Brief Description: Creating a job development fund.

Sponsors: Representatives Ericks, Haler, Linville, Springer, Kilmer, Morrell, O'Brien, Schual-Berke, P. Sullivan, Simpson, Pettigrew, Jarrett, Wallace, Sells, Strow, Grant, Upthegrove, Kessler, Dunn, Fromhold, Appleton, Chase, Green, Moeller, Hasegawa and Takko.

Hearing Date: 2/16/05

Staff: Tracey Taylor (786-7196).

Background:

The Community Economic Revitalization Board (CERB) program was created in 1982 to provide direct loans and grants to counties, cities, and special purpose districts for economic development-related infrastructure improvements. The CERB financing is available for public improvements that include the acquisition, construction, or repair of domestic and industrial water, sewer and storm water infrastructure; bridge, railroad, electricity, telecommunication, and road improvements; buildings and structures; port facilities; and feasibility studies. The CERB financing must be necessary to either bring a new business into a community or expand or retain an existing business that is already located in the community.

The CERB has 15 voting members. There are two members from the House of Representatives appointed by the Speaker of the House, and chosen from each of the two major caucuses. There are two members from the Senate, appointed by the President of the Senate, and chosen from each of the two major caucuses. The Governor appoints a recognized private or public sector economist, a port district official, one county official, one city official, one representative of a federally recognized Indian tribe and one representative of small business from each of the following geographic areas: (a) the area west of Puget Sound; (b) the area east of Puget Sound and west of the Cascade range; (c) the area east of the Cascade range and west of the Columbia River; and (d) the area east of the Columbia River. In addition, the Governor shall appoint one executive from large businesses on each side of the Cascades. The Director of the Department of Community, Trade & Economic Development, the Director of the Department of Revenue, the Commissioner of the Employment Security Department and the Secretary of Transportation all serve as nonvoting advisory members.

Summary of Bill:

The Job Development Fund is created in the custody of the State Treasurer for revenues generated from legislatively authorized bond sales and other lawful sources. Funds may only be spent after an appropriation. Expenditures from the fund shall be used to make grants to local governments for public infrastructure projects to stimulate the community and economic development.

The Job Development Fund grant program will be administered by the Community Economic Revitalization Board (CERB). The CERB will establish a competitive process to request proposals for and prioritize projects from political subdivisions of the state and federally recognized Indian tribes. The projects must have a primary objective to stimulate community and economic development through redevelopment and rehabilitation projects.

A redevelopment project includes: the acquisition of a blighted area; demolition and removal or buildings and improvements; installation, construction or reconstruction of streets utilities, parks, playgrounds, and other improvements necessary for the carrying out in the area the provisions of a community renewal plan; making the land available for development or redevelopment by private enterprise or public bodies at its fair value for uses in accordance with the community renewal plan; and making loans or grants to a person or public body for the purpose of creating or retaining jobs, a substantial portion of which, as determined by the municipality, shall be for persons of low income.

A rehabilitation project includes the restoration and renewal of a blighted area in accordance with a community renewal plan by: carrying out plans for a program of voluntary or compulsory repair and rehabilitation of buildings or other improvements; acquisition of real property and demolition or removal of buildings or improvements thereon where necessary to eliminate unhealthful, insanitary or unsafe conditions, lessen density, reduce traffic hazards, eliminate obsolete or other uses detrimental to the public welfare, or otherwise to remove or prevent the spread of blight or deterioration, or to provide land for needed public facilities; installation, construction or reconstruction of streets, utilities, parks, playgrounds, and other improvements necessary for carrying out the area's community renewal plan; and the disposition of any property acquired in a community renewal area for use in accordance with the area's community renewal plan.

The CERB will develop criteria to evaluate and rank applications. The CERB must also develop performance and evaluation criteria to review how well successful applicants met the community and economic development objectives stated in their applications. Among the priorities for project ranking the CERB must consider are the relative benefits provided to the community by the jobs the project would create. This includes, but should not be limited to, the total of number of jobs a project would create after it is completed. The CERB must also consider the rate of return of the state's investment in the project. This includes the expected increase in state and local tax revenues associated with the project. An applicant must demonstrate that the requested assistance will directly stimulate community and economic development by facilitating the creation of new jobs or the retention of existing jobs. An examination of the applicant's existing assets that may be applied to the project shall also be considered. An applicant must also demonstrate that no other timely source of funding is available for the project at a reasonably similar cost. A project may not receive funding from the job development fund if the project would result in a development or expansion that would displace existing jobs in any other community in the state.

The maximum grant available from the Job Development Fund for any single project is $10 million and may not exceed 33 percent of the total cost of the project. The nonstate portion of the total project costs may include cash, the value of real property when acquired solely for the purpose of the project, and in-kind contributions.

For the 2005-2007 biennium, the CERB may solicit and rank applications; however to the extent funding is provided in the 2005-07 Capital Budget, the list of selected projects does not have to be submitted to the Legislature for approval unless otherwise required in the 2005-07 Capital Budget appropriation.

Beginning in 2007-09 biennium, the CERB shall submit to the Legislature and the Governor a prioritized list of recommended projects for 70 percent of any biennial appropriation. However, the CERB may not sign contracts or otherwise financially obligate funds until the Legislature has approved a specific list of projects. The list must include a description of each project, the amount of recommended state funding, documentation of nonstate funds to be used for the project and a description of the expected community or economic development. The Legislature may remove projects from the CERB's recommended list, but may not change the order of priority for the projects. The CERB shall request a biennial appropriation of $50 million; therefore, the total amount of CERB recommended projects shall not exceed $30 million. The CERB may provide an alternative list of projects for an additional $10 million in funds.

The remaining 30 percent or $20 million dollars may be expended or obligated by the CERB, after consultation with the Legislature, for applications not on the legislatively approved list if the circumstances have subsequently changed making a project more urgent or more highly ranked. An application submitted after the deadline through no fault of the applicant that would have been ranked high on the list and that cannot wait until the next biennial application period due to emergency or exigent circumstances may also qualify for funding from the 30 percent; however, the Legislature must be consulted first. Consultation with the Legislature means the CERB notifies in writing the Speaker of the House of Representatives and the Majority Leader of the Senate, then waits 10 days to give the Legislature time to comment on the proposed action prior to the obligating or spending the funds.

Grant contracts must include a provision that if a grantee is found to be out of compliance with the provisions of the contract, including the agreed-to performance criteria, the grantee must repay to the state general fund the principal amount of the grant, plus interest or an amount otherwise agreed to by the Department of Community, Trade and Economic Development.

Grantees are required to provide an annual report by March 1 of each year. The report must include, at a minimum: the names of any businesses locating within the grantee's jurisdiction as a result of the public improvements financed in whole or in part by the Job Development Fund; the total number of permanent jobs created within the grantee's jurisdiction as a result of the public improvements financed in whole or in part by the Job Development Fund; and the average wage and benefits received by all employees of the businesses within the grantee's jurisdiction as the result of the public improvements funded in whole or in part by the Job Development Fund.

The CERB must report to the Governor and the Legislature on the implementation of the Job Development Fund program by December 1, 2005, and by December 1 in succeeding even-numbered years.

Appropriation: None.

Fiscal Note: Requested on February 10, 2005.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.