CERTIFICATION OF ENROLLMENT

 

          ENGROSSED SECOND SUBSTITUTE SENATE BILL 5594

 

 

                   Chapter 164, Laws of 1999

 

                         (partial veto)

 

                        56th Legislature

                      1999 Regular Session

 

 

ECONOMIC VITALITY

 

 

 

                    EFFECTIVE DATE:  8/1/99

Passed by the Senate April 24, 1999

  YEAS 48   NAYS 0

 

 

               BRAD OWEN

President of the Senate

 

Passed by the House April 24, 1999

  YEAS 94   NAYS 1

             CERTIFICATE

 

I, Tony M. Cook, Secretary of the Senate of the State of Washington, do hereby certify that the attached is  ENGROSSED SECOND SUBSTITUTE SENATE BILL 5594 as passed by the Senate and the House of Representatives on the dates hereon set forth.

 

 

             CLYDE BALLARD

Speaker of the

      House of Representatives

            TONY M. COOK

                            Secretary

 

 

 

              FRANK CHOPP

Speaker of the

      House of Representatives

 

 

Approved May 3, 1999, with the exception of sections 106, 201 and 401, which are vetoed.Place Style On Codes above, and Style Off Codes below.  

                                FILED          

 

 

              May 3, 1999 - 3:25 p.m.

 

 

 

              GARY LOCKE

Governor of the State of Washington

                 Secretary of State

                 State of Washington


          _______________________________________________

 

           ENGROSSED SECOND SUBSTITUTE SENATE BILL 5594

          _______________________________________________

 

                      AS AMENDED BY THE HOUSE

 

             Passed Legislature - 1999 Regular Session

 

State of Washington      56th Legislature     1999 Regular Session

 

By Senate Committee on Ways & Means (originally sponsored by Senators Rasmussen, T. Sheldon, Prentice, Fairley and Winsley; by request of Governor Locke)

 

Read first time 03/05/99.

Enhancing economic vitality.   


    AN ACT Relating to enhancing economic vitality; amending RCW 43.160.010, 43.160.020, 43.160.060, 43.160.070, 43.160.900, 43.160.200, 43.180.160, 82.60.020, 82.60.040, 82.60.070, 82.62.010, 82.62.030, 43.168.010, 43.168.020, 43.168.110, 43.168.120, 43.17.250, 43.155.070, 70.146.070, and 43.131.386; reenacting and amending RCW 43.160.076; adding a new section to chapter 43.63A RCW; adding a new section to chapter 82.60 RCW; adding a new section to chapter 82.62 RCW; adding a new section to chapter 43.168 RCW; creating new sections; repealing RCW 43.160.212; repealing 1997 c 367 s 11, 1995 c 226 s 8, 1993 c 316 s 7, and 1991 c 314 s 33 (uncodified); providing an effective date; and providing an expiration date.

 

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

 

    NEW SECTION.  Sec. 1.  The legislature finds that while Washington's economy is currently prospering, economic growth continues to be uneven, particularly as between metropolitan and rural areas.  This has created in effect two Washingtons.  One afflicted by inadequate infrastructure to support and attract investment, another suffering from congestion and soaring housing prices.  In order to address these problems, the legislature intends to use resources strategically to build on our state's strengths while addressing threats to our prosperity.

 

                              PART I

                    RURAL ECONOMIC DEVELOPMENT

 

        Enhanced Flexibility for Use of Community Economic

                    Revitalization Board Funds

 

    Sec. 101.  RCW 43.160.010 and 1996 c 51 s 1 are each amended to read as follows:

    (1) The legislature finds that it is the public policy of the state of Washington to direct financial resources toward the fostering of economic development through the stimulation of investment and job opportunities and the retention of sustainable existing employment for the general welfare of the inhabitants of the state.  Reducing unemployment and reducing the time citizens remain jobless is important for the economic welfare of the state.  A valuable means of fostering economic development is the construction of public facilities which contribute to the stability and growth of the state's economic base.  Strengthening the economic base through issuance of industrial development bonds, whether single or umbrella, further serves to reduce unemployment.  Consolidating issues of industrial development bonds when feasible to reduce costs additionally advances the state's purpose to improve economic vitality.  Expenditures made for these purposes as authorized in this chapter are declared to be in the public interest, and constitute a proper use of public funds.  A community economic revitalization board is needed which shall aid the development of economic opportunities.  The general objectives of the board should include:

    (a) Strengthening the economies of areas of the state which have experienced or are expected to experience chronically high unemployment rates or below average growth in their economies;

    (b) Encouraging the diversification of the economies of the state and regions within the state in order to provide greater seasonal and cyclical stability of income and employment;

    (c) Encouraging wider access to financial resources for both large and small industrial development projects;

    (d) Encouraging new economic development or expansions to maximize employment;

    (e) Encouraging the retention of viable existing firms and employment; and

    (f) Providing incentives for expansion of employment opportunities for groups of state residents that have been less successful relative to other groups in efforts to gain permanent employment.

    (2) The legislature also finds that the state's economic development efforts can be enhanced by, in certain instances, providing funds to improve state highways ((in the vicinity of new)), county roads, or city streets for industries considering locating or expanding in this state ((or existing industries that are considering significant expansion)).

    (a) The legislature finds it desirable to provide a process whereby the need for diverse public works improvements necessitated by planned economic development can be addressed in a timely fashion and with coordination among all responsible governmental entities.

    (b) ((It is the intent of the legislature to create an economic development account within the motor vehicle fund from which expenditures can be made by the department of transportation for state highway improvements necessitated by planned economic development.))  All ((such)) transportation improvements on state highways must first be approved by the state transportation commission and the community economic revitalization board in accordance with the procedures established by RCW 43.160.074 and 47.01.280.  ((It is further the intent of the legislature that such improvements not jeopardize any other planned highway construction projects.  The improvements are intended to be of limited size and cost, and to include such items as additional turn lanes, signalization, illumination, and safety improvements.))

    (3) The legislature also finds that the state's economic development efforts can be enhanced by, in certain instances, providing funds to assist development of telecommunications infrastructure that supports business development, retention, and expansion in rural natural resources impact areas and rural counties of the state.

    (4) The legislature also finds that the state's economic development efforts can be enhanced by providing funds to improve markets for those recyclable materials representing a large fraction of the waste stream.  The legislature finds that public facilities which result in private construction of processing or remanufacturing facilities for recyclable materials are eligible for consideration from the board.

    (((4))) (5) The legislature finds that sharing economic growth state-wide is important to the welfare of the state.  Rural counties and rural natural resources impact areas do not share in the economic vitality of the Puget Sound region.  The ability of these communities to pursue business and job retention, expansion, and development opportunities depends on their capacity to ready necessary economic development project plans, sites, permits, and infrastructure for private investments.  Project-specific planning, predevelopment, and infrastructure ((is one of several)) are critical ingredients ((that are critical)) for economic development.  Rural counties and rural natural resources impact areas generally lack ((the infrastructure)) these necessary tools and resources to diversify and revitalize their economies.  It is, therefore, the intent of the legislature to increase the ((availability of funds to help provide infrastructure to rural natural resource impact areas)) amount of funding available through the community economic revitalization board for rural counties and rural natural resources impact areas, and to authorize flexibility for available resources in these areas to help fund planning, predevelopment, and construction costs of infrastructure and facilities and sites that foster economic vitality and diversification.

 

    Sec. 102.  RCW 43.160.020 and 1997 c 367 s 8 are each amended to read as follows:

    Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

    (1) "Board" means the community economic revitalization board.

    (2) "Bond" means any bond, note, debenture, interim certificate, or other evidence of financial indebtedness issued by the board pursuant to this chapter.

    (3) "Department" means the department of community, trade, and economic development.

    (4) "Financial institution" means any bank, savings and loan association, credit union, development credit corporation, insurance company, investment company, trust company, savings institution, or other financial institution approved by the board and maintaining an office in the state.

    (5) "Industrial development facilities" means "industrial development facilities" as defined in RCW 39.84.020.

    (6) "Industrial development revenue bonds" means tax-exempt revenue bonds used to fund industrial development facilities.

    (7) "Local government" or "political subdivision" means any port district, county, city, town, special purpose district, and any other municipal corporations or quasi-municipal corporations in the state providing for public facilities under this chapter.

    (8) "Sponsor" means any of the following entities which customarily provide service or otherwise aid in industrial or other financing and are approved as a sponsor by the board:  A bank, trust company, savings bank, investment bank, national banking association, savings and loan association, building and loan association, credit union, insurance company, or any other financial institution, governmental agency, or holding company of any entity specified in this subsection.

    (9) "Umbrella bonds" means industrial development revenue bonds from which the proceeds are loaned, transferred, or otherwise made available to two or more users under this chapter.

    (10) "User" means one or more persons acting as lessee, purchaser, mortgagor, or borrower under a financing document and receiving or applying to receive revenues from bonds issued under this chapter.

    (11) "Public facilities" means a project of a local government for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of bridges, roads, domestic and industrial water, earth stabilization, sanitary sewer, storm sewer, railroad, electricity, telecommunications, transportation, natural gas, buildings or structures, and port facilities, all for the purpose of job creation, job retention, or job expansion.

    (12) "Rural county" means a county with a population density of fewer than one hundred persons per square mile as determined by the office of financial management.

    (13) "Rural natural resources impact area" means:

    (a) A nonmetropolitan county, as defined by the 1990 decennial census, that meets three of the five criteria set forth in subsection (((13))) (14) of this section;

    (b) A nonmetropolitan county with a population of less than forty thousand in the 1990 decennial census, that meets two of the five criteria as set forth in subsection (((13))) (14) of this section; or

    (c) A nonurbanized area, as defined by the 1990 decennial census, that is located in a metropolitan county that meets three of the five criteria set forth in subsection (((13))) (14) of this section.

    (((13))) (14) For the purposes of designating rural natural resources impact areas, the following criteria shall be considered:

    (a) A lumber and wood products employment location quotient at or above the state average;

    (b) A commercial salmon fishing employment location quotient at or above the state average;

    (c) Projected or actual direct lumber and wood products job losses of one hundred positions or more;

    (d) Projected or actual direct commercial salmon fishing job losses of one hundred positions or more; and

    (e) An unemployment rate twenty percent or more above the state average.  The counties that meet these criteria shall be determined by the employment security department for the most recent year for which data is available.  For the purposes of administration of programs under this chapter, the United States post office five-digit zip code delivery areas will be used to determine residence status for eligibility purposes.  For the purpose of this definition, a zip code delivery area of which any part is ten miles or more from an urbanized area is considered nonurbanized.  A zip code totally surrounded by zip codes qualifying as nonurbanized under this definition is also considered nonurbanized.  The office of financial management shall make available a zip code listing of the areas to all agencies and organizations providing services under this chapter.

 

    Sec. 103.  RCW 43.160.060 and 1996 c 51 s 5 are each amended to read as follows:

    The board is authorized to make direct loans to political subdivisions of the state for the purposes of assisting the political subdivisions in financing the cost of public facilities, including development of land and improvements for public facilities, project-specific environmental, capital facilities, land use, permitting, feasibility and marketing studies and plans; project design, site planning, and analysis; project debt and revenue impact analysis; as well as the construction, rehabilitation, alteration, expansion, or improvement of the facilities.  A grant may also be authorized for purposes designated in this chapter, but only when, and to the extent that, a loan is not reasonably possible, given the limited resources of the political subdivision and the finding by the board that ((unique)) financial circumstances ((exist.  The board shall not obligate more than twenty percent of its biennial appropriation as grants)) require grant assistance to enable the project to move forward.

    Application for funds shall be made in the form and manner as the board may prescribe.  In making grants or loans the board shall conform to the following requirements:

    (1) The board shall not provide financial assistance:

    (a) For a project the primary purpose of which is to facilitate or promote a retail shopping development or expansion.

    (b) For any project that evidence exists would result in a development or expansion that would displace existing jobs in any other community in the state.

    (c) For the acquisition of real property, including buildings and other fixtures which are a part of real property.

    (2) The board shall only provide financial assistance:

    (a) For those projects which would result in specific private developments or expansions (i) in manufacturing, production, food processing, assembly, warehousing, advanced technology, research and development, and industrial distribution; (ii) for processing recyclable materials or for facilities that support recycling, including processes not currently provided in the state, including but not limited to, de-inking facilities, mixed waste paper, plastics, yard waste, and problem-waste processing; (iii) for manufacturing facilities that rely significantly on recyclable materials, including but not limited to waste tires and mixed waste paper; (iv) which support the relocation of businesses from nondistressed urban areas to ((distressed)) rural counties or rural natural resources impact areas; or (v) which substantially support the trading of goods or services outside of the state's borders.

    (b) For projects which it finds will improve the opportunities for the successful maintenance, establishment, or expansion of industrial or commercial plants or will otherwise assist in the creation or retention of long-term economic opportunities.

    (c) When the application includes convincing evidence that a specific private development or expansion is ready to occur and will occur only if the public facility improvement is made.

    (3) The board shall prioritize each proposed project according to:

    (a) The relative benefits provided to the community by the jobs the project would create, not just the total number of jobs it would create after the project is completed and according to the unemployment rate in the area in which the jobs would be located((.  As long as there is more demand for financial assistance than there are funds available, the board is instructed to fund projects in order of their priority)); and

    (b) The rate of return of the state's investment, that includes the expected increase in state and local tax revenues associated with the project.

    (4) A responsible official of the political subdivision shall be present during board deliberations and provide information that the board requests.

    Before any financial assistance application is approved, the political subdivision seeking the assistance must demonstrate to the community economic revitalization board that no other timely source of funding is available to it at costs reasonably similar to financing available from the community economic revitalization board.

 

    Sec. 104.  RCW 43.160.070 and 1998 c 321 s 27 (Referendum Bill No. 49) are each amended to read as follows:

    Public facilities financial assistance, when authorized by the board, is subject to the following conditions:

    (1) The moneys in the public facilities construction loan revolving account and the distressed county public facilities construction loan account shall be used solely to fulfill commitments arising from financial assistance authorized in this chapter or, during the 1989-91 fiscal biennium, for economic development purposes as appropriated by the legislature.  The total outstanding amount which the board shall dispense at any time pursuant to this section shall not exceed the moneys available from the accounts.  The total amount of outstanding financial assistance in Pierce, King, and Snohomish counties shall never exceed sixty percent of the total amount of outstanding financial assistance disbursed by the board under this chapter without reference to financial assistance provided under RCW 43.160.220.

    (2) On contracts made for public facilities loans the board shall determine the interest rate which loans shall bear.  The interest rate shall not exceed ten percent per annum.  The board may provide reasonable terms and conditions for repayment for loans, including partial forgiveness of loan principal and interest payments on projects located in rural counties or rural natural resources impact areas, as the board determines.  The loans shall not exceed twenty years in duration.

    (3) Repayments of loans made from the public facilities construction loan revolving account under the contracts for public facilities construction loans shall be paid into the public facilities construction loan revolving account.  Repayments of loans made from the distressed county public facilities construction loan account under the contracts for public facilities construction loans shall be paid into the distressed county public facilities construction loan account.  Repayments of loans from moneys from the new appropriation from the public works assistance account for the fiscal biennium ending June 30, 1999, shall be paid into the public works assistance account.

    (4) When every feasible effort has been made to provide loans and loans are not possible, the board may provide grants upon finding that unique circumstances exist.

 

    Sec. 105.  RCW 43.160.076 and 1998 c 321 s 28 (Referendum Bill No. 49) and 1998 c 55 s 4 are each reenacted and 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 financial assistance in a biennium under this chapter without reference to financial assistance provided under RCW 43.160.220, the board shall spend at least seventy-five percent for financial assistance for projects in ((distressed)) rural counties or rural natural resources impact areas.  ((For purposes of this section, the term "distressed counties" includes any county, in which the average level of unemployment for the three years before the year in which an application for financial assistance is filed, exceeds the average state unemployment for those years by twenty percent.))

    (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)) rural counties or rural natural resources impact areas are clearly insufficient to use up the seventy-five percent allocation under subsection (1) of this section, 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 financial assistance to projects not located in ((distressed)) rural counties or rural natural resources impact areas.

    (((3) This section expires June 30, 2000.))

 

    *Sec. 106.  RCW 43.160.900 and 1993 c 320 s 8 are each amended to read as follows:

    (1) The community economic revitalization board shall report to the appropriate standing committees of the legislature biennially on the implementation of this chapter.  The report shall include information on the number of applications for community economic revitalization board assistance, the number and types of projects approved, the grant or loan amount awarded each project, the projected number of jobs created or retained by each project, the actual number of jobs created or retained by each project, the amount of state and local tax revenue generated by projects funded under this chapter, the number of delinquent loans, and the number of project terminations.  The report may also include additional performance measures and recommendations for programmatic changes.  The first report shall be submitted by December 1, 1994.

    (2) The joint legislative audit and review committee shall conduct performance reviews on the effectiveness of the program administered by the board under this chapter.  The committee may contract for services to conduct the performance reviews.  The costs for the performance reviews shall be paid from repayments of principal and interest on loans made under this chapter.  The performance reviews shall be submitted to the appropriate committees of the legislature by December 1, 2000, December 1, 2004, and December 1, 2008.

*Sec. 106 was vetoed.  See message at end of chapter.

 

    Sec. 107.  RCW 43.160.200 and 1996 c 51 s 9 are each amended to read as follows:

    (1) The economic development account is created within the public facilities construction loan revolving fund under RCW 43.160.080.  Moneys in the account may be spent only after appropriation.  Expenditures from the account may be used only for the purposes of RCW 43.160.010(((3))) (5) and this section.  The account is subject to allotment procedures under chapter 43.88 RCW.

    (2) Applications under this section for assistance from the economic development account are subject to all of the applicable criteria set forth under this chapter, as well as procedures and criteria established by the board, except as otherwise provided.

    (3) Eligible applicants under this section are limited to political subdivisions of the state in rural natural resources impact areas ((that demonstrate, to the satisfaction of the board, the local economy's dependence on the forest products and salmon fishing industries)) and rural counties.

    (4) Applicants must demonstrate that their request is part of an economic development plan consistent with applicable state planning requirements.  Applicants must demonstrate that tourism projects have been approved by the local government.  Industrial projects must be approved by the local government and the associate development organization.

    (5) Publicly owned projects may be financed under this section upon proof by the applicant that the public project is a necessary component of, or constitutes in whole, a tourism project.

    (6) Applications must demonstrate local match and participation.  Such match may include:  Land donation, other public or private funds or both, or other means of local commitment to the project.

    (7) Board financing for project-specific environmental, capital facilities, land use, permitting, feasibility and marketing studies and plans; project engineering, design, and site planning and analysis; and project debt and revenue impact analysis shall not exceed ((twenty-five)) fifty thousand dollars per study.  Board funds for ((feasibility studies)) these purposes may be provided as a grant and require a ((dollar for dollar)) match ((with up to one-half in-kind match allowed)).

    (8) Board financing for tourism projects shall not exceed two hundred fifty thousand dollars.  Other public facility construction projects under this section shall not exceed ((five hundred thousand)) one million dollars.  Loans with flexible terms and conditions to meet the needs of the applicants shall be provided.  Grants may also be authorized, but only when, and to the extent that, a loan is not reasonably possible, given the limited resources of the political subdivision.

    (9) The board shall develop guidelines for allowable local match and ((feasibility studies)) planning and predevelopment activities.

    (10) The board may allow de minimis general system improvements to be funded if they are critically linked to the viability of the economic development project assisted under this section.

    (11) Applications under this section need not demonstrate evidence that specific private development or expansion is ready to occur or will occur if funds are provided.

    (((11))) (12) The board shall establish guidelines for providing financial assistance under this section to ensure that the requirements of this chapter are complied with.  The guidelines shall include:

    (a) A process to equitably compare and evaluate applications from competing communities.

    (b) Criteria to ensure that approved projects will have a high probability of success and are likely to provide long-term economic benefits to the community.  The criteria shall include:  (i) A minimum amount of local participation, determined by the board per application, to verify community support for the project; (ii) an analysis that establishes the project is feasible using standard economic principles; and (iii) an explanation from the applicant regarding how the project is consistent with the communities' economic strategy and goals.

    (c) A method of evaluating the impact of the financial assistance on the economy of the community and whether the financial assistance achieved its purpose.

 

                              PART II

                              HOUSING

 

      Increasing the Housing Finance Commission's Debt Limit

 

    *Sec. 201.  RCW 43.180.160 and 1996 c 310 s 2 are each amended to read as follows:

    The total amount of outstanding indebtedness of the commission may not exceed ((two)) three billion dollars at any time.  The calculation of outstanding indebtedness shall include the initial principal amount of an issue and shall not include interest that is either currently payable or that accrues as a part of the face amount of an issue payable at maturity or earlier redemption.  Outstanding indebtedness shall not include notes or bonds as to which the obligation of the commission has been satisfied and discharged by refunding or for which payment has been provided by reserves or otherwise.

*Sec. 201 was vetoed.  See message at end of chapter.

 

    NEW SECTION.  Sec. 202.  A new section is added to chapter 43.63A RCW to read as follows:

    The department shall establish and administer a "one-stop clearinghouse" to coordinate state assistance for growers and nonprofit organizations in developing housing for agricultural employees.  Growers, housing authorities, and nonprofit organizations shall have direct access to the one-stop clearinghouse.  The department one-stop clearinghouse shall provide assistance on planning and design, building codes, temporary worker housing regulations, financing options, and management to growers and nonprofit organizations interested in farmworker construction.  The department one-stop clearinghouse shall also provide educational materials and services to local government authorities on Washington state law concerning farmworker housing.

 

                             PART III

                  DISTRESSED AREA TAX INCENTIVES

            Distressed Area Sales and Use Tax Deferral

 

    Sec. 301.  RCW 82.60.020 and 1996 c 290 s 4 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; (d) a designated community empowerment zone approved under RCW 43.63A.700 or a county containing such a community empowerment zone; (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; (f) a county designated by the governor as an eligible area under RCW 82.60.047; or (g) a county that is contiguous to a county that qualifies as an eligible area under (a) or (f) of this subsection)) a county with fewer than one hundred persons per square mile as determined annually by the office of financial management and published by the department of revenue effective for the period July 1st through June 30th.

    (4)(a) "Eligible investment project" means((:

    (i))) an investment project in an eligible area as defined in subsection (3)(((a), (b), (c), (e), or (f))) of this section((; or

    (ii) That portion of an investment project in an eligible area as defined in subsection (3)(d) or (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))) (10) "Recipient" means a person receiving a tax deferral under this chapter.

    (((12))) (11) "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. 302.  RCW 82.60.040 and 1997 c 156 s 5 are each amended to read as follows:

    (1) The department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project that((:

    (a))) is located in an eligible area as defined in RCW 82.60.020(((3) (a), (b), (c), (e), or (f);

    (b) Is located in an eligible area as defined in RCW 82.60.020(3)(g) if seventy-five percent of the new qualified employment positions are to be filled by residents of a contiguous county that is an eligible area as defined in RCW 82.60.020(3) (a) or (f); or

    (c) Is located in an eligible area as defined in RCW 82.60.020(3)(d) if seventy-five percent of the new qualified employment positions are to be filled by residents of a designated community empowerment zone approved under RCW 43.63A.700 located within the county in which the eligible investment project is located)).

    (2) The department shall keep a running total of all deferrals granted under this chapter during each fiscal biennium.

    (3) This section expires July 1, 2004.

 

    Sec. 303.  RCW 82.60.070 and 1995 1st sp.s. c 3 s 9 are each amended to read as follows:

    (1) ((Each recipient of a deferral granted under this chapter prior to July 1, 1994, shall submit a report to the department on December 31st of each year during the repayment period until the tax deferral is repaid.))  Each recipient of a deferral granted under this chapter after June 30, 1994, shall submit a report to the department on December 31st of the year in which the investment project is certified by the department as having been operationally completed, and on December 31st of each of the seven succeeding calendar years.  The report shall contain information, as required by the department, from which the department may determine whether the recipient is meeting the requirements of this chapter.  If the recipient fails to submit a report or submits an inadequate report, the department may declare the amount of deferred taxes outstanding to be immediately assessed and payable.

    (2) If, on the basis of a report under this section or other information, the department finds that an investment project is not eligible for tax deferral under this chapter ((for reasons other than failure to create the required number of qualified employment positions)), the amount of deferred taxes outstanding for the project shall be immediately due.

    (3) ((If, on the basis of a report under this section or other information, the department finds that an investment project for which a deferral has been granted under this chapter prior to July 1, 1994, has been operationally complete for three years and has failed to create the required number of qualified employment positions, the department shall assess interest, but not penalties, on the deferred taxes for the project.  The interest shall be assessed at the rate provided for delinquent excise taxes, shall be assessed retroactively to the date of deferral, and shall accrue until the deferred taxes are repaid.

    (4) If, on the basis of a report under this section or other information, the department finds that an investment project for which a deferral has been granted under this chapter after June 30, 1994, has been operationally complete for three years and has failed to create the required number of qualified employment positions, the amount of taxes not eligible for deferral shall be immediately due.  The department shall assess interest at the rate provided for delinquent excise taxes, but not penalties, retroactively to the date of deferral.

    (5) If, on the basis of a report under this section or other information, the department finds that an investment project qualifying for deferral under RCW 82.60.040(1) (b) or (c) has failed to comply with any requirement of RCW 82.60.045 for any calendar year for which reports are required under subsection (1) of this section, twelve and one-half percent of the amount of deferred taxes shall be immediately due.  The department shall assess interest at the rate provided for delinquent excise taxes, but not penalties, retroactively to the date of deferral.

    (6))) Notwithstanding any other subsection of this section, deferred taxes need not be repaid on machinery and equipment for lumber and wood products industries, and sales of or charges made for labor and services, of the type which qualifies for exemption under RCW 82.08.02565 or 82.12.02565 to the extent the taxes have not been repaid before July 1, 1995.

    (((7))) (4) Notwithstanding any other subsection of this section, deferred taxes on the following need not be repaid:

    (a) Machinery and equipment, and sales of or charges made for labor and services, which at the time of purchase would have qualified for exemption under RCW 82.08.02565; and

    (b) Machinery and equipment which at the time of first use would have qualified for exemption under RCW 82.12.02565.

 

    NEW SECTION.  Sec. 304.  A new section is added to chapter 82.60 RCW to read as follows:

    (1) For the purposes of this section:

    (a) "Eligible area" also means a designated community empowerment zone approved under RCW 43.63A.700 or a county containing a community empowerment zone.

    (b) "Eligible investment project" also means an investment project in an eligible area as defined in this section.

    (2) In addition to the provisions of RCW 82.60.040, the department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW, on each eligible investment project that is located in an eligible area, if the applicant establishes that at the time the project is operationally complete:

    (a) The applicant will hire at least one qualified employment position for each seven hundred fifty thousand dollars of investment on which a deferral is requested; and

    (b) The positions will be filled by persons who at the time of hire are residents of the community empowerment zone in which the project is located.  As used in this subsection, "resident" means the person makes his or her home in the community empowerment zone.  A mailing address alone is insufficient to establish that a person is a resident for the purposes of this section.  The persons must be hired after the date the application is filed with the department.

    (3) All other provisions and eligibility requirements of this chapter apply to applicants eligible under this section.

    (4) If a person does not meet the requirements of this section by the end of the calendar year following the year in which the project is certified as operationally complete, all deferred taxes are immediately due.

 

      Distressed Area Business and Occupation Tax Job Credit

 

    Sec. 305.  RCW 82.62.010 and 1996 c 290 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 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; (d) a designated community empowerment zone approved under RCW 43.63A.700; or (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)) an area as defined in RCW 82.60.020.

    (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. 306.  RCW 82.62.030 and 1997 c 366 s 5 are each amended to read as follows:

    (1) A person shall be allowed a credit against the tax due under chapter 82.04 RCW as provided in this section.  ((For an application approved before January 1, 1996, the credit shall equal one thousand dollars for each qualified employment position directly created in an eligible business project.  For an application approved on or after January 1, 1996, the credit shall equal two thousand dollars for each qualified employment position directly created in an eligible business project.  For an application approved on or after July 1, 1997,)) The credit shall equal:  (a) Four thousand dollars for each qualified employment position with wages and benefits greater than forty thousand dollars annually that is directly created in an eligible business((.  For an application approved on or after July 1, 1997, the credit shall equal)) and (b) two thousand dollars for each qualified employment position with wages and benefits less than or equal to forty thousand dollars annually that is directly created in an eligible business.

    (2) The department shall keep a running total of all credits granted under this chapter during each fiscal year.  The department shall not allow any credits which would cause the tabulation to exceed ((five million five hundred thousand dollars in fiscal year 1998 or 1999 or)) seven million five hundred thousand dollars in any fiscal year ((thereafter)).  If all or part of an application for credit is disallowed under this subsection, the disallowed portion shall be carried over for approval the next fiscal year.  However, the applicant's carryover into the next fiscal year is only permitted if the tabulation for the next fiscal year does not exceed the cap for that fiscal year as of the date on which the department has disallowed the application.

    (3) No recipient may use the tax credits to decertify a union or to displace existing jobs in any community in the state.

    (4) No recipient may receive a tax credit on taxes which have not been paid during the taxable year.

 

    NEW SECTION.  Sec. 307.  A new section is added to chapter 82.62 RCW to read as follows:

    (1) For the purposes of this section "eligible area" also means a designated community empowerment zone approved under RCW 43.63A.700.

    (2) An eligible business project located within an eligible area as defined in this section qualifies for a credit under this chapter for those employees who at the time of hire are residents of the community empowerment zone in which the project is located, if the fifteen percent threshold is met.  As used in this subsection, "resident" means the person makes his or her home in the community empowerment zone.  A mailing address alone is insufficient to establish that a person is a resident for the purposes of this section.

    (3) All other provisions and eligibility requirements of this chapter apply to applicants eligible under this section.

 

                              PART IV

                    ECONOMIC VITALITY COMMITTEE

 

    *NEW SECTION.  Sec. 401.  (1) The legislature shall establish an ad hoc economic development group to analyze potential economic development projects of state-wide significance and recommend appropriate administrative or legislative actions.

    (2) The group shall include one representative each from the department of community, trade, and economic development, the department of agriculture, and the department of revenue as well as two representatives from rural economic development councils appointed by the legislature.

    (3) The group shall promote economic development and business diversification throughout the state with special attention given to the economic difficulties of rural counties.

    (4) In order to expedite coordinated responses, the governor may direct the group to meet on an emergency basis when projects of state-wide significance arise.

    (5) The department of community, trade, and economic development shall establish criteria to determine whether a project meets the standards of a "project of state-wide significance."  These criteria may include such economic indicators as local unemployment and personal income levels and project scope indicators such as the assessed value of the project in relation to the assessed value of the county.

*Sec. 401 was vetoed.  See message at end of chapter.

 

                              PART V

                    RURAL WASHINGTON LOAN FUND

 

    Sec. 501.  RCW 43.168.010 and 1985 c 164 s 1 are each amended to read as follows:

    The legislature finds that:

    (1) The economic health and well-being of the state, particularly in areas of high unemployment, economic stagnation, and poverty, is of substantial public concern.

    (2) The consequences of minimal economic activity and persistent unemployment and underemployment are serious threats to the safety, health, and welfare of residents of these areas, decreasing the value of private investments and jeopardizing the sources of public revenue.

    (3) The economic and social interdependence of communities and the vitality of industrial and economic activity necessitates, and is in part dependent on preventing substantial dislocation of residents and rebuilding the diversification of the areas' economy.

    (4) The ability to remedy problems in stagnant areas of the state is beyond the power and control of the regulatory process and influence of the state, and the ordinary operations of private enterprise without additional governmental assistance are insufficient to adequately remedy the problems of poverty and unemployment.

    (5) The revitalization of depressed communities requires the stimulation of private investment, the development of new business ventures, the provision of capital to ventures sponsored by local organizations and capable of growth in the business markets, and assistance to viable, but under-financed, small businesses in order to create and preserve jobs that are sustainable in the local economy.

    Therefore, the legislature declares there to be a substantial public purpose in providing capital to promote economic development and job creation in areas of economic stagnation, unemployment, and poverty.  To accomplish this purpose, the legislature hereby creates the rural Washington ((state development)) loan fund ((committee)) and vests in the ((committee)) department of community, trade, and economic development the authority to spend federal funds to stimulate the economy of distressed areas.

 

    Sec. 502.  RCW 43.168.020 and 1996 c 290 s 3 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))) (2) "Director" means the director of community, trade, and economic development.

    (((4))) (3) "Distressed area" means:  (a) A rural county; (b) a county which has an unemployment rate which is twenty percent above the state average for the immediately previous three years; (((b))) (c) 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))) (d) 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; (((d))) (e) 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 (((e))) (f) a county designated as a rural natural resources impact area under RCW 43.31.601 if an application is filed by July 1, 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))) (4) "Fund" means the rural Washington ((state development)) loan fund.

    (((6))) (5) "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))) (6) "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.

    (7) "Rural county" means a county with a population density of fewer that one hundred persons per square mile as determined by the office of financial management.

 

    NEW SECTION.  Sec. 503.  A new section is added to chapter 43.168 RCW to read as follows:

    In addition to the requirements of RCW 43.168.050, the department shall, subject to applicable federal funding criteria, give priority to applications that capitalize or recapitalize an existing or new local revolving fund based on criteria established by the department.

 

    Sec. 504.  RCW 43.168.110 and 1992 c 235 s 11 are each amended to read as follows:

    There is established the rural Washington ((state development)) loan fund which shall be an account in the state treasury.  All loan payments of principal and interest which are transferred under RCW 43.168.050 shall be deposited into the account.  Moneys in the account may be spent only after legislative appropriation for loans under this chapter.  Any expenditures of these moneys shall conform to federal law.

 

    Sec. 505.  RCW 43.168.120 and 1987 c 461 s 6 are each amended to read as follows:

    (1) The ((committee)) department shall develop guidelines for ((development)) rural Washington loan funds to be used to fund existing economic development revolving loan funds.  Consideration shall be given to the selection process for grantees, loan quality criteria, legal and regulatory issues, and ways to minimize duplication between ((development)) rural Washington loan funds and local economic development revolving loan funds.

    (2) If it appears that all of the funds appropriated to the ((development loan)) fund for a biennium will not be fully granted to local governments within that biennium, the ((committee)) department may make available up to twenty percent of the eighty percent of the funds available to projects in distressed areas under RCW 43.168.050(((9))) (10) for grants to local governments to assist existing economic development revolving loan funds in distressed areas.  The grants to local governments shall be utilized to make loans to businesses that meet the specifications for loans under this chapter.  The local governments shall, to the extent permitted under federal law, agree to convey to the ((development loan)) fund the principal and interest payments from existing loans that the local governments have made through their revolving loan funds.  Under circumstances where the federal law does not permit the ((committee)) department to require such transfer, the ((committee)) department shall give priority to applications where the applicants on their own volition make commitments to provide for the transfer.

 

                              PART VI

                PUBLIC FACILITIES GRANTS AND LOANS

 

    Sec. 601.  RCW 43.17.250 and 1991 sp.s. c 32 s 25 are each amended to read as follows:

    (1) Whenever a state agency is considering awarding grants or loans for a county, city, or town planning under RCW 36.70A.040 to finance public facilities, it shall consider whether the county, city, or town ((that is)) requesting the grant or loan ((is a party to a county-wide planning policy under RCW 36.70A.210 relating to the type of public facility for which the grant or loan is sought, and shall accord additional preference to the county, city, or town if such county-wide planning policy exists)) has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.

    (2) When reviewing competing requests from counties, cities, or towns planning under RCW 36.70A.040, a state agency considering awarding grants or loans for public facilities shall accord additional preference to those counties, cities, or towns that have adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.  For the purposes of the preference accorded in this section, a county, city, or town planning under RCW 36.70A.040 is deemed to have satisfied the requirements for adopting a comprehensive plan and development regulations specified in RCW 36.70A.040 if the county, city, or town:

    (a) Adopts or has adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040;

    (b) Adopts or has adopted a comprehensive plan and development regulations before submitting a request for a grant or loan if the county, city, or town failed to adopt a comprehensive plan and/or development regulations within the time periods specified in RCW 36.70A.040; or

    (c) Demonstrates substantial progress toward adopting a comprehensive plan or development regulations within the time periods specified in RCW 36.70A.040.  A county, city, or town that is more than six months out of compliance with the time periods specified in RCW 36.70A.040 shall not be deemed to demonstrate substantial progress for purposes of this section.

    (3) The preference specified in subsection (2) of this section applies only to competing requests for grants or loans from counties, cities, or towns planning under RCW 36.70A.040.  A request from a county, city, or town planning under RCW 36.70A.040 shall be accorded no additional preference based on subsection (2) of this section over a request from a county, city, or town not planning under RCW 36.70A.040.

    (4) Whenever a state agency is considering awarding grants or loans ((to a special district)) for public facilities to a special district requesting funding for a proposed facility located in a county, city, or town planning under RCW 36.70A.040, it shall consider whether the county, city, or town in whose planning jurisdiction the proposed facility is located ((is a party to a county-wide planning policy under RCW 36.70A.210 relating to the type of public facility for which the grant or loan is sought)) has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040 and shall apply the preference specified in subsection (2) of this section and restricted in subsection (3) of this section.

 

    Sec. 602.  RCW 43.155.070 and 1997 c 429 s 29 are each amended to read as follows:

    (1) To qualify for loans or pledges under this chapter the board must determine that a local government meets all of the following conditions:

    (a) The city or county must be imposing a tax under chapter 82.46 RCW at a rate of at least one-quarter of one percent;

    (b) The local government must have developed a long-term plan for financing public works needs; and

    (c) The local government must be using all local revenue sources which are reasonably available for funding public works, taking into consideration local employment and economic factors((; and)).

    (((d))) (2) Except where necessary to address a public health need or substantial environmental degradation, a county, city, or town ((that is required or chooses to plan)) planning under RCW 36.70A.040 must have adopted a comprehensive plan ((in conformance with the requirements of chapter 36.70A RCW, after it is required that the comprehensive plan be adopted, and must have adopted development regulations in conformance with the requirements of chapter 36.70A RCW, after it is required that development regulations be adopted)), including a capital facilities plan element, and development regulations as required by RCW 36.70A.040.  This subsection does not require any county, city, or town planning under RCW 36.70A.040 to adopt a comprehensive plan or development regulations before requesting or receiving a loan or loan guarantee under this chapter if such request is made before the expiration of the time periods specified in RCW 36.70A.040.  A county, city, or town planning under RCW 36.70A.040 which has not adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040 is not prohibited from receiving a loan or loan guarantee under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before submitting a request for a loan or loan guarantee.

    (3) In considering awarding loans for public facilities to special districts requesting funding for a proposed facility located in a county, city, or town planning under RCW 36.70A.040, the board shall consider whether the county, city, or town planning under RCW 36.70A.040 in whose planning jurisdiction the proposed facility is located has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.

    (((2))) (4) The board shall develop a priority process for public works projects as provided in this section.  The intent of the priority process is to maximize the value of public works projects accomplished with assistance under this chapter.  The board shall attempt to assure a geographical balance in assigning priorities to projects.  The board shall consider at least the following factors in assigning a priority to a project:

    (a) Whether the local government receiving assistance has experienced severe fiscal distress resulting from natural disaster or emergency public works needs;

    (b) Whether the project is critical in nature and would affect the health and safety of a great number of citizens;

    (c) The cost of the project compared to the size of the local government and amount of loan money available;

    (d) The number of communities served by or funding the project;

    (e) Whether the project is located in an area of high unemployment, compared to the average state unemployment;

    (f) Whether the project is the acquisition, expansion, improvement, or renovation by a local government of a public water system that is in violation of health and safety standards, including the cost of extending existing service to such a system;

    (g) The relative benefit of the project to the community, considering the present level of economic activity in the community and the existing local capacity to increase local economic activity in communities that have low economic growth; and

    (h) Other criteria that the board considers advisable.

    (((3))) (5) Existing debt or financial obligations of local governments shall not be refinanced under this chapter.  Each local government applicant shall provide documentation of attempts to secure additional local or other sources of funding for each public works project for which financial assistance is sought under this chapter.

    (((4))) (6) Before November 1 of each year, the board shall develop and submit to the appropriate fiscal committees of the senate and house of representatives a description of the loans made under RCW 43.155.065, 43.155.068, and subsection (((7))) (9) of this section during the preceding fiscal year and a prioritized list of projects which are recommended for funding by the legislature, including one copy to the staff of each of the committees.  The list shall include, but not be limited to, a description of each project and recommended financing, the terms and conditions of the loan or financial guarantee, the local government jurisdiction and unemployment rate, demonstration of the jurisdiction's critical need for the project and documentation of local funds being used to finance the public works project.  The list shall also include measures of fiscal capacity for each jurisdiction recommended for financial assistance, compared to authorized limits and state averages, including local government sales taxes; real estate excise taxes; property taxes; and charges for or taxes on sewerage, water, garbage, and other utilities.

    (((5))) (7) The board shall not sign contracts or otherwise financially obligate funds from the public works assistance account before the legislature has appropriated funds for a specific list of public works projects.  The legislature may remove projects from the list recommended by the board.  The legislature shall not change the order of the priorities recommended for funding by the board.

    (((6))) (8) Subsection (((5))) (7) of this section does not apply to loans made under RCW 43.155.065, 43.155.068, and subsection (((7))) (9) of this section.

    (((7))) (9)(a) Loans made for the purpose of capital facilities plans shall be exempted from subsection (((5))) (7) of this section.  In no case shall the total amount of funds utilized for capital facilities plans and emergency loans exceed the limitation in RCW 43.155.065.

    (b) For the purposes of this section "capital facilities plans" means those plans required by the growth management act, chapter 36.70A RCW, and plans required by the public works board for local governments not subject to the growth management act.

    (((8))) (10) To qualify for loans or pledges for solid waste or recycling facilities under this chapter, a city or county must demonstrate that the solid waste or recycling facility is consistent with and necessary to implement the comprehensive solid waste management plan adopted by the city or county under chapter 70.95 RCW.

 

    Sec. 603.  RCW 70.146.070 and 1997 c 429 s 30 are each amended to read as follows:

    (1) When making grants or loans for water pollution control facilities, the department shall consider the following:

    (((1))) (a) The protection of water quality and public health;

    (((2))) (b) The cost to residential ratepayers if they had to finance water pollution control facilities without state assistance;

    (((3))) (c) Actions required under federal and state permits and compliance orders;

    (((4))) (d) The level of local fiscal effort by residential ratepayers since 1972 in financing water pollution control facilities;

    (((5))) (e) The extent to which the applicant county or city, or if the applicant is another public body, the extent to which the county or city in which the applicant public body is located, has established programs to mitigate nonpoint pollution of the surface or subterranean water sought to be protected by the water pollution control facility named in the application for state assistance; and

    (((6))) (f) The recommendations of the Puget Sound action team and any other board, council, commission, or group established by the legislature or a state agency to study water pollution control issues in the state.

    (2) Except where necessary to address a public health need or substantial environmental degradation, a county, city, or town ((that is required or chooses to plan)) planning under RCW 36.70A.040 may not receive a grant or loan for water pollution control facilities unless it has adopted a comprehensive plan ((in conformance with the requirements of chapter 36.70A RCW, after it is required that the comprehensive plan be adopted, or unless it has adopted development regulations in conformance with the requirements of chapter 36.70A RCW, after it is required that development regulations be adopted)), including a capital facilities plan element, and development regulations as required by RCW 36.70A.040.  This subsection does not require any county, city, or town planning under RCW 36.70A.040 to adopt a comprehensive plan or development regulations before requesting or receiving a grant or loan under this chapter if such request is made before the expiration of the time periods specified in RCW 36.70A.040.  A county, city, or town planning under RCW 36.70A.040 which has not adopted a comprehensive plan and development regulations within the time periods specified in RCW 36.70A.040 is not prohibited from receiving a grant or loan under this chapter if the comprehensive plan and development regulations are adopted as required by RCW 36.70A.040 before submitting a request for a grant or loan.

    (3) Whenever the department is considering awarding grants or loans for public facilities to special districts requesting funding for a proposed facility located in a county, city, or town planning under RCW 36.70A.040, it shall consider whether the county, city, or town planning under RCW 36.70A.040 in whose planning jurisdiction the proposed facility is located has adopted a comprehensive plan and development regulations as required by RCW 36.70A.040.

 

                             PART VII

                         REPEALED SECTIONS

 

    Sec. 701.  RCW 43.131.386 and 1997 c 367 s 19 are each amended to read as follows:

    The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 2001:

    (1) RCW 43.31.601 and 1997 c 367 s 1, 1995 c 226 s 1, 1992 c 21 s 2, & 1991 c 314 s 2;

    (2) RCW 43.31.641 and 1997 c 367 s 6, 1995 c 226 s 4, 1993 c 280 s 50, & 1991 c 314 s 7;

    (3) RCW 50.22.090 and ((1995 c 226 s 5, 1993 c 316 s 10, 1992 c 47 s 2, & 1991 c 315 s 4)) 1997 c 367 s 4;

    (4) ((RCW 43.160.212 and 1996 c 168 s 4, 1995 c 226 s 6, & 1993 c 316 s 5;

    (5))) RCW 43.63A.021 and 1997 c 367 s 5 & 1995 c 226 s 11;

    (((6))) (5) RCW 43.63A.600 and 1995 c 226 s 12, 1994 c 114 s 1, 1993 c 280 s 77, & 1991 c 315 s 23;

    (((7))) (6) RCW 43.63A.440 and 1997 c 367 s 7, 1995 c 226 s 13, 1993 c 280 s 74, & 1989 c 424 s 7;

    (((8) RCW 43.160.200 and 1995 c 226 s 16, 1993 c 320 s 7, 1993 c 316 s 4, & 1991 c 314 s 23;

    (9))) (7) RCW 28B.50.258 and 1995 c 226 s 18 & 1991 c 315 s 16;

    (((10))) (8) RCW 28B.50.262 and 1995 c 226 s 19 & 1994 c 282 s 3;

    (((11))) (9) RCW 28B.80.570 and 1997 c 367 s 14, 1995 c 226 s 20, 1992 c 21 s 6, & 1991 c 315 s 18;

    (((12))) (10) RCW 28B.80.575 and 1995 c 269 s 1001, 1995 c 226 s 21, & 1991 c 315 s 19;

    (((13))) (11) RCW 28B.80.580 and 1997 c 367 s 15, 1995 c 226 s 22, 1993 sp.s. c 18 s 34, 1992 c 231 s 31, & 1991 c 315 s 20;

    (((14))) (12) RCW 28B.80.585 and 1995 c 226 s 23 & 1991 c 315 s 21;

    (((15))) (13) RCW 43.17.065 and 1995 c 226 s 24, 1993 c 280 s 37, 1991 c 314 s 28, & 1990 1st ex.s. c 17 s 77;

    (((16))) (14) RCW 43.20A.750 and ((1995 c 226 s 25, 1993 c 280 s 38, 1992 c 21 s 4, & 1991 c 153 s 28)) 1997 c 367 s 16;

    (((17))) (15) RCW 43.168.140 and 1995 c 226 s 28 & 1991 c 314 s 20;

    (((18))) (16) RCW 50.12.270 and 1997 c 367 s 17, 1995 c 226 s 30, & 1991 c 315 s 3;

    (((19))) (17) RCW 50.70.010 and 1995 c 226 s 31, 1992 c 21 s 1, & 1991 c 315 s 5; and

    (((20))) (18) RCW 50.70.020 and 1995 c 226 s 32 & 1991 c 315 s 6.

 

    NEW SECTION.  Sec. 702.  RCW 43.160.212 (Rural natural resources impact areas--Loans for public works facilities) and 1996 c 168 s 4, 1995 c 226 s 6, 1993 c 316 s 5, 1992 c 21 s 8, & 1991 c 314 s 26 are each repealed.

 

    NEW SECTION.  Sec. 703.  1997 c 367 s 11, 1995 c 226 s 8, 1993 c 316 s 7, & 1991 c 314 s 33 (uncodified) are each repealed.

 

                             PART VIII

                           MISCELLANEOUS

 

    NEW SECTION.  Sec. 801.  Part headings and subheadings used in this act are not any part of the law.

 

    NEW SECTION.  Sec. 802.  This act takes effect August 1, 1999.

 

    NEW SECTION.  Sec. 803.  Sections 301 through 303, 305, 306, and 601 through 603 of this act do not affect any existing right acquired or liability or obligation under the sections amended or repealed in those sections or any rule or order adopted under those sections, nor does it affect any proceeding instituted under those sections.

 

    NEW SECTION.  Sec. 804.  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.


    Passed the Senate April 24, 1999.

    Passed the House April 24, 1999.

Approved by the Governor May 3, 1999, with the exception of certain items that were vetoed.

    Filed in Office of Secretary of State May 3, 1999.


 

    Note:  Governor's explanation of partial veto is as follows:

 

    "I am returning herewith, without my approval as to sections 106, 201 and 401, Engrossed Second Substitute Senate Bill No. 5594 entitled:

 

"AN ACT Relating to enhancing economic vitality;"

 

    E2SSB 5594 is an omnibus rural economic development bill.  Among other things it will provide the Community Economic Revitalization Board (CERB) with greater ability to fund new types of infrastructure projects; it will create the Rural Washington Loan Fund for making direct loans to business in eligible areas with federal money; and it will create a one-stop clearinghouse in the Department of Community, Trade and Economic Development (CTED) for farmworker housing.

 

    Section 106 of the bill would require the joint legislative audit and review committee to conduct performance reviews of the program administered by CERB.  JLARC is an entity controlled by the legislature, so it is unnecessary and unwise to dictate the work schedule of JLARC in statute.  The legislature can authorize funding for such performance reviews any time it believes they are warranted.

 

    Section 201 of the bill is identical to section 2 of Engrossed Senate Bill No. 5843 which I signed on April 28, 1999, and is unnecessary.

 

    Section 401 of the bill would establish an ad hoc economic development group to analyze projects, make recommendations, and to promote economic development and business diversification.  The membership of the group is unclear, and I have concerns about violation of the separation of powers doctrine.  The group would be organized by the legislature, but have control over executive agencies.   A process already exists in CTED for using a similar ad hoc groups.  Additionally, I will be organizing an economic development sub-cabinet, chaired by my Chief of Staff, to provide greater input on projects of statewide significance.

 

    For these reasons, I have vetoed sections 106, 201 and 401 of Engrossed Second Substitute Senate Bill No. 5594. 

 

    With the exception of sections 106, 201 and 401, Engrossed Second Substitute Senate Bill No. 5594 is approved."