AN ACT Relating to
distressed county designation; amending RCW 43.160.210, 43.165.010, 43.168.020,
82.60.020, 82.62.010, and 82.08.02565; creating a new section; providing an
effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. RCW 43.160.210 and 1991
c 314 s 25 are each amended to read as follows:
(1) Except as
authorized to the contrary under subsection (2) of this section, from all funds
available to the board for loans and grants, the board shall spend at least
twenty percent for grants and loans for projects in distressed counties. For
purposes of this section, the term "distressed counties" includes any
county, in which: (a) The average level of unemployment for the three
years before the year in which an application for a loan or grant is filed,
exceeds the average state employment for those years by twenty percent; or
(b) a county that has a median household income that is less than seventy‑five
percent of the state median household income for the previous three years.
(2) If at any time during
the last six months of a biennium the board finds that the actual and
anticipated applications for qualified projects in distressed counties are
clearly insufficient to use up the twenty percent allocation, then the board
shall estimate the amount of the insufficiency and during the remainder of the
biennium may use that amount of the allocation for loans and grants for
projects not located in distressed counties.
Sec. 2. RCW 43.165.010 and 1995
c 399 s 91 are each amended to read as follows:
Unless the context
clearly requires to the contrary, the definitions in this section apply
throughout this chapter.
(1)
"Department" means the department of community, trade, and economic
development.
(2)
"Director" means the director of the department.
(3) "Distressed
area" means: (a) A county that has an unemployment rate that is twenty
percent above the state-wide average for the previous three years; ((or))
(b) a county that has a median household income that is less than seventy-five
percent of the state median household income for the previous three years; (c)
a community or area that has experienced sudden and severe or long-term and
severe loss of employment, or erosion of its economic base due to decline of
its dominant industries; or (((c))) (d) an area within a county
which area: (i) Is composed of contiguous census tracts; (ii) has a minimum
population of five thousand persons; (iii) has at least seventy percent of its
families and unrelated individuals with incomes below eighty percent of the
county's median income for families and unrelated individuals; and (iv) has an
unemployment rate which is at least forty percent higher than the county's
unemployment rate. For purposes of this definition, "families and unrelated
individuals" has the same meaning that is ascribed to that term by the
federal department of housing and urban development in its regulations
authorizing action grants for economic development and neighborhood
revitalization projects.
(4) "Economic
development revolving loan funds" means a local, not-for-profit or
governmentally sponsored business loan program.
(5) "Team"
means the community revitalization team.
(6) "Technical
assistance" includes, but is not limited to, assistance with strategic
planning, market research, business plan development review, organization and
management development, accounting and legal services, grant and loan
packaging, and other assistance which may be expected to contribute to the
redevelopment and economic well-being of a distressed area.
Sec. 3. RCW 43.168.020 and 1995
c 226 s 27 are each amended to read as follows:
Unless the context
clearly requires otherwise, the definitions in this section apply throughout
this chapter.
(1)
"Committee" means the Washington state development loan fund
committee.
(2)
"Department" means the department of community, trade, and economic
development.
(3)
"Director" means the director of community, trade, and economic
development.
(4) "Distressed
area" means: (a) A county which has an unemployment rate which is twenty
percent above the state average for the immediately previous three years; (b) a
county that has a median household income that is less than seventy-five
percent of the state median household income for the previous three years; (c)
a metropolitan statistical area, as defined by the office of federal
statistical policy and standards, United States department of commerce, in
which the average level of unemployment for the calendar year immediately
preceding the year in which an application is filed under this chapter exceeds
the average state unemployment for such calendar year by twenty percent((.
Applications under this subsection (4)(b) shall be filed by April 30, 1989; (c)));
(d) an area within a county, which area: (i) Is composed of contiguous
census tracts; (ii) has a minimum population of five thousand persons; (iii)
has at least seventy percent of its families and unrelated individuals with
incomes below eighty percent of the county's median income for families and
unrelated individuals; and (iv) has an unemployment rate which is at least
forty percent higher than the county's unemployment rate; or (((d))) (e)
a county designated as a rural natural resources impact area under RCW
43.31.601 if an application is filed by July 1, ((1993)) 1997.
For purposes of this definition, "families and unrelated individuals"
has the same meaning that is ascribed to that term by the federal department of
housing and urban development in its regulations authorizing action grants for
economic development and neighborhood revitalization projects.
(5) "Fund"
means the Washington state development loan fund.
(6) "Local
development organization" means a nonprofit organization which is
organized to operate within an area, demonstrates a commitment to a
long-standing effort for an economic development program, and makes a demonstrable
effort to assist in the employment of unemployed or underemployed residents in
an area.
(7) "Project"
means the establishment of a new or expanded business in an area which when
completed will provide employment opportunities. "Project" also
means the retention of an existing business in an area which when completed
will provide employment opportunities.
Sec. 4. RCW 82.60.020 and 1995
1st sp.s. c 3 s 5 are each amended to read as follows:
Unless the context clearly
requires otherwise, the definitions in this section apply throughout this
chapter.
(1)
"Applicant" means a person applying for a tax deferral under this
chapter.
(2)
"Department" means the department of revenue.
(3) "Eligible
area" means: (a) A county in which the average level of unemployment for
the three years before the year in which an application is filed under this
chapter exceeds the average state unemployment for those years by twenty
percent; (b) a county that has a median household income that is less than
seventy-five percent of the state median household income for the previous
three years; (c) a metropolitan statistical area, as defined by the office
of federal statistical policy and standards, United States department of
commerce, in which the average level of unemployment for the calendar year
immediately preceding the year in which an application is filed under this
chapter exceeds the average state unemployment for such calendar year by twenty
percent; (((c))) (d) a designated community empowerment zone
approved under RCW 43.63A.700 or a county containing such a community
empowerment zone; (((d))) (e) a town with a population of less
than twelve hundred persons in those counties that are not covered under (a) of
this subsection that are timber impact areas as defined in RCW 43.31.601; (((e)))
(f) a county designated by the governor as an eligible area under RCW
82.60.047; or (((f))) (g) a county that is contiguous to a county
that qualifies as an eligible area under (a) or (((e))) (f) of
this subsection.
(4)(a) "Eligible
investment project" means:
(i) An investment
project in an eligible area as defined in subsection (3)(a), (b), (((d), or))
(c), (e), or (f) of this section; or
(ii) That portion of an
investment project in an eligible area as defined in subsection (3)(((c)))(d)
or (((f))) (g) of this section which is directly utilized to
create at least one new full-time qualified employment position for each three
hundred thousand dollars of investment on which a deferral is requested in an
application approved before July 1, 1994, and for each seven hundred fifty
thousand dollars of investment on which a deferral is requested in an
application approved after June 30, 1994.
(b) The lessor/owner of
a qualified building is not eligible for a deferral unless the underlying
ownership of the buildings, machinery, and equipment vests exclusively in the
same person, or unless the lessor by written contract agrees to pass the
economic benefit of the deferral to the lessee in the form of reduced rent
payments.
(c) For purposes of
(a)(ii) of this subsection:
(i) The department
shall consider the entire investment project, including any investment in
machinery and equipment that otherwise qualifies for exemption under RCW
82.08.02565 or 82.12.02565, for purposes of determining the portion of the
investment project that qualifies for deferral as an eligible investment
project; and
(ii) The number of new
full-time qualified employment positions created by an investment project shall
be deemed to be reduced by the number of full-time employment positions
maintained by the recipient in any other community in this state that are
displaced as a result of the investment project.
(d) "Eligible
investment project" does not include any portion of an investment project
undertaken by a light and power business as defined in RCW 82.16.010(5), other
than that portion of a cogeneration project that is used to generate power for
consumption within the manufacturing site of which the cogeneration project is
an integral part, or investment projects which have already received deferrals
under this chapter.
(5) "Investment
project" means an investment in qualified buildings or qualified machinery
and equipment, including labor and services rendered in the planning,
installation, and construction of the project.
(6)
"Manufacturing" means all activities of a commercial or industrial
nature wherein labor or skill is applied, by hand or machinery, to materials so
that as a result thereof a new, different, or useful substance or article of
tangible personal property is produced for sale or commercial or industrial use
and shall include the production or fabrication of specially made or custom
made articles. "Manufacturing" also includes computer programming,
the production of computer software, and other computer-related services, and
the activities performed by research and development laboratories and
commercial testing laboratories.
(7) "Person"
has the meaning given in RCW 82.04.030.
(8) "Qualified
buildings" means construction of new structures, and expansion or
renovation of existing structures for the purpose of increasing floor space or
production capacity used for manufacturing and research and development
activities, including plant offices and warehouses or other facilities for the
storage of raw material or finished goods if such facilities are an essential
or an integral part of a factory, mill, plant, or laboratory used for
manufacturing or research and development. If a building is used partly for
manufacturing or research and development and partly for other purposes, the
applicable tax deferral shall be determined by apportionment of the costs of
construction under rules adopted by the department.
(9) "Qualified
employment position" means a permanent full-time employee employed in the
eligible investment project during the entire tax year.
(10) "Qualified
machinery and equipment" means all new industrial and research fixtures,
equipment, and support facilities that are an integral and necessary part of a
manufacturing or research and development operation. "Qualified machinery
and equipment" includes: Computers; software; data processing equipment;
laboratory equipment; manufacturing components such as belts, pulleys, shafts,
and moving parts; molds, tools, and dies; operating structures; and all
equipment used to control or operate the machinery.
(11)
"Recipient" means a person receiving a tax deferral under this
chapter.
(12) "Research and
development" means the development, refinement, testing, marketing, and
commercialization of a product, service, or process before commercial sales
have begun. As used in this subsection, "commercial sales" excludes
sales of prototypes or sales for market testing if the total gross receipts
from such sales of the product, service, or process do not exceed one million
dollars.
Sec. 5. RCW 82.62.010 and 1994
sp.s. c 7 s 705 are each amended to read as follows:
Unless the context
clearly requires otherwise, the definitions in this section apply throughout
this chapter.
(1)
"Applicant" means a person applying for a tax credit under this
chapter.
(2)
"Department" means the department of revenue.
(3) "Eligible area"
means: (a) A county in which the average level of unemployment for the three
years before the year in which an application is filed under this chapter
exceeds the average state unemployment for those years by twenty percent; (b) a
county that has a median household income that is less than seventy-five
percent of the state median household income for the previous three years; (c)
a metropolitan statistical area, as defined by the office of federal
statistical policy and standards, United States department of commerce, in
which the average level of unemployment for the calendar year immediately
preceding the year in which an application is filed under this chapter exceeds
the average state unemployment for such calendar year by twenty percent; (((c)))
(d) a designated community empowerment zone approved under RCW
43.63A.700; or (((d))) (e) subcounty areas in those counties that
are not covered under (a) of this subsection that are timber impact areas as
defined in RCW 43.31.601.
(4)(a) "Eligible
business project" means manufacturing or research and development
activities which are conducted by an applicant in an eligible area at a
specific facility, provided the applicant's average full-time qualified
employment positions at the specific facility will be at least fifteen percent
greater in the year for which the credit is being sought than the applicant's
average full-time qualified employment positions at the same facility in the
immediately preceding year.
(b) "Eligible
business project" does not include any portion of a business project
undertaken by a light and power business as defined in RCW 82.16.010(5) or that
portion of a business project creating qualified full-time employment positions
outside an eligible area or those recipients of a sales tax deferral under
chapter 82.61 RCW.
(5)
"Manufacturing" means all activities of a commercial or industrial
nature wherein labor or skill is applied, by hand or machinery, to materials so
that as a result thereof a new, different, or useful substance or article of
tangible personal property is produced for sale or commercial or industrial use
and shall include the production or fabrication of specially made or custom
made articles. "Manufacturing" also includes computer programming,
the production of computer software, and other computer-related services, and
the activities performed by research and development laboratories and
commercial testing laboratories.
(6) "Person"
has the meaning given in RCW 82.04.030.
(7) "Qualified
employment position" means a permanent full-time employee employed in the
eligible business project during the entire tax year.
(8) "Tax
year" means the calendar year in which taxes are due.
(9)
"Recipient" means a person receiving tax credits under this chapter.
(10) "Research and
development" means the development, refinement, testing, marketing, and
commercialization of a product, service, or process before commercial sales
have begun. As used in this subsection, "commercial sales" excludes
sales of prototypes or sales for market testing if the total gross receipts
from such sales of the product, service, or process do not exceed one million
dollars.
Sec. 6. RCW 82.08.02565 and 1995
1st sp.s. c 3 s 2 are each amended to read as follows:
(1) The tax levied by
RCW 82.08.020 shall not apply to sales to a manufacturer or processor for hire
of machinery and equipment used directly in a manufacturing operation, or to
sales of or charges made for labor and services rendered in respect to
installing the machinery and equipment, but only when the purchaser provides
the seller with an exemption certificate in a form and manner prescribed by the
department by rule, and the purchaser provides the department with a duplicate
of the certificate or a summary of exempt sales as the department may require.
The seller shall retain a copy of the certificate for the seller's files.
(2) For purposes of
this section and RCW 82.12.02565:
(a) "Machinery and
equipment" means industrial fixtures, devices, and support facilities.
"Machinery and equipment" includes pollution control equipment
installed and used in a manufacturing operation to prevent air pollution, water
pollution, or contamination that might otherwise result from the manufacturing
operation.
(b) "Machinery and
equipment" does not include:
(i) Hand tools;
(ii) Property with a
useful life of less than one year;
(iii) Repair parts
required to restore machinery and equipment to normal working order;
(iv) Replacement parts
that do not increase productivity, improve efficiency, or extend the useful
life of the machinery and equipment; or
(v) Building fixtures
that are not integral to the manufacturing operation that are permanently
affixed to and become a physical part of a building, such as utility systems
for heating, ventilation, air conditioning, communications, plumbing, or
electrical.
(c) Machinery and
equipment is "used directly" in a manufacturing operation if the
machinery and equipment:
(i) Acts upon or
interacts with an item of tangible personal property;
(ii) Conveys,
transports, handles, or temporarily stores an item of tangible personal
property at the manufacturing site;
(iii) Controls, guides,
measures, verifies, aligns, regulates, or tests tangible personal property;
(iv) Provides physical
support for or access to tangible personal property;
(v) Produces power for,
or lubricates machinery and equipment;
(vi) Produces another
item of tangible personal property for use in the manufacturing operation; or
(vii) Places tangible
personal property in the container, package, or wrapping in which the tangible
personal property is normally sold or transported.
(d) "Manufacturing
operation" means the manufacturing of articles, substances, or commodities
for sale as tangible personal property. The manufacturing operation begins at
the point where the raw materials enter the manufacturing site and ends at the
point where the finished product leaves the manufacturing site. In the case
of the manufacturing of building trusses in eligible areas, as defined in RCW
82.60.020(3)(e), the manufacturing operation ends at the point where the
finished product is delivered to the building site. The term also includes
that portion of a cogeneration project that is used to generate power for
consumption within the manufacturing site of which the cogeneration project is
an integral part. The term does not include research and development, the
production of electricity by a light and power business as defined in RCW
82.16.010, or the preparation of food products on the premises of a person
selling food products at retail.
(e)
"Cogeneration" means the simultaneous generation of electrical energy
and low-grade heat from the same fuel.
NEW SECTION. Sec.
7. Section 6 of this act
applies to manufacturing machinery and equipment acquired after June 30, 1995.
NEW SECTION. Sec.
8. (1) Section 6 of 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.
(2)
Section 1 of this act shall take effect June 30, 1997.
