BP BHEAD INT S

AN ACT Relating to industrial and commercial development; amending RCW 43.163.010, 43.163.070, and 43.163.120; adding a new section to chapter 43.163 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. It is found and declared that there exists in the state a great and growing need for industrial and commercial development and activity to provide and maintain employment and tax revenues; that assistance and encouragement of industrial and commercial development to provide and maintain the employment and revenues is an important function of the state; that the availability of financial assistance is an important inducement to industrial and commercial enterprises to remain or locate in this state; that there exists in the state a serious shortage of venture capital to promote the development and exploitation of invention and products; that this shortage has resulted and will result in a serious decrease in the development of new business enterprise and job opportunities in Washington state; and further, that providing state financial assistance for the development of products, innovation, and invention for industry in this state will assist in diversifying the economy of our state which has been significantly impacted by downturns in defense-related, timber-related, and fisheries-related industries; and further that the assistance will result in the creation of new products and industry in this state, resulting in increased employment and public revenues over time; and therefore the necessity in the public interest and for the public benefit and good for the provisions of chapter ..., Laws of 1994 (this act) is hereby declared as a matter of legislative determination.

Sec. 2. 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, any national bank, federal savings and loan association~~)) director of the department of financial institutions, 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 3 of this act.

(8) "Financial aid" means the infusion of risk 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) "Product" means a product, device, technique, or process that is or may be exploitable commercially. The term shall 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.

(12) "Venture" means, without limitation, a contractual arrangement with an eligible person whereby the authority obtains rights from or in an invention or product or proceeds therefrom in exchange for the granting of financial aid to the person.

NEW SECTION. Sec. 3. A new section is added to chapter 43.163 RCW to read as follows:

The authority is authorized to 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.

(1) For the purposes of this program, the authority shall have the following powers and duties:

(a) To enter into venture agreements with eligible persons doing business in Washington state, upon terms and on conditions as are consistent with the purposes of this chapter, for the advancement of financial aid 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;

(b) 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 research financed by the authority;

(c) Negotiate royalty payments to the authority on patents and licenses for products arising in the course of research financed by the authority;

(d) Negotiate and enter into other types of contracts with eligible persons which assure a return on an investment made by the authority; provided that the contracts are consistent with the state's constitution;

(e) Encourage and provide technical assistance to eligible persons in the process of developing new products;

(f) Refer eligible persons to researchers or laboratories for the purpose of testing and evaluating new products, processes, or innovations; and

(g) 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.

(2) Eligible persons seeking financial aid 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 financial aid shall be completed by the staff of the authority. The investigation and report shall include, but shall not be 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: (a) Existing resource-based industries of agriculture, forestry, and fisheries; (b) existing advanced technology industries of electronics, computer and instrument manufacturing, computer software, and information and design; and (c) emerging industries of environmental technology, biotechnology, biomedical sciences, materials sciences and optics.

(3) The director of the department of community, trade, and economic development may create an advisory committee to assist in the evaluation and selection of projects seeking financing under this program. The committee members shall be knowledgeable and have favorable reputations for skill, knowledge, and experience in the areas of the development of technological invention. Members shall receive no compensation for the performance of their duties under this section, but shall be reimbursed for necessary expenses incurred in the performance thereof and shall be reimbursed for travel expenses as provided in RCW 43.03.050 and 43.03.060.

Sec. 4. 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 functions of the program created under section 3 of this act.

Sec. 5. 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 functions of the program created under section 3 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.

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.