BILL REQ. #:  H-5458.1 

READ FIRST TIME 02/07/08.   

     AN ACT Relating to small business incubators; amending RCW 43.176.010 and 43.176.020; adding new sections to chapter 43.176 RCW; and creating new sections.

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

Sec. 1   RCW 43.176.010 and 2004 c 237 s 1 are each amended to read as follows:
     (1) It is hereby declared to be the policy of the state of Washington to assist in the creation and expansion of innovative small commercial enterprises that produce marketable goods and services through the employment of Washington residents, the use of technology, and the application of best management practices. This policy is to be implemented through the use of small business incubators.
     (2) The purpose of small business incubators is to provide comprehensive business assistance to start-up and early-stage firms in order to improve their chances of growing into healthy, sustainable companies. The legislature finds that companies that graduate from incubators create jobs, revitalize neighborhoods, and commercialize new technologies, thus strengthening local and regional economies.

Sec. 2   RCW 43.176.020 and 2004 c 237 s 2 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Business incubator" means a facility ((that offers:
     (a) Space for start-up and expanding firms;
     (b) The shared use of equipment and work areas;
     (c) Daily management support services essential to high-quality commercial operations; and
     (d) Technical assistance)) or program that provides, on an on-going basis, business-related training, services, and technical assistance to businesses that are less than five years old and have fewer than five employees at the time of admission to the facility or program.
     (2) "Department" means the department of community, trade, and economic development.
     (3) "Economically distressed or disadvantaged area" means: (a) A county that has an unemployment rate that is twenty percent above the state average for the immediately previous three years; or (b) an area 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.
     (4) "Qualified small business incubator" means an incubator that is:
     (a)(i) Designated as a nonprofit organization under section 501(c)(3) or section 501(c)(6) of the internal revenue code, or (ii) consists of a partnership between a designated nonprofit organization under section 501(c)(3) or section 501(c)(6) of the internal revenue code and a government or quasi-government agency;
     (b) Focused on developing small businesses in an economically distressed or disadvantaged area; ((and))
     (c) Structured around a sound business plan; and
     (d) Certified under section 3 of this act.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.176 RCW to read as follows:
     CERTIFICATION. (1) The department must develop a certification program for small business incubators. At a minimum, the program must require that: (a) An incubator meets the statutory definition of a small business incubator in RCW 43.176.020; and (b) the incubator work with each client business to develop a graduation plan at the time the business is admitted to the facility or program, and that the graduation plan be reviewed and updated annually. The department must develop additional criteria for certification and when developing such criteria will consult with the Washington association of small business incubators and the national business incubator association.
     (2) In order to qualify for any funding from the department, a business incubator must at a minimum be certified under this section.
     (3) Certification must be renewed every five years.
     (4) Failure to meet the annual reporting requirements under section 5 of this act automatically revokes a small business incubator's certification under this section.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.176 RCW to read as follows:
     ACCOUNTABILITY. All certified small business incubators are required annually to collect data for each client business. The collection of data must continue for at least five years after the client business stops receiving services from the certified small business incubator or the client business moves out the certified small business incubator facility. Client and certified small business incubator data must be submitted to the department by March 31st annually and include:
     (1) Identification of the incubator's sponsors and the amount and source of their contributions;
     (2) The number of current clients of the certified small business incubator;
     (3) The industry and type of business for each client and graduate business;
     (4) The total number of graduates of the certified small business incubator since its founding;
     (5) The number of graduate firms still in business or that have been merged or acquired;
     (6) The number of people currently employed full time by client and graduate firms;
     (7) The number of people currently employed part time by client and graduate firms;
     (8) Current monthly salaries and wages paid by client and graduate firms;
     (9) Gross revenues for the most recent full year for client and graduate firms;
     (10) The dollar amount of debt capital raised in the most recent year by client and graduate firms;
     (11) The dollar amount of equity capital raised in the most recent year by client and graduate firms;
     (12) The dollar amount of grant funds raised in the most recent full year by client and graduate firms;
     (13) The total number of new jobs created in the last year by client and graduate firms;
     (14) The percent of jobs created by client and graduate firms above the county minimum wage;
     (15) The percent of graduates still in business;
     (16) The number of graduates in the last three years;
     (17) The income of certified small business incubator clients;
     (18) The amount of taxes paid by small business incubator clients; and
     (19) The number of small business incubator clients owned by minorities or women.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.176 RCW to read as follows:
     REPORTING. Utilizing the data collected under section 4 of this act, the department is required to submit a biennial report to the legislature and the Washington economic development commission by September 1st of each even-numbered year, beginning in 2010, regarding the performance of certified small business incubators.

NEW SECTION.  Sec. 6   Captions used in sections 3 through 5 of this act are not any part of the law.

NEW SECTION.  Sec. 7   If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2008, in the omnibus appropriations act, this act is null and void.