FINAL BILL REPORT

HB 2850

                                   C 53 L 90

BYRepresentatives Raiter, Doty, Cantwell, Rayburn and Wineberry

Revising provisions for the Washington economic development finance authority.

House Committe on Trade & Economic Development

Senate Committee on Economic Development & Labor

SYNOPSIS AS ENACTED

BACKGROUND:

The Washington Economic Development Finance Authority (WEDFA) was established in 1989 to help small and medium-sized businesses meet their capital needs.  WEDFA is administered by a 15 member board: three members representing the Department of Trade and Economic Development, the Department of Community Development, and the state treasurer; four legislators; and eight members from the general public appointed by the governor.  Three of the public members must be from Eastern Washington.  The Department of Trade and Economic Development provides the staff for WEDFA, although the staff cannot issue nonrecourse bonds or make credit decisions.

WEDFA is authorized: to develop programs to fund export transactions for small businesses that cannot get commercial loans from private lenders at competitive rates and terms; to provide advance or up front financing for economic development to farmers based on their subsidy from the federal government for not growing crops; to pool loans guaranteed by the federal Small Business Administration or the Farm Home Administration; to access federal development finance programs; and to provide advice and technical assistance to Industrial Development Corporations.  WEDFA is also authorized to engage in a broad range of activities to assist businesses, as long as the activity is within policy guidelines specified in statute.

WEDFA may not lend state credit, issue bills of credit, take deposits, or finance housing, health care facilities, or educational facilities that are financed through other statutory commissions or authorities.  WEDFA is authorized to issue nonrecourse bonds. These bonds are not obligations of the state.

SUMMARY:

Changes are made to the Washington Economic Development Finance Authority (WEDFA).  These changes are:

The prohibition in the intent section of the enabling legislation regarding WEDFA using "public" funds is changed to "state" funds;

The WEDFA board is expanded from 15 members to 18 members.  The director of the Department of Agriculture is added, as well as two members from the general public.  Minority-owned and women-owned businesses must be represented on the board;

The requirement that WEDFA only be allowed to borrow money for board member expenses from the Department of Trade and Economic Development for the first year of its operation is removed.  Also, the provision limiting annual administrative expenses to 5 percent of funds received is removed;

The provision allowing the finance authority to pool loans guaranteed by the federal Small Business Administration and the Farm Home Administration is expanded to allow pooling of any loans guaranteed by the federal government;

The provision that allows WEDFA to assist businesses is expanded to include farm enterprises; and

The provisions dealing with Industrial Development Corporations are removed.

VOTES ON FINAL PASSAGE:

      House 98   0

      Senate    49     0

EFFECTIVE:June 7, 1990