AN ACT Relating to minority and women-owned businesses; amending RCW 43.31.085, 43.31.055, and 39.19.030; 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. It is the intent of the legislature to combat discrimination in the economy.

(1) The legislature finds that discrimination is in part responsible for:

(a) The disproportionately small percentage of the state's businesses that are owned by minorities and women;

(b) The limited and unequal opportunity minority and women entrepreneurs and business owners have to procure small business financing; and

(2) The legislature further finds that:

(a) Many minority and women entrepreneurs and business owners lack training in how to establish and operate a business. This lack of training inhibits their competitiveness when they apply for business loans, bonds, and contracts;

(b) Minorities and women are an increasingly expanding portion of the population and work force. In order for these individuals to fully contribute to the society and economy it is necessary to ensure that minority and women entrepreneurs and business owners are provided an equal opportunity to procure small business financing, bonds, and contracts; and

(c) The growth of small businesses will have a favorable impact on the Washington economy by creating jobs, increasing competition in the marketplace, and expanding tax revenues. Access to financial markets, bonds, and contracts by entrepreneurs and small business owners is vital to this process. Without reasonable access to financing, bonds, and contracts, talented and aggressive entrepreneurs and small business owners are cut out of the economic system and the state's economy suffers.

(3) Therefore, the legislature declares there to be a substantial public purpose in providing technical assistance in the areas of marketing, finance, and management, and access to capital resources, bonds, and contracts, to help start or expand a minority or women-owned business, and specifically to encourage and make possible greater participation by minorities and women in international trade, public works and construction, and public facility concessions. To accomplish these purposes, it is the intent of the legislature to:

(a) Develop training courses in financing, marketing, managing, accounting, and recordkeeping for a small business and to make these programs available to minority and women entrepreneurs and small business owners;

(b) Make public works and construction projects and public facility concessions accessible to a greater number of minority and women-owned businesses;

(c) Provide for the lending of nonstate funds to qualified minority and women entrepreneurs and business owners in order to provide the maximum practicable opportunity for innovative minority and women entrepreneurs and business owners to compete for small business financing; and

(d) Provide professional services assistance grants and bond guarantees on behalf of qualified contractors in order to provide the maximum practicable opportunity for minority and women-owned contracting businesses to participate in the Washington state economy by bidding and completing various public and private contracting jobs.

I. EDUCATION AND TECHNICAL ASSISTANCE

Sec. 2. RCW 43.31.085 and 1989 c 430 s 2 are each amended to read as follows:

MARKETING, FINANCE, AND MANAGEMENT ASSISTANCE. The business assistance center shall:

(1) Serve as the state's lead agency and advocate for the development and conservation of businesses.

(2) Coordinate the delivery of state programs to assist businesses.

(3) Provide comprehensive referral services to businesses requiring government assistance.

(4) Serve as the business ombudsman within state government and advise the governor and the legislature of the need for new legislation to improve the effectiveness of state programs to assist businesses.

(5) Aggressively promote business awareness of the state's business programs and distribute information on the services available to businesses.

(6) Develop, in concert with local economic development and business assistance organizations, coordinated processes that complement both state and local activities and services.

(7) The business assistance center shall work with other federal, state, and local agencies and organizations to ensure that business assistance services including small business, trade services, and distressed area programs are provided in a coordinated and cost-effective manner.

(8) Provide technical assistance to minority and women-owned business enterprises in a variety of areas, including, but not limited to, marketing, finance, and management.

(9) In collaboration with the child care coordinating committee in the department of social and health services, prepare and disseminate information on child care options for employers and the existence of the program. As much as possible, and through interagency agreements where necessary, such information should be included in the routine communications to employers from (a) the department of revenue, (b) the department of labor and industries, (c) the department of community development, (d) the employment security department, (e) the department of trade and economic development, (f) the small business development center, and (g) the department of social and health services.

((~~(9)~~)) (10) In collaboration with the child care coordinating committee in the department of social and health services, compile information on and facilitate employer access to individuals, firms, organizations, and agencies that provide technical assistance to employers to enable them to develop and support child care services or facilities.

((~~(10)~~)) (11) Actively seek public and private money to support the child care facility fund described in RCW 43.31.502, staff and assist the child care facility fund committee as described in RCW 43.31.504, and work to promote applications to the committee for loan guarantees, loans, and grants.

Sec. 3. RCW 43.31.055 and 1985 c 466 s 6 are each amended to read as follows:

EXPORT ASSISTANCE. The department shall assist in expanding the state's role as a major international gateway for landing and transshipping goods bound for domestic and foreign markets. The department shall identify and work with Washington businesses which can utilize state assistance to increase domestic and foreign exports and are capable of increasing production of goods and services, including but not limited to manufactured goods, raw materials, services, and retail trade. The department shall participate in trade and industry exhibitions both foreign and domestic to promote and market state products and services. The department's activities shall include, but not be limited to:

(1) Operating an active and vigorous effort to market the state's products and services internationally, coordinated with private and public international trade efforts throughout the state.

(2) Coordinating with the domestic and foreign export market development activities of the state department of agriculture.

(3) Sending delegations to foreign countries and other states to promote trade with Washington.

(4) Acting as a centralized location for the assimilation and distribution of trade information.

(5) Identifying, when resources permit, domestic and international markets in which minority and women-owned businesses may have an advantage and providing technical assistance to those minority and women-owned businesses with the capacity to participate in international trade.

NEW SECTION. Sec. 4. STANDARD COURSE OF INSTRUCTION. The department of trade and economic development may contract with associate development organizations to establish a standard course of instruction available to resident minority and women small business owners and entrepreneurs. The instruction shall be intensive, practical training courses in financing, marketing, managing, accounting, and recordkeeping for a small business, with an emphasis on federal, state, local, or private programs available to assist small businesses. The business assistance center shall appoint professional instructors, with practical knowledge and experience on how to start and operate a business, to teach the courses. Instruction shall be offered in major population centers throughout the state at times and locations which are convenient for minority and women small business owners and entrepreneurs.

II. FAIRNESS IN CONTRACTING AND CONCESSIONS

Sec. 5. RCW 39.19.030 and 1989 c 175 s 85 are each amended to read as follows:

PARTICIPATION IN PUBLIC WORKS AND CONSTRUCTION. There is hereby created the office of minority and women's business enterprises. The governor shall appoint a director for the office, subject to confirmation by the senate. The director may employ a deputy director and a confidential secretary, both of which shall be exempt under chapter 41.06 RCW, and such staff as are necessary to carry out the purposes of this chapter.

The office shall consult with the minority and women's business enterprises advisory committee to:

(1) Develop, plan, and implement programs to provide an opportunity for participation by qualified minority and women-owned and controlled businesses in public works and the process by which goods and services are procured by state agencies and educational institutions from the private sector;

(2) Develop a comprehensive plan insuring that qualified minority and women-owned and controlled businesses are provided an opportunity to participate in public contracts for public works and goods and services;

(3) Identify barriers to equal participation by qualified minority and women-owned and controlled businesses in all state agency and educational institution contracts;

(4) Establish annual overall goals for participation by qualified minority and women-owned and controlled businesses for each state agency and educational institution to be administered on a contract-by-contract basis or on a class-of-contracts basis;

(5) Require that each state agency adopt a plan, developed by each agency in consultation with the director and the advisory committee, to insure that minority and women-owned businesses are afforded the maximum practicable opportunity to directly and meaningfully participate in the execution of public contracts for public works and construction. In order to achieve the established participation goals, this plan shall include, but not be limited to, the agency contracting directly with certified minority and women-owned businesses for public works and construction;

(6) Develop and maintain a central minority and women's business enterprise certification list for all state agencies and educational institutions. No business is entitled to certification under this chapter unless it meets the definition of small business concern as established by the office. All applications for certification under this chapter shall be sworn under oath;

((~~(6)~~)) (7) Develop, implement, and operate a system of monitoring compliance with this chapter;

((~~(7)~~)) (8) Adopt rules under chapter 34.05 RCW, the Administrative Procedure Act, governing: (a) Establishment of agency goals; (b) development and maintenance of a central minority and women's business enterprise certification program, including a definition of "small business concern" which shall be consistent with the small business requirements defined under section 3 of the Small Business Act, 15 U.S.C. Sec. 632, and its implementing regulations as guidance; (c) procedures for monitoring and enforcing compliance with goals, regulations, contract provisions, and this chapter; and (d) utilization of standard clauses by state agencies and educational institutions, as specified in RCW 39.19.050;

((~~(8)~~)) (9) Submit an annual report to the governor and the legislature outlining the progress in implementing this chapter;

((~~(9)~~)) (10) Investigate complaints of violations of this chapter with the assistance of the involved agency or educational institution; and

((~~(10)~~)) (11) Cooperate and act jointly or by division of labor with the United States or other states, and with political subdivisions of the state of Washington and their respective minority, socially and economically disadvantaged and women business enterprise programs to carry out the purposes of this chapter. However, the power which may be exercised by the office under this subsection permits investigation and imposition of sanctions only if the investigation relates to a possible violation of chapter 39.19 RCW, and not to violation of local ordinances, rules, regulations, however denominated, adopted by political subdivisions of the state.

III. LOAN FUND

NEW SECTION. Sec. 6. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout sections 7 through 14 of this act.

(1) "Committee" means the Washington state minority and women-owned businesses loan fund committee.

(2) "Department" means the department of community development.

(3) "Director" means the director of the department of community development.

(4) "Fund" means the Washington state minority and women-owned businesses loan fund.

NEW SECTION. Sec. 7. COMMITTEE ESTABLISHED. The director may establish within the department of community development the Washington state minority and women-owned businesses loan fund committee. The committee shall have seven members. The director shall appoint the members, subject to the following requirements:

(1) Three members shall be experienced in investment finance and have skills in providing capital to new and innovative businesses, starting and operating businesses, and providing professional services to small or expanding businesses.

(2) Two members shall represent minority business enterprises.

(3) Two members shall represent women's business enterprises.

(4) Each member appointed by the director shall serve a term of three years, except that of the seven members first appointed, two shall serve two-year terms and two shall serve one-year terms. A person appointed to fill a vacancy shall serve only the unexpired term of the member replaced. A member is eligible for reappointment. A member may be removed by the director only for cause.

(5) The director shall designate a committee member as committee chairperson. The committee may select such other officers as it deems appropriate. Four members of the committee constitute a quorum. Four affirmative votes are necessary for the transaction of business or the exercise of any power or function of the committee.

(6) Committee members serve without compensation, but are entitled to reimbursement for actual and necessary expenses incurred in the performance of official duties in accordance with RCW 43.03.050 and 43.03.060.

(7) Committee members are not liable to the state, to the fund, or to any other person as a result of their activities, whether ministerial or discretionary, except for willful dishonesty or intentional violations of law.

NEW SECTION. Sec. 8. LOAN FUND ESTABLISHED. There is established the Washington state minority and women-owned businesses loan fund. The fund is an account in the state treasury. All loan payments of principal and interest which are transferred under section 10 of this act shall be deposited into the account. Moneys in the account may be spent without legislative appropriation for loans under this chapter. However, any expenditures of these moneys shall conform to federal law. No more than five percent of the fund balance may be spent to administer the fund during the biennium. The department shall make available for use by the committee an amount of federal funds equal to the amount of state funds transferred or appropriated to the department for purposes of supplementing the department's federal funds.

NEW SECTION. Sec. 9. LENDING AUTHORITY ESTABLISHED. Subject to the restrictions contained in this chapter, the committee is authorized to approve applications of qualified business owners and qualified entrepreneurs for loans from the fund. Applications approved by the committee under this chapter shall conform to applicable federal requirements.

NEW SECTION. Sec. 10. LIMITATIONS ON LENDING AUTHORITY. (1) The committee shall receive and approve loan applications on a quarterly basis for each fiscal year. Department staff shall process and assist in the preparation of applications. Each application shall show in detail the nature of the business and the purpose intended for the loan. Each application shall include a credit analysis of the business to receive the loan. The committee chairperson may convene the committee on short notice to respond to applications of an immediate nature.

(2) The committee may only approve an application providing a loan to a qualified business owner or qualified entrepreneur that:

(a) Will likely lead to the establishment of a new business or improve an existing business;

(b) Would probably not be completed without the loan because other capital or financing at feasible terms is unavailable or the return on investment is inadequate.

(3) The committee shall not approve any application which would result in a loan in excess of seventy-five thousand dollars without the director's approval. The committee may approve an application which results in a loan of up to one hundred fifty thousand dollars if the application is approved by the director.

(4) The committee shall fix the terms and rates pertaining to its loans.

(5) To the extent permitted under federal law the committee shall require applicants to provide for the transfer of all payments of principal and interest on loans to the fund created under this chapter. Under circumstances where the federal law does not permit the committee to require such transfer, the committee shall give priority to applicants who provide for the transfer.

NEW SECTION. Sec. 11. OVERSIGHT. The committee shall keep performance records on the loans made and the successes of the businesses that receive loans, and the committee shall develop performance standards for judging the effectiveness of its lending practices. The committee shall report to the fiscal committees in the legislature each January.

NEW SECTION. Sec. 12. COMMITTEE SUPPORT. The department shall provide adequate and appropriate staff to the committee. A record of committee proceedings shall be maintained by the department. The department is encouraged to work with local development organizations to promote applications for loans by the fund. The department shall also provide assistance to local development organizations and lending organizations to identify viable projects for consideration by the committee. The department shall adopt such rules as are appropriate for the committee to carry out its authority under this chapter.

IV. MISCELLANEOUS

NEW SECTION. Sec. 13. CAPTIONS NOT LAW. Section headings as used in this act do not constitute part of the law.

NEW SECTION. Sec. 14. This chapter may be known and cited as the omnibus minority and women-owned businesses assistance act.

NEW SECTION. Sec. 15. Sections 1, 4, and 6 through 14 of this act shall constitute a new chapter in Title 43 RCW.