitute a new chapter in Title 43 RCW.