"NEW SECTION.  Sec. 1   (1) The legislature finds that:
     (a) Many regions of the state are thriving but other communities throughout rural and urban Washington need increased investments to create vibrant local business districts and prosperous neighborhoods;
     (b) Nonprofit organizations provide a variety of community services that serve the needs of the citizens of Washington. Many of these services are implemented under contract with state agencies. The efficiency and quality of these services may be enhanced by the provision of safe, reliable, and sound facilities, and, in certain cases, it may be appropriate for the state to assist in the development of these facilities; and
     (c)Providing capital investments is critical for the economic health of many communities, helps build strong relationships with the state, and expands life opportunities for underserved, low-income populations.
     (2) It is the intent of the legislature to enhance community service programs by nonprofit organizations by creating the building communities fund.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout sections 3 through 5 of this act unless the context clearly requires otherwise.
     (1) "Department" means the department of community, trade, and economic development.
     (2) "Eligible project area" means: (a) A county that has an unemployment rate that is twenty percent above the state average for the immediately previous three years; (b) an area within a county that the department determines to be a low-income community consistent with the definition of low-income community in section 45D of the internal revenue code, as amended; or (c) an area within a school district in which at least fifty percent of local elementary students receive free and reduced-price meals.
     (3) "Nonprofit organization" means an organization that is tax exempt, or not required to apply for an exemption, under section 501(c)(3) or 501(c)(6) of the internal revenue code, as amended.
     (4) "Technical assistance" means professional services provided under contract to nonprofit organizations for feasibility studies, planning, and project management related to acquiring, constructing, or rehabilitating nonresidential community services facilities.

NEW SECTION.  Sec. 3   The building communities fund account is created in the state treasury. The account shall consist of legislative appropriations and gifts, grants, or endowments from other sources as permitted by law. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for capital and technical assistance grants as provided in RCW 43.63A.125.

NEW SECTION.  Sec. 4   (1) The building communities fund program is created in the department. Under the program, capital and technical assistance grants may be made to nonprofit organizations in eligible project areas. The department shall establish a statewide competitive process to solicit, evaluate, and prioritize grant applications for acquiring, constructing, or rehabilitating facilities, including social service centers, multipurpose community centers, and cultural centers, used for the delivery of nonresidential community services. The department shall evaluate and rank applications in consultation with a citizen advisory committee. Applicants must demonstrate that:
     (a) Their facilities will offer to:
     (i) Provide social services;
     (ii) Provide technical assistance to start or retain small businesses;
     (iii) Provide employment readiness training for community residents;
     (iv) Increase the job skills of community residents;
     (v) Provide educational and recreational opportunities beyond those available from the public education system; or
     (vi) Provide services to meet such other high priority needs of residents of eligible project areas as are determined by the department in consultation with the citizen advisory committee required in this section; and
     (b) The proposed project:
     (i) Will increase the range, efficiency, or quality of social services it provides to citizens;
     (ii) Will be located in and serve an eligible project area;
     (iii) Reflects a long-term vision for the development of the community, shared by residents, businesses, leaders, and partners;
     (iv) Requires state funding to accomplish a discrete, usable phase of the project;
     (v) Is ready to proceed and will make timely use of the funds;
     (vi) Is sponsored by one or more entities that have the organizational and financial capacity to fulfill the terms of the grant agreement and to maintain the project into the future;
     (vii) Fills an unmet need for community services;
     (viii) Will achieve its stated objectives; and
     (ix) Is a community priority as shown through tangible commitments of existing or future assets made to the project by community residents, leaders, businesses, and government partners.
     (2) The evaluation and ranking process shall also include an examination of existing assets that applicants may apply to projects. Grant assistance under this section shall not exceed twenty-five percent of the total cost of the project. The nonstate portion of the total project cost may include cash, the value of real property when acquired solely for the purpose of the project, and in-kind contributions.
     (3)(a) The department shall submit a ranked list of recommended projects to the governor and the legislature in the department's biennial capital budget requests beginning with the 2009-2011 biennium and thereafter. The list shall include a description of each project, its total cost, the amount of requested state funding, and the amount of recommended state funding.
     (b) The total amount of recommended state capital funding for projects on a biennial ranked project list shall be determined by the capital budget beginning with the 2009-2011 biennium and thereafter, and shall not exceed ten million dollars. In addition, if funds not obtained through the issuance of bonds have been appropriated, up to three million dollars may be used for technical assistance grants. The department shall not sign contracts or otherwise financially obligate funds under this section until the legislature has approved a specific list of projects.
     (4) In addition to the ranked list, the department shall submit to the appropriate fiscal committees of the legislature all application materials it received and all working papers it developed during its evaluation process.
     (5) After the legislature has approved a specific list of projects in law, the department shall:
     (a) Develop and manage appropriate contracts with the selected applicants;
     (b) Monitor project expenditures and grantee performance;
     (c) Report project and contract information to the appropriate fiscal and policy committees of the legislature; and
     (d) Exercise due diligence and other contract management responsibilities as required.
     (6) In contracts for grants authorized under this section, the department shall include provisions that require that capital improvements be held by the grantee for a specified period of time appropriate to the amount of the grant and that facilities be used for the express purpose of the grant. If the grantee is found to be out of compliance with provisions of the contract, the grantee shall repay to the state general fund the principal amount of the grant plus interest calculated at the rate of interest on state of Washington general obligation bonds issued most closely to the date of authorization of the grant.

NEW SECTION.  Sec. 5   (1) The department shall develop both performance measures and accountability and reporting standards for grant recipients and shall annually evaluate the progress of each grant recipient applying these measures and standards. At a minimum, the department shall require performance measures of workload or level of service, measures of efficiency, and measures of effectiveness. Performance measures should be as consistent as is practicable to allow for cross-project comparisons. The department shall, based on its evaluations, share best practices with grant recipients.
     (2) Beginning January 1, 2011, the department shall submit an annual report to the appropriate committees of the legislature, including:
     (a) A list of projects currently under contract with the department under the building communities fund program; a description of each project, its total cost, the amount of state funding awarded and expended to date, the project status, the number of low-income people served, and the results of the project evaluations required in subsection (1) of this section; and
     (b) Recommendations, if any, for policy and programmatic changes to the building communities fund program to better achieve program objectives.

NEW SECTION.  Sec. 6   Sections 2 through 5 of this act are each added to chapter 43.63A RCW."