HOUSE BILL REPORT

ESHB 743

BYHouse Committee on Trade & Economic Development (originally sponsored by Representatives Cantwell, Vekich, Schoon, R. King, Scott, Holm and Sutherland; by request of Department of Trade and Economic Development)

Revising community economic revitalization board statutes.

House Committe on Trade & Economic Development

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (17)

     Signed by Representatives Vekich, Chair; Wineberry, Vice Chair; Amondson, Beck, Belcher, Braddock, Cantwell, Doty, Hargrove, Holm, Kremen, McLean, Moyer, Rasmussen, Schoon, B. Williams and J. Williams.

House Staff:Stephen Hodes (786-7092)

AS PASSED HOUSE MARCH 10, 1987

BACKGROUND:

The Community Economic Revitalization Board (CERB) program was established by the legislature in 1982.  The program is designed to provide grants and loans to local jurisdictions for the financing of public facilities necessary for the completion of private job-creating development projects.  The CERB program offers incentives to prospective employers interested in locating in the state and to firms expanding existing facilities without violating the state's limitations on the lending of public credit.  The program is managed by a 22-member board with staff support provided by the Department of Trade and Economic Development. The CERB program has undertaken a total of 58 projects since its inception, and has provided loans to local jurisdictions totalling $16.5 million as well as $8.2 million in grants.

The board's enabling statute has undergone a number of revisions in the legislative sessions which followed its creation.  These revisions have concerned such issues as: the size and composition of the board; the purposes and conditions for which grants and loans may be offered; and the responsibility for managing additional programs related to the board's economic development mission, (such as responsibility for the state's umbrella industrial revenue bond program).

The provision of loans and grants to local governments by the board is funded by a state general obligation bond issuance.  The program also provides funding for transportation projects which contribute to specific economic development projects, funded by state highway funds.  The board is responsible for making recommendations as to the allocation of industrial development bonds under the state's bond allocation process, through the use of a special subcommittee, and for the issuance of single and consolidated umbrella revenue bonds.

The program has attempted to act as an economic development marketing tool, providing swift and reliable yes or no decisions to companies wishing to locate in the state, and to the local governments which would have to bear most of the ultimate costs of the improvements.  At the same time, the program must be broadly accountable as to the efficiency of specific financing decisions.

SUMMARY:

The Community Economic Revitalization Board (CERB) is reauthorized.  The CERB Board is composed of fifteen members.  Five executive agency directors shall serve as advisory members.  There are four legislators on the Board from the House Trade and Economic Development Committee and the Senate Commerce and Labor Committee.  Legislators are authorized to permit other members of the appropriate legislative committee to act as designees in their absence.

No more than one-quarter of the funds available to the Board may be expended in the first three six-month periods of the biennium.  Funds remaining in the last six months may be spent in those months to fund necessary projects late in the biennium.

The Board's Private Activity Bond Subcommittee is composed of six members, including a legislative member.  There are no sunset provisions applying to the Board.  The program is terminated June 30, 1994, with no new loans or grants authorized after June 30, 1993.

EFFECT OF SENATE AMENDMENT(S):  The amendments would eliminate the requirement that no more than one-quarter of the funds available to the board could be expended in the first three six-month periods of the biennium.  That requirement would have permitted expenditure of remaining funds in the final six months of the biennium.  This would have resulted in funds being reserved to fund necessary projects late in the biennium.  The effect of the amendments is to remove this required reserve.

Fiscal Note:    Requested February 11, 1987.

House Committee ‑ Testified For:     Representative Cantwell; Jerry Ellis, Department of Trade & Economic Development; Stan Finkelstein, Association of Washington Cities; Hon. Mayor Hardy, City of Westport; and Bill Lotto, Economic Development Executives of Washington.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     CERB is the primary economic development tool for the state.  Cities find CERB to be a useful tool and local governments also appreciate its value.  A smaller sized board would make CERB more effective.  Funding for a larger staff would be useful.

House Committee - Testimony Against: None Presented.

VOTE ON FINAL PASSAGE:

     Yeas 96; Nays 1; Absent 0; Excused 1

Voting Nay:     Representative Nelson

Excused:   Representative Doty