FINAL BILL REPORT

SHB 1156

                                  C 461 L 87

BYHouse Committee on Trade & Economic Development (originally sponsored by Representatives Vekich, Schoon and Cantwell)

Revising distressed area requirements in the community revitalization team program and the development loan fund program.

House Committe on Trade & Economic Development

Senate Committee on Commerce & Labor

SYNOPSIS AS ENACTED

BACKGROUND:

The legislature established the Community Revitalization Team program and the Development Loan Fund program in the Department of Community Development in 1985 to assist communities in their responses to economic dislocation.  The Community Revitalization Team program provides a coordinated state response to the problems of economically distressed communities.  The program also assists local communities in developing strategies for economic renewal.  Participating state agencies include the departments of Community Development, Trade and Economic Development, Employment Security and the Commission for Vocational Education.

The Development Loan Fund program utilizes federal Community Development Block Grant funds to make grants to local governments for loans to businesses in economically distressed areas of the state.  The repayments of the principal and interest on loans made by local governments to businesses are repaid to the Development Loan Fund to be utilized again.  A seven-member committee reviews and approves applications to the program.  Projects must be in a distressed area, be expected to increase or maintain employment and have benefits accruing to residents of the distressed area.

SUMMARY:

The definition of distressed area regarding the Community Revitalization Team program is expanded to include communities or areas which have experienced long-term and severe loss of employment or the erosion of their economic base due to the decline of dominant industries.

The Development Loan Fund program is expanded so that the program may be utilized in areas of the state which are not economically distressed.  Assistance offered under the program must result in job creation or retention. The Development Loan Fund Committee must make at least 80 percent of appropriated funds available to projects in distressed areas.  Funds shall not be made available to projects located in areas not designated distressed if the Development Loan Fund's net worth is less than $7.1 million.

If objections are raised to projects seeking financing by the Development Loan Fund on the basis of unfair business competition, the Development Loan Fund Committee must evaluate the potential impact of a project on similar businesses located in the local market area.  A grant may be denied by the committee if a project is not likely to result in a net increase in employment within a local market area.

If Development Loan Fund monies in a biennium are not fully expended, up to 20 percent of the funds reserved for distressed areas will be made available to local governments that operate existing economic development revolving loan funds in distressed areas.  Economic development revolving loan funds are defined as local, not-for-profit or governmentally-sponsored business loan programs.  The grants will be utilized to make loans to businesses meeting the specifications for loans under the Development Loan Fund enabling legislation. To the extent possible under federal law, the local government will convey the principal and interest on payments from outstanding loans made by the economic development revolving loan funds to the Development Loan Fund in order to permit additional grants to local governments.

The Development Loan Committee is directed to develop performance standards for judging the effectiveness of the program.  Standards will include examining the effectiveness of the program in regard to:  job creation for low income individuals; job retention; creation of new employee opportunities; local economic diversification; establishment of employee cooperatives and assistance to employee buy-outs; and the degree of risk assumed by the Development Loan Fund, with an emphasis on loans which did not receive financing from commercial lenders, but which are financially sound.

The Development Loan Fund Committee is directed to report to appropriate legislative standing committees on the development of performance standards by January, 1988.

VOTES ON FINAL PASSAGE:

      House 94   0

      Senate    44     0(Senate amended)

      House 98   0(House concurred)

EFFECTIVE:May 18, 1987