SENATE BILL REPORT

SB 6685

BYSenators Anderson, Moore, Lee and Smitherman

Revising provisions for the Washington economic development finance authority.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 1, 1990; February 2, 1990

Majority Report:     That Substitute Senate Bill No. 6685 be substituted therefor, and the substitute bill do pass.

     Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McDonald, McMullen, Matson, Murray, Saling, Smitherman, West, Williams.

Senate Staff:Jack Brummel (786-7428)

                February 9, 1990

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, FEBRUARY 2, 1990

BACKGROUND:

The Washington Economic Development Finance Authority (WEDFA) was established in 1989 to help small and medium-sized businesses meet their capital needs.  WEDFA is authorized to issue nonrecourse bonds, which are not obligations of the state.  WEDFA is governed by a 15-member board.  The Department of Trade and Economic Development provides the Authority's staff.  The Authority reports annually to the Legislature.

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 17 members.  The director of the Department of Agriculture is added, as well as another member from the general public;

(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 is expanded to allow pooling of any loans guaranteed by the federal government;

(5) The finance authority can help farm enterprises as well as businesses through its programs;

(6) The provisions dealing with industrial development corporations are removed;

(7) The prohibition of state staff involvement in the "issuance of bonds" is removed, and the prohibition of state staff involvement in making credit decisions is changed to less restrictive language that does not allow state staff to make credit decisions.

EFFECT OF PROPOSED SUBSTITUTE:

The provision limiting annual administrative expenses to 5 percent of funds is changed to provide that administrative expenses may be met only with those funds specifically designated for administrative purposes.

Section 7 of the bill, which changed the prohibition on state staff involvement in issuance of bonds or in making credit decisions, is deleted.

Appropriation:  none

Revenue:   none

Fiscal Note:    available

Senate Committee - Testified:   Terry Sapp, DTED (pro); Rod Bristol, Sudden Printing (pro)