"NEW SECTION.  Sec. 1   The legislature finds that Washington is home to some of the world's most innovative companies, researchers, entrepreneurs, and workers. Talent and creativity exist in all areas of Washington. The legislature further finds that economic potential can be enhanced when the state facilitates partnerships between talented leaders from research institutions, industry, and local economic development and workforce development organizations to attract additional talent and build on the strengths found in existing industry clusters. Washington is a national leader in economic strategy based on clusters of industries, promoting the connections among firms, suppliers, customers, and public resources. It is the intent of the legislature that Washington support innovation partnerships and partnership zones around the state that will become globally recognized as hubs of expertise, innovation, and commercialization and advance Washington's position in the world economy.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.330 RCW to read as follows:
     (1) The department of community, trade, and economic development shall administer, with the advice of the Washington economic development commission, an innovation partnership zone program.
     (2) On October 1st of each year, the director shall designate innovation partnership zones. Applications for state designation of an area as an innovation partnership zone may be submitted by associate development organizations, port districts, workforce development councils, cities, or counties. Applicants must demonstrate:
     (a) The support of a local jurisdiction, a research institution, an educational institution, an industry or cluster association, a workforce development council, and an associate development organization, port, or chamber of commerce;
     (b) Evidence of planning for the innovation partnership zone;
     (c) Identifiable boundaries for the zone within which the applicant will concentrate efforts to connect innovative researchers, entrepreneurs, investors, industry associations or clusters, and training providers. The geographic area defined should lend itself to a distinct identity and have the capacity to accommodate firm growth;
     (d) The presence within the proposed innovation partnership zone of research capacity, including research teams focused on emerging technologies and their commercialization or faculty and researchers that could increase their focus on commercialization of technology if provided the appropriate technical assistance;
     (e) Using labor market information from the employment security department and local labor markets as well as data on revenue growth rates, wage levels, and other factors, a concentration of firms within the proposed innovation partnership zone that are important to the economic prosperity of the state and have comparative competitive advantage or the potential for comparative competitive advantage;
     (f) Training capacity either within the zone or readily accessible to the zone.
     (3) An innovation partnership zone shall be designated as a zone for a four-year period. At the end of the four-year period, the zone must reapply for the designation through the department.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.330 RCW to read as follows:
     The director shall disburse innovation partnership zone grants. Innovation partnership zone grants must be used to improve the commercialization facilities within an area designated as an innovation partnership zone and be used to facilitate the collaboration between research teams, industry, and workforce training providers that will lead to the formation and financing of new innovative firms, the commercialization of research results, and the movement of firms and industry clusters into globally competitive niches. The grants will be awarded only to applicants operating within a designated innovation partnership zone consistent with the following criteria and such other criteria as the director develops in consultation with the Washington state economic development commission:
     (1) Each grant must be matched by a commitment of financial support from the private sector equal to or greater than fifty percent of the requested grant amount;
     (2) Eligible grant applicants may include associate development organizations, port districts, workforce development councils, educational or research institutions, and local jurisdictions;
     (3) During the biennium ending June 30, 2009, no more than two partnership zone grants shall be awarded to recipients in the central Puget Sound region, a minimum of two such grants shall be awarded in eastern Washington and a minimum of one such grant shall be awarded in western Washington outside the central Puget Sound region;
     (4) Applicants for innovation partnership zone grants must:
     (a) Disclose the service delivery mechanisms to be used to allow industry associations, cluster associations, and businesses to access the technical assistance, advisory, research, and commercialization capabilities of research teams within the zone;
     (b) Detail how training services will be coordinated and delivered to industry associations, cluster associations, and businesses within the zone; and
     (c) Describe the methods by which the applicant will facilitate the competitiveness of firms, the commercialization of research, and the upgrading of worker skills within the zone.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.330 RCW to read as follows:
     (1) The Washington state economic development commission shall, with the advice of an innovation partnership advisory group selected by the commission, have oversight responsibility for the implementation of the state's efforts to further innovation partnerships throughout the state. The commission shall:
     (a) Provide information and advice to the department of community, trade, and economic development to assist in the implementation of the innovation partnership zone program, including criteria to be used in the selection of grant applicants for funding;
     (b) Document clusters of companies throughout the state that have comparative competitive advantage or the potential for comparative competitive advantage, using the process and criteria for identifying strategic clusters developed by the working group specified in subsection (2) of this section;
     (c) Conduct an innovation opportunity analysis to identify (i) the strongest current intellectual assets and research teams in the state focused on emerging technologies and their commercialization, and (ii) faculty and researchers that could increase their focus on commercialization of technology if provided the appropriate technical assistance and resources;
     (d) Based on its findings and analysis, and in conjunction with the higher education coordinating board and research institutions:
     (i) Develop a plan to build on existing, and develop new, intellectual assets and innovation research teams in the state in research areas where there is a high potential to commercialize technologies. The commission shall present the plan to the governor and legislature by December 31, 2007. The higher education coordinating board shall be responsible for implementing the plan in conjunction with the publicly funded research institutions in the state. The plan shall address the following elements and such other elements as the commission deems important:
     (A) Specific mechanisms to support, enhance, or develop innovation research teams and strengthen their research and commercialization capacity in areas identified as useful to strategic clusters and innovative firms in the state;
     (B) Identification of the funding necessary for laboratory infrastructure needed to house innovation research teams;
     (C) Specification of the most promising research areas meriting enhanced resources and recruitment of significant entrepreneurial researchers to join or lead innovation research teams;
     (D) The most productive approaches to take in the recruitment, in the identified promising research areas, of a minimum of ten significant entrepreneurial researchers over the next ten years to join or lead innovation research teams;
     (E) Steps to take in solicitation of private sector support for the recruitment of entrepreneurial researchers and the commercialization activity of innovation research teams; and
     (F) Mechanisms for ensuring the location of innovation research teams in innovation partnership zones;
     (ii) Provide direction for the development of comprehensive entrepreneurial assistance programs at research institutions. The programs may involve multidisciplinary students, faculty, entrepreneurial researchers, entrepreneurs, and investors in building business models and evolving business plans around innovative ideas. The programs may provide technical assistance and the support of an entrepreneur-in-residence to innovation research teams and offer entrepreneurial training to faculty, researchers, undergraduates, and graduate students. Curriculum leading to a certificate in entrepreneurship may also be offered;
     (e) Develop performance measures to be used in evaluating the performance of innovation research teams, the implementation of the plan and programs under (d)(i) and (ii) of this subsection, and the performance of innovation partnership zone grant recipients, including but not limited to private investment measures, business initiation measures, job creation measures, and measures of innovation such as licensing of ideas in research institutions, patents, or other recognized measures of innovation. The performance measures developed shall be consistent with the economic development commission's comprehensive plan for economic development and its standards and metrics for program evaluation. The commission shall report to the legislature and the governor by December 31, 2008, on the measures developed; and
     (f) Using the performance measures developed, perform a biennial assessment and report, the first of which shall be due December 31, 2012, on:
     (i) Commercialization of technologies developed at state universities, found at other research institutions in the state, and facilitated with public assistance at existing companies;
     (ii) Outcomes of the funding of innovation research teams and recruitment of significant entrepreneurial researchers;
     (iii) Comparison with other states of Washington's outcomes from the innovation research teams and efforts to recruit significant entrepreneurial researchers; and
     (iv) Outcomes of the grants for innovation partnership zones.
The report shall include recommendations for modifications of this act and of state commercialization efforts that would enhance the state's economic competitiveness.
     (2) The economic development commission and the workforce training and education coordinating board shall jointly convene a working group to:
     (a) Specify the process and criteria for identification of substate geographic concentrations of firms or employment in an industry and the industry's customers, suppliers, supporting businesses, and institutions, which process will include the use of labor market information from the employment security department and local labor markets; and
     (b) Establish criteria for identifying strategic clusters which are important to economic prosperity in the state, considering cluster size, growth rate, and wage levels among other factors.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.330 RCW to read as follows:
     The innovation partnership fund is created in the custody of the state treasurer. Only the state economic development commission, with the concurrence of the higher education coordinating board, may authorize expenditures from the fund. Expenditures from the fund may be made only for the purposes of section 4 of this act. Revenues to the fund consist of transfers or appropriations made by the legislature, transfers made by state research institutions, and private donations.

NEW SECTION.  Sec. 6   A new section is added to chapter 43.330 RCW to read as follows:
     For the purposes of this act, "commercialization" means a sequence of steps, including technology transfer, technical assistance in product development, production process design, and technical skills development, necessary to achieve market entry and general market competitiveness of innovative technologies, processes, and products."