HOUSE BILL REPORT
HB 1156
BYRepresentatives Vekich, Schoon and Cantwell
Revising distressed area requirements in the community revitalization team program and the development loan fund program.
House Committe on Trade & Economic Development
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (16)
Signed by Representatives Vekich, Chair; Wineberry, Vice Chair; Amondson, Beck, Belcher, Cantwell, Doty, Grant, Hargrove, Holm, McLean, McMullen, Moyer, Rasmussen, Schoon and B. Williams.
House Staff:Stephen Hodes (786-7092)
AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT
MARCH 2, 1987
BACKGROUND:
The Legislature established the Community Revitalization Team program and the Development Loan Fund program in the Department of Community Development in 1985 to assist communities in their responses to economic dislocation. The Community Revitalization Team program provides a coordinated state response to the problems of economically distressed communities by the departments of Community Development, Trade and Economic Development, and Employment Security, and the Commission for Vocational Education. The program assists communities in developing strategies for economic renewal and helps to mobilize state resources to assist communities respond to the consequences of economic distress.
The Development Loan Fund program utilizes federal Community Development Block Grant funds in the state-administered program in order to make grants to local governments for loans to businesses in distressed areas of the state. The repayments of the principal and interest on loans made by local governments to businesses are repaid to the Development Loan Fund to be utilized again. A seven-member committee reviews and approves applications to the program. Projects must be in a distressed area, be expected to increase or maintain employment, and have benefits accruing to residents of the distressed area.
SUMMARY:
SUBSTITUTE BILL: The definition of distressed area regarding the Community Revitalization Team program is expanded to include communities or areas which have experienced long-term and severe loss of employment or the erosion of their economic base due to the decline of dominant industries.
The Development Loan Fund program is expanded so that the program may be utilized in areas of the state which are not economically distressed. Assistance offered under the program must result in job creation or retention. The Development Loan Fund Committee must make at least 80 percent of appropriated funds available to projects in distressed areas. Funds shall not be made available to projects located in areas not designated distressed if less than $7.1 million is in the Development Loan Fund.
If objections are raised to projects seeking financing by the Development Loan Fund on the basis of unfair business competition, the Development Loan Fund Committee shall evaluate the potential impact of a project on similar businesses located in the local market area. A grant may be denied by the committee if a project is not likely to result in a net increase in employment within a local market area.
If Development Loan Fund monies in a biennium are not fully expended, up to 20 percent of the funds reserved for distressed areas shall be made available to local governments that operate existing economic development revolving loan funds in distressed areas. The grants shall be utilized to make loans to businesses meeting the specifications for loans under the Development Loan Fund enabling legislation. To the extent possible under federal law, the local government will convey the principal and interest on payments from outstanding loans made by the economic development revolving loan funds to the Development Loan Fund in order to make additional grants to local governments.
The Development Loan Committee is directed to develop performance standards for judging the effectiveness of the loans made by local governments. Standards will include: job creation for low income individuals, job retention, local economic diversification, assistance in cases of employee buy-outs, loans made which did not receive financing from commercial lenders.
SUBSTITUTE COMPARED TO ORIGINAL: The substitute reserves 80 percent of the funds appropriated to the Development Loan Fund for grants to distressed areas while the original bill reserved 70 percent of the funds. The substitute requires that when funds appropriated to the Development Loan Fund in a biennium are not fully expended, up to 20 percent of the funds reserved for distressed areas be made available for grants to local governments in distressed areas with economic development revolving loan funds. These governments are to convey the principal and interest on existing loans made by the local funds to the Development Loan Fund. The Development Loan Committee is directed to develop performance standards for judging the effectiveness of loans made by local governments receiving grants from the Fund. An emergency clause is added.
Fiscal Note: Requested March 2, 1987.
Effective Date:The bill contains an emergency clause and takes effect immediately.
House Committee ‑ Testified For: Gregg Dohrn, Department of Community Development.
House Committee - Testified Against: None Presented.
House Committee - Testimony For: The Community Revitalization Team has experienced difficulties serving all the distressed areas in the state under current definition of distress. Changes in the bill will resolve these problems. The Development Loan Fund could be more useful if it could be used in more of the state. There is a strong concern to retain commitment of program and resources to distressed areas.
House Committee - Testimony Against: None Presented.