HOUSE BILL REPORT
HB 1903
As Reported by House Committee On:
Economic Development, Agriculture & Trade
Title: An act relating to creating a job development fund.
Brief Description: Creating a job development fund.
Sponsors: Representatives Ericks, Haler, Linville, Springer, Kilmer, Morrell, O'Brien, Schual-Berke, P. Sullivan, Simpson, Pettigrew, Jarrett, Wallace, Sells, Strow, Grant, Upthegrove, Kessler, Dunn, Fromhold, Appleton, Chase, Green, Moeller, Hasegawa and Takko.
Brief History:
Economic Development, Agriculture & Trade: 2/16/05, 3/1/05 [DP].
Brief Summary of Bill |
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HOUSE COMMITTEE ON ECONOMIC DEVELOPMENT, AGRICULTURE & TRADE
Majority Report: Do pass. Signed by 13 members: Representatives Linville, Chair; Pettigrew, Vice Chair; Blake, Chase, Clibborn, Grant, Kenney, Kilmer, McCoy, Morrell, Quall, P. Sullivan and Wallace.
Minority Report: Do not pass. Signed by 10 members: Representatives Kristiansen, Ranking Minority Member; Skinner, Assistant Ranking Minority Member; Buri, Condotta, Dunn, Haler, Holmquist, Kretz, Newhouse and Strow.
Staff: Tracey Taylor (786-7196).
Background:
The Community Economic Revitalization Board (CERB) program was created in 1982 to
provide direct loans and grants to counties, cities, and special purpose districts for economic
development-related infrastructure improvements. The CERB financing is available for
public improvements that include the acquisition, construction, or repair of domestic and
industrial water, sewer and storm water infrastructure; bridge, railroad, electricity,
telecommunication, and road improvements; buildings and structures; port facilities; and
feasibility studies. The CERB financing must be necessary to either bring a new business
into a community or expand or retain an existing business that is already located in the
community.
The CERB has 15 voting members. There are two members from the House of
Representatives appointed by the Speaker of the House, and chosen from each of the two
major caucuses. There are two members from the Senate, appointed by the President of the
Senate, and chosen from each of the two major caucuses. The Governor appoints a
recognized private or public sector economist, a port district official, one county official, one
city official, one representative of a federally recognized Indian tribe and one representative
of small business from each of the following geographic areas: (a) the area west of Puget
Sound; (b) the area east of Puget Sound and west of the Cascade range; (c) the area east of
the Cascade range and west of the Columbia River; and (d) the area east of the Columbia
River. In addition, the Governor shall appoint one executive from large businesses on each
side of the Cascades. The Director of the Department of Community, Trade & Economic
Development, the Director of the Department of Revenue, the Commissioner of the
Employment Security Department and the Secretary of Transportation all serve as nonvoting
advisory members.
Summary of Bill:
The Job Development Fund is created in the custody of the State Treasurer for revenues
generated from legislatively authorized bond sales and other lawful sources. Funds may only
be spent after an appropriation. Expenditures from the fund shall be used to make grants to
local governments for public infrastructure projects to stimulate the community and
economic development.
The Job Development Fund grant program will be administered by the CERB. The CERB
will establish a competitive process to request proposals for and prioritize projects from
political subdivisions of the state and federally recognized Indian tribes. The projects must
have a primary objective to stimulate community and economic development through
redevelopment and rehabilitation projects.
A redevelopment project includes: the acquisition of a blighted area; demolition and removal
of buildings and improvements; installation, construction or reconstruction of streets utilities,
parks, playgrounds, and other improvements necessary for the carrying out in the area the
provisions of a community renewal plan; making the land available for development or
redevelopment by private enterprise or public bodies at its fair value for uses in accordance
with the community renewal plan; and making loans or grants to a person or public body for
the purpose of creating or retaining jobs, a substantial portion of which, as determined by the
municipality, shall be for persons of low income.
A rehabilitation project includes the restoration and renewal of a blighted area in accordance
with a community renewal plan by: carrying out plans for a program of voluntary or
compulsory repair and rehabilitation of buildings or other improvements; acquisition of real
property and demolition or removal of buildings or improvements thereon where necessary to
eliminate unhealthful, unsanitary or unsafe conditions, lessen density, reduce traffic hazards,
eliminate obsolete or other uses detrimental to the public welfare, or otherwise to remove or
prevent the spread of blight or deterioration, or to provide land for needed public facilities;
installation, construction or reconstruction of streets, utilities, parks, playgrounds, and other
improvements necessary for carrying out the area's community renewal plan; and the
disposition of any property acquired in a community renewal area for use in accordance with
the area's community renewal plan.
The CERB will develop criteria to evaluate and rank applications. The CERB must also
develop performance and evaluation criteria to review how well successful applicants met the
community and economic development objectives stated in their applications. Among the
priorities for project ranking the CERB must consider are the relative benefits provided to the
community by the jobs the project would create. This includes, but should not be limited to,
the total of number of jobs a project would create after it is completed. The CERB must also
consider the rate of return of the state's investment in the project. This includes the expected
increase in state and local tax revenues associated with the project. An applicant must
demonstrate that the requested assistance will directly stimulate community and economic
development by facilitating the creation of new jobs or the retention of existing jobs. An
examination of the applicant's existing assets that may be applied to the project shall also be
considered. An applicant must also demonstrate that no other timely source of funding is
available for the project at a reasonably similar cost. A project may not receive funding from
the job development fund if the project would result in a development or expansion that
would displace existing jobs in any other community in the state.
The maximum grant available from the Job Development Fund for any single project is $10
million and may not exceed 33 percent of the total cost of the project. The nonstate portion
of the total project costs may include cash, the value of real property when acquired solely for
the purpose of the project, and in-kind contributions.
For the 2005-2007 biennium, the CERB may solicit and rank applications; however to the
extent funding is provided in the 2005-07 Capital Budget, the list of selected projects does
not have to be submitted to the Legislature for approval unless otherwise required in the
2005-07 Capital Budget appropriation.
Beginning in the 2007-09 biennium, the CERB shall submit to the Legislature and the
Governor a prioritized list of recommended projects for 70 percent of any biennial
appropriation. However, the CERB may not sign contracts or otherwise financially obligate
funds until the Legislature has approved a specific list of projects. The list must include a
description of each project, the amount of recommended state funding, documentation of
nonstate funds to be used for the project and a description of the expected community or
economic development. The Legislature may remove projects from the CERB's
recommended list, but may not change the order of priority for the projects. The CERB shall
request a biennial appropriation of $50 million; therefore, the total amount of CERB
recommended projects shall not exceed $30 million. The CERB may provide an alternative
list of projects for an additional $10 million in funds.
The remaining 30 percent or $20 million dollars may be expended or obligated by the CERB,
after consultation with the Legislature, for applications not on the legislatively approved list
if the circumstances have subsequently changed making a project more urgent or more highly
ranked. An application submitted after the deadline through no fault of the applicant that
would have been ranked high on the list and that cannot wait until the next biennial
application period due to emergency or exigent circumstances may also qualify for funding
from the 30 percent; however, the Legislature must be consulted first. Consultation with the
Legislature means the CERB notifies in writing to the Speaker of the House of
Representatives and the Majority Leader of the Senate, then waits 10 days to give the
Legislature time to comment on the proposed action prior to the obligating or spending the
funds.
Grant contracts must include a provision that if a grantee is found to be out of compliance
with the provisions of the contract, including the agreed-to performance criteria, the grantee
must repay to the State General Fund the principal amount of the grant, plus interest or an
amount otherwise agreed to by the Department of Community, Trade and Economic
Development.
Grantees are required to provide an annual report by March 1 of each year. The report must
include, at a minimum: the names of any businesses locating within the grantee's jurisdiction
as a result of the public improvements financed in whole or in part by the Job Development
Fund; the total number of permanent jobs created within the grantee's jurisdiction as a result
of the public improvements financed in whole or in part by the Job Development Fund; and
the average wage and benefits received by all employees of the businesses within the
grantee's jurisdiction as the result of the public improvements funded in whole or in part by
the Job Development Fund.
The CERB must report to the Governor and the Legislature on the implementation of the Job
Development Fund program by December 1, 2005, and by December 1 in succeeding
even-numbered years.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.
Testimony For: (In support) Municipal governments and other political subdivisions
provide development that spurs on the creation of jobs and the growth of the economy. This
bill provides a new mechanism to provide a quick infusion of cash for infrastructure needed
for an economic development opportunity. The reality is that most cities and counties are
small and their means and abilities to provide infrastructure development are hampered.
In addition, this is a new tool that will assist in making Washington competitive in business
retention and recruitment. The 30 percent set aside is an excellent way to be responsive to
economic development opportunities. The state really lacks a great grant tool such as this to
compete against Oregon, a state that has many more economic development tools than
Washington.
(With concerns) Although this proposal has merit, the potential funding sources cause
concern. In addition, the fact that this program would be a grant program, unlike CERB and
Public Works Trust Fund, the CERB would be spending down the principal with no
commitment to maintain it. Also, the CERB is a great program and a great board, but there is
concern about impacting its core program by adding to its duties.
Testimony Against: None.
Persons Testifying: (In support) Representative Ericks, prime sponsor; Noel Gibb, City of
Burien; Jeff Marcell, Enterprise Seattle; Scott Taylor, Washington Public Ports Association;
Bryan Wall, Washington Association of Realtors; Steve Mullet, City of Tukwila; Mark
Brown, City of Vancouver and Columbia River Economic Development Council; Kathy
Keolker-Wheeler, City of Renton; Ron Newbry, Washington Economic Development
Association; and Greg Hanon, National Association of Industrial and Office Properties.
(With concerns) Rick Slunaker, Associated General Contractors.