2737-S.E AAS 3/3/94 S5602.2
ESHB 2737 - S COMM AMD
By Committee on Trade, Technology & Economic Development
ADOPTED 3/3/94
Strike everything after the enacting clause and insert the following:
"Sec. 1. RCW 43.163.010 and 1989 c 279 s 2 are each amended to read as follows:
As used in this chapter, the following words and terms have the following meanings, unless the context requires otherwise:
(1) "Authority" means the Washington economic development finance authority created under RCW 43.163.020 or any board, body, commission, department or officer succeeding to the principal functions of the authority or to whom the powers conferred upon the authority shall be given by law;
(2) "Bonds" means any bonds, notes, debentures, interim certificates, conditional sales or lease financing agreements, lines of credit, forward purchase agreements, investment agreements, and other banking or financial arrangements, guaranties, or other obligations issued by or entered into by the authority. Such bonds may be issued on either a tax-exempt or taxable basis;
(3) "Borrower" means one or more public or private persons or entities acting as lessee, purchaser, mortgagor, or borrower who has obtained or is seeking to obtain financing either from the authority or from an eligible banking organization that has obtained or is seeking to obtain funds from the authority to finance a project. A borrower may include a party who transfers the right of use and occupancy to another party by lease, sublease or otherwise, or a party who is seeking or has obtained a financial guaranty from the authority;
(4) "Eligible banking organization"
means any organization subject to regulation by the ((state supervisor of
banking or the state supervisor of savings and loans)) director of the
department of financial institutions, any national bank, federal savings
and loan association, and federal credit union located within this state;
(5) "Eligible export transaction" means any preexport or export activity by a person or entity located in the state of Washington involving a sale for export and product sale which, in the judgment of the authority: (a) Will create or maintain employment in the state of Washington, (b) will obtain a material percent of its value from manufactured goods or services made, processed or occurring in Washington, and (c) could not otherwise obtain financing on reasonable terms from an eligible banking organization;
(6) "Eligible farmer" means any person who is a resident of the state of Washington and whose specific acreage qualifying for receipts from the federal department of agriculture under its conservation reserve program is within the state of Washington;
(7) "Eligible person" means an individual, partnership, corporation, or joint venture carrying on business, or proposing to carry on business within the state and is seeking financial assistance under section 5 of this act;
(8) "Financial assistance" means the infusion of capital to persons for use in the development and exploitation of specific inventions and products;
(9) "Financing document" means an instrument executed by the authority and one or more persons or entities pertaining to the issuance of or security for bonds, or the application of the proceeds of bonds or other funds of, or payable to, the authority. A financing document may include, but need not be limited to, a lease, installment sale agreement, conditional sale agreement, mortgage, loan agreement, trust agreement or indenture, security agreement, letter or line of credit, reimbursement agreement, insurance policy, guaranty agreement, or currency or interest rate swap agreement. A financing document also may be an agreement between the authority and an eligible banking organization which has agreed to make a loan to a borrower;
(((8))) (10) "Plan"
means the general plan of economic development finance objectives developed and
adopted by the authority, and updated from time to time, as required under RCW
43.163.090((.));
(11) "Economic development activities" include, but are not limited to those activities related to: Manufacturing, processing, research, production, assembly, tooling, warehousing, export assistance, tourism, pollution control, energy generating, conservation, transmission, and sports facilities and industrial parks;
(12) "Project costs" means costs of:
(a) Acquisition, lease, construction, reconstruction, remodeling, refurbishing, rehabilitation, extension, and enlargement of land, rights to land, buildings, structures, docks, wharves, fixtures, machinery, equipment, excavations, paving, landscaping, utilities, approaches, roadways and parking, handling and storage areas, and similar ancillary facilities, and any other real or personal property included in an economic development activity;
(b) Architectural, engineering, consulting, accounting, and legal costs related directly to the development, financing, acquisition, lease, construction, reconstruction, remodeling, refurbishing, rehabilitation, extension, and enlargement of an activity included under subsection (11) of this section, including costs of studies assessing the feasibility of an economic development activity;
(c) Finance costs, including the costs of credit enhancement and discounts, if any, the costs of issuing revenue bonds, and costs incurred in carrying out any financing document;
(d) Start-up costs, working capital, capitalized research and development costs, capitalized interest during construction and during the eighteen months after estimated completion of construction, and capitalized debt service or repair and replacement or other appropriate reserves;
(e) The refunding of any outstanding obligations incurred for any of the costs outlined in this subsection; and
(f) Other costs incidental to any of the costs listed in this section;
(13) "Product" means a product, device, technique, or process that is or may be exploitable commercially. "Product" does not refer to pure research, but shall be construed to apply to products, devices, techniques, or processes that have advanced beyond the theoretic stage and are readily capable of being, or have been, reduced to practice;
(14) "Financing agreements" means, and includes without limitation, a contractual arrangement with an eligible person whereby the authority obtains rights from or in an invention or product or proceeds from an invention or product in exchange for the granting of financial and other assistance to the person.
Sec. 2. RCW 43.163.070 and 1990 c 53 s 4 are each amended to read as follows:
The authority may use any funds legally
available to it for any purpose specifically authorized by this chapter, or for
otherwise improving economic development in this state by assisting businesses
and farm enterprises that do not have access to capital at terms and rates
comparable to large corporations due to the location of the business, the size
of the business, the lack of financial expertise, or other appropriate
reasons((: PROVIDED, That)). However, no funds of the state
shall be used for such purposes; except that funds of the state may be used
to support the administrative and technical assistance functions of the
programs created under section 5 of this act.
Sec. 3. RCW 43.163.080 and 1990 c 53 s 5 are each amended to read as follows:
(1) The authority shall adopt general operating procedures for the authority. The authority shall also adopt operating procedures for individual programs as they are developed for obtaining funds and for providing funds to borrowers. These operating procedures shall be adopted by resolution prior to the authority operating the applicable programs.
(2) The operating procedures shall include, but
are not limited to: (a) Appropriate minimum reserve requirements to secure the
authority's bonds and other obligations; (b) appropriate standards for securing
loans and other financing the authority provides to borrowers, such as
guarantees or collateral; and (c) ((appropriate)) strict
standards for providing financing to borrowers, such as (i) the borrower is a
responsible party with a high probability of being able to repay the financing
provided by the authority, (ii) the financing is reasonably expected to provide
economic growth or stability in the state by enabling a borrower to increase or
maintain jobs or capital in the state, (iii) the borrowers with the greatest
needs or that provide the most public benefit are given higher priority by the
authority, and (iv) the financing is consistent with any plan adopted by the
authority under RCW 43.163.090.
Sec. 4. RCW 43.163.120 and 1989 c 279 s 13 are each amended to read as follows:
The authority shall receive no appropriation of
state funds; except that funds of the state may be used to support the
administrative and technical assistance functions of the programs created under
section 5 of this act. The department of community, trade,
and economic development shall provide staff to the authority, to the extent
permitted by law, to enable the authority to accomplish its purposes; the staff
from the department of community, trade, and economic development
may assist the authority in organizing itself and in designing programs, but
shall not be involved in the issuance of bonds or in making credit decisions
regarding financing provided to borrowers by the authority. The authority
shall report each December on its activities to the ((house trade and
economic development committee and to the senate economic development and labor
committee)) appropriate standing committees of the house of
representatives and senate.
NEW SECTION. Sec. 5. A new section is added to chapter 43.163 RCW to read as follows:
For the purpose of facilitating economic development in the state of Washington and encouraging the employment of Washington workers at meaningful wages:
(1) The authority may develop and conduct a program or programs to provide nonrecourse revenue bond financing for the project costs for no more than five economic development activities included under the authority's existing general plan of economic development finance objectives;
(2) The authority shall also develop and conduct a program that will stimulate and encourage the development of new products within Washington state by the infusion of financial aid for invention and innovation in situations in which the financial aid would not otherwise be reasonably available from commercial sources. The authority is authorized to provide nonrecourse revenue bond financing for this program.
(a) For the purposes of this program, the authority shall have the following powers and duties:
(i) To enter into financing agreements with eligible persons doing business in Washington state, upon terms and on conditions consistent with the purposes of this chapter, for the advancement of financial and other assistance to the persons for the development of specific products, procedures, and techniques, to be developed and produced in this state, and to condition the agreements upon contractual assurances that the benefits of increasing or maintaining employment and tax revenues shall remain in this state and accrue to it;
(ii) Own, possess, and take license in patents, copyrights, and proprietary processes and negotiate and enter into contracts and establish charges for the use of the patents, copyrights, and proprietary processes when the patents and licenses for products result from assistance provided by the authority;
(iii) Negotiate royalty payments to the authority on patents and licenses for products arising as a result of assistance provided by the authority;
(iv) Negotiate and enter into other types of contracts with eligible persons that assure that public benefits will result from the provision of services by the authority; provided that the contracts are consistent with the state Constitution;
(v) Encourage and provide technical assistance to eligible persons in the process of developing new products;
(vi) Refer eligible persons to researchers or laboratories for the purpose of testing and evaluating new products, processes, or innovations; and
(vii) To the extent permitted under its contract with eligible persons, to consent to a termination, modification, forgiveness, or other change of a term of a contractual right, payment, royalty, contract, or agreement of any kind to which the authority is a party.
(b) Eligible persons seeking financial and other assistance under this program shall forward an application, together with an application fee prescribed by rule, to the authority. An investigation and report concerning the advisability of approving an application for assistance shall be completed by the staff of the authority. The investigation and report may include, but is not limited to, facts about the company under consideration as its history, wage standards, job opportunities, stability of employment, past and present financial condition and structure, pro forma income statements, present and future markets and prospects, integrity of management as well as the feasibility of the proposed product and invention to be granted financial aid, including the state of development of the product as well as the likelihood of its commercial feasibility. After receipt and consideration of the report set out in this subsection and after other action as is deemed appropriate, the application shall be approved or denied by the authority. The applicant shall be promptly notified of action by the authority. In making the decision as to approval or denial of an application, priority shall be given to those persons operating or planning to operate businesses of special importance to Washington's economy, including, but not limited to: (i) Existing resource-based industries of agriculture, forestry, and fisheries; (ii) existing advanced technology industries of electronics, computer and instrument manufacturing, computer software, and information and design; and (iii) emerging industries such as environmental technology, biotechnology, biomedical sciences, materials sciences, and optics.
(3) The authority may also develop and implement such other economic development financing programs adopted in future general plans of economic development finance objectives developed under RCW 43.163.090.
NEW SECTION. Sec. 6. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
NEW SECTION. Sec. 7. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately."
ESHB 2737 - S COMM AMD
By Committee on Trade, Technology & Economic Development
ADOPTED 3/3/94
On page 1, line 2 of the title, after "authority;" strike the remainder of the title and insert "amending RCW 43.163.010, 43.163.070, 43.163.080, and 43.163.120; adding a new section to chapter 43.163 RCW; and declaring an emergency."
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