"Sec. 1   RCW 43.160.010 and 1999 c 164 s 101 and 1999 c 94 s 5 are each reenacted and 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, county roads, or city streets for industries considering locating or expanding in this state.
     (((a))) (3) 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) All 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.
     (3))) (4) 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))) (5) 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.
     (((5))) (6) The legislature finds that sharing economic growth statewide 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 are critical ingredients for economic development. ((Rural counties and rural natural resources impact areas generally lack these necessary tools and resources to diversify and revitalize their economies.)) It is, therefore, the intent of the legislature to increase the 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. 2   RCW 43.160.020 and 2004 c 252 s 1 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))) (3) "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))) (4) "Public facilities" means a project of a local government or a federally recognized Indian tribe 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))) (5) "Rural county" means a county with a population density of fewer than one hundred persons per square mile or a county smaller than two hundred twenty-five square miles, as determined by the office of financial management and published each year by the department for the period July 1st to June 30th.
     (((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 (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 (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 (14) of this section.
     (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. 3   RCW 43.160.030 and 2004 c 252 s 2 are each amended to read as follows:
     (1) The community economic revitalization board is hereby created to exercise the powers granted under this chapter.
     (2) The board shall consist of one member from each of the two major caucuses of the house of representatives to be appointed by the speaker of the house and one member from each of the two major caucuses of the senate to be appointed by the president of the senate. The board shall also consist of the following members appointed by the governor: A recognized private or public sector economist; one port district official; one county official; one city official; one representative of a federally recognized Indian tribe; one representative of the public; one representative of small businesses each from: (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; one executive from large businesses each from the area west of the Cascades and the area east of the Cascades. The appointive members shall initially be appointed to terms as follows: Three members for one-year terms, three members for two-year terms, and three members for three-year terms which shall include the chair. Thereafter each succeeding term shall be for three years. The chair of the board shall be selected by the governor. The members of the board shall elect one of their members to serve as vice-chair. The director of community, trade, and economic development, the director of revenue, the commissioner of employment security, and the secretary of transportation shall serve as nonvoting advisory members of the board.
     (3) Management services, including fiscal and contract services, shall be provided by the department to assist the board in implementing this chapter ((and the allocation of private activity bonds)).
     (4) Members of the board shall be reimbursed for travel expenses as provided in RCW 43.03.050 and 43.03.060.
     (5) If a vacancy occurs by death, resignation, or otherwise of appointive members of the board, the governor shall fill the same for the unexpired term. Members of the board may be removed for malfeasance or misfeasance in office, upon specific written charges by the governor, under chapter 34.05 RCW.
     (6) A member appointed by the governor may not be absent from more than fifty percent of the regularly scheduled meetings in any one calendar year. Any member who exceeds this absence limitation is deemed to have withdrawn from the office and may be replaced by the governor.
     (7) A majority of members currently appointed constitutes a quorum.

Sec. 4   RCW 43.160.050 and 1996 c 51 s 4 are each amended to read as follows:
     The board may:
     (1) Adopt bylaws for the regulation of its affairs and the conduct of its business.
     (2) Adopt an official seal and alter the seal at its pleasure.
     (3) Utilize the services of other governmental agencies.
     (4) Accept from any federal agency loans or grants for the planning or financing of any project and enter into an agreement with the agency respecting the loans or grants.
     (5) Conduct examinations and investigations and take testimony at public hearings of any matter material for its information that will assist in determinations related to the exercise of the board's lawful powers.
     (6) Accept any gifts, grants, or loans of funds, property, or financial or other aid in any form from any other source on any terms and conditions which are not in conflict with this chapter.
     (7) ((Exercise all the powers of a public corporation under chapter 39.84 RCW.
     (8) Invest any funds received in connection with industrial development revenue bond financing not required for immediate use, as the board considers appropriate, subject to any agreements with owners of bonds.
     (9) Arrange for lines of credit for industrial development revenue bonds from and enter into participation agreements with any financial institution.
     (10) Issue industrial development revenue bonds in one or more series for the purpose of defraying the cost of acquiring or improving any industrial development facility or facilities and securing the payment of the bonds as provided in this chapter.
     (11))) Enter into agreements or other transactions with and accept grants and the cooperation of any governmental agency in furtherance of this chapter.
     (((12) Sell, purchase, or insure loans to finance the costs of industrial development facilities.
     (13) Service, contract, and pay for the servicing of loans for industrial development facilities.
     (14) Provide financial analysis and technical assistance for industrial development facilities when the board reasonably considers it appropriate.
     (15) Collect, with respect to industrial development revenue bonds, reasonable interest, fees, and charges for making and servicing its lease agreements, loan agreements, mortgage loans, notes, bonds, commitments, and other evidences of indebtedness. Interest, fees, and charges are limited to the amounts required to pay the costs of the board, including operating and administrative expenses and reasonable allowances for losses that may be incurred.
     (16) Procure insurance or guarantees from any party as allowable under law, including a governmental agency, against any loss in connection with its lease agreements, loan agreements, mortgage loans, and other assets or property.
     (17))) (8) Adopt rules under chapter 34.05 RCW as necessary to carry out the purposes of this chapter.
     (((18))) (9) Do all acts and things necessary or convenient to carry out the powers expressly granted or implied under this chapter.

Sec. 5   RCW 43.160.060 and 2007 c 231 s 3 are each amended to read as follows:
     The board is authorized to make direct loans to political subdivisions of the state and to federally recognized Indian tribes for the purposes of assisting the political subdivisions and federally recognized Indian tribes 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 or the federally recognized Indian tribe and the finding by the board that financial circumstances require grant assistance to enable the project to move forward. However, ((at least ten)) no more than twenty-five percent of all financial assistance ((provided)) approved by the board in any biennium ((shall)) may consist of grants to political subdivisions and federally recognized Indian tribes.
     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.
     (d))) For a project the primary purpose of which is to facilitate or promote gambling.
     (d) For a project located outside the jurisdiction of the applicant political subdivision or federally recognized Indian tribe.
     (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 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)) a project demonstrating convincing evidence that a specific private development or expansion is ready to occur and will occur only if the public facility improvement is made that:
     (i) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted; and
     (ii) 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));
     (b) For a project that cannot meet the requirement of (a) of this subsection but is a project that:
     (i) Results in the creation of significant private sector jobs or significant private sector capital investment as determined by the board and is consistent with the state comprehensive economic development plan developed by the Washington economic development commission pursuant to chapter 43.162 RCW, once the plan is adopted;
     (ii) Is part of a local economic development plan consistent with applicable state planning requirements;
     (iii) Can demonstrate project feasibility using standard economic principles; and
     (iv) Is located in a rural community as defined by the board, or a rural county;
     (c) For site-specific plans, studies, and analyses that address environmental impacts, capital facilities, land use, permitting, feasibility, marketing, project engineering, design, site planning, and project debt and revenue impacts, as grants not to exceed fifty thousand dollars.
     (3) The board shall develop guidelines for local participation and allowable match and activities.
     (4) An application must demonstrate local match and local participation, in accordance with guidelines developed by the board.
     (5) An application must be approved by the political subdivision and supported by the local associate development organization or local workforce development council or approved by the governing body of the federally recognized Indian tribe.
     (6) The board may allow de minimis general system improvements to be funded if they are critically linked to the viability of the project.
     (7) An application must demonstrate convincing evidence that the median hourly wage of the private sector jobs created after the project is completed will exceed the countywide median hourly wage.
     (8) 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)), but also giving consideration to the unemployment rate in the area in which the jobs would be located;
     (b) The rate of return of the state's investment, ((that includes the)) including, but not limited to, the leveraging of private sector investment, anticipated job creation and retention, and expected increases in state and local tax revenues associated with the project; ((and))
     (c) Whether the proposed project offers a health insurance plan for employees that includes an option for dependents of employees;
     (d) Whether the public facility investment will increase existing capacity necessary to accommodate projected population and employment growth in a manner that supports infill and redevelopment of existing urban or industrial areas that are served by adequate public facilities. Projects should maximize the use of existing infrastructure and provide for adequate funding of necessary transportation improvements; and
     (e) Whether the applicant has developed and adhered to guidelines regarding its permitting process for those applying for development permits consistent with section 1(2), chapter 231, Laws of 2007.
     (((4))) (9) A responsible official of the political subdivision or the federally recognized Indian tribe shall be present during board deliberations and provide information that the board requests.
     Before any financial assistance application is approved, the political subdivision or the federally recognized Indian tribe 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. 6   RCW 43.160.070 and 1999 c 164 s 104 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 account((s)). ((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 communities as defined by the board, or 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. 7   RCW 43.160.074 and 1985 c 433 s 5 are each amended to read as follows:
     (1) An application to the board from a political subdivision may also include a request for improvements to an existing state highway or highways. The application is subject to all of the applicable criteria relative to qualifying types of development set forth in this chapter, as well as procedures and criteria established by the board.
     (2) Before board consideration of an application from a political subdivision that includes a request for improvements to an existing state highway or highways, the application shall be forwarded by the board to the department of transportation ((commission)).
     (3) The board may not make its final determination on any application made under subsection (1) of this section before receiving approval, as submitted or amended or disapproval from the department of transportation ((commission)) as specified in RCW 47.01.280. Notwithstanding its disposition of the remainder of any such application, the board may not approve a request for improvements to an existing state highway or highways without the approval as submitted or amended of the department of transportation ((commission)) as specified in RCW 47.01.280.
     (4) The board shall notify the department of transportation ((commission)) of its decision regarding any application made under this section.

Sec. 8   RCW 43.160.076 and 1999 c 164 s 105 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)) approve at least seventy-five percent of the first twenty million dollars of funds available and at least fifty percent of any additional funds for financial assistance for projects in rural counties ((or rural natural resources impact areas)).
     (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 rural counties ((or rural natural resources impact areas)) are clearly insufficient to use up the ((seventy-five percent)) allocations 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 rural counties ((or rural natural resources impact areas)).

Sec. 9   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)) conduct biennial outcome-based evaluations of the financial assistance provided under this chapter. The ((report)) evaluations 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 and cost of jobs created or retained by each project((,)); the wages and health benefits associated with the jobs; the amount of state funds and total capital invested in projects; the number and types of businesses assisted by funded projects; the location of funded projects; the transportation infrastructure available for completed projects; the local match and local participation obtained; the number of delinquent loans((,)); and the number of project terminations. The ((report)) evaluations may also include additional performance measures and recommendations for programmatic changes. ((The first report shall be submitted by December 1, 1994.))
     (2)(a) By September 1st of each even-numbered year, the board shall forward its draft evaluation to the Washington state economic development commission for review and comment, as required in section 10 of this act. The board shall provide any additional information as may be requested by the commission for the purpose of its review.
     (b) Any written comments or recommendations provided by the commission as a result of its review shall be included in the board's completed evaluation. The evaluation must be presented to the governor and appropriate committees of the legislature by December 31st of each even-numbered year. The initial evaluation must be submitted by December 31, 2010.

NEW SECTION.  Sec. 10   A new section is added to chapter 43.162 RCW to read as follows:
     The Washington state economic development commission shall review and provide written comments and recommendations for inclusion in the biennial evaluation conducted by the community economic revitalization board under RCW 43.160.900.

Sec. 11   RCW 43.160.080 and 1998 c 321 s 30 are each amended to read as follows:
     There shall be a fund in the state treasury known as the public facilities construction loan revolving account, which shall consist of all moneys collected under this chapter((, except moneys of the board collected in connection with the issuance of industrial development revenue bonds and moneys deposited in the distressed county public facilities construction loan account under RCW 43.160.220,)) and any moneys appropriated to it by law((: PROVIDED, That seventy-five percent of all principal and interest payments on loans made with the proceeds deposited in the account under section 901, chapter 57, Laws of 1983 1st ex. sess. shall be deposited in the general fund as reimbursement for debt service payments on the bonds authorized in RCW 43.83.184)). Disbursements from the revolving account shall be on authorization of the board. In order to maintain an effective expenditure and revenue control, the public facilities construction loan revolving account shall be subject in all respects to chapter 43.88 RCW.

NEW SECTION.  Sec. 12   (1) The legislature recognizes that although many regions of the state are thriving, there are still distressed communities throughout rural and urban Washington where capital investments in community services initiatives could create vibrant local business districts and prosperous neighborhoods.
     (2) The legislature also recognizes that nonprofit organizations provide a variety of community services that serve the needs of the citizens of Washington, including many services implemented under contract with state agencies. The legislature also finds that the efficiency and quality of these services may be enhanced by the provision of safe, reliable, and sound facilities, and that, in certain cases, it may be appropriate for the state to assist in the development of these facilities.
     (3) The legislature finds that providing these capital investments is critical for the economic health of local distressed communities, helps build strong relationships with the state, and expands life opportunities for underserved, low-income populations.

NEW SECTION.  Sec. 13   A new section is added to chapter 43.63A RCW to read as follows:
     The definitions in this section apply throughout RCW 43.63A.125, this section, and sections 14 and 16 of this act unless the context clearly requires otherwise.
     (1) "Department" means the department of community, trade, and economic development.
     (2) "Distressed community" means: (a) A county that has an unemployment rate that is twenty percent above the state average for the immediately previous three years; (b) an area within a county that the department determines to be a low-income community, using as guidance the low-income community designations under the community development financial institutions fund's new markets tax credit program of the United States department of the treasury; or (c) a school district in which at least fifty percent of local elementary students receive free and reduced-price meals.
     (3) "Nonprofit organization" means an organization that is tax exempt, or not required to apply for an exemption, under section 501(c)(3) or 501(c)(6) of the federal internal revenue code of 1986, as amended.
     (4) "Technical assistance" means professional services provided under contract to nonprofit organizations for feasibility studies, planning, and project management related to acquiring, constructing, or rehabilitating nonresidential community services facilities.

NEW SECTION.  Sec. 14   A new section is added to chapter 43.63A RCW to read as follows:
     The building communities fund account is created in the state treasury. The account shall consist of legislative appropriations and gifts, grants, or endowments from other sources as permitted by law. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for capital and technical assistance grants as provided in RCW 43.63A.125.

Sec. 15   RCW 43.63A.125 and 2006 c 371 s 233 are each amended to read as follows:
     (1) The department shall establish ((a competitive process to solicit proposals for and prioritize projects that assist nonprofit organizations in)) the building communities fund program. Under the program, capital and technical assistance grants may be made to nonprofit organizations for acquiring, constructing, or rehabilitating facilities used for the delivery of nonresidential ((social)) community services, including social service centers and multipurpose community centers, including those serving a distinct or ethnic population. Such facilities must be located in a distressed community or serve a substantial number of low-income or disadvantaged persons.
     (2) The department shall establish a competitive process to solicit, evaluate, and prioritize applications for the ((assistance)) building communities fund program as follows:
     (a) The department shall conduct a statewide solicitation of project applications from ((local governments,)) nonprofit organizations((, and other entities, as determined by the department)).
     (b) The department shall evaluate and rank applications in consultation with a citizen advisory committee using objective criteria. ((At a minimum,)) Applicants must demonstrate that the ((requested assistance)) proposed project:
     (i) Will increase the range, efficiency, or quality of the ((social)) services ((it provides)) provided to citizens;
     (ii) Will be located in a distressed community or will serve a substantial number of low-income or disadvantaged persons;
     (iii) Will offer a diverse set of activities that meet multiple community service objectives, including but not limited to: Providing social services; expanding employment opportunities for or increasing the employability of community residents; or offering educational or recreational opportunities separate from the public school system or private schools, as long as recreation is not the sole purpose of the facility;
     (iv) Reflects a long-term vision for the development of the community, shared by residents, businesses, leaders, and partners;
     (v) Requires state funding to accomplish a discrete, usable phase of the project;
     (vi) Is ready to proceed and will make timely use of the funds;
     (vii) Is sponsored by one or more entities that have the organizational and financial capacity to fulfill the terms of the grant agreement and to maintain the project into the future;
     (viii) Fills an unmet need for community services;
     (ix) Will achieve its stated objectives; and
     (x) Is a community priority as shown through tangible commitments of existing or future assets made to the project by community residents, leaders, businesses, and government partners.
     (c) The evaluation and ranking process shall also include an examination of existing assets that applicants may apply to projects. ((Grant assistance under this section shall not exceed twenty-five percent of the total cost of the project.)) The department shall require a nonstate match for grant assistance under this section. The nonstate portion of the total project cost may include cash, the value of real property when acquired solely for the purpose of the project, and in-kind contributions. Grant assistance may not exceed fifty percent of the total cost of the project.
     (((b))) (d) The department may not:
     (i) Set a monetary limit to funding requests; or
     (ii) Require that state funds be the last to be spent on a project.
     (3)(a) The department shall submit a ((prioritized)) ranked list of recommended projects annually to the governor and the legislature in the department's ((biennial)) capital budget requests beginning with the ((2001-2003)) 2009-2011 biennium and thereafter. ((For the 1999-2001 biennium, the department shall conduct a solicitation and ranking process, as described in (a) of this subsection, for projects to be funded by appropriations provided for this program in the 1999-2001 capital budget.)) The list shall include a description of each project, its total cost, the amount of requested state funding, and the amount of recommended state funding((, and documentation of nonstate funds to be used for the project)).
     (b) The total amount of recommended state capital funding for projects on ((a biennial)) the annual ranked project list shall be determined by the capital budget beginning with the 2009-2011 biennium and thereafter, and shall not exceed ((ten million dollars)) forty percent of the total amount appropriated for the building communities fund program. In addition, if cash funds have been appropriated, up to three million dollars may be used for technical assistance grants. ((Except for the 1999-2001 biennium,)) The department shall not sign contracts or otherwise financially obligate funds under this section until the legislature has approved a specific list of projects.
     (((c))) (4) The department shall also submit to the legislature an unranked list of the remaining eligible projects for which applications were received. The list must include a description of each project, its total cost, and the amount of state funding requested. The appropriate fiscal committees of the legislature shall use this list to determine, in the legislature's sole discretion, any additional building communities fund projects that may receive funding in the capital budget. The total amount of state capital funding available for all projects on the annual unranked list shall be determined by the capital budget beginning with the 2009-2011 biennium and thereafter, and shall not exceed sixty percent of the total amount appropriated for the building communities fund program.
     (5) In addition to the ranked and the unranked lists, the department shall submit to the appropriate fiscal committees of the legislature:
     (a) All application materials it received and all working papers it developed during its evaluation process; and
     (b) A summary report that describes the solicitation, evaluation and prioritization processes, including but not limited to the number of applications received, the total amount of funding requested, issues encountered, if any, and any recommendations for process improvements for future competitive rounds.
     (6) After the legislature has approved a specific list of projects in law, the department shall develop and manage appropriate contracts with the selected applicants; monitor project expenditures and grantee performance; report project and contract information; and exercise due diligence and other contract management responsibilities as required.
     (7) In contracts for grants authorized under this section the department shall include provisions which require that capital improvements shall be held by the grantee for a specified period of time appropriate to the amount of the grant and that facilities shall be used for the express purpose of the grant. If the grantee is found to be out of compliance with provisions of the contract, the grantee shall repay to the state general fund the principal amount of the grant plus interest calculated at the rate of interest on state of Washington general obligation bonds issued most closely to the date of authorization of the grant.

NEW SECTION.  Sec. 16   A new section is added to chapter 43.63A RCW to read as follows:
     (1) The department shall develop accountability and reporting standards for grant recipients. At a minimum, the department shall use the criteria listed in RCW 43.63A.125(2)(b) to evaluate the progress of each grant recipient.
     (2) Beginning January 1, 2011, the department shall submit an annual report to the appropriate committees of the legislature, including:
     (a) A list of projects currently under contract with the department under the building communities fund program; a description of each project, its total cost, the amount of state funding awarded and expended to date, the project status, the number of low-income people served, and the extent to which the project has met the criteria in RCW 43.63A.125(2)(b); and
     (b) Recommendations, if any, for policy and programmatic changes to the building communities fund program to better achieve program objectives.

NEW SECTION.  Sec. 17   The legislature finds that communities surrounding Washington's military bases should reflect our state's appreciation of the armed forces and the value of the sacrifice of military personnel stationed in our region. Declining resources for new infrastructure has increased pressure on cities and counties and, as urban areas have grown near Washington's military bases, these areas have often developed in a pattern that has not supported the needs of the military for housing and services.
     The legislature finds that local governments can implement funding options to encourage high-quality redevelopment of the neighborhoods nearest the state's military bases, and infrastructure consistent with the highest public health, safety, and welfare standards in a manner supportive to the military's esprit de corps.

NEW SECTION.  Sec. 18   A new section is added to chapter 43.330 RCW to read as follows:
     (1) The department must conduct a military improvement zone pilot program. The principal purpose of the pilot program is to encourage the development of high-quality infrastructure and affordable housing in the areas nearest to federal military bases. The pilot program must also determine the effectiveness of the program in increasing the development of high-quality infrastructure and additional affordable housing in improvement zones. The pilot program must be administered by the department.
     (2)(a) The department, for purposes of the pilot program authorized by this section, must designate qualifying areas as military improvement zones.
     (b) Applications to designate qualifying areas as improvement zones may be submitted by counties or cities. To be eligible for designation as an improvement zone in the pilot program, an area must:
     (i) Be a defined geographic area consisting of a neighborhood or contiguous neighborhoods;
     (ii) Be within two miles of not more than two federal military bases, which base or bases have over thirty thousand personnel combined, that are wholly contained within either tract 720 or 806 as designated by the United States census bureau; and
     (iii) Demonstrate a need for infrastructure improvements that result from population growth, a limited property tax base, a low-income population, a lack of affordable housing, or a designation of a majority of the area as qualified census tracts by the United States department of housing and urban development.
     (3) The department must:
     (a) Develop operational guidelines and criteria for the pilot program; and
     (b) Provide technical assistance to counties and cities participating in the pilot program.
     (4) Subject to the availability of amounts appropriated for this specific purpose, the department must provide grants to counties and cities participating in the pilot program authorized under this section. The grants must only be for public infrastructure projects related to affordable housing projects for the improvement zone. Authorized uses include, but are not limited to:
     (a) Street and road construction necessary to serve the improvement zone;
     (b) Water and sewer system construction; and
     (c) Construction of storm water and drainage management systems.
     (5)(a) The department must provide a comprehensive pilot program status report to the governor and appropriate committees of the house of representatives and the senate by September 30, 2010.
     (b) The department must report its pilot program findings and recommendations to the governor and appropriate committees of the house of representatives and the senate by September 30, 2012.
     (6) As used in this section, "affordable housing" has the same meaning as in RCW 43.185A.010.
     (7) This section expires June 30, 2013.

NEW SECTION.  Sec. 19   A new section is added to chapter 82.32 RCW to read as follows:
     (1) To be eligible for distributions under section 20 of this act, the county or city must:
     (a) Submit an application to the department prior to the initiation of construction of the affordable housing project. The application must be in a form and manner required by the department and must include provisions verifying that:
     (i) The project is in a military improvement zone designated by the department under section 18 of this act;
     (ii) The expected completion date of the construction of the affordable housing project is consistent with the requirements of the department;
     (iii) The proceeds distributed under section 20 of this act will be used for infrastructure that is required for the development to occur;
     (iv) At least twenty-five percent of the housing units in the project qualify as affordable housing; and
     (v) A development agreement has been made between the developer and the applicable county or city providing for: (A) The number of affordable housing units to be developed; (B) site and building design specifications; and (C) the infrastructure necessary for the project to be constructed. The department must rule on the application within forty-five days of its receipt;
     (b) Submit an expenditure plan to the department within one hundred twenty days of the date the application is submitted under (a) of this subsection (1). The plan must specify the intended use of proceeds distributed under section 20 of this act. The department must notify the county or city of any deficiencies in the expenditure plan within ninety days of its submittal.
     (2) Proceeds distributed under section 20 of this act may only be used for public infrastructure projects related to a qualifying affordable housing project. Authorized uses include, but are not limited to:
     (a) Street and road construction necessary to serve the improvement zone;
     (b) Water and sewer system construction; and
     (c) Construction of storm water and drainage management systems.
     (3) As used in this section, "affordable housing" has the same meaning as in RCW 43.185A.010.
     (4) As used in this section, "department" means the department of community, trade, and economic development.
     (5) The department may not transfer money to the account established in section 20 of this act after July 1, 2013.

NEW SECTION.  Sec. 20   A new section is added to chapter 43.330 RCW to read as follows:
     (1) The military improvement zone account is created in the custody of the state treasurer. Receipts from the proceeds of bond sales, tax revenues, budget transfers, federal appropriations, gifts, or any other lawful source, specifically designated for purposes of sections 18 and 19 of this act, must be deposited into the account. Expenditures from the account may be used by a county or city only for public infrastructure projects authorized under sections 19(2) and 18(4) of this act. Only the director or the director's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.
     (2) The department of revenue must distribute proceeds under this section annually at no cost to the receiving county or city. Proceeds must be distributed to a city or county by July 1st of each year, beginning in the state fiscal year following the fiscal year in which initiation of construction of the affordable housing project begins.
     (3) The department of revenue may not distribute proceeds under this section for construction occurring after the date of completion specified in section 19(1)(a)(ii) of this act. However, the department of revenue, in consultation with the department, may extend the date of completion for good cause shown.

NEW SECTION.  Sec. 21   A new section is added to chapter 43.330 RCW to read as follows:
     (1) The department must conduct an examination of land use tools and funding options that local governments can implement to encourage:
     (a) High-quality development of the neighborhoods nearest the state's military bases;
     (b) Affordable housing for military personnel; and
     (c) Infrastructure for this housing that is consistent with the highest public health, safety, and welfare standards.
     (2) As used in this section, "affordable housing" has the same meaning as in RCW 43.185A.010.
     (3) The department must report its findings and recommendations to the governor and the appropriate committees of the house of representatives and the senate by January 30, 2009.

NEW SECTION.  Sec. 22   The following acts or parts of acts are each repealed:
     (1) RCW 43.160.100 (Status of board) and 1984 c 257 s 3;
     (2) RCW 43.160.120 (Commingling of funds prohibited) and 1984 c 257 s 5;
     (3) RCW 43.160.130 (Personal liability) and 1984 c 257 s 6;
     (4) RCW 43.160.140 (Accounts) and 1987 c 422 s 8 & 1984 c 257 s 7;
     (5) RCW 43.160.150 (Faith and credit not pledged) and 1984 c 257 s 8;
     (6) RCW 43.160.160 (Security) and 1984 c 257 s 9;
     (7) RCW 43.160.170 (Special reserve account) and 1984 c 257 s 10;
     (8) RCW 43.160.200 (Economic development account -- Eligibility for assistance) and 2004 c 252 s 4, 1999 c 164 s 107, 1996 c 51 s 9, & 1995 c 226 s 16;
     (9) RCW 43.160.210 (Distressed counties -- Twenty percent of financial assistance) and 1998 c 321 s 31 & 1998 c 55 s 5;
     (10) RCW 43.160.220 (Distressed county public facilities construction loan account) and 1998 c 321 s 9;
     (11) RCW 43.160.230 (Job development fund program) and 2007 c 231 s 4 & 2005 c 425 s 2;
     (12) RCW 43.160.240 (Job development fund program--Maximum grants) and 2005 c 425 s 3; and
     (13) RCW 44.28.801 (State public infrastructure programs and funds -- Inventory -- Report) and 2006 c 371 s 229 & 2005 c 425 s 5.

NEW SECTION.  Sec. 23   Sections 1, 2, 4 through 11, and 22 of this act take effect July 1, 2009.

NEW SECTION.  Sec. 24   Section 3 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 takes effect immediately."