BILL REQ. #:  S-3982.1 

Read first time 01/21/2004.   Referred to Committee on Economic Development.

     AN ACT Relating to providing a source of funding for customized work force training; amending RCW 43.163.020; adding a new section to chapter 82.32 RCW; and adding a new chapter to Title 28C RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that the availability of a trained work force is critical to attracting and retaining businesses. The legislature also finds that the growth of many businesses is limited by an unmet need for training. Furthermore, training not only helps business, it also improves the quality of life for workers and communities. Because of the statewide public benefit to be gained from instituting a customized training program, the legislature intends to create a new program to fund work force training through the sale of bonds. The bonds themselves will be paid by the earmarking of the state business and occupation tax and public utility tax that is imposed on participating employers.

NEW SECTION.  Sec. 2   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Authority" means the Washington economic development finance authority created under RCW 43.163.020, or any board, body, commission, department, or officer succeeding to the principal functions of the authority or to whom the powers conferred upon the authority shall be given by law.
     (2) "Board" means the state board for community and technical colleges.
     (3) "Bond resolution" means any resolution of the authority, adopted under this chapter, authorizing the issuance and sale of bonds.
     (4) "Bonds" means bonds, notes, commercial paper, certificates of indebtedness, or other evidences of indebtedness of the authority issued under this chapter.
     (5) "Community college" has the definition in RCW 28B.50.030.
     (6) "Costs of training" means the direct payments made under a contract with a community college for formal technical or skill training, including basic skills. "Costs of training" includes amounts in the contract for costs of instruction, materials, equipment, rental of class space, marketing, and overhead. "Costs of training" does not include employee tuition reimbursements unless the tuition reimbursement is specifically included in a contract.
     (7) "Participant" means a private employer that, under this chapter, undertakes a training program with a community college or technical college.
     (8) "Technical college" has the definition in RCW 28B.50.030.
     (9) "Training program" means a program funded under this chapter at a community college or a technical college.
     (10) "Trust indenture" means any agreement, trust indenture, or other similar instrument by and between the authority and one or more corporate trustees.

NEW SECTION.  Sec. 3   (1) The Washington customized employment work force training program is hereby created to allow employers locating or expanding in the state to receive training assistance to provide training for employees.
     (2)(a) Application to receive funding under this program shall be made to the board in a form and manner as specified by the board. Persons who have been approved as eligible shall be provided with a training grant to be used to pay for the costs of training. A person may not receive credit for amounts over the maximum annual training cost per employee, as established by the state board for community and technical colleges, and is not eligible to receive total grants over five hundred thousand dollars per calendar year.
     (b) Approval shall be granted for applicants who meet the following criteria:
     (i) The employer must have entered into an agreement with a community college or a technical college to engage in customized training and the employer must agree to: (A) Reimburse the college in an amount equal to one-half of the amount of the training grant; (B) pay the taxes to be deposited into the employment training finance account pursuant to section 11 of this act; and (C) make such other payments as the college specifies to ensure payments into the employment training finance account sufficient to cover the costs associated with the bonds issued under section 6 of this act. The taxes deposited in the employment training finance account do not constitute payment to the college.
     (ii) The employer must either: (A) Be engaged in activities subject to tax under chapter 82.04 or 82.16 RCW and must report, or expect to report, such tax over a ten-year period in an annual amount of at least one-tenth of the amount of the grant, or, if more than one grant is received, at least one-tenth the total of all grants received for which taxes are being deposited into the employment training finance account pursuant to section 11 of this act; or (B) document that the community college or technical college with which it has a training contract has applied for and has received a job skills program grant under RCW 28C.04.420 that may be used to meet the reimbursement requirement of (b)(i)(A) of this subsection. In order to qualify under this subsection, the terms of the job skills program grant must provide for the employer to pay back the job skills program grant over a period of time not to exceed ten years.
     (iii) The number of employees an employer has in the state during the calendar year following the completion of the training program will equal the number of employees the employer had in the state in the calendar year preceding the start of the training program plus seventy-five percent of the number of trainees. The agreement with the community or technical college provided for in (b)(i) of this subsection shall specify terms for additional reimbursement or payment to the employment training finance account by the employer if the criterion of this subsection is not met.
     (iv) The training grant may not be used to train workers who have been hired as a result of a strike or lockout.
     (c) Training grants are available on a first-come first-served basis, with priority based on the date and time the application is received by the board.
     (3) Community colleges and technical colleges may enter into agreements with four-year institutions of higher education as defined in RCW 28B.10.016 in accordance with the interlocal cooperation act, chapter 39.34 RCW.
     (4) The board may adopt rules to implement this section.

NEW SECTION.  Sec. 4   SPECIAL OBLIGATION BONDS--ISSUANCE. (1) The authority may, from time to time, issue its special obligation bonds in order to carry out the purposes of this chapter and to enable the authority to exercise any of the powers granted to it in this chapter. The bonds may be issued on either a taxable or federally tax-exempt basis. The bonds shall be issued pursuant to a bond resolution or trust indenture and shall be payable solely out of the employment training finance account created in section 11 of this act. The employment training finance account shall be funded in whole or in part from moneys paid by one or more participants for whose benefit such bonds were issued and from any other sources authorized by law, including from the proceeds of bonds issued by the authority for the purpose of refunding any outstanding bonds of the authority.
     (2) The bonds may be secured by:
     (a) A first lien against any unexpended proceeds of the bonds;
     (b) A first lien against moneys in the employment training finance account created in section 11 of this act;
     (c) A first or subordinate lien against the revenue and receipts of the participant or participants;
     (d) A first or subordinate security interest against any real or personal property, tangible or intangible, of the participant or participants, including, but not limited to, the training program financed by the authority;
     (e) Any other real or personal property of the participant or participants, tangible or intangible; or
     (f) Any combination of (a) through (e) of this subsection.
     Any security interest created against the unexpended bond proceeds and against the employment training finance account shall be immediately valid and binding against the moneys and any securities in which the moneys may be invested without authority or trustee possession, and the security interest shall be prior to any party having any competing claim against the moneys or securities, without filing or recording under Article 9A of the Uniform Commercial Code, Title 62A RCW, and regardless of whether the party has notice of the security interest.
     (3) The bonds may be issued as serial bonds or as term bonds or any such combination. The bonds shall bear such date or dates; mature at such time or times; bear interest at such rate or rates, either fixed or variable; be payable at such time or times; be in such denominations; carry such registration privileges; be made transferable, exchangeable, and interchangeable; be payable in lawful money of the United States of America at such place or places; be subject to such terms of redemption; and be sold at public or private sale, in such manner, at such time, and at such price as the authority shall determine. The bonds shall be executed by the manual or facsimile signatures of the chairperson and the authority's duly elected secretary or its executive director, and by the trustee if the authority determines to use a trustee. At least one signature shall be manually subscribed.
     (4) Any bond resolution, trust indenture, or agreement with a participant relating to bonds issued by the authority or the financing or refinancing made available by this act may contain provisions, which may be made a part of the contract with the holders or owners of the bonds to be issued, pertaining to the following, among other matters:
     (a) The security interests granted by the participant to secure repayment of any amounts financed and the performance by the participant of its other obligations in the financing;
     (b) The security interests granted to the holders or owners of the bonds to secure repayment of the bonds;
     (c) Rentals, fees, and other amounts to be charged, and the sums to be raised in each year through such charges, and the use, investment, and disposition of the sums;
     (d) The segregation of reserves or sinking funds, and the regulation, investment, and disposition thereof;
     (e) Limitations on the uses of the project;
     (f) Limitations on the purposes to which, or the investments in which, the proceeds of the sale of any issue of bonds may be applied;
     (g) Terms pertaining to the issuance of additional parity bonds;
     (h) Terms pertaining to the incurrence of parity debt;
     (i) The refunding of outstanding bonds;
     (j) Procedures, if any, by which the terms of any contract with bondholders may be amended or abrogated;
     (k) Acts or failures to act that constitute a default by the participant or the authority in their respective obligations and the rights and remedies in the event of a default;
     (l) Terms governing performance by the trustee of its obligation; or
     (m) Such other additional covenants, agreements, and provisions as are deemed necessary, useful, or convenient by the authority for the security of the holders of the bonds.
     (5) Bonds may be issued by the authority to refund other outstanding authority bonds, at or before the maturity thereof, and to pay any redemption premium with respect thereto. Bonds issued for such refunding purposes may be combined with bonds issued for the financing or refinancing of new training programs. Pending the application of the proceeds of the refunding bonds to the redemption of the bonds to be redeemed, the authority may enter into an agreement or agreements with a corporate trustee under section 7 of this act with respect to the interim investment of the proceeds and the application of the proceeds and the earnings on the proceeds to the payment of the principal of and interest on, and the redemption of the bonds to be redeemed.
     (6) All bonds and any interest coupons appertaining to the bonds are negotiable instruments under Title 62A RCW.
     (7) Neither the members of the authority, nor its employees or agents, nor any person executing the bonds is liable personally on the bonds or subject to any personal liability or accountability by reason of the issuance of the bonds.
     (8) The authority may purchase its bonds with any of its funds available for the purchase. The authority may hold, pledge, cancel, or resell the bonds subject to and in accordance with agreements with bondholders.

NEW SECTION.  Sec. 5   SPECIAL OBLIGATION BONDS--PAYMENT--SEGREGATION OF PROCEEDS AND MONEYS. Bonds issued under this chapter shall not be deemed to constitute obligations, either general or special, of the state or of any political subdivision of the state, or a pledge of the faith and credit of the state or of any political subdivision, or a general obligation of the authority. The bonds shall be special obligations of the authority and shall be payable solely from the employment training finance account created in section 11 of this act. Except for any initial appropriations which may be made after the biennium ending June 30, 2005, the fund or funds shall be funded in whole or in part from moneys paid by one or more participants for whose benefit such bonds were issued and from any other sources authorized by law, including from the proceeds of bonds issued by the authority for the purpose of refunding any outstanding bonds of the authority. The issuance of bonds under this chapter shall not obligate, directly, indirectly, or contingently, the state or any political subdivision of the state to levy any taxes or appropriate or expend any funds for the payment of the principal or the interest on the bonds.
     Neither the proceeds of bonds issued under this chapter, any moneys used or to be used to pay the principal of or interest on the bonds, nor any moneys received by the authority to defray its administrative costs shall constitute public money or property. All of such moneys shall be kept segregated and set apart from funds of the state and any political subdivision of the state and shall not be subject to appropriation or allotment by the state or subject to the provisions of chapter 43.88 RCW.

NEW SECTION.  Sec. 6   AGREEMENTS WITH PARTICIPANTS--PAYMENT OF COSTS AND EXPENSES. In connection with any bonds issued by the authority, the authority shall enter into agreements with participants which shall provide for the payment by each participant of amounts which shall be sufficient, together with other revenues available to the authority, if any, to: (1) Pay the issuance and administrative fees set by the authority; (2) pay the costs of conducting the training program financed by the authority, to the extent that the payment of the costs has not otherwise been adequately provided for; (3) pay the business and occupation tax and utility tax due, or, if the participant is eligible for an exemption or credit on such tax, pay an amount equivalent to the amount that would be due, but for the exemption or credit, into the employment training finance account to pay the principal of, premium, if any, and interest on outstanding bonds of the authority issued in respect of such program or programs as the same shall become due and payable; and (4) create and maintain reserves required or provided for in any bond resolution or trust indenture authorizing the issuance of such bonds of the authority. The payments shall not be subject to supervision or regulation by any department, committee, board, body, bureau, or agency of the state other than the authority.

NEW SECTION.  Sec. 7   MONEYS DEEMED TRUST FUNDS--AGREEMENT OR TRUST INDENTURE WITH BANK OR TRUST COMPANY. All moneys received by or on behalf of the authority under this chapter, whether as proceeds from the sale of bonds or from participants or from other sources, shall be deemed to be trust funds to be held and applied solely as provided in this chapter. The authority, in lieu of receiving and applying the moneys itself, may enter into an agreement or trust indenture with one or more banks or trust companies having the power and authority to conduct trust business in the state to:
     (1) Perform all of any part of the obligations of the authority with respect to: (a) Bonds issued by it; (b) the receipt, investment, and application of the proceeds of the bonds and moneys paid by a participant or available from other sources for the payment of the bonds; (c) the enforcement of the obligations of a participant in connection with the financing or refinancing of any project; and (d) other matters relating to the exercise of the authority's powers under this chapter;
     (2) Receive, hold, preserve, and enforce any security interest or evidence of security interest granted by a participant for purposes of securing the payment of the bonds; and
     (3) Act on behalf of the authority or the holders or owners of bonds of the authority for purposes of assuring or enforcing the payment of the bonds, when due.

NEW SECTION.  Sec. 8   CHAPTER SUPPLEMENTAL--APPLICATION OF OTHER LAWS. This chapter provides a complete, additional, and alternative method for accomplishing the purposes of this chapter and shall be regarded as supplemental and additional to powers conferred by other laws. The issuance of bonds and refunding bonds under this chapter need not comply with the requirements of any other law applicable to the issuance of bonds.

NEW SECTION.  Sec. 9   CONSTRUCTION. This chapter, being necessary for the welfare of the state and its inhabitants, shall be liberally construed to effect its purposes. Insofar as the provisions of this chapter are inconsistent with the provisions of any general or special law, or parts thereof, the provisions of this chapter shall be controlling.

NEW SECTION.  Sec. 10   CAPTIONS NOT LAW. Captions used in this chapter are not any part of the law.

NEW SECTION.  Sec. 11   A new section is added to chapter 82.32 RCW to read as follows:
     The business and occupation tax and public utility tax received from a person who is an employer participating under section 3 of this act shall be deposited into the employment training finance account, which is hereby created in the custody of the state treasurer. Only the Washington economic development finance authority may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures. The money in the account must be used for the purposes of bond resolution or trust indenture under which the bonds are issued under chapter 28C.-- RCW (sections 1 through 10 of this act). The deposit of revenue under this section from a person shall cease when the state board for community and technical colleges specifies that the participant has met the monetary obligations of the program and is no longer participating in the program under section 3 of this act.

Sec. 12   RCW 43.163.020 and 1995 c 399 s 89 are each amended to read as follows:
     The Washington economic development finance authority is established as a public body corporate and politic, with perpetual corporate succession, constituting an instrumentality of the state of Washington exercising essential governmental functions. The authority is a public body within the meaning of RCW 39.53.010.
     The authority shall consist of ((eighteen [seventeen])) seventeen members as follows: The director of the department of community, trade, and economic development, the director of the ((department of agriculture)) state board for community and technical colleges, the state treasurer, one member from each caucus in the house of representatives appointed by the speaker of the house, one member from each caucus in the senate appointed by the president of the senate, and ten public members with one representative of women-owned businesses and one representative of minority-owned businesses and with at least three of the members residing east of the Cascades. The public members shall be residents of the state appointed by the governor on the basis of their interest or expertise in trade, agriculture or business finance or jobs creation and development. One of the public members shall be appointed by the governor as chair of the authority and shall serve as chair of the authority at the pleasure of the governor. The authority may select from its membership such other officers as it deems appropriate.
     The term of the persons appointed by the governor as public members of the authority, including the public member appointed as chair, shall be four years from the date of appointment, except that the term of three of the initial appointees shall be for two years from the date of appointment and the term of four of the initial appointees shall be for three years from the date of appointment. The governor shall designate the appointees who will serve the two-year and three-year terms.
     In the event of a vacancy on the authority due to death, resignation or removal of one of the public members, or upon the expiration of the term of one of the public members, the governor shall appoint a successor for the remainder of the unexpired term. If either of the state offices is abolished, the resulting vacancy on the authority shall be filled by the state officer who shall succeed substantially to the power and duties of the abolished office.
     Any public member of the authority may be removed by the governor for misfeasance, malfeasance or willful neglect of duty after notice and a public hearing, unless such notice and hearing shall be expressly waived in writing by the affected public member.
     The state officials serving in ex officio capacity may each designate an employee of their respective departments to act on their behalf in all respects with regard to any matter to come before the authority. Such designations shall be made in writing in such manner as is specified by the rules of the authority.
     The members of the authority shall serve without compensation but shall be entitled to reimbursement, solely from the funds of the authority, for expenses incurred in the discharge of their duties under this chapter. The authority may borrow funds from the department for the purpose of reimbursing members for expenses; however, the authority shall repay the department as soon as practicable.
     A majority of the authority shall constitute a quorum.

NEW SECTION.  Sec. 13   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.

NEW SECTION.  Sec. 14   Sections 1 through 10 of this act constitute a new chapter in Title 28C RCW.