SENATE BILL REPORT

ESHB 743

BYHouse Committee on Trade & Economic Development (originally sponsored by Representatives Cantwell, Vekich, Schoon, R. King, Scott, Holm and Sutherland; by request of Department of Trade and Economic Development)

Revising community economic revitalization board statutes.

House Committe on Trade & Economic Development

Senate Committee on Commerce & Labor

Senate Hearing Date(s):March 24, 1987

Majority Report:     Do pass as amended.

     Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Anderson, Cantu, Lee, Tanner, Vognild, West, Wojahn.

Senate Staff:Patrick Woods (786-7430)

                March 30, 1987

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR, MARCH 30, 1987

BACKGROUND:

The Community Economic Revitalization Board (CERB) program was established by the Legislature in 1982.  The program is designed to provide grants and loans to local jurisdictions for the financing of public facilities necessary for the completion of private job-creating development projects.  The CERB program offers incentives to prospective employers interested in locating in the state and to firms expanding existing facilities without violating the state's limitations on the lending of public credit.  The program is managed by a 22-member board with staff support provided by the Department of Trade and Economic Development.  The CERB program has undertaken a total of 58 projects since its inception, and has provided loans to local jurisdictions totalling $16.5 million as well as $8.2 million in grants.

The Board's enabling statute has undergone a number of revisions in the legislative sessions which followed its creation.  These revisions have concerned such issues as: the size and composition of the Board; the purposes and conditions for which grants and loans may be offered; and the responsibility for managing additional programs related to the Board's economic development mission, (such as responsibility for the state's umbrella industrial revenue bond program).

The provision of loans and grants to local governments by the Board is funded by a state general obligation bond issuance.  The program also provides funding for transportation projects which contribute to specific economic development projects, funded by state highway funds.  The Board is responsible for making recommendations as to the allocation of industrial development bonds under the state's bond allocation process, through the use of a special subcommittee, and for the issuance of single and consolidated umbrella revenue bonds.

The program has attempted to act as an economic development marketing tool, providing swift and reliable yes or no decisions to companies wishing to locate in the state, and to the local governments which would have to bear most of the ultimate costs of the improvements.  At the same time, the program must be broadly accountable as to the efficiency of specific financing decisions.

SUMMARY:

The Community Economic Revitalization Board (CERB) is reauthorized.  The CERB Board is composed of fifteen members.  Five executive agency directors serve as advisory members.  There are four legislators on the Board from the House Trade and Economic Development Committee and the Senate Commerce and Labor Committee.  Legislators are authorized to permit other members of the appropriate legislative committee to act as designees in their absence.

No more than one-quarter of the funds available to the Board may be expended in the first three six-month periods of the biennium.  Funds remaining in the last six months may be spent in those months to fund necessary projects late in the biennium.

The Board's Private Activity Bond Subcommittee is composed of six members, including a legislative member.  There are no sunset provisions applying to the Board.  The program is terminated June 30, 1994, with no new loans or grants authorized after June 30, 1993.

SUMMARY OF PROPOSED SENATE AMENDMENT:

The provisions requiring dispersal of funds during six month intervals are deleted.

The Board is authorized to fund projects that result in displacing jobs between different locations in the state only if failure to make the grant or loan would result in the loss of existing jobs to the entire state.

Fiscal Note:    requested

Senate Committee - Testified:   Jerry Ellis, Department of Trade and Economic Development