BILL REQ. #:  H-2232.1 

Read first time 02/21/2007.   Referred to Committee on Capital Budget.

     AN ACT Relating to creating the community development fund; and adding a new chapter to Title 43 RCW.

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

NEW SECTION.  Sec. 1   INTENT. (1) The legislature recognizes that although many regions of the state are thriving, there are still distressed communities throughout rural and urban Washington where investments in economic development and social services initiatives could create vibrant local business districts and prosperous neighborhoods. Communities, whether they are formed by cultural identity, geography, or other characteristics, can grow strong with a long-term vision and the synergy of crucial investments. Providing these investments is critical for the economic health of local distressed communities, helps build strong relationships with the state, and expands life opportunities for underserved, low-income populations.
     (2) The legislature further recognizes that private nonprofit corporations fill an important public purpose in providing health, safety, and welfare services to our state's residents. Acting through partnerships with governmental entities, these private sector providers are able to increase the amount and quality of services available to state residents, conferring a valuable benefit on the public.
     (3) The legislature therefore finds that existing programs by governmental entities and private nonprofit organizations to help distressed communities and underserved, low-income populations could be enhanced by creating the community development fund.

NEW SECTION.  Sec. 2   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Access to human services" means resources to help people in low-income communities access services including, but not limited to, health care, state programs, education, and workforce development and placement programs.
     (2) "Capacity building" means supporting the development and stability of community organizations and programs including building cooperative relationships between low-income communities with established nonprofit organizations.
     (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) "Distressed rural and urban areas" means areas that show evidence of severe economic distress including poverty, unemployment, low-income residents, dependence upon public assistance, job loss, plant closures, outmigration, incidence of crime, abandoned housing stock, deteriorated infrastructure, and other quantifiable measures of economic distress.
     (6) "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 federal internal revenue code of 1986, as amended.
     (7) "Technical assistance" means providing professional services under contract to emerging or expanding nonprofit organizations that will enable them to initiate or improve service to their customers.

NEW SECTION.  Sec. 3   FUND CREATION AND PURPOSE. The community development fund is created in the state treasury. Moneys in the fund may be spent only after appropriation. The fund shall be used to make grants to governmental entities and nonprofit organizations in economically distressed communities for high priority capacity-building, technical assistance, and capital projects that:
     (1) Support local economic development initiatives, particularly those that encourage small business start-up and sustainability;
     (2) Offer access to human services that help local communities care for those in need;
     (3) Provide education and recreational opportunities separate from the public education system;
     (4) Strengthen local capacity to establish goals, carry out initiatives, and build cooperative relationships within their communities; and
     (5) Support capital projects that further community objectives.

NEW SECTION.  Sec. 4   GRANT-MAKING PROCESS AND CRITERIA. The department shall establish and conduct a competitive process to solicit and evaluate projects that propose to invest in economic development and social services initiatives in distressed rural and urban areas, as follows:
     (1) The department shall determine a process to notify qualifying governmental entities and nonprofit organizations of the availability of moneys through the community development fund.
     (2) The department shall issue a request for proposals, and conduct an application and evaluation process according to the following criteria:
     (a) The applicant demonstrates a long-term vision for the development of the community, using the synergy of enhanced services, infrastructure, and community improvements;
     (b) The applicant demonstrates that the state's investment in the project is critical;
     (c) The applicant demonstrates that the applicant has the ability to fulfill the terms of the grant agreement;
     (d) Severity of economic distress including poverty, unemployment, low-income residents, dependence upon public assistance, job loss, plant closures, outmigration, incidence of crime, abandoned housing stock, deteriorated infrastructure, and other measures of distress;
     (e) Evidence that there is an unmet need for human and social services, youth education, or workforce training;
     (f) Evidence that the project will achieve its stated goals including:
     (i) Creating new or retaining existing jobs;
     (ii) Increasing local economic development opportunities;
     (iii) Providing residents with needed human and social services; or
     (iv) Providing the workforce and youth with needed education and training opportunities; and
     (g) Extent to which the grassroots community, local leaders, and partners are involved in developing and carrying out the project.
     (3) The department may not: (a) Set a monetary limit to funding requests; (b) require applicants to contribute cash or an in-kind match to the state funds requested; or (c) require that state funds be the last to be spent on a project.
     (4)(a) The department shall submit to the governor and the legislature a ranked, prioritized list of recommended projects for funding in the department's biennial budget requests. The list must include a description of each prioritized project and the amount of recommended state funding. The total amount of recommended state funding for all projects on the ranked, prioritized list shall not exceed ten million dollars.
     (b) The department shall also submit to the governor and the legislature an unranked list of the remaining projects for which applications were received. The appropriate committees of the legislature shall use this list to determine any additional community development fund projects that may receive funding in the biennial budgets.
     (c) In addition to the ranked and the unranked lists, the department shall submit to the appropriate 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 develop and manage appropriate contracts with the selected applicants; monitor project expenditures and grantee performance; report project and contract information; and exercise due diligence and other contract management responsibilities as required. The department may not sign agreements or otherwise financially obligate funds under this section until the legislature has approved a specific list of projects in law.
     (6) In contracts for grants authorized under this section, the department shall include provisions which require that capital improvements must be held by the grantee for a specific period of time appropriate to the amount of the grant and that facilities must 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 community development 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.
     (7) The grant-making process and criteria described in this section shall be used by the department for community development fund grants beginning with the 2009-2011 fiscal biennium, and each biennium thereafter.

NEW SECTION.  Sec. 5   ACCOUNTABILITY AND REPORTS. (1) The department shall develop accountability and reporting standards for grant recipients.
     (2) The department shall submit a report each biennium to the appropriate committees of the legislature, including at a minimum:
     (a) The results of projects funded during the current biennium;
     (b) Recommendations for policy and programmatic changes to the community development fund; and
     (c) The ranked list of prioritized projects and amounts proposed for funding in the subsequent biennium, and the unranked list of the remaining projects for which applications were received.
     (3) The department shall submit its initial report by January 1, 2009, when, in addition to providing the information required in subsection (2) of this section, the department shall propose one or more sources of ongoing funding for the community development fund.

NEW SECTION.  Sec. 6   CAPTIONS. Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 7   CODIFICATION. Sections 1 through 6 of this act constitute a new chapter in Title 43 RCW.