2460-S AAS 3/8/00 S5146

2460-S AAS 3/8/00 S5146.2

SHB 2460 - S COMM AMD

By Committee on Ways & Means

ADOPTED 3/8/00

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. (1) The legislature finds that:

(a) There are geographic areas within communities that are characterized by a lack of employment opportunities, an average income level that is below the median income level for the surrounding community, a lack of affordable housing, deteriorating infrastructure, and a lack of facilities for community services, job training, and education;

(b) Strategies to encourage reinvestment in these areas by assisting local businesses to become stronger and area residents to gain economic power involve a variety of activities and partnerships;

(c) Reinvestment in these areas cannot be accomplished with only governmental resources and require a comprehensive approach that integrates various incentives, programs, and initiatives to meet the economic, physical, and social needs of the area;

(d) Successful reinvestment depends on a local government's ability to coordinate public resources in a cohesive, comprehensive strategy that is designed to leverage long-term private investment in an area;

(e) Reinvestment can strengthen the overall tax base through increased tax revenue from expanded and new business activities and physical property improvement;

(f) Local governments, in cooperation with area residents, can provide leadership as well as planning and coordination of resources and necessary supportive services to address reinvestment in the area; and

(g) It is in the public interest to adopt a targeted approach to revitalization and enlist the resources of all levels of government, the private sector, community-based organizations, and community residents to revitalize an area.

(2) The legislature declares that the purposes of the community empowerment zone act are to:

(a) Encourage reinvestment through strong partnerships and cooperation between all levels of government, community-based organizations, area residents, and the private sector;

(b) Involve the private sector and stimulate private reinvestment through the judicious use of public resources;

(d) Include all levels of government, community individuals, organizations, and the private sector in the policy-making process.

NEW SECTION. Sec. 2. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise:

(1) "Area" means a geographic area within a local government that is described by a close perimeter boundary.

(2) "Community empowerment zone" means an area meeting the requirements of RCW 43.63A.700 (as recodified by this act) and officially designated by the director.

(3) "Department" means the department of community, trade, and economic development.

(4) "Director" means the director of the department of community, trade, and economic development.

(5) "Local government" means a city, code city, town, or county.

Sec. 3. RCW 43.63A.700 and 1994 sp.s. c 7 s 702 are each amended to read as follows:

(1) The department, in cooperation with the department of revenue, the employment security department, and the office of financial management, ((~~shall~~)) may approve applications submitted by local governments for an area's designation as a community empowerment zone under this ((~~section~~)) chapter. The application for designation shall be in the form and manner and contain such information as the department may prescribe, provided that the application ((~~for designation~~)) shall:

(a) Contain information sufficient for the director to determine if the criteria established in RCW 43.63A.710 (as recodified by this act) have been met((.));

(b) Be submitted on behalf of the local government by its chief elected official, or, if none, by the governing body of the local government((.));

(c) Contain a five-year community empowerment plan that ((describes the proposed designated community empowerment zone's community development needs and present a strategy for meeting those needs. The plan shall address the following categories: Housing needs; public infrastructure needs, such as transportation, water, sanitation, energy, and drainage/flood control; other public facilities needs, such as neighborhood facilities or facilities for provision of health, education, recreation, public safety, or other services; community economic development needs, such as commercial/industrial revitalization, job creation and retention considering the unemployment and underemployment of area residents, accessibility to financial resources by area residents and businesses, investment within the area, or other related components of community economic development; and social service needs.

The local government is required to provide a description of its strategy for meeting the needs identified in this subsection (1)(c). As part of the strategy, the local government is required to identify the needs for which specific plans are currently in place and the source of funds expected to be used. For the balance of the area's needs, the local government must identify the source of funds expected to become available during the next two-year period and actions the local government will take to acquire those funds.)) meets the requirements of section 5 of this act; and

(d) Certify that ((~~neighborhood~~)) area residents were given the opportunity to participate in the development of the five-year community empowerment strategy required under ((~~(c) of this subsection~~)) section 5 of this act.

(2) No local government shall submit more than two ((~~neighborhoods~~)) areas to the department for possible designation as a ((~~designated~~)) community empowerment zone under this ((~~section~~)) chapter.

(3)(a) ((~~Within ninety days after January 1, 1994,~~)) The director may designate up to six ((~~designated~~)) community empowerment zones, state-wide, from among the applications ((~~eligible~~)) submitted for designation as a ((~~designated~~)) community empowerment zone.

(b) The director shall make determinations of designated community empowerment zones on the basis of the following factors:

(i) The strength and quality of the local government commitments to meet the needs identified in the five-year community empowerment plan required under ((~~this~~)) section 5 of this act.

(ii) The level of private ((~~commitments by private entities~~)) sector commitment of additional resources and contribution to the ((~~designated~~)) community empowerment zone.

(iii) The potential for revitalization of the area as a result of designation as a ((~~designated~~)) community empowerment zone.

(iv) Other factors the director deems necessary.

(4) Except as provided in section 6 of this act, an area that was designated a community empowerment zone before January 1, 1996, under this section, automatically and without additional action by the local government continues its designation under this chapter.

(5) The department may not designate additional community empowerment zones after January 1, 2004, but may amend or rescind designation of community empowerment zones in accordance with section 6 of this act.

Sec. 4. RCW 43.63A.710 and 1994 sp.s. c 7 s 703 are each amended to read as follows:

(1) The director may not designate an area as a ((~~designated~~)) community empowerment zone unless that area meets the following requirements:

(a) The area must be designated by the legislative authority of the local government as an area to receive federal, state, and local assistance designed to increase economic, physical, or social activity in the area;

(b) The area must have at least fifty-one percent of the households in the area with incomes at or below eighty percent of the county's median income, adjusted for household size;

(c) The average unemployment rate for the area, for the most recent twelve-month period for which data is available must be at least one hundred twenty percent of the average unemployment rate of the county; and

(d) A five-year community empowerment plan for the area that meets the requirements of ((~~RCW 43.63A.700(1)(c) and as further defined by the director~~)) section 5 of this act must be adopted.

(2) The director may establish, by rule, such other requirements as the director may reasonably determine necessary and appropriate to assure that the purposes of this ((~~section~~)) chapter are satisfied.

(3) In determining if an area meets the requirements of this section, the director may consider data provided by the United States bureau of the census from the most recent census or any other reliable data that the director determines to be acceptable for the purposes for which the data is used.

NEW SECTION. Sec. 5. (1) The five-year community empowerment plan required under RCW 43.63A.700 (as recodified by this act) shall contain information that describes the community development needs of the proposed community empowerment zone and present a strategy for meeting those needs. The plan shall address the following categories:

(a) Housing needs for all economic segments of the proposed community empowerment zone;

(b) Public infrastructure needs, such as transportation, water, sanitation, energy, and drainage and flood control;

(c) Other public facilities needs, such as neighborhood facilities or facilities for the provision of health, education, recreation, public safety, and other services;

(d) Community economic development needs, such as commercial and industrial revitalization, job creation and retention considering the unemployment and underemployment of area residents, accessibility to financial resources by area residents and businesses, investment within the area, and other related components of community economic development; and

(e) Social service needs of residents in the proposed community empowerment zone.

(2) The local government must provide a description of its strategy for meeting the needs identified in subsection (1) of this section. As part of the community empowerment zone strategy, the local government must identify the needs for which specific plans are currently in place and the source of funds expected to be used. For the balance of the area's needs, the local government must identify the source of funds expected to become available during the next two-year period and actions the local government will take to acquire those funds.

(3) The local government must submit an annual progress report to the department that details the extent to which the local government is working to meet the needs identified in the five-year community empowerment plan. If applicable, the progress report must also contain a discussion on the impediments to meeting the needs outlined in the five-year community empowerment plan. The department must determine the date the annual progress reports are due from each local government.

NEW SECTION. Sec. 6. (1) The terms or conditions of a community empowerment zone approved under this chapter may be amended to:

(a) Alter the boundaries of the community empowerment zone; or

(b) Terminate the designation of a community empowerment zone.

(2)(a) A request for an amendment under subsection (1)(a) of this section may not be in effect until the department issues an amended designation for the community empowerment zone that approves the requested amendment. The local government must promptly file with the department a request for approval that contains information the department deems necessary to evaluate the proposed changes and its impact on the area's designation as a community empowerment zone under RCW 43.63A.710 (as recodified by this act). The local government must hold at least two public hearings on the proposed changes and include the information in its request for an amendment to its community empowerment zone.

(b) The department shall approve or disapprove a proposed amendment to a community empowerment zone within sixty days of its receipt of a request under subsection (1)(a) of this section. The department may not approve changes to a community empowerment zone that are not in conformity with this chapter.

(3)(a) The termination of an area's designation as a community empowerment zone under subsection (1)(b) of this section is not effective until the department issues a finding stating the reasons for the termination, which may include lack of commitment of resources to activities in the community empowerment zone by the public, private, and community-based sectors. The local government may file an appeal to the department's findings within sixty days of the notice to terminate the area's designation. The department must notify the local government of the results within thirty days of the filing of the appeal.

(b) A termination of an area's designation as a community empowerment zone has no effect on benefits previously extended to individual businesses. The local government may not commit benefits to a business after the effective date of the termination of an area's designation as a community empowerment zone.

(4) The department may request applications from local governments for designation as community empowerment zones under this chapter as a result of a termination of an area's designation as a community empowerment zone under this section.

NEW SECTION. Sec. 7. The department must administer this chapter and has the following powers and duties:

(1) To monitor the implementation of chapter . . ., Laws of 2000 (this act) and submit reports evaluating the effectiveness of the program and any suggestions for legislative changes to the governor and legislature by December 1, 2000;

(2) To develop evaluation and performance measures for local governments to measure the effectiveness of the program at the local level on meeting the objectives of this chapter;

(3) To provide information and appropriate assistance to persons desiring to locate and operate a business in a community empowerment zone;

(4) To work with appropriate state agencies to coordinate the delivery of programs, including but not limited to housing, community and economic development, small business assistance, social service, and employment and training programs which are carried on in a community empowerment zone; and

(5) To develop rules necessary for the administration of this chapter.

NEW SECTION. Sec. 8. The administration of a community empowerment zone is under the jurisdiction of the local government. Each local government must, by ordinance, designate a community empowerment zone administrator for the area designated as a community empowerment zone that is within its jurisdiction. A community empowerment zone administrator must be an officer or employee of the local government. The community empowerment zone administrator is the liaison between the local government, the department, the business community, and labor and community-based organizations within the community empowerment zone.

NEW SECTION. Sec. 9. This chapter may be known and cited as the Washington community empowerment zone act.

NEW SECTION. Sec. 10. Sections 1, 2, and 5 through 9 of this act constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 11. RCW 43.63A.700 and 43.63A.710, as amended by this act, are each recodified as sections in chapter 43.-- RCW (sections 1, 2, and 5 through 9 of this act).

NEW SECTION. Sec. 12. If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of this act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this act in its application to the agencies concerned. Rules adopted under this act must meet federal requirements that are a necessary condition to the receipt of federal funds by the state.

NEW SECTION. Sec. 13. (1) The legislature finds that establishing a clear state-wide strategy for successful economic development will best prepare the state of Washington to respond to the challenges and take advantage of future economic cycles. The legislature further finds that without a state-wide economic development plan the state's budget and election cycles make it difficult for government to adhere to consistent, long-term economic development priorities that are essential to successful, enhanced economic development. The legislature further finds that the purpose of economic development is to increase the standard of living and enhance the quality of life of the citizens of this state.

(2) It is the intent of the legislature that a strategic state-wide economic development plan be created that reflects the following goals and objectives:

(a) To create and maintain jobs and income that would not otherwise be created or maintained, and to increase wealth rather than to redistribute it;

(b) To add value to private sector economic activity; and

(c) To assist businesses in developing their business strategies, increasing the skills of their workers and managers, applying advanced technologies, developing infrastructure, accessing capital, and enhancing social capital.

NEW SECTION. Sec. 14. For the purposes of this chapter "department" means the department of community, trade, and economic development, or its successor agency or agencies. "The plan" or "state plan" means a state-wide economic development plan, as developed under sections 15 and 16 of this act.

NEW SECTION. Sec. 15. (1) The legislative committee on economic development shall take the lead responsibility for creating a state‑wide strategic plan for economic development in conjunction with the department, and an advisory group of business, labor, and other interests. The advisory group shall be appointed by the lieutenant governor and shall consist of no more than twelve members.

(2) In preparing the state plan, the legislative committee on economic development and the department shall recognize:

(a) Regional economic, political, and cultural differences, and acknowledge the special challenges facing urban and rural communities; and

(b) Special contributions of, and challenges facing, women and minority-owned businesses.

(3) The plan should set priorities and concentrate resources on those priorities.

(4) The plan should include specific implementation steps and establish a process for institutionalizing economic development planning.

NEW SECTION. Sec. 16. The legislative committee on economic development and the department shall develop and include the following elements in the plan:

(1) New strategies that seek to improve the overall competitiveness of groups of similar businesses, usually termed clusters, and entire industries or sectors rather than traditional strategies that focus on individualized assistance. These strategies should foster interfirm cooperation and learning, technology adaptation, and work-based learning to improve work force skills. Under these strategies the state acts as a broker of available private and public development resources, or contracts for such broker services;

(2) Direction to the department to develop programs consistent with the state plan, and that are characterized by outcome-based performance management systems and decentralized decision making;

(3) Direction to the department to assist local governments and other interested parties in the creation of regional economic development plans consistent with the state plan; and

(4) Direction to the department to develop a professional research capacity to keep the state's trade assistance operation regularly appraised of opportunities and updated on performance.

NEW SECTION. Sec. 17. The legislature recognizes the urgent need for having a plan in place as soon as is reasonably possible. The legislative committee on economic development and the department are directed to immediately develop a work plan and take other steps necessary to implement sections 13 through 16 of this act.

NEW SECTION. Sec. 18. Sections 13 through 16 of this act constitute a new chapter in Title 43 RCW.

Sec. 19. RCW 43.330.070 and 1993 c 280 s 10 are each amended to read as follows:

(1) The department shall work closely with local communities to increase their capacity to respond to economic, environmental, and social problems and challenges. The department shall coordinate the delivery of development services and technical assistance to local communities or regional areas. It shall promote partnerships between the public and private sectors and between state and local officials to encourage appropriate economic growth and opportunity in communities throughout the state, in particular strategies designed to encourage economic growth and opportunities in community empowerment zones designated under RCW 43.63A.700 (as recodified by this act). The department shall promote appropriate local development by: Supporting the ability of communities to develop and implement strategic development plans; assisting businesses to start up, maintain, or expand their operations; encouraging public infrastructure investment and private and public capital investment in local communities; supporting efforts to manage growth and provide affordable housing and housing services; providing for the identification and preservation of the state's historical and cultural resources; and expanding employment opportunities.

(2) The department shall define a set of services including training and technical assistance that it will make available to local communities, community-based nonprofit organizations, regional areas, industry clusters, or businesses. The department shall simplify access to these programs by providing more centralized and user-friendly information and referral. The department shall coordinate community and economic development efforts to minimize program redundancy and maximize accessibility. The department shall develop a set of criteria for targeting services to local communities.

(3) The department shall develop a coordinated and systematic approach to providing training to community-based nonprofit organizations, local communities, industry clusters, and businesses. The approach shall be designed to increase the economic and community development skills available in local communities by providing training and funding for training for local citizens, nonprofit organizations, industry clusters, and businesses. The department shall emphasize providing training in those communities most in need of state assistance.

(4) As used in this section, "industry clusters" means a geographic concentration of interdependent competitive firms that do business with each other. Clusters also include firms that sell inside and outside of the geographic region as well as support firms that supply raw materials, components, and business services.

NEW SECTION. Sec. 20. The legislature finds that economic development, work force training, international trade, tourism development, housing assistance, assistance to local governments, and other programs and services provided by the department of community, trade, and economic development are vital to all regions of the state. The legislature further finds that program development and service delivery to the eastern region of the state could be significantly enhanced by a continuous, full-time physical staff presence in that region.

NEW SECTION. Sec. 21. For the purposes of sections 20 through 23 of this act:

(1) "Department" means the department of community, trade, and economic development, or its successor agency or agencies.

(2) "Director" means the director of the department.

NEW SECTION. Sec. 22. In order to more effectively respond to the needs of eastern Washington communities, the department shall, as soon as practicable, establish a field office and a full-time staff presence in eastern Washington. If practicable, the office shall be colocated with one or more existing state agencies in the Tri-Cities area to facilitate the urgent economic development needs of southeastern Washington. This office shall be staffed by the director in the most efficient manner that is likely to provide improved service to eastern Washington communities.

NEW SECTION. Sec. 23. Program activities and priorities for this office serving eastern Washington shall be determined by the director, in consultation with local government officials, business, labor, and educational advisors from the region.

NEW SECTION. Sec. 24. (1) The legislature finds that Washington's quality of life, standard of living, and social and economic opportunity all depend on the vitality of the state's economy. The legislature further finds that economic development tries to reinforce the natural way by which strong foundations in the areas of human resources, capital resources, technology, tax and regulatory, advanced physical infrastructure, information and communication infrastructure, and quality of life strengthen the economy. The legislature further finds that the strength and vitality of the state's economy depends on the competitiveness of the state's industry clusters. The legislature further finds industry clusters can become a powerful magnet for businesses to locate in an area and create a spawning ground for start-up companies. The legislature further finds that industry clusters create large, diverse pools of experienced workers; attract suppliers who tend to congregate in their vicinity for increased efficiency; and foster a competitive spirit that stimulates growth and innovative strategic alliances. The legislature further finds that the state must first identify and understand the industry clusters before strategies can be developed to enhance their competitive position in the world.

(2) It is the intent of the legislature to establish an industry cluster-based approach to economic development as a component of a state-wide strategy to address economic growth and quality of life issues.

NEW SECTION. Sec. 25. A new section is added to chapter 43.330 RCW to read as follows:

(1) The department of community, trade, and economic development, or its successor agency, shall work with industry associations and organizations to identify industry clusters on a regional and state-wide basis. The industry clusters may include, but not be limited to aerospace, agriculture, food processing, forest products, business services, financial services, health and biomedical, software, transportation and distribution, environmental technology, and microelectronics.

(2) In the identification of industry clusters, the department's activities may include, but are not limited to:

(a) Conducting focus group discussions, facilitating meetings, and conducting studies to identify industry clusters, members of an industry cluster, the current state of the industry cluster, and issues of common concern of the industry cluster;

(b) Supporting the formation of industry cluster associations, publication of cluster association directories, and related efforts to encourage the entry of new firms into the industry cluster; and

(3) The department shall work with identified industry clusters, private sector organizations, local governments, local economic development organizations, and higher education and training institutions to assist in the development of strategies designed to strengthen the competitiveness of the state's industry clusters. The department shall, on a continuing basis, evaluate effectiveness of the services provided to industry clusters using information gathered at the regional and state-wide level.

(4) As used in this section, "industry cluster" means a geographic concentration of interdependent competitive firms that do business with each other. Clusters also include firms that sell inside and outside of the geographic region as well as support firms that supply raw materials, components, and business services.

Sec. 26. RCW 43.330.090 and 1998 c 245 s 85 are each amended to read as follows:

(1) The department shall work with private sector organizations, industry clusters, local governments, local economic development organizations, and higher education and training institutions to assist in the development of strategies to diversify the economy, facilitate technology transfer and diffusion, and increase value-added production by focusing on targeted sectors. The targeted sectors may include, but are not limited to, software, forest products, biotechnology, environmental industries, recycling markets and waste reduction, aerospace, food processing, tourism, film and video, microelectronics, new materials, robotics, and machine tools. The department shall, on a continuing basis, evaluate the potential return to the state from devoting additional resources to a targeted sector's approach to economic development and including additional sectors in its efforts. The department shall use information gathered in each service delivery region in formulating its sectoral strategies and in designating new targeted sectors.

(2) The department shall ensure that the state continues to pursue a coordinated program to expand the tourism industry throughout the state in cooperation with the public and private tourism development organizations. The department shall work to provide a balance of tourism activities throughout the state and during different seasons of the year. In addition, the department shall promote, market, and encourage growth in the production of films and videos, as well as television commercials within the state; to this end the department is directed to assist in the location of a film and video production studio within the state.

(3) In assisting in the development of a targeted sector, the department's activities may include, but are not limited to:

(a) Conducting focus group discussions, facilitating meetings, and conducting studies to identify members of the sector, appraise the current state of the sector, and identify issues of common concern within the sector;

(b) Supporting the formation of industry associations, publications of association directories, and related efforts to create or expand the activities or industry associations;

(c) Assisting in the formation of flexible networks by providing (i) agency employees or private sector consultants trained to act as flexible network brokers and (ii) funding for potential flexible network participants for the purpose of organizing or implementing a flexible network;

(d) Helping establish research consortia;

(e) Facilitating joint training and education programs;

(f) Promoting cooperative market development activities;

(g) Analyzing the need, feasibility, and cost of establishing product certification and testing facilities and services; and

(h) Providing for methods of electronic communication and information dissemination among firms and groups of firms to facilitate network or industry cluster activity.

(4) As used in this section, "industry cluster" has the same meaning as in section 25 of this act.

Sec. 27. RCW 82.60.049 and 1999 c 164 s 304 are each amended to read as follows:

(1) For the purposes of this section:

(a) "Eligible area" also means a designated community empowerment zone approved before January 1, 2000, under RCW 43.63A.700 or a county containing a community empowerment zone approved before January 1, 2000.

(b) "Eligible investment project" also means an investment project in an eligible area as defined in this section.

(2) In addition to the provisions of RCW 82.60.040, the department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW, on each eligible investment project that is located in an eligible area, if the applicant establishes that at the time the project is operationally complete:

(a) The applicant will hire at least one qualified employment position for each seven hundred fifty thousand dollars of investment on which a deferral is requested; and

(b) The positions will be filled by persons who at the time of hire are residents of the community empowerment zone in which the project is located. As used in this subsection, "resident" means the person makes his or her home in the community empowerment zone. A mailing address alone is insufficient to establish that a person is a resident for the purposes of this section. The persons must be hired after the date the application is filed with the department.

(3) All other provisions and eligibility requirements of this chapter apply to applicants eligible under this section.

(4) If a person does not meet the requirements of this section by the end of the calendar year following the year in which the project is certified as operationally complete, all deferred taxes are immediately due.

NEW SECTION. Sec. 28. A new section is added to chapter 82.14 RCW to read as follows:

(1) The county legislative authority of a county in which there is a community empowerment zone as defined in section 2 of this act may submit an authorizing proposition to the county voters and, if the proposition is approved by a majority of persons voting, fix and impose a sales and use tax in accordance with the terms of this chapter for the purposes designated in subsection (3) of this section.

(2) The tax authorized in this section shall be in addition to any other taxes authorized by law and shall be collected from those persons who are taxable by the state under chapters 82.08 and 82.12 RCW upon the occurrence of any taxable event within the county. The rate of tax shall equal one-tenth of one percent of the selling price in the case of sales tax, or value of the article used in the case of a use tax.

(3) Moneys received from any tax imposed under this section shall be used solely for the purpose of providing funds for costs associated with financing, design, acquisition, construction, equipping, operating, maintaining, remodeling, repairing, reequipping, and improvement of emergency communication systems and facilities.

(4) Counties in which there are community empowerment zones as defined in section 2 of this act are authorized to develop joint ventures to collocate emergency communication systems and facilities.

NEW SECTION. Sec. 29. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected."

SHB 2460 - S COMM AMD

By Committee on Ways & Means

ADOPTED 3/8/00

On page 1, line 1 of the title, after "zones;" strike the remainder of the title and insert "amending RCW 43.63A.700, 43.63A.710, 43.330.070, 43.330.090, and 82.60.049; adding a new section to chapter 43.330 RCW; adding a new section to chapter 82.14 RCW; adding new chapters to Title 43 RCW; creating new sections; and recodifying RCW 43.63A.700 and 43.63A.710."