HOUSE BILL REPORT

HB 1260

As Reported by House Committee On:

Technology & Economic Development

Title: An act relating to public facilities' grants and loans.

Brief Description: Concerning public facilities' grants and loans.

Sponsors: Representatives Warnick and Stanford; by request of Washington State Department of Commerce.

Brief History:

Committee Activity:

Technology & Economic Development: 1/29/13, 2/5/13 [DP].

Majority Report: Do pass. Signed by 17 members: Representatives Morris, Chair; Habib, Vice Chair; Smith, Ranking Minority Member; Crouse, Assistant Ranking Minority Member; Dahlquist, Freeman, Hudgins, Kochmar, Magendanz, Maxwell, Morrell, Stonier, Tarleton, Vick, Walsh, Wylie and Zeiger.

Staff: Jennifer Thornton (786-7147).

Background:

The Community Economic Revitalization Board (CERB) is governed by a 20-member statutory state board that is charged with funding public infrastructure improvements that encourage new business development and expansion in areas seeking economic growth. The CERB receives administrative support from the Department of Commerce.

The CERB's focus is on creating and retaining jobs in partnership with local governments. Through CERB, local governments can apply for low-interest loans and, occasionally, grants, to help finance public facility projects. Counties, cities, towns, port districts, federally-recognized Indian tribes, special purpose districts, municipal corporations, and quasi-municipal corporations with economic development purposes are eligible to apply. Public facilities eligible for the CERB financing include: bridges; roads; domestic and industrial water; earth stabilization; sanitary sewer; storm sewer; railroad; telecommunications; electricity; transportation; natural gas; buildings or structures; and port facilities.

The traditional CERB program offers three financing programs: Committed Private Partner

Construction, which requires evidence that a private development or expansion is ready to occur, contingent on approval of CERB funds; Prospective Development Construction, which requires evidence that a private development or expansion is likely to occur as a result of the public improvements; and planning projects, which evaluate high-priority economic development projects. Funding for CERB projects is appropriated in the Capital Budget primarily from the Public Facilities Construction Loan Revolving Account. The CERB is required to make at least 75 percent of the first $20 million of funds available and at least 50 percent of additional funds available to financial assistance for projects in rural counties.

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Summary of Bill:

Intent language is added, stating that the Legislature finds that the Community Economic Revitalization Board (CERB) has successfully acted as an economic development infrastructure financier for local governments, and intends to authorize flexibility for CERB to help fund planning, predevelopment and construction costs of infrastructure and facilities and sites that foster economic vitality and diversification.

Existing geographic requirements for the six business members of the board are removed. Instead, the director must endeavor to ensure equitable geographic representation.

The board is directed to manage the Public Facilities Construction Loan Revolving Account in such a way as to ensure its sustainability, and to finance projects under the following programs: Committed Private Sector Partner Construction; Prospective Development Construction; Planning; and any other program authorized by the Legislature.

Specific criteria required for the awarding of loans and grants, and requirements for prioritizing proposed projects are removed.

Instead, for Committed Private Sector Partner Construction and Prospective Development Construction projects, the board must prioritize funding using criteria that include: the number of jobs created; the average wage of those expected jobs; the local unemployment rate; the fit of the expected business creation or expansion within the region's preferred economic growth strategy; the speed with which the project can begin construction; the leveraging of non-state funds; and expected job creation and wage benefits for the amount of money provided.

The board is given the authority to elect to reserve up to $1 million of its biennial appropriation to use as state match for federal grant awards, as long as the purpose of the federal funds is consistent with CERB's purpose of financing economic development infrastructure, and the reserved CERB funds are matched, at a minimum, dollar for dollar by federal funds.

The board's authority to familiarize government officials and members of the public with the CERB program is expanded to require collaborative relationships with economic development stakeholders, and to provide advice to the Governor and Legislature on matters related to economic development.

Language is reorganized throughout the bill for clarity.

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Appropriation: None.

Fiscal Note: Available.

Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.

Staff Summary of Public Testimony:

(In support) This bill upgrades and reorganizes criteria that were first put in place in 1982. It is time to look at the jobs we are creating and the infrastructure throughout the state, and reset CERB for the current economy. The CERB is one of the few state programs that make funding available for job-creating public infrastructure. The CERB leverages public dollars to create private sector jobs. This bill streamlines current statute so it makes sense, and takes lessons learned in last year's capital budget proviso, which allowed for good flexibility but also had clear priorities and outcomes.

(Opposed) None.

Persons Testifying: Representative Warnick, Prime Sponsor; Nick Demerice, Department of Commerce; and Ginger Eagle, Washington Public Ports Association.

Persons Signed In To Testify But Not Testifying: None.