HOUSE BILL REPORT

EHB 2850

BYRepresentatives Raiter, Doty, Cantwell, Rayburn and Wineberry

Revising provisions for the Washington economic development finance authority.

House Committe on Trade & Economic Development

Majority Report:  Do pass as amended.  (12)

      Signed by Representatives Cantwell, Chair; Wineberry, Vice Chair; Doty, Ranking Republican Member, Kirby, Kremen, Moyer, Raiter, Rasmussen, Rector, Schoon, Tate and Youngsman.

House Staff:Charlie Gavigan (786-7340)

AS PASSED HOUSE FEBRUARY 12, 1990

BACKGROUND:

The Washington Economic Development Finance Authority (WEDFA) was established in 1989 to help small and medium-sized businesses meet their capital needs. The WEDFA is administered by a 15 member board, including one member each from the Department of Trade and Economic Development, the Department of Community Development, the state treasurer, four legislators, and eight members from the general public appointed by the governor.  Three of the public members must be from Eastern Washington.  The Department of Trade and Economic Development provides the staff for the WEDFA, although the staff cannot issue nonrecourse bonds or make credit decisions.

The WEDFA is authorized: (1) to develop programs to fund export transactions for small businesses that cannot get commercial loans from private lenders at competitive rates and terms; (2) to provide advance or up front financing for economic development to farmers based on their subsidy from the federal government for not growing crops; (3) to pool loans guaranteed by the federal Small Business Administration or the Farm Home Administration; (4) to access federal development finance programs; and (5) to provide advice and technical assistance to Industrial Development Corporations.  The WEDFA is also authorized to engage in broad activity to assist businesses as long as the activity is within specified policy guidelines specified in statute.

The WEDFA is required to develop a plan outlining economic development goals and defining strategies to accomplish the goals. The authority is required to hold at least one public hearing regarding its plan, and update the plan at least every two years.  The authority is also required to implement operating procedures for itself and its programs.

The WEDFA may not lend state credit, issue bills of credit, take deposits, or finance housing, health care facilities, or educational facilities that are financed through other statutory commissions or authorities. The WEDFA is authorized to issue nonrecourse bonds. These bonds are not obligations of the state.

The authority may not exceed $250 million in outstanding debt at any time. The authority must report annually to the Legislature.  The Legislative Budget Committee is required to conduct a fiscal and program review of the authority by December 1, 1992.

SUMMARY:

Changes are made to the 1989 legislation that established the Washington Economic Development Finance Authority (WEDFA).  These changes are:

      1.The prohibition in the intent section of the enabling legislation against the finance authority using "public" funds is changed to "state" funds;

      2.The WEDFA board is expanded from 15 members to 18 members.  The director of the Department of Agriculture is added, as well as two members from the general public.  Minority-owned and women-owned businesses must be represented on the board;

      3.The requirement that the finance authority only be allowed to borrow money for board member expenses from the Department of Trade and Economic Development for the first year of its operation is removed.  Also, the provision limiting annual administrative expenses to 5 percent of funds received is removed;

      4.The provision allowing the finance authority to pool loans guaranteed by the federal Small Business Administration and the Farm Home Administration are expanded to allow pooling of any loans guaranteed by the federal government;

      5.The finance authority can help farm enterprises as well as businesses; and

      6.The provisions dealing with Industrial Development are removed.

Fiscal Note:      Requested January 17, 1990.

House Committee ‑ Testified For:    Ted Bristol, Washington Economic Development Authority; Terry Sapp, Department of Trade and Economic Development assigned to the Washington Economic Development Authority; and Lee Fisher, Export Assistance Center.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    These amendments give the finance authority more flexibility for budgeting and administrative purposes, and clarify ambiguities in present law.

House Committee - Testimony Against:      None.