BILL REQ. #:  H-2683.5 

READ FIRST TIME 03/05/07.   

     AN ACT Relating to creating the community development fund; and adding a new chapter to Title 43 RCW.

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

NEW SECTION.  Sec. 1   INTENT. (1) The legislature recognizes that although many regions of the state are thriving, there are still distressed communities throughout rural and urban Washington where capital investments in economic development and social services initiatives could create vibrant local business districts and prosperous neighborhoods. Providing these capital investments is critical for the economic health of local distressed communities, helps build strong relationships with the state, and expands life opportunities for underserved, low-income populations.
     (2) The legislature further recognizes that nonprofit corporations fill an important public purpose in providing health, safety, and welfare services to our state's residents. Acting through partnerships with governmental entities, these private sector providers are able to increase the amount and quality of services available to state residents, conferring a valuable benefit on the public.
     (3) The legislature therefore finds that programs by local governments, federally recognized Indian tribes, and nonprofit organizations to help distressed communities and underserved, low-income populations could be enhanced by creating the community development fund.

NEW SECTION.  Sec. 2   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Access to human services" means resources to help people in distressed rural or urban communities access services including, but not limited to, health care, state programs, education, and workforce development and placement programs.
     (2) "Capital project" means a project to construct either new facilities or make significant, long-term renewal improvements to existing facilities in order to achieve a program goal. "Capital project" may include costs of site preparation; preconstruction activities; acquisition, new construction, or improvement of facilities and infrastructure; and purchase of built-in or fixed equipment. "Capital project" does not include costs of land acquisition; planning activities or feasibility studies; revolving loan funds; lease payments; facility maintenance; vehicles; moveable or temporary operating equipment; or consumable supplies, including software that is not dedicated to the control of a specialized system.
     (3) "Department" means the department of community, trade, and economic development.
     (4) "Director" means the director of the department of community, trade, and economic development.
     (5) "Distressed rural or urban area" means (a) a county that has an unemployment rate which is twenty percent above the state average for the immediately previous three years; or (b) an area within a county, which area: (i) Is composed of contiguous census tracts; (ii) has at least fifty-one percent of its households with incomes at or below eighty percent of the county's median income, adjusted for household size; and (iii) has an average unemployment rate for the area, for the most recent twelve-month period for which data is available, at least one hundred twenty percent of the average unemployment rate for the county.
     (6) "Infrastructure" means sewer, water, electrical systems, and those roads or parking lots that are within the footprint of the project and under site control of the applicant.
     (7) "Local government" means cities, towns, counties, or those special purpose districts whose statutory purposes are directly related to the purposes of the community development fund.
     (8) "Nonprofit organization" means an organization that is tax exempt, or not required to apply for an exemption, under section 501(c)(3) or 501(c)(6) of the federal internal revenue code of 1986, as amended.

NEW SECTION.  Sec. 3   FUND CREATION AND PURPOSE. Communities, whether they are formed by cultural identity, geography, or other characteristics, can grow strong with a long-term vision and the synergy of crucial investments. The community development fund is created in the state treasury. Moneys in the fund may be spent only after appropriation. The fund shall be used to make grants to local governments, federally recognized Indian tribes, or nonprofit organizations in distressed rural or urban communities for high priority capital projects that further one or more of the following community development objectives:
     (1) Support local community development initiatives, particularly those that (a) encourage small business start-ups or sustainability; (b) expand employment opportunities for community residents; or (c) increase the employability of community residents. Examples include but are not limited to construction of a small business services facility, site preparation to attract a new business to the area, or renovation of an existing facility for small business counseling or workforce education.
     (2) Access to human services that enable community residents to take advantage of the economic opportunities provided in subsection (1) of this section. Examples include but are not limited to facilities that offer child care, elder, or respite care; classrooms for financial literacy workshops; food bank facilities; or infrastructure needed to complete a low-income housing community.
     (3) Educational and recreational opportunities separate from the public education system. Examples include but are not limited to facilities that offer academic tutoring, or athletics, arts, or cultural programming targeted especially to youth.

NEW SECTION.  Sec. 4   GRANT-MAKING PROCESS AND CRITERIA. The department shall establish and conduct a competitive process to solicit and evaluate applications proposing capital projects that correspond to the community objectives contained in section 3 of this act.
     (1) The department shall notify local governments, federally recognized Indian tribes, and nonprofit organizations of the availability of moneys through the community development fund.
     (2) The department shall issue a request for proposals, and conduct an application and evaluation process.
     (a) The department shall first evaluate whether a proposed project is located within a distressed rural or urban area as defined in section 2 of this act. Projects that are located outside of such an area shall be ineligible for further consideration. The department shall next evaluate whether a proposed project is designed to meet one of the three objectives contained in section 3 of this act. Projects that do not meet any of these objectives shall be ineligible for further consideration.
     (b) The department shall evaluate the remaining eligible proposals according to the following criteria. Successful applicants must demonstrate:
     (i) A long-term vision for the development of the community, shared by local residents, businesses, leaders, and partners, that uses the synergy of enhanced services, infrastructure, and community improvements;
     (ii) That the state's investment is critical in order for the applicant to accomplish a discrete, usable phase of the project, that the project is ready to proceed, and will make timely use of the funds;
     (iii) That the applicant has the organizational and financial capacity to fulfill the terms of the grant agreement and to maintain the project into the future;
     (iv) That there is an unmet need for economic development opportunities, access to human services, and educational or recreational opportunities separate from the public education system;
     (v) That the project will achieve its stated goals including but not limited to:
     (A) Expanding local economic development opportunities, including increasing the employability of community residents;
     (B) Providing residents with needed human services; or
     (C) Providing the workforce and youth with needed education, instruction, or mentoring opportunities; and
     (vi) That the project is a community priority as shown through tangible commitments made by residents, businesses, local leaders, and partners to developing and carrying out the project, or other evidence of its importance.
     (3) The department may not: (a) Set a monetary limit to funding requests; (b) require applicants to contribute cash or an in-kind match to the state funds requested; or (c) require that state funds be the last to be spent on a project.
     (4)(a) The department shall submit to the governor and the legislature a ranked, prioritized list of recommended projects for funding in the department's biennial capital budget request. The projects included on the department's ranked list must have as their main, but not necessarily sole, objective local community development as described in section 3(1) of this act. The list must include a description of each prioritized project, its total cost, the amount of state funding requested, and the amount recommended for funding. The total amount of recommended state funding for all projects on the ranked, prioritized list shall not exceed ten million dollars and shall include a minimum of five projects.
     (b) The department shall also submit to the legislature an unranked list of the remaining eligible projects for which applications were received. The list must include a description of each project, its total cost, and the amount of state funding requested. The appropriate fiscal committees of the legislature shall use this list to determine, in the legislature's sole discretion, any additional community development fund projects that may receive funding in the biennial capital budget. The total amount of state funding available for all projects on the unranked list shall not exceed fifteen million dollars.
     (c) In addition to the ranked and the unranked lists, the department shall submit to the appropriate fiscal committees of the legislature all application materials it received and all working papers it developed during its evaluation process.
     (5) After the legislature has approved a specific list of projects in law, the department shall develop and manage appropriate contracts with the selected applicants; monitor project expenditures and grantee performance; report project and contract information; and exercise due diligence and other contract management responsibilities as required. The department may not sign agreements or otherwise financially obligate funds under this section until the legislature has approved a specific list of projects in law.
     (6) In contracts for grants authorized under this section, the department shall include provisions which require that capital improvements must be held by the grantee for a specific period of time appropriate to the amount of the grant and that facilities must be used for the express purpose of the grant. If the grantee is found to be out of compliance with provisions of the contract, the grantee shall repay to the community development fund the principal amount of the grant plus interest calculated at the rate of interest on state of Washington general obligation bonds issued most closely to the date of authorization of the grant.
     (7) The grant-making process and criteria described in this section shall be used by the department beginning in 2007-09 to solicit, evaluate, and recommend projects for funding in the 2009-2011 fiscal biennium, and each biennium thereafter.

NEW SECTION.  Sec. 5   ACCOUNTABILITY AND REPORTS. (1) The department shall develop accountability and reporting standards for grant recipients.
     (2) The department shall submit a report each biennium to the appropriate committees of the legislature, including at a minimum:
     (a) A list of projects funded during the current biennium, including a description of each project, its total cost, the amount of state funding awarded and expended to date, the project milestones completed, and the extent to which the project has met its stated goals;
     (b) Recommendations, if any, for policy and programmatic changes to the community development fund to better achieve program objectives; and
     (c) The ranked list of prioritized projects and amounts proposed for funding in the subsequent biennium, and the unranked list of the remaining projects for which applications were received, as submitted in the department's biennial capital budget request as required in section 4(4) of this act.
     (3) The department shall submit its initial report by January 1, 2009.

NEW SECTION.  Sec. 6   CAPTIONS. Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 7   CODIFICATION. Sections 1 through 6 of this act constitute a new chapter in Title 43 RCW.